Serious Misconduct

MARIBAGO BLUEWATER BEACH RESORT, INC. v. NITO DUALG.R. No. 180660 July 20, 2010Perez, J.

DOCTRINE: Respondent's acts constitute serious misconduct which is a just cause for termination under the law. Theft committed by an employee is a valid reason for his dismissal by the employer.

FACTS: Petitioner Maribago is a corporation operating a resort hotel and restaurant in Barangay Maribago, Lapu-Lapu City(Cebu). On Oct. 18, 1995, it hired respondent Dual as waiter and promoted him later as outlet cashier of its Poolbar/Allegro Restaurant.

Around 6:30 p.m. on January 9, 2005, a group of Japanese guests and their companions dined at Allegro. Captain waiter Hiyas took their dinner orders comprising of 6 sets of lamb and 6 sets of fish. Hiyas forwarded one copy of the order slip to the kitchen and another copy to respondent. Hiyas and waiter Genaro Mission, Jr. served 12 set dinners to the guests, and another 2 sets to their guides free of charge (total of 14 sets of dinner).

After dinner, at around 9:00 p.m., the guests asked for their bill. Since Hiyas was attending to other guests, he gave a signal to Mission to give the bill. Mission asked respondent Dual for the sales transaction receipt and presented this to the guests. The guests paid the amount indicated on the receipt and thereafter left in a hurry. The receipt printed at 10:40 p.m. shows that only P3,036.00 was remitted by cashier Dual corresponding to only 6 sets of dinner. In view of the discrepancy between the order slip and the receipt issued, petitioner issued memoranda requiring Dual, Alvin Hiyas, Ernesto Avenido and Basilio Alcoseba to explain why they should not be penalized for violating House Rule 4.1 (dishonesty in any nature).

After the investigation, respondent Dual was found guilty of dishonesty for his fabricated statements and for asking one of the waiters (Mission) to corroborate his allegations. He was terminated.

Petitioner Maribago submits that the transaction receipt handed to Mission by respondent Dual amounted to P10,100.00 (more or less). The guests allegedly gave Mission P10,500.00 with the instruction to return only P200.00. The rest can be kept by the waiter as tip. Mission then handed Dual the P10,500.00 and relayed the guests' instruction. Dual handed Mission the P200.00 which the latter gave to the guests. It was discovered later that only P3,036.00 was entered by Dual in the cash register. The rest of the payment was missing. The original transaction receipt for P10,100.00 was likewise missing and in its place, only a transaction receipt for P3.036.00 was registered. Upon verification, it was also found out that the order slip was tampered by Alcoseba to make it appear that only 6 set dinners were ordered.

Dual filed a complaint for illegal dismissal before the NLRC, Regional Arbitration Branch No. VII, Cebu City. The LA found that the termination was without valid cause. The NLRC set aside the LA’s decision and dismissed the complaint. The CA reversed the NLRC resolution. It found no sufficient valid cause to justify respondent’s dismissal.

ISSUE: Whether or not respondent was illegally dismissed.

HELD: NO.The law requires that an employer shall not terminate the services of an employee except for a just or authorized cause. Otherwise, an employee unjustly dismissed from work is entitled to reinstatement and full backwages. The law also requires the employer to observe due process in termination cases. In Agabon v. NLRC, we ruled that violation of the employee's statutory right to due process makes the employer liable to pay indemnity in the form of nominal damages. The law further requires that the burden of proving the cause for termination rests with the employer.

In this case, respondent is guilty of dishonesty and of stealing money entrusted to him as cashier. Instead of reporting P10,100.00 as payment by the guests for their dinner, respondent cashier only reported P3,036.00 as shown by the receipt which he admitted to have issued. The receipt which bears his name "NITO" was printed at 10:40 p.m. or 1 hour and 40 minutes after the guests had left at 9:00 p.m. Moreover, respondent's claim that he received P3,100.00 only and gave Mission P64.00 as change is not shown by the receipt that he issued.

In addition, the amount indicated in the receipt does not coincide with Dual's contention that only 4 dishes were cancelled and 2 dishes were given free of charge. If such were the case, then the amount charged to the guests

should have been for 8 sets of dinner and not 6 sets (14-6=8). As established during the clarificatory hearing, 12 sets of dinner were served to guests and 2 dinner sets were given to the tour guides free of charge. It is clearly indicated in the altered order slip that 6 out of the 12 sets of dinner were cancelled.

The alibi of cancellation has no leg to stand on. The standard operating procedure of Maribago dictates that in cases of cancellation, the order slip has to be countersigned by the attending waiter but such was not so in this case.

Dual and Alcoseba tried twice to convince Mission to cover up their crime. They even asked Mission to take the fall by asking him to admit that he altered the order slip from twelve 12 sets of dinner to 6 sets. In fine, what is damning to the cause of Dual is the receipt which he admittedly issued. The receipt was issued long after the guests had left (9:00 p.m.) and after the alteration of the order slip (9:45 p.m.) was done. Such fact led us to the conclusion that he consented to and participated in the anomaly.

Respondent's acts constitute serious misconduct which is a just cause for termination under the law . Theft committed by an employee is a valid reason for his dismissal by the employer.

Although as a rule this Court leans over backwards to help workers and employees continue with their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property, petitioner's income in this case, are a different matter. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. The management also has its own rights, as such, are entitled to respect and enforcement in the interest of simple fair play.

JOEB M. ALIVIADO, et al. v. PROCTER & GAMBLE PHILS, INC., and PROMM-GEM INC.G.R. No. 160506 March 9, 2010Del Castillo, J.

DOCTRINE: In order to constitute serious misconduct, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been performed with wrongful intent.

FACTS: Petitioners worked as merchandisers of P&G from various dates. They all individually signed employment contracts with either Promm-Gem or SAPS for periods of more or less 5 months at a time. They were assigned at different outlets, supermarkets and stores where they handled all the products of P&G. They received their wages from Promm-Gem or SAPS. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products.

In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later amended to include the matter of their subsequent dismissal.

The LA dismissed the complaint for lack of merit.

The NLRC affirmed such decision. The CA denied petitioners’ petition for certiorari.

Petitioners insist that they are employees of P&G. They claim that they were recruited by the salesmen of P&G and were engaged to undertake merchandising chores for P&G long before the existence of Promm-Gem and/or SAPS. They further claim that when the latter had its so-called re-alignment program, petitioners were instructed to fill up application forms and report to the agencies which P&G created.

Petitioners further claim that P&G instigated their dismissal from work as can be gleaned from its letter to SAPS dated February 24, 1993, informing the latter that their Merchandising Services Contract will no longer be renewed.

ISSUES: Whether or not petitioners were illegally dismissed.

HELD: (Take note: the first issue was whether or not there was employer-employee relationship between petitioners and P&G; petitioners were actually asking for regularization and payment of benefits from P&G).

NO. In case of regular employment, the employer shall not terminate the services of an employee except for a just or authorized cause. In the instant case, the termination letters by Promm-Gem to its employees uniformly specified the cause of dismissal as grave misconduct and breach of trust, as follows:

“This informs you that effective May 5, 1992, your employment with our company, Promm-Gem, Inc. has been terminated. We find your expressed admission, that you considered yourself as an employee of Procter & Gamble Phils., Inc. and assail the integrity of the Company as legitimate and independent promotion firm, is deemed as an act of disloyalty prejudicial to the interests of our Company: serious misconduct and breach of trust reposed upon you as employee of our Company which constitute just cause for the termination of your employment.”

Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful in character implying wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. To be a just cause for dismissal, such misconduct:

a. Must be serious:b. Must relate to the performance of the employees duties; and

c. Must show that the employee has become unfit to continue working or the employer.

In order to constitute serious misconduct, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been performed with wrongful intent.

In the instant case, petitioners-employees of Promm-Gem may have committed an error of judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing so. As such, we find them guilty of only simple misconduct for assailing the integrity of Promm-Gem as a legitimate and independent promotion firm. A misconduct which is not serious or grave cannot be a valid basis for dismissing an employee.

THE COCA-COLA EXPORT CORPORATION v. CLARITA P. GACAYANG.R. No. 149433 December 15, 2010LEONARDO-DE CASTRO, J.: FACTS

Clarita P. Gacayan was a Senior Financial Accountant of Coca Cola Export Corporation. One of her benefits was the reimbursement of meal and transportation expenses incurred while rendering overtime work. This reimbursement was allowed only when the employee worked overtime. The maximum amount allowed to be reimbursed was P150.00 pesos. Because of the alleged alterations(date and food purchase) in three receipts (McDonald’s and Shakey’s) which Gacayan submitted to support her claim for reimbursement of meal expenses, Coca-cola called the attention of Gacayan and required her to explain. Gacayan denied any personal knowledge in the commission of the alterations in the subject receipts. She asserted that her sister’s driver/messenger may have caused the alteration, but she could not be certain about it. With regard to the Shakey’s receipt, respondent maintained that what she ordered was a buddy pack with extra mojos. Her explanation was referred to the Assistant Manager of the Shakey’s Pizza Parlor and upon verification, it was discovered that the receipt was actually for three orders of Bunch of Lunch, and not for Buddy Pack which has a different item code.

A memorandum was sent to Gacayan inviting her to a hearing and formal investigation and to give her an opportunity to explain the issues against her. Gacayan appeared at the initial hearing but failed to appear on the second due to her doctor’s advice to rest since she was suffering from “severe mixed migraine and muscle contraction headache.” Gacayan also complained of the alleged partiality of the investigating committee against her. During that second hearing the personnel of Shakey’s denied the allegations of Gacayan. Coca Cola then sent another notice informing Gacayan of the re-setting of the continuation of the formal investigation but Gacayan failed to attend such hearing. Coca Cola then concluded the formal investigation. In a letter, Coca Cola dismissed Gacayan for fraudulently submitting tampered and/or altered receipts in support of her petty cash reimbursements in gross violation of the company’s rules and regulations. Gacayan then filed a complaint for illegal dismissal. Gacayan averred that, assuming that she altered the receipts in question, dismissal was too harsh a penalty for her considering that: “(a) it was her first offense in her 9 ½ years of service; (b) the offense imputed was minor, as only the dates and items, not the amounts, were altered or the amounts involved were very minimal; (c) the company did not suffer material damage, as she was really entitled to the P150.00 allowance even without accompanying receipt; and (d) respondent acted without malice, as she really rendered (unpaid) overtime work on those three dates.” Coca Cola maintained that Gacayan was dismissed for cause, that of “tampering official receipts to substantiate her claim for (meal) reimbursement which reflects her

questionable integrity and honesty.” Petitioner added that in terminating the services of an employee for breach of trust, “it is enough that the misconduct of the employee tends to prejudice the employer’s interest since it would be unreasonable to require the employer to wait until he is materially injured before removing the cause of the impending evil.” The Labor Arbiter ruled in favor of Coca Cola and dismissed the complaint. It was held that Coca Cola complied with the notice requirement strictly and that Gacayan was terminated for repeatedly submitting fraudulent items of expense, clearly in violation of company rules and regulations which consequently resulted in loss of trust and confidence. NLRC affirmed. The Court of Appeals reversed and set aside the Resolutions ruling that the penalty of dismissal imposed was too harsh.

Coca Cola appealed, contending that Gacayan’s repeated submission of altered or tampered receipts to support her claim for reimbursement constitutes a betrayal of the employer’s trust and confidence and a serious misconduct, thus, giving cause for the termination of her employment. ISSUEWON there is serious misconduct. HELD The Labor Code mandates that before an employer may validly dismiss an employee from the service, the requirement of substantial and procedural due process must be complied with. Under the requirement of substantial due process, the grounds for termination of employment must be based on just or authorized causes. Article 282 of the Labor Code enumerates the just causes for the termination of employment, thus:

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 the instant case, it was only in the Reply to Respondent’s Comment, that petitioner made mention of another ground for the dismissal of respondent, that of serious misconduct, when she submitted altered or tampered receipts to support her claim for reimbursement. Such allegation appears to be a mere afterthought, being tardily raised only in the Reply. In a case, it was held that: Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful character, and implies wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however serious, must nevertheless be in connection with the employee’s work to constitute just cause for his separation. Thus, for misconduct or improper behavior to be a just cause for dismissal, (a) it must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer. Indeed, an employer may not be compelled to continue to employ such person whose continuance in the service would be patently inimical to his employer’s business. In this light, the alleged infractions of respondent could hardly be considered serious misconduct. It is well to stress that in order to constitute serious misconduct which will warrant the dismissal of an employee, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been done with wrongful intent. Such is, however, lacking in the instant case.

\SALVADOR O. ECHANO, JR. v. LIBERTY TOLEDOG.R. No. 173930 September 15, 2010ABAD, J.:

FACTS:Laurence V. Taguinod of the Medical Center Trading Corporation entrusted a January 18, 2000 manager’s

check for P55,205.36 to Rogelio S. Reyes, an officer of the City Treasurer’s Business License Division in payment of his company’s business tax who issued a receipt. However, it was found by Liberty M. Toledo, City Treasurer of Manila, that the receipt issued was spurious since its validation imprint was copied from the Municipal License Receipt issued to Co Siu Kheng and that the city did not receive the manager’s check nor was it deposited to its account with the Land Bank of the Philippines-YMCA Branch. As it turned out, Liza E. Perez, a stenographer in the Office of the Clerk of Court, Manila RTC, deposited the check in her personal account with the Land Bank-Taft Avenue Branch. The deposit was approved by Salvador O. Echano, Jr., Acting Branch Cashier of the Land Bank-Taft Avenue Branch.

Toledo then filed charges of grave misconduct and conduct prejudicial to the service against Reyes, Perez, and Echano with the Office of the Ombudsman. Echano claimed that Perez became his bank’s client in 1993 and had been depositing second-endorsed checks to her accounts with the bank since 1995. Edwin Quesada, the Assistant Department Manager, introduced her to him as a valued client with a long-standing business relationship with the bank. Quesada told him that Perez was in the business of rediscounting checks and it was not unusual for her to deposit

numerous second-endorsed checks at any given time. Liwliwa Eli, Echano’s predecessor as Acting Branch Cashier, also called him to facilitate Perez’s transactions, she being a valued client of the bank.

Echano added that he was unaware, prior to the filing of the complaint, that Perez had been able to deposit in her accounts second-endorsed checks that were payable to the City Treasurer of Manila. He claimed that he may have inadvertently missed out the payee’s name on the check when he examined it prior to signing the stamp of approval on the dorsal side.

The Office of the Ombudsman found Reyes and Echano guilty of grave misconduct and dishonesty and meted out to them the penalty of dismissal from the service with forfeiture of leave credits and perpetual disqualification from employment in the government and in government-owned and controlled corporations. On appeal, CA affirmed the Ombudsman decision.

ISSUEWON the Office of the Ombudsman erred in finding Echano guilty of grave misconduct and dishonesty

HELDThere is no doubt, based on the evidence that Echano was guilty of grave misconduct. Misconduct is a

transgression of some established and definite rule of action, more particularly, unlawful behavior or gross negligence by a public officer. As differentiated from simple misconduct, in grave misconduct the elements of corruption, clear intent to violate the law or flagrant disregard of established rule, must be manifest.

As the CA pointed out, Echano, as Acting Branch Cashier, should have exercised a high degree of diligence and care in handling Perez’s second-endorsed checks since her rediscounting of checks was not a regular banking transaction. Moreover, the manager’s check in this case had been crossed and issued for the payee’s account only. This meant that Medical Center Trading Corporation intended it to be deposited to the account of the payee, namely, the City Treasurer of Manila. And Echano cannot plead simple oversight because he had approved for deposit to Perez’s accounts more or less 26 second-endorsed checks intended for the City Treasurer of Manila. What is more, Echano failed to prove that Perez had indeed been a valued client of his bank or that her questionable transactions carried the approval of higher bank officials.

Echano claims that Judge Antonio J. de Castro, who presided over Branch 3 of the RTC of Manila, requested and guaranteed the deposit of Perez’s second-endorsed checks. But the evidence shows that those requests were made in 1995 and 1996 and under the premise that the checks were payable to the court. The transaction in this case occurred in 2000 and there is no showing that Judge De Castro guaranteed it.

As Acting Branch Cashier, petitioner was charged with responsibility of handling the bank’s daily transactions which could run into large amounts. There is a tremendous difference between the degree of responsibility, care, and trustworthiness expected of a clerk or ordinary employee in the bureaucracy and that required of bank managers, cashiers, finance officers, and other officials directly handling large sums of money and properties.3 The evidence clearly shows that Echano took light of such responsibility and flagrantly disregarded established banking rules and practices. His misconduct and dishonesty paved the way for the commission of fraud against, and consequent damage to, the City Government of Manila.

Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen Valenzuela vs. Keihin Philippines CorporationG.R. No. 171115, August 9, 2010Del Castillo, J.

DOCTRINE: Misconduct is defined as “the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.” For serious misconduct to justify dismissal under the law, “(a) it must be serious, (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer.” The fact that the value of the thing is minimal is not an excuse so long as the requisites are complied with.

FACTS: Petitioner Helen Valenzuela is a was a production associate in respondent Keihin Philippines Corporation, a company engaged in the production of intake manifold and throttle body used in motor vehicles manufactured by Honda. Due to several cases of theft and vandalism involving both respondent company’s property and personal belongings of other employees, respondent company issued two memoranda implementing an intensive inspection procedure of the employees before they leave the work premises.

On September 5, 2003, while Helen was about to leave the company premises, she saw a packing tape near her work area and placed it inside her bag because it would be useful in her transfer of residence. When the lady guard on duty inspected Helen’s bag, she found the packing tape inside her bag. The guard confiscated it and submitted an incident report. The next day, , respondent company issued a show cause notice to Helen accusing her of violating F.2 of the company’s Code of Conduct, which says, “Any act constituting theft or robbery, or any attempt to commit theft or robbery, of any company property or other associate’s property. Penalty: Dismissal.”She was then directed to explain in writing why no disciplinary action should be taken against her.

Helen, in her explanation, admitted the offense stating, “Kumuha po ako ng isang packing tape na gagamitin ko sa paglilipat ng gamit ko sa bago kong lilipatang bahay.” She even manifested that she would accept whatever penalty would be imposed upon her.

On September 26, 2003, Helen received a notice of disciplinary action informing her that Keihin has decided to terminate her services.

Aggrieved, petitioners filed a complaint against respondent for illegal dismisaal, non-payment of 13 th month pay, with a prayer for reinstatement and payment of full backwages as well as moral and exemplary damages. They alleged that Helen’s act of taking the packing tape did not constitute serious misconduct, because the same was done with no malicious intent. According to petitioners, during the routine inspection and even before the guard opened Helen’s bag, she readily admitted that the bag contained a packing tape. Petitioners claim that the mental attitude of Helen negates depravity, willful or wrongful intent and, thus, she cannot be held guilty of serious misconduct. Rather, it was a mere error of judgment on the part of Helen. They believed that the tape was not of great value and of no further use to respondent company since it was already half used. Also, although Helen admitted that she took the packing tape, petitioners claimed that her punishment was disproportionate to her infraction.

Keihin, on the other hand, maintained that Helen was guilty of serious misconduct because there was a deliberate act of stealing from the company. Respondent company also claimed that motive and value of the thing stolen are irrelevant in this case.

Both the Labor Arbiter and NLRC dismissed the complaint of illegal dismissal. The sane was affirmed by the Court of Appeals.

ISSUE: Whether, in taking the packing tape for her own personal use, Helen committed serious misconduct, which is a just cause for her dismissal from service

HELD: YES. Misconduct is defined as “the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.” For serious misconduct to justify dismissal under the law, “(a) it must be serious, (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer.”

In the case at bar, Helen took the packing tape with the thought that she could use it for her own personal purposes. By her own admission, there was intent on her part to benefit herself when she attempted to bring home the packing tape in question.

It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving both respondent company’s property and personal belongings of other employees. In order to address this issue of losses, respondent company issued two memoranda implementing an intensive inspection procedure and reminding all employees that those who will be caught stealing and performing acts of vandalism will be dealt with in accordance with the company’s Code of Conduct. Despite these reminders, Helen took the packing tape and was caught during the routine inspection. All these circumstances point to the conclusion that it was not just an error of judgment on the part of Helen, but a deliberate act of theft of company property. Likewise, it is of no moment that the value of the thing taken is very minimal.

JEFFREY NACAGUE v, SULPICIO LINES, NC.G.R. No. 172589, August 8, 2010Carpio, J.

DOCTRINE: When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal.

FACTS: Respondent hired Nacague as “hepe de viaje” or the representative of Sulpicio Lines on board its vessel M/V Princess of the World. On January 25, 2003, Sulpicio Lines received an anonymous letter reporting the use of illegal drugs on board the ship. Later on, Ceasar T. Chico, a housekeeper on the ship, submitted a report regarding the drug paraphernalia found inside the Mopalla Suite Room and the threat on his life made by Nacague and Chief Mate Reynaldo Doroon after he found the drug paraphernalia. Acting on such report, Sulpicio Lines sent a notice of investigation to Nacague informing him of the charges against him for use of illegal drugs and threatening a co-employee.

When the ship docked in the port of Manila, some crew members of the ship, together with Nacague, were subjected to a random drug test. They were taken to S.M. Lazo Medical Clinic (S.M. Lazo Clinic) and were required to submit urine samples. The result of the random drug test revealed that Nacague was positive for methamphetamine hydrochloride or shabu. As a result, Sulpicio Lines subjected Nacague to a formal investigation. Nacague denied using illegal drugs.

On Februarry 23, 2003, Nacague went to Chong Hua Hospital in Cebu City to undergo a voluntary drug test. The drug test with Chong Hua Hospital yielded a negative result. Nacague submitted this test result to Sulpicio Lines.

However, on 7 March 2003, Sulpicio Lines sent a memorandum to Nacague terminating him from the service, basing the same from the positive drug test result from S.M. Lazo Clinic. He was terminated on the ground of grave misconduct and loss of trust and confidence. Aggrieved, Nacague filed a complaint for illegal suspension, illegal dismissal and for reinstatement with backwages.

Nacague maintains that the S.M. Lazo Clinic drug test was not credible because Sulpicio Lines failed to show that S.M. Lazo Clinic is an authorized drug testing center. Nacague also alleges that the urine samples were gathered carelessly without proper labels to identify their owners and that S.M. Lazo Clinic did not ask Nacague if he was taking any medication that might alter the results of the drug test. Nacague adds that Republic Act No. 9165 (R.A. No. 9165) and the Department of Labor and Employment Order No. 53-03 (Department Order No. 53-03) require two drug tests — a screening test and a confirmatory test. Nacague maintains that, since only a screening test was conducted, he was illegally dismissed based on an incomplete drug test.

Respondent, on the other hand, argues that since Nacague knew that the residue of the drug would no longer be detectable in his body after five days, Nacague underwent another drug test with the Chong Hua Hospital. Sulpicio Lines insists that the most accurate drug test is the random drug test conducted by S.M. Lazo Clinic and that the test with Chong Hua Hospital was a “planned” test.

The Labor Arbiter rendered a decision in favor of Nacague and declared that Sulpicio Lines illegally dismissed Nacague. The NLRC reversed the same. The Court of Appeals affirmed the decision of the NLRC. Hence, this petition.

ISSUE: Whether the termination of Nacague is valid

HELD: NO. Under Article 279 of the Labor Code, an employer may terminate the services of an employee for just causes or for authorized causes. Furthermore, under Article 277(b) of the Labor Code, the employer must send the employee who is about to be terminated, a written notice stating the causes for termination and must give the employee the opportunity to be heard and to defend himself. Thus, to constitute valid dismissal from employment, two requisites must concur: (1) the dismissal must be for a just or authorized cause; and (2) the employee must be afforded an opportunity to be heard and to defend himself.

The NLRC and the Court of Appeals ruled that Sulpicio Lines validly terminated Nacague’s employment because he was found guilty of using illegal drugs which constitutes serious misconduct and loss of trust and confidence. However, the Supreme Court finds that Sulpicio Lines failed to clearly show that Nacague was guilty of using illegal drugs. We agree with the Labor Arbiter that the lack of accreditation of S.M. Lazo Clinic made its drug test results doubtful.

Section 36 of R.A. No. 9165 provides that drug tests shall be performed only by authorized drug testing centers. Moreover, Section 36 also prescribes that drug testing shall consist of both the screening test and the confirmatory test. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center. Sulpicio Lines did not even deny Nacague’s allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test was conducted to determine if Nacague was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory test. Sulpicio Lines failed to indubitably prove that Nacague was guilty of using illegal drugs amounting to serious misconduct and loss of trust and confidence. Sulpicio Lines failed to clearly show that it had a valid and legal cause for terminating Nacague’s employment. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal. However, while this is a matter of illegal dismissal, Nacague’s reinstatement is no longer feasible due to strained relations between Nacague and Sulpicio Lines. Hence, Nacague should instead be granted separation pay.

National Power Corporation vs. Alan Olandesca G.R. No. 171434, April 23, 2010 Peralta, J. :

DOCTRINE:

Dishonesty is defined as the disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition to defraud, deceive or betray.

FACTS:

A complaint for acts inimical to government service and for violations of NPC Code of Conduct and Discipline was filed against respondent Olandesca, who was a Supervising Property Officer in petitioner National power Corporation. It was alleged that respondent withdrew several items from the warehouse/property office, without the required Warehouse Requisition Slip (WRS), on three occasions during nighttime. Petitioner claimed that such acts clearly proved his intention to cheat his employer by deliberately and maliciously taking undue advantage of his position as Supervising Property Officer.

Respondent countered that he had no intent to defraud the government in taking the property from the warehouse. He asserted that the materials he took was used fence the mango seedlings which were planted on petitioner’s watershed areas, and that he replaced all the materials taken three days after the last withdrawal even without any demand from any of petitioner’s officers or personnel.

Petitioner's Regional Board of Inquiry and Discipline (RBID) heard the case, and recommended the penalty of dismissal. Said recommendation was adopted by the petitioner. The Civil Service Commission affirmed the dismissal. Upon appeal to the CA, the latter ruled in favor of respondent, and ordered his reinstatement.

ISSUE: Whether or not respondent Olandesca should be dismissed for his act of withdrawing items without the required WRS.

HELD: No. The Court ruled that respondent acted in complete good faith, and was motivated only by a desire to serve the public beyond the call of duty.

Dishonesty is defined as the disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition to defraud, deceive or betray.

It is not disputed that respondent took several materials and supplies from petitioner's warehouse without the approved WRS. However, this should not be construed as dishonesty on the part of respondent that would warrant his dismissal from the service for the following reasons: First, the withdrawal of the supplies were duly recorded in the security guard's logbook. the recording to be done in the logbook indicates his lack of intent to deceive or defraud petitioner; Second, Right after withdrawing the items, respondent replaced them on his own initiative, without anyone instructing him to do so. This act negates his intent to defraud petitioner; Third. There is no clear showing that respondent misappropriated or converted the items for his own personal use or benefit; and Fourth. Morevoer, the Graft Investigation Officer of the Office of the Ombudsman dismissed a complaint for qualified theft filed against respondent.

Nonetheless, although the respondent did not commit an overt act of dishonesty, he is not exonerated from liability. It was an established company procedure that before the materials can be taken out from the warehouse, the issuance of a WRS is an indispensable requirement. For having violated said rule, the appropriate penalty to be imposed against him is reprimand.

Caltex (Philippines), Inc., et. al. vs. Hermie G. Agad, et. al.G.R. No. 163554, April 23, 2010Carpio, J.

DOCTRINE:

Misconduct has been defined as a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be serious, the misconduct must be of such grave and aggravated character.

FACTS:

Respondent Hermie Agad was a Depot Superintendent in petitioner company. Two audit reports were submitted by the company auditors whereby, in the first report, it was discovered that Agad ask for reimbursement for the expense incurred in the construction of two crates amounting to P15, 500, when as alleged by Delda, owner of the construction company which made the two crates, only P400 was given to them by Agad, although, as appearing from the official receipt issued by Delda, the amount indicated was P15, 500. In the second report, the company auditor declared that 190 pieces of 11 kg. liquefied petroleum gas (LPG) cylinders from the Depot were allegedly withdrawn for scrap and repair purposes without proper documentation, i.e. Records of Materials Received/Delivered (RMRD), when Agad was still depot superintendent.

During the investigation conducted by petitioner, Agad was placed under preventive suspension. Later, he was informed of his dismissal on the grounds of serious misconduct and loss of trust and confidence, both just causes for termination of employment, prompting him to file a case for illegal dismissal before the Labor Arbiter.

ISSUE:

Whether Caltex legally terminated Agad’s employment on just causes: (1) acts tantamount to serious misconduct and willful violation of company rules and regulations; and (2) willful breach of trust and confidence as Depot Superintendent.

HELD:

With respect to the reimbursement of crafting expense, the Court ruled that petitioners were not able to fully substantiate the alleged fictitious reimbursement of the crating expense. Delda’s testimony alone, without any corroborating evidence to prove otherwise, is insufficient to overcome the presumption of regularity in the issuance of his own official receipt which he gave to Agad.

With regard to withdrawal and sale of 190 pieces of LPG cylinders without proper documentation, the Court ruled that Agad committed a serious infraction amounting to theft of company property. In this case, Agad, after ordering the bidding and sale of LPG cylinders, did not remit the proceeds of the sale of the same. Even if considered as scrap materials, the LPG cylinders still had monetary value which Agad cannot appropriate for himself without Caltex’s consent.

This act is akin to a serious misconduct or willful disobedience by the employee of the lawful orders of his employer in connection with his work, a just cause for termination of employment recognized under Article 282(a) of the Labor Code.Misconduct has been defined as a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be serious, the misconduct must be of such grave and aggravated character.

Further, Agad’s conduct constitutes willful breach of the trust reposed in him, another just cause for termination of employment recognized under Article 282(c) of the Labor Code. Loss of trust and 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. 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.

As a superintendent, Agad occupied a position tasked to perform key and sensitive functions which necessarily involved the custody and protection of Caltex’s properties. Consequently, Agad comes within the purview of the trust and confidence rule. In sum, even if Agad did not commit the alleged charge of fictitious reimbursement of crating expense, he was found to have acted without authority, a serious infraction amounting to theft of company property, in the withdrawal and sale of the 190 pieces of LPG cylinders owned by the company. Caltex, as the employer, has discharged the burden of proof necessary in terminating the services of Agad, who was ascertained to have blatantly abused his position and authority. Thus, Agad’s dismissal from employment based on (1) acts tantamount to serious misconduct or willful violation of company rules and regulations; and (2) willful breach of trust and confidence as Depot Superintendent was lawful and valid under the circumstances as mandated by Article 282 (a) and (c) of the Labor Code.

WHITE DIAMOND TRADING CORPORATION VS. NLRCG.R. NO. 186019 / 617 scra 129March 29, 2010

Doctrine: Where the employer failed to observe procedural due process in the employee’s dismissal, payment of indemnity in the form of nominal damages is warranted.

FACTS:

Petitioner is engaged in buying and selling second hand vehicles. Jerry Uy is its owner and President. Omela is the assistant secretary; Pastoril; is the secretary; and Escoto is the salesman.

Escoto consummated the sale of a car to Aquino for P200,000. Aquino tried but failed to haggle for a lower price. The purchase price indicated in the receipt issued to Aquino was P200,000, but the price indicated in the duplicate copy of the receipt that remained in the company was P190,000. The receipt was issued by Omela to Aquino after Aquino gave Omela P200,000 in cash. Pastoril then took out a deed of sale (which shows that the consideration was P190,000) and handed it to Aquino. Because of this transaction, the company terminated the employment of Omela, Pastoril, and Escoto.

The dismissed employees denied the allegation and averred that Aquino was asking for an additional discount. Jessie Uy agreed to give the requested discount but Aquino had already left the premises. Omela then reflected the correct amount of purchase price in the duplicate receipt. When Escoto contacted Aquino, he told him that there is a refund of P10,000. Aquino collected the amount and issued a receipt for such.

The company that the company manager became suspicious of the transaction and was prompted to look at the records of the sale; he tried to contact Aquino but to no avail. It was also discovered that Aquino was not residing in the address stated in the records. The dismissed employees likewise changed Aquino’s phone number.

Labor Arbiter: there is substantial evidence showing the Escoto, Omela and Pastoril were legally dismissed due to fraud committed in connection with the sale.

NLRC and CA: affirmed LA’s decision with modification. It held that Pastoril had no participation in the commission because she merely handed the deed of sale to Aquino. Hence, Pastoril should be awarded with backwages and separation pay.

ISSUE: Whether Pastoril was illegally dismissed and should be awarded with backwages and separation pay.

HELD: NO.1. Pastoril’s involvement in the questionable transaction as much more than handing over to Aquino his copy of deed of sale. The payment of the purchase price, the issuance of the receipt and the handing of the deed of sale were not separate isolated acts. They occurred in one continuous logical sequence with the players in close proximity with one another.2. The company failed to observe procedural due process in dismissing the employees. For this reason, payment of indemnity in the form of nominal damages is warranted.

RENO FOODS, INC. VS. NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-KATIPUNAN615 SCRA 240 / G.R. 164016March 15, 2010

DOCTRINES:* Criminal conviction is not necessary to find just cause for employment termination.* Separation pay is only warranted when the cause for termination is not attributable to employee’s fault, such as those provided in Articles 283 and 284 of the Labor Code, as well in the cases of illegal dismissal in which reinstatement is no longer feasible.

FACTS:The guard on duty found six Reno canned goods wrapped in nylon leggings inside employee Nenita Capor’s fabric clutch bag. Petitioner accorded Capor several opportunities to explain her side, often with the assistance of respondent union. After petitioner sent Capor a Notice of Termination, the latter was given another opportunity for reconsideration. Unfortunately, petitioner found no reason to change its decision.

Petitioner then filed a criminal case for qualified theft against Capor. Capor was acquitted in the criminal case based on reasonable doubt. Thereafter, respondent union filed on behalf of Capor a complaint for illegal dismissal and money claims.

Labor Arbiter: Capor is guilty of serious misconduct which is a just cause for terminationNLRC and CA: affirmed LA’s factual findings and monetary awards but added an award of financial assistance in the form of separation pay.

ISSUES:1. Whether conviction in a criminal case is necessary to find just cause for termination of employment2. Whether the award of separation pay to Capor is warranted.

HELD:

No. Criminal conviction is not necessary to find just cause for employment termination. Employee’s acquittal, especially one grounded on the existence of reasonable doubt, will not preclude a determination in a labor case the he is guilty of acts inimical to the employer’s interests. Criminal cases require proof beyond reasonable doubt, while labor disputes require only substantial evidence (such relevant evidence as a reasonable mind might accept as adequate to justify a conclusion).

No. Separation pay is only warranted when the cause for termination is not attributable to employee’s fault, such as those provided in Articles 283 and 284 of the Labor Code, as well in the cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause, such as serious misconduct.

Willful Disobedience

LORES REALTY ENTERPRISES, INC., LORENZO Y. SUMULONG III, vs.VIRGINIA E. PACIA,

DOCTRINE:

The offense of willful disobedience requires the concurrence of two (2) requisites: (1) the employee’s assailed conduct must have been willful, that is characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.

Facts:

Respondent Virginia E. Pacia (Pacia) was hired by LREI. At the time of her dismissal, she was the assistant manager and officer-in-charge of LREI’s Accounting Department under the Finance Administrative Division.

On October 28, 1998, LREI’s acting general manager, petitioner Sumulong, through Ms. Julie Ontal, directed Pacia to prepare Check Voucher No. 16477 worth P150,000.00 as partial payment for LREI’s outstanding obligation to the Bank of the Philippine Islands-Family Bank (BPI-FB). Pacia did not immediately comply with the instruction. After two repeated directives, Pacia eventually prepared Check No. 0000737526 in the amount of P150,000.00. Later, Sumulong again directed Pacia to prepare Check Voucher No. 16478 in the amount of P175,000.00 to settle the balance of LREI’s outstanding indebtedness with BPI-FB. Pacia once again was slow in obeying the order. Due to the insistence of Sumulong, however, Pacia eventually prepared Check No. 0000737527 in the amount of P175,000.00.

To explain her refusal to immediately follow the directive, Pacia reasoned out that the funds in LREI’s account were not sufficient to cover the amounts to be indicated in the checks.

On November 6, 1998, Pacia received a notice of termination5 stating, among others, that she was being dismissed because of her willful disobedience and their loss of trust and confidence in her. Pacia then filed a Complaint for Unfair Labor Practice due to Harassment, Constructive Dismissal, Moral and Exemplary Damages 6 against LREI and Sumulong. Subsequently, Pacia filed an Amended Complaint7 to include the charges of illegal dismissal and non-payment of salaries. the Labor Arbiter (LA) rendered a decision8 finding that the dismissal of Pacia was for a just and valid cause. On appeal, the NLRC in its March 31, 2000 Decision9 reversed the LA’s Decision and found LREI and Sumulong guilty of illegal dismissal. Dissatisfied, LREI and Sumulong elevated the case to the CA. The CA held that LREI and Sumulong failed to establish with substantial evidence that the dismissal of Pacia was for a just cause. It found that Pacia’s initial reluctance to obey the orders of her superiors was for a good reason - to shield the company from liability in the event that the checks would be dishonored for insufficiency of funds.

Issue: Whether or not Pacia’s dismissal was justified under the circumstances?

Ruling: NO. Article 282 of the Labor Code enumerates the just causes for which an employer may terminate the services of an employee, to wit:

ARTICLE 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;

The offense of willful disobedience requires the concurrence of two (2) requisites: (1) the employee’s assailed conduct must have been willful, that is characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.

Pacia’s initial reluctance to prepare the checks, however, which was seemingly an act of disrespect and defiance, was for honest and well intentioned reasons. Protecting LREI and Sumulong from liability under the Bouncing Checks Law18 was foremost in her mind. It was not wrongful or willful. Neither can it be considered an obstinate defiance of company authority. The Court takes into consideration that Pacia, despite her initial reluctance, eventually did prepare the checks on the same day she was tasked to do it.

In finding for Pacia, the Court is guided by the time-honored principle that if doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The rule in controversies between a laborer and his master distinctly states that doubts reasonably arising from the evidence, or in the interpretation of agreements and writing, should be resolved in the former's favor.

Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.

DOCTRINE:

A bank manager’s abuse of authority in implementing bank policies is an abuse of the trust reposed in him by his employer which constitutes as a just cause for his termination.

Facts:

Respondent was employed by then Philippine Commercial and Industrial Bank (PCIB), which came to be Equitable PCI Bank and now herein petitioner Banco De Oro Unibank, Inc. In 1995, he was assigned as branch manager of PCIB’s Makati Cinema Branch. On July 24, 1996, PCIB’s Operations Subcenter Head, Gerardo C. Gabriel (Gabriel), called the attention of PCIB’s Ayala-Makati Area Head, Cora Mallillin (Mallillin), regarding a number of Philippine Long Distance Telephone Company (PLDT) dividend checks being sent for clearing by PCIB Makati Cinema Branch. It appears that respondent allowed Luz Fuentes (Fuentes), a client-depositor of PCIB Makati Cinema Branch who opened checking account no. 0672-04408-0 on July 14, 1995, to deposit several second-endorsed PLDT dividend checks beginning the last quarter of 1995.

A special audit was then conducted, the audit committee recommended respondent’s dismissal from employment and setting up of a contingent liability for the potential loss for violation of bank’s policies and failure to exercise prudence expected of a branch head.

On February 7, 1997, respondent received a Memo dated January 7, 1997 dismissing him from employment on the grounds of serious policy violations, willful breach of trust, and loss of confidence, with further sanction of forfeiture of benefits and contingent restitution. respondent filed a complaint for illegal dismissal before the Regional Arbitration Branch of the NLRC. The Labor Arbiter rendered a Decision finding respondent’s dismissal valid. The Labor Arbiter concluded that there were enough infractions committed by respondent which constitute serious misconduct or willful disobedience and willful breach of trust and that petitioner need not incur damages to sustain the validity of dismissal.

Both parties appealed to the NLRC, the NLRC dismissed both appeals for lack of merit and, consequently, affirmed the Labor Arbiter’s Decision. It held that petitioner, as employer, has the discretion of terminating an employee who holds a position of trust and confidence on the ground of lack or absence thereof. According to the NLRC, there was enough basis for the loss of trust and confidence on respondent by petitioner on account of the former’s evident disobedience. Upon appeal to the court of appeals it rendered its Decision reversing the ruling of the NLRC and holding that respondent’s dismissal was effected without due process of law and without just cause.

Issue:

Whether or not Respondent committed willful disobedience and willful breach of trust sufficient as just causes for his dismissal?

Ruling:

YES! To justify willful disobedience or insubordination as a valid ground for termination, “the employee’s assailed conduct must have been willful [or] characterized by a wrongful or perverse attitude and the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.” On the other hand, willful breach of trust requires that “the loss of confidence must not be simulated; it should not be used as a subterfuge for causes which are illegal, improper or unjustified; it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; it must be genuine, not a mere afterthought to justify earlier action taken in bad faith; and, the employee involved holds a position of trust and confidence.”

In the case at bench, we hold that respondent was validly dismissed on the grounds of willful disobedience and willful breach of trust under Article 282 of the Labor Code.

While petitioner’s manual of procedures does not absolutely prohibit the negotiation or acceptance of second-endorsed checks for deposits, it does expressly disallow the acceptance of checks endorsed by corporations, societies, firms, etc. and checks with unusual endorsements. As shown by the records, this explicit policy was transgressed by respondent intentionally and willfully. It was not

denied that on June 27, 1996, respondent was instructed by management to stop accepting second-endorsed checks due to the irregularities attendant to the transactions with Fuentes. Despite such reasonable order, on two occasions, respondent unhesitatingly accommodated the request of Fuentes to accept her checks allegedly on the strength of the Area Head’s approval on the first instance and on the second instance, respondent justifies his acceptance of the checks as the same were nevertheless returned and cancelled on the ground that the checks include those payable to corporations. Respondent admittedly disobeyed not only his superiors’ directives but also simple bank rules. Respondent, as bank manager, has the duty to ensure that bank rules are strictly complied with not only to ensure efficient bank operation which is imbued with public interest but also to serve the best interest of the bank as he holds a position of trust and confidence. As emphasized by petitioner, respondent was in charge of the overall administration of the branch and is tasked to ensure that all policies and procedures are strictly followed. Indubitably, any negligence in the exercise of his responsibilities can be sufficient ground for loss of trust and confidence demanded by his position. Respondent’s wanton violation of bank policies equates to abuse of authority and, therefore, abuse of the trust reposed in him. Such intention to violate the trust of petitioner is enough for his dismissal from service.

Gross Negligence

Hospital Management Services Inc, - Medical Center Manila vs Hospital Management Service Inc. - Medical Center Manila Employees Association-AFW and Edna R. De Castro

FACTS: Respondent De Castro started working as a staff nurse at petitioner hospital since September 28, 1990, until she was dismissed on July 20, 1999.

Between 2:00 a.m. to 3:00 a.m. of March 24, 1999, while respondent De Castro and ward-clerk orientee Gina Guillergan were at the nurse station on night duty (from 10:00 p.m. of March 23, 1999 to 6:00 a.m. of March 24, 1999), one Rufina Causaren, an 81-year-old patient confined at Room 724-1 of petitioner hospital for “gangrenous wound on her right anterior leg and right forefoot” and scheduled for operation on March 26, 1999, fell from the right side of the bed as she was trying to reach for the bedpan. Because of what happened, the niece of patient Causaren staying in the room was awakened and she sought assistance from the nurse station. Instead of personally seeing the patient, respondent De Castro directed ward-clerk orientee Guillergan to check the patient. The vital signs of the patient were normal. Later, the physician on duty and the nursing staff on duty for the next shift again attended to patient Causaren.

Chief Nurse Josefina M. Villanueva informed Dr. Asuncion Abaya-Morido, president and hospital director, about the incident and requested for a formal investigation. In the Investigation Report[5] dated May 20, 1999, the Investigation Committee found that the subject incident happened between 11:00 a.m. to 11:30 a.m. of March 23, 1999. The three other nurses for the shift were not at the nurse station. Staff Nurse Paderes was then in another nurse station encoding the medicines for the current admissions of patients, while Nursing Assistant Respicio was making the door name tags of admitted patients and Nursing Assistant Tatad delivered some specimens to the laboratory. The committee recommended that despite her more than seven years of service, respondent De Castro should be terminated from employment for her lapse in responding to the incident and for trying to manipulate and influence her staff to cover-up the incident.

On July 5, 1999, Janette A. Calixijan, HRD Officer of petitioner hospital, issued a notice of termination, duly noted by Dr. Abaya-Morido, upon respondent De Castro, effective at the close of office hours of July 20, 1999, for alleged violation of company rules and regulations, particularly paragraph 16 (a), Item 3, Chapter XI of the Employee's Handbook and Policy Manual of 1996 (Employee's Handbook):[6] (1) negligence to follow company policy on what to do with patient Rufina Causaren who fell from a hospital bed; (2) failure to record and refer the incident to the physician-[on- duty and] allow[ing] a significant lapse of time before reporting the incident; (3) deliberately instructing the staff to follow her version of the incident in order to cover up the lapse; and (4) negligence and carelessness in carrying out her duty as staff nurse-on-duty when the incident happened. On July 21, 1999, respondent De Castro, with the assistance of respondent Hospital Management Services Inc.-Medical Center Manila Employees Association-AFW, filed a Complaint[7] for illegal dismissal against petitioners.

On January 18, 2001, the Labor Arbiter rendered a Decision,[8] ordering petitioner hospital to reinstate respondent De Castro to her former position or by payroll reinstatement, at the option of the former, without loss of seniority rights. On appeal by respondent De Castro, the NLRC rendered a Decision dated February 28, 2002, reversing the findings of the Labor Arbiter and dismissing the complaint against the petitioners. On May 24, 2006, the CA reversed and set aside the Decision of the NLRC and reinstated the Decision of the Labor Arbiter, with modification that respondent De Castro should be entitled to payment of full backwages and other benefits, or their monetary equivalent, computed from the expiration of the 14-day-suspension period up to actual reinstatement. The

CA ruled that while respondent De Castro's failure to personally attend to patient Causeran amounted to misconduct, however, being her first offense, such misconduct could not be categorized as serious or grave that would warrant the extreme penalty of termination from the service after having been employed for almost 9 years.

ISSUE: WHETHER OR NOT DE CASTRO WAS ILLEGALLY TERMINATED.

HELD: YES. Article 282 (b) of the Labor Code provides that an employer may terminate an employment for gross and habitual neglect by the employee of his duties. The CA ruled that per the Employee’s Handbook of petitioner hospital, respondent De Castro’s infraction is classified as a less serious offense for “commission of negligent acts during working time” as set forth in subparagraph 11, paragraph 3 (B) of Chapter XI[10] thereof. Petitioners anchor respondent De Castro’s termination of employment on the ground of serious misconduct for failure to personally attend to patient Causaren who fell from the bed as she was trying to reach for the bedpan. Based on her evaluation of the situation, respondent De Castro saw no necessity to record in the chart of patient Causaren the fact that she fell from the bed as the patient did not suffer any injury and her vital signs were normal.

Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross negligence connotes want of care in the performance of one's duties. Habitual neglect implies repeated failure to perform one's duties for a period of time, depending upon the circumstances. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. Despite our finding of culpability against respondent De Castro; however, we do not see any wrongful intent, deliberate refusal, or bad faith on her part when, instead of personally attending to patient Causaren, she requested Nursing Assistant Tatad and ward-clerk orientee Guillergan to see the patient, as she was then attending to a newly-admitted patient at Room 710. It was her judgment call, albeit an error of judgment, being the staff nurse with presumably more work experience and better learning curve, to send Nursing Assistant Tatad and ward-clerk orientee Guillergan to check on the health condition of the patient, as she deemed it best, under the given situation, to attend to a newly-admitted patient who had more concerns that needed to be addressed accordingly. Being her first offense, respondent De Castro cannot be said to be grossly negligent so as to justify her termination of employment.

Negligence is defined as the failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation. The Court emphasizes that the nature of the business of a hospital requires a higher degree of caution and exacting standard of diligence in patient management and health care as what is involved are lives of patients who seek urgent medical assistance. An act or omission that falls short of the required degree of care and diligence amounts to serious misconduct which constitutes a sufficient ground for dismissal.

Considering that this was the first offense of respondent De Castro in her nine (9) years of employment with petitioner hospital as a staff nurse without any previous derogatory record and, further, as her lapse was not characterized by any wrongful motive or deceitful conduct, the Court deems it appropriate that, instead of the harsh penalty of dismissal, she would be suspended for a period of six (6) months without pay, inclusive of the suspension for a period of 14 days which she had earlier served.

St. Luke's Medical Center, Inc. and Robert Kuan vs Estrelito NotarioG.R. No. 152166. October 20, 2010.Peralta, J.: Second Division

FACTS: On June 23, 1995, St. Luke’s Medical Center, Inc. (petitioner hospital), located at Quezon City, employed respondent as In-House Security Guard. In August 1996, Nimaya Electro Corporation installed a closed-circuit television (CCTV) system in the premises of petitioner hospital to enhance its security measures[6] and conducted an orientation seminar for the in-house security personnel on the proper way of monitoring video cameras, subject to certain guidelines.

On December 30, 1996, respondent was on duty from 6:00 p.m. to 6:00 a.m. of the following day, December 31, 1996. His work consisted mainly of monitoring the video cameras. In the evening of December 30, 1996, Justin Tibon, a foreigner from Majuro, Marshall Island, then attending to his 3-year-old daughter, Andanie De Brum, who was admitted since December 20, 1996 at room 257, reported the lost of his bag containig tickets and passports. Acting on the complaint of Tibon, the Security Department of petitioner hospital conducted an investigation. When the tapes of video camera recorder (VCR) no. 3 covering the subject period were reviewed, it was shown that the VCR was focused on camera no. 2 (Old Maternity Unit), from 2103H to 2215H [or 9:03 p.m. to 10:15 p.m.] of December 30, 1996, and camera no. 1 (New Maternity Unit), from 0025H to 0600H [or 12:25 a.m. to 6:00 a.m.] of December 31, 1996. The cameras failed to record any incident of theft at room 257.

On January 6, 1997, petitioner hospital, through Abdul A. Karim, issued a Memorandum[8] to respondent, the CCTV monitoring staff on duty, directing him to explain in writing, within 24 hours upon receipt thereof, why no disciplinary action should be taken against him for violating the normal rotation/sequencing process of the VCR and, consequently, failed to capture the theft of Tibon's traveling bag at room 257. In his letter dated January 6, 1997, respondent explained that on the subject dates, he was the only personnel on duty as nobody wanted to assist him. Because of this, he decided to focus the cameras on the Old and New Maternity Units, as these two units have high incidence of crime.

Finding the written explanation of respondent to be unsatisfactory, petitioner hospital, through Calixton, served on respondent a copy of the Notice of Termination, dated January 24, 1997, dismissing him on the ground of gross negligence/inefficiency under Section 1, Rule VII of its Code of Discipline.

Thus, on March 19, 1997, respondent filed a Complaint for illegal dismissal against petitioner hospital and its Chairman, Robert Kuan, seeking reinstatement with payment of full backwages from the time of his dismissal up to actual reinstatement, without of loss of seniority rights and other benefits.

On November 11, 1998, the Labor Arbiter dismissed respondent’s complaint for illegal dismissal against petitioners. He stated that a CCTV monitoring system is designed to focus on many areas in a programmed and sequential manner and should not to be focused only on a specific area, unless the situation requires it. On appeal by the respondent, the NLRC issued a Resolution dated January 19, 2000, reversing the Decision of the Labor Arbiter. On September 21, 2001, the CA dismissed petitioners' petition for certiorari, affirming the NLRC’s finding that while respondent may appear to be negligent in monitoring the cameras on the subject dates, the same would not constitute sufficient ground to terminate his employment.

ISSUE: WHETHER OR NOT RESPONDENT WAS VALIDLY TERMINATED.

HELD: YES. To effectuate a valid dismissal from employment by the employer, the Labor Code has set twin requirements, namely: (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 defend himself. This first requisite is referred to as the substantive aspect, while the second is deemed as the procedural aspect.

A perusal of petitioner hospital’s CCTV Monitoring Guidelines,[15] disseminated to all in-house security personnel, reveals that that there is no categorical provision requiring an in-house security personnel to observe a rotation sequence procedure in focusing the cameras so that the security monitoring would cover as many areas as possible. This fact is corroborated by Tito M. Maganis, petitioners' former In-House Security Department Head, in his Affidavit.

Under Article 282 (b) of the Labor Code, an employer may terminate an employee for gross and habitual neglect of duties. Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross negligence connotes want of care in the performance of one’s duties. Habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee . Under the prevailing circumstances, respondent exercised his best judgment in monitoring the CCTV cameras so as to ensure the security within the hospital premises. Verily, assuming arguendo that respondent was negligent, although this Court finds otherwise, the lapse or inaction could only be regarded as a single or isolated act of negligence that cannot be categorized as habitual and, hence, not a just cause for his dismissal.

The employee must be furnished two written notices: the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, and the second is a subsequent notice, which informs the employee of the employer's decision to dismiss him. Petitioners failed to observe this requirement.

The facts showed that on January 6, 1997, petitioner hospital, through Abdul A. Karim, issued a Memorandum to respondent, with the directive to require him to explain in writing, within 24 hours upon receipt thereof, why no disciplinary action should be taken against him for violating the normal rotation or sequencing process of the VCR which led to the loss of the traveling bag of Tibon, the patient’s father, at room 257. On the same day, January 6, 1997, respondent submitted a written explanation, stating that during the subject hours on December 30 to 31, 1996, he was the only personnel on duty as nobody wanted to assist him and, this being so, he decided to focus the cameras on the Old and New Maternity Units as these two units usually have high incidence of theft and other

untoward incidents. Later, on January 24, 1997, petitioner hospital served a copy of the Notice of Termination upon the respondent for gross negligence/inefficiency.

Petitioners’ lack of just cause and non-compliance with the procedural requisites in terminating respondent’s employment renders them guilty of illegal dismissal. Consequently, respondent is entitled to reinstatement to his former position without loss of seniority rights and payment of backwages. However, if such reinstatement proves impracticable, and hardly in the best interest of the parties, perhaps due to the lapse of time since his dismissal, or if he decides not to be reinstated, respondent should be awarded separation pay in lieu of reinstatement.

Jesus E. Dycoco, Jr. vs. Equitable PCI Bank (now Banco de Oro), Rene Bunaventura and SilesSamalea, G.R. No. 188271, August 16, 2010

CORONA, C.J.:

Facts: Petitioner was hired by respondent bank as Assistant Manager and/or OIC Branch Head of its Legazpi City Branch. In 2000, petitioner became Branch Head and in September 2003, respondent bank underwent an internal reorganization. Pursuant thereto, petitioner became the Personal Banking Manager (PBM) of the Legazpi branch. In June 2005, several clients of the Legazpi branch filed complaints for alleged unauthorized abstraction of various trust funds, treasury placements and deposits. Respondent bank promptly commenced an investigation. Consequently, "show cause" letters were issued to the officers of the Legazpi branch. On September 22, 2006, while petitioner was under preventive suspension, he filed a complaint in the NLRC Regional Arbitration Branch No. V alleging constructive dismissal and illegal suspension, and demanding reinstatement or separation pay and payment of incentives, 13th month pay, bonuses, moral and exemplary damages and attorney’s fees. However, on October 10, 2006, respondent bank rendered a decision with respect to the "show cause" letter finding petitioner guilty of violating Articles IV (F) (Class C) (1), IV (D) (Class D) (1) and IV (E) (Class C) (13) of the bank’s Code of Conduct, and Article 282 (b) of the Labor Code. The penalty of dismissal was imposed on him.

Issue: Whether the petitioner was illegally dismissed.

Held: NO. As the banking industry is impressed with public interest, all bank personnel are burdened with a high level of responsibility insofar as care and diligence in the custody and management of funds are concerned. Petitioner miserably failed to discharge this burden. Gross negligence connotes "want of care in the performance of one’s duties." Petitioner’s failure to observe basic procedure constituted gross negligence. Petitioner violated his duties and responsibilities as PBM when he signed and approved the subject transactions without the necessary signatures of the concerned clients. His repeated failure to carefully observe his duties as PBM clearly showed utter want of care. After committing gross negligence, petitioner surprisingly still expects respondent bank to retain him. Nothing can compel an employer to continue availing of the services of an employee guilty of acts inimical to its interests as this is a ground for loss of confidence. Petitioner’s breach of respondent bank’s policies intended to safeguard the bank and its clients’ funds was clearly inimical to the interests of his employer. Loss of confidence and dismissal from employment were therefore justified.Loss of confidence applies to situations where the employee is routinely charged with the care and custody of employer’s money or property. "If the employees are cashiers, managers, supervisors, salesmen or other personnel occupying positions of responsibility, the employer’s loss of trust and confidence in said employees may justify termination of their employment."

Dr. Edilberto Estampa, Jr. vs. Government of Davao, G.R. No. 190681, June 21, 2010.

Abad, J.

Facts: Dr. Edilberto Estampa, Jr. Is a Medical Officer VI at Davao’s City Health Office. The position made him head of a Task Force Unit assigned to deal with any untoward event taking place in the city and Disaster Coordinator for the Davao City Health Office under the Davao City Disaster Coordinating Council. On March 4, 2003, at around 6 p.m., a powerful bomb exploded at the passengers' terminal of the Davao International Airport, killing 22 persons and injuring 113 others. Dr. Estampa had just arrived home at that time and was taking care of his one-year-old daughter. He learned of the bombing incident between 7 to 8 p.m. His wife arrived at 9 p.m. from her work at the Davao Medical Center where most of the bombing victims were brought for treatment. She prevail on Dr. Estampa to stay home and he did. For this Dr. Estampa was charged with “grave neglect of duty” before the City Legal Officer. The doctor was later found guilty by said officer and was recommended for dismissal. Thereafter, the mayor approved the recommendation and dismissed Dr. Estampa. The latter moved for reconsideration but this was denied, prompting him to appeal to the Civil Service Commission (CSC). On June 2, 2006 the CSC denied Dr. Estampa's appeal, corrected the denomination of his offense

to “gross neglect of duty”, and affirmed his dismissal. The CSC also denied Dr. Estampa's motion for reconsideration for lack of merit.

Issue: Whether Dr. Estampa is guilty of gross neglect of duty for failing to respond to the March 4, 2003 Davao City bombing.

Held: YES. Gross neglect of duty denotes a flagrant and culpable refusal or unwillingness of a person to perform a duty. It has been held that gross negligence exists when a public official's breach of duty is flagrant and palpable. In his letter-explanation, Dr. Estampa justified his absence from the emergency rooms of the hospitals to attend to the bombing victims with the claim that he needed to attend to his family first. Initially, he could not leave his one-year-old daughter because they had no house help. When his wife arrived from work shortly, he also could not leave because she was six months pregnant. Further, a bomb was found some meters from their apartment a few weeks earlier. Dr. Estampa said in his letter that he was unable from the beginning to give full commitment to his job since he gave priority to his family. He simply was not the right person for the job of disaster coordinator.

Dr. Estampa's defense is not acceptable. A person's duty to his family is not incompatible with his job-related commitment to come to the rescue of victims of disasters. Disasters do not strike every day. Besides, knowing that his job as senior medical health officer entailed the commitment to make a measure of personal sacrifice, he had the choice to resign from it when he realized that he did not have the will and the heart to respond.

Assuming that he had a one-year-old daughter in the house, he could have taken her to relatives temporarily while his wife was still on her way from work. But he did not. And when his wife arrived shortly at 9 p.m., he still did not leave under the pretext that his wife was six months pregnant. Yet, he had in fact permitted her to work away from home up to the evening. What marked his gross irresponsibility was that he did not even care to call up his superior or associates to inform them of his inability to respond to the emergency. As a result, the city health office failed to provide the needed coordination of all efforts intended to cope with the disaster. Who knows? Better coordination and dispatch of victims to the right emergency rooms could have saved more lives. The Court finds no excuse for reinstating Dr. Estampa to the position he abandoned when it needed him.

Bank of the Philippine Islands vs. NLRCGR no 179801, June 18, 2010Perez, J.:

DOCTRINE: For there to be valid dismissal based on loss of trust and confidence, the breach of trust must be willful, meaning it must be done intentionally, knowingly, and purposely, without justifiable excuse.

FACTS: Private respondent Ma. Rosario Arambulo was a bank manager in BPI-San Pablo, Laguna Branch. One day, a client of a bank requested for a certification of her savings account. Her balance reflected an amount less than the actual amount deposited. Hence BPI conducted an investigation and discovered that its bank teller, Azucena was making unauthorized withdrawals. Azucena implicated respondent, in that the latter, on many occasions, would make temporary cash borrowings and would return the money at the end of the day through withdrawals from her own or other clients’ accounts. BPI also discovered that respondent had approved several withdrawals from various accounts of clients whose signatures were forged and validated withdrawals slips unsigned by the client at the time of the validation --- it was the respondent who personally accomplished the withdrawal slips and later signed by the client beyond banking hours. Respondent was served with notice of termination on the ground of loss and trust and confidence, for gross violation of policies and procedures.

ISSUE: Whether or not there was a valid dismissal.

HELD: Yes. For there to be a valid dismissal based on loss of trust and confidence, the breach of trust must be willful, meaning it must be done intentionally, knowingly, and purposely, without justifiable excuse. The basic premise for dismissal on the ground of loss of confidence is that the employees concerned hold a position of trust and confidence. It is the breach of this trust that results in the employer’s loss of confidence in the employee.

Respondent, in affixing her signatures on the withdrawal slips which were later found to have been accomplished through forgery, clearly failed to monitor instances of unauthorized withdrawals. While the evidence presented by BPI fell short of proving respondent’s complicity in the forging of these withdrawal slips, her omission, coupled with unusual accommodation extended to certain bank clients in violation of the bank’s standard operating procedures, cost her job. In fact, the validity of her dismissal for loss of trust and confidence was no longer disputed by respondent.

ISSUE(2): Whether or not respondent was entitled to separation pay.

HELD: No. 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, wilful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime against the employer or his family, or those reflecting on his moral character – if an employee had been dismissed for a just cause under Article 282, he is not entitled to separation pay.

Kulas Ideas & Creations vs. AlcosebaGR no 180123, February 18, 2010Carpio-Morales, J.:

DOCTRINE: Uncorroborated assertions and accusations of employer on the gross and habitual neglect of duty do not suffice to effect a dismissal of an employee, otherwise the constitutional guaranty of security of tenure of the employee would be jeopardized.

FACTS: Respondents Juliet Alcoseba and Flordelinda Arao-Arao were employed as sales attendants of petitioner. As part of their duties and responsibilities, respondents were tasked to sell Kulas’s products, prepare weekly sales reports and assist the clerk in the monthly inventory of saleable goods. Petitioner directed respondents to explain and/or investigate an alleged inventory discrepancy. And it thereafter suspended the respondents for seven days for gross negligence of duties and responsibilities. In the reconciliation report it was stated that the respondents were assigned at the Ayala boutique to diligently monitor all stocks and to report any stock discrepancy to the office, if there were any, so that the proper action may be taken but there never was any report made regarding the stock shortage. Respondents were given 3 days to settle the shortage. Kulas then charge the respondents for estafa but the complaint was later dismissed. Respondents filed for illegal dismissal.

ISSUE: Whether or not there was a valid ground based on gross and habitual neglect of duty to terminate the employment of respondents.

HELD: No. Article 282 (b) and (c) of the Labor Code provide that an employer may terminate an employee for "gross and habitual neglect by the employee of his duties" and for "fraud." In both instances, substantial evidence is necessary for an employer to effectuate any dismissal. Uncorroborated assertions and accusations by the employer do not suffice, otherwise the constitutional guaranty of security of tenure of the employee would be jeopardized.

Article 282 (b) imposes a stringent condition before an employer may terminate an employment due to gross and habitual neglect by the employee of his duties. To sustain a termination of employment based on this provision of law, the negligence must not only be gross but also habitual.

Petitioners assert that respondents failed to regularly undertake a monthly physical inventory of the outlet's merchandise. The assertion fails to persuade. For the most part, inventory preparation and reporting did not fall on respondents shoulders since they were to "assist the [stock] clerk" only. The Court also noted that petitioners were themselves remiss in conducting a regular monthly stock inventory.

Breach of Trust and Confidence

James Ben L. Jerusalem v. Keppel Monte Bank, et al.,

G.R. No. 169564. April 6, 2011 .

Del Castillo

DOCTRINE: For breach of trust and confidence to become a valid ground for the dismissal of an employee, the cause of loss of trust and confidence must be related to the performance of the employee’s duties

FACTS: James Jerusalem was hired by Keppel as assistant vice president. He was assigned as Head of newly created Visa Credit card department then in April 1999 he was reassigned as Head of marketing and operations of jewelry department. On May 1999, James received sealed envelopes said to be containing visa application forms submitted by Javier. James immediately submitted the 67 applications to Visa Credit Card Unit which were approved. Later it was learned that all cards were sham.

James recommended the filing of criminal case (estafa) against Javier, and prompt coordination with other banks as regards Javier’s deposits and suggested that Keppel must look in the inside job angle of the approval of credit cards. James received a termination notice on the ground of breach of trust and confidence for knowingly and maliciously referring, endorsing and vouching for VISA card applicants who later turned out to be impostors resulting in financial loss to Keppel. James filed for illegal dismissal

ISSUE: whether Keppel legally terminated James’s employment on the ground of willful breach of trust and confidence.

HELD: NO. Keppel has the burden in proving that it has sufficient basis in terminating James’ services. There must be an act that would justify the loss of trust and confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established. Keppel bank has not been able to show any concrete proof that indeed complainant had participated in the approval of the questioned VISA CARD accounts. The fact that there were notations on the applications, that is, c/o James Jerusalem and the mere act of handing the applications do not mean that he directed that existing policy on approval of credit cards be dispensed. James has nothing to do with the approval of the cards for he was already Head of another department. Keppel had gone too far in blaming James for the shortcomings and imprudence of Visa unit head. The invocation of Keppel of the loss of trust and confidence as ground for James’s termination has therefore no basis at all.

Having shown that Keppel failed to discharge its burden of proving that James’s dismissal is for a just cause, we have no other recourse but to declare that such dismissal based on the ground of loss of trust and confidence was illegal. This is in consonance with the constitutional guarantee of security of tenure.

Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor,G.R. Nos. 163293 & 163297, December 8, 2010.

DEL CASTILLO, J.

DOCTRINE: A bank manager’s abuse of authority in implementing bank policies is an abuse of the trust reposed in him by his employer which constitutes as a just cause for his termination.

FACTS: Castor Dompor was branch manager of PCIB Makati Cinema Branch. He allowed Fuentes to open an account despite lack of documents. Fuentes deposited several second-endorsed PLDT dividends check amounting to 6 million. These checks were fraudulently negotiated to Fuentes and that the signatures of different payees have similarities in stroke. Castor failed to comply with the bank rules that checks payable to corporations, societies, firms, etc. for credit to a personal account and/or checks with unusual endorsement should not be accepted and defiance to the order to stop Allowing/approving the acceptance of second-endorsed checks. He was dismissed from his employment on the grounds of serious policy violations, willful breach of trust, and loss of confidence. He filed for illegal dismissal

ISSUE: whether or not he was dismissed illegally

HELD: No. Castor transgressed wilfully and intentionally the explicit policy of the bank to disallow the acceptance of checks endorsed by corporations, societies, firms, etc. and checks with unusual endorsements. Castor was instructed by management to stop accepting second-endorsed checks due to the irregularities attendant to the transactions with Fuentes. Despite such reasonable order, on two occasions, respondent unhesitatingly accommodated the request of Fuentes. Respondent admittedly disobeyed not only his superiors’ directives but also simple bank rules. Respondent unduly yielded to the whims of a client and gave undue advantage to her instead of performing his duties towards the best interest of the bank. From the start, respondent was perceived to have been extending special favors to Fuentes even though such entails contravention of strict bank guidelines. All transactions coursed by Fuentes were approved by respondent even if questionable. Despite several recommendations and orders by his superiors to close the account of Fuentes due to several infractions committed and mishandling of the account, respondent defied the instructions. Respondent, as bank manager, has the duty to ensure that bank rules are strictly complied with not only to ensure efficient bank operation which is imbued with public interest but also to serve the best interest of the bank as he holds a position of trust and confidence. As emphasized by petitioner, respondent was in charge of the overall administration of the branch and is tasked to ensure that all policies and procedures are strictly followed. Indubitably, any negligence in the exercise of his responsibilities can be sufficient ground for loss of trust and confidence demanded by his position. Respondent’s wanton violation of bank policies equates to abuse of authority and, therefore, abuse of the trust reposed in him. Such intention to violate the trust of petitioner is enough for his dismissal from service.

CENTURY CANNING CORPORATION, RICARDO T. PO, JR. and AMANCIO C. RONQUILLO, vs. VICENTE RANDY R. RAMILG.R. No. 171630 : August 8, 2010PERALTA, J.:

FACTS:

Petitioner Century Canning Corporation, a company engaged in canned food manufacturing, employed respondent Vicente Randy Ramil in August 1993 as technical specialist. Prior to his dismissal his job included the preparation of the purchase requisition (PR) forms and capital expenditure (CAPEX) forms, as well as the coordination with the

purchasing department regarding technical inquiries on needed products and services of petitioner's different departments.

On March 3, 1999, respondent prepared a CAPEX form for external fax modems and terminal server, per order of Technical Operations Manager Jaime Garcia, Jr. and endorsed it to Marivic Villanueva, Secretary of Executive Vice-President Ricardo T. Po, for the latter's signature. The CAPEX form, however, did not have the complete details and some required signatures. The following day, with the form apparently signed by Po, respondent transmitted it to Purchasing Officer Lorena Paz in Taguig Main Office. Paz processed the paper and found that some details in the CAPEX form were left blank. She also doubted the genuineness of the signature of Po, as appearing in the form. Paz then transmitted the CAPEX form to Purchasing Manager Virgie Garcia and informed her of the questionable signature of Po. Consequently, the request for the equipment was put on hold due to Po's forged signature. However, due to the urgency of purchasing badly needed equipment, respondent was ordered to make another CAPEX form, which was immediately transmitted to the Purchasing Department.

Suspecting him to have committed forgery, respondent was asked to explain in writing the events surrounding the incident. He vehemently denied the alleged forgery. Respondent was, thereafter, suspended on April 21, 1999. Subsequently, he received a Notice of Termination on May 20, 1999, for loss of trust and confidence.

Respondent filed a Complaint for illegal dismissal, non-payment of overtime pay, separation pay, moral and exemplary damages and attorney's fees against petitioner and its officers before the Labor Arbiter. LA Potenciano S. Canizares rendered a Decision dismissing the complaint for lack of merit. Aggrieved by the LA's finding, respondent appealed to the National Labor Relations Commission. Upon recommendation of LA Cristeta D. Tamayo, who reviewed the case, the NLRC First Division set aside the ruling of LA Canizares. The NLRC declared respondent's dismissal to be illegal and directed petitioner to reinstate respondent with full backwages and seniority rights and privileges. It found that petitioner failed to show clear and convincing evidence that respondent was responsible for the forgery of the signature of Po in the CAPEX form.

NLRC reversed itself and upheld LA Canizares' dismissal of his complaint. The CA ordered petitioner to reinstate respondent, without loss of seniority rights and privileges, and to pay respondent full backwages from the time his employment was terminated on May 20, 1999 up to the time of the finality of its decision.

ISSUE:

W.O.N. MERE EXISTENCE OF A BASIS FOR BELIEVING THAT SUCH EMPLOYEE HAS BREACHED THE TRUST AND CONFIDENCE OF HIS EMPLOYER SUFFICES FOR HIS DISMISSAL.

HELD:

The rule is that high respect is accorded to the findings of fact of quasi-judicial agencies, more so in the case at bar where both the LA and the NLRC share the same findings. The rule is not, however, without exceptions one of which is when the findings of fact of the labor officials on which the conclusion was based are not supported by substantial evidence. The same holds true when it is perceived that far too much is concluded, inferred or deduced from bare facts adduced in evidence. In the case at bar, the NLRC's findings of fact upon which its conclusion was based are not supported by substantial evidence, that is, the amount of relevant evidence, which a reasonable mind might accept as adequate to justify a conclusion.

Further, as correctly found by the NLRC, if respondent was the one who forged the signature of Po in the CAPEX form, there was no need for him to endorse the same to Villanueva and transmit it the next day. He could have easily forged the signature of Po on the same day that he prepared the CAPEX form and submitted it on the very same day to petitioner's main office without passing through any officer of petitioner.

The law mandates that the burden of proving the validity of the termination of employment rests with the employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal justification for dismissing employees. 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.

Lastly, while We have previously held that employers are allowed a wider latitude of discretion in terminating the services of employees who perform functions which by their nature require the employers' full trust and confidence and the mere existence of basis for believing that the employee has breached the trust of the employer is sufficient, this does not

mean that the said basis may be arbitrary and unfounded. The right of an employer to dismiss an employee on the ground that it has lost its trust and confidence in him must not be exercised arbitrarily and without just cause. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established, but proof beyond reasonable doubt is not necessary. It must rest on substantial grounds and not on the employer's arbitrariness, whim, caprice or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. There is neither direct evidence nor substantial documentary evidence pointing to respondent as the one liable for the forgery of the signature of Po.

Respondent's illegal dismissal carries the legal consequences defined under Article 279 of the Labor Code, that is, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, and to the payment of 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.

However, the Court finds that it would be best to award separation pay instead of reinstatement, in view of the strained relations between petitioner and respondent. Respondent was dismissed due to loss of trust and confidence and it would be impractical to reinstate an employee whom the employer does not trust, and whose task is to handle and prepare delicate documents.

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 hand, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.

In view of the foregoing, respondent is entitled to the payment of full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the date of his dismissal on May 20, 1999 up to the finality of this decision, and separation pay in lieu of reinstatement equivalent to one month salary for every year of service, computed from the time of his engagement by petitioner on August 1993 up to the finality of the decision.

The case is, therefore, remanded to the Labor Arbiter for the purpose of computing the proper monetary award due to the respondent.

LUZVIMINDA A. ANG vs. PHILIPPINE NATIONAL BANKG.R. No. 178762 June 16, 2010ABAD, J.:

FACTS:

Petitioner Luzviminda A. Ang claimed that respondent Philippine National Bank hired her on December 4, 1967 as a probationary clerk. But she rose from the ranks, eventually becoming an Assistant Department Manager I, a position she held when the PNB was privatized on May 26, 1996 and when she, like her co-employees, was deemed automatically retired. The bank computed Ang’s gratuity benefits, the monetary value of her leave credits, and the other benefits due her and cleared her of any accountability.

But the PNB re-employed Ang as Assistant Manager and assigned her in its Tuguegarao, Cagayan Branch. Less than four months later, however, the PNB administratively charged her with serious misconduct and willful breach of trust for taking part in a scam, called "kiting operation," where a depositor used a conduit bank account for depositing several unfunded checks drawn against the same depositor’s other current accounts and from which conduit bank account he later withdrew those checks. The PNB alleged that Ang had allowed this illegal activity while she was the Assistant Department Manager I in its Tuguegarao Branch.

On September 16, 1996 the PNB heaped other charges against Ang of serious misconduct and gross violation of the bank’s rules and regulations.

Ang claimed that it was not a "kiting operation," but an accommodation of a very valued client. She admitted that the checks were not funded and were converted into account receivables or accommodation loans that the client had settled, including interests, penalties, and other charges. Consequently, the PNB did not suffer any loss from those transactions; it even reaped enormous profits from them. She also claimed that the issuance of the certificates had

been tolerated to accommodate valued clients as a marketing strategy and prevent their move to other banks. These had been open transactions, said Ang, which were known to all the officers of the branch.

Ang claimed that she was not covered by the circular governing office hours because she was a bank officer. Managerial employees, according to her, worked beyond the usual eight hours and even worked on Saturdays and Sundays. She added that, since the bank had already made deductions for tardiness on her pay check, she cannot anymore be administratively charged for it.

Ang filed a complaint against the PNB before the National Labor Relations Commission (NLRC), for illegal dismissal, illegal deductions, non-payment of 13th month pay, allowances, separation pay, and retirement benefits with prayer for payment of moral and exemplary damages, attorney’s fees, and litigation expenses.

The Labor Arbiter found the PNB’s dismissal of Ang illegal for failure to show that the dismissal was for a valid cause and after notice and hearing. Specifically, the PNB failed to prove any basis for loss of trust. The LA ordered the reinstatement of petitioner Ang to her former position or its substantial equivalent, without loss of seniority rights and with full backwages and other benefits or their money value from the time of her actual dismissal on July 25, 1996 up to her reinstatement.

The PNB appealed the decision to the NLRC but the latter dismissed the same. Upon motion for reconsideration, however, the NLRC reconsidered its finding of lack of due process, considering Ang’s admission during direct examination that the PNB informed her of the charges against her and gave her a chance to present her side with the assistance of a counsel. The NLRC deleted the award of damages because of absence of bad faith on the part of the PNB officers but maintained the LA’s finding that the PNB had not proved loss of trust as a ground for dismissal.

CA upheld Ang’s dismissal from the service for willful breach of the trust reposed in her by the PNB.

ISSUE:

1. Whether or not the CA erred in finding that the PNB dismissed Ang based on the evidence that she betrayed its trust in her as a bank officer;

2. Whether or not the CA erred in holding that Ang was not entitled to the benefits that the PNB withheld from her.

HELD:

The offenses that Ang committed against the bank before its privatization continued to be offenses against the bank after the privatization. But, since the PNB was already a private corporation when it looked into Ang’s offenses, the provisions of the Labor Code governed its disciplinary action.

As to the existence of just cause, it is clear to the Court that Ang did not deny the acts and omissions constituting the offense. The transcript of stenographic notes taken during her direct examination on April 22, 1998 before the NLRC Regional Arbitration Branch in Tuguegarao, Cagayan, shows that her defense consisted in her claim that she accommodated a client’s unfunded checks and issued false bank certificates with the knowledge and consent of the branch manager and comptroller.

But such uncorroborated defense is unsatisfactory, revealing a mind that was willing to disregard bank rules and regulations when other branch officers concurred. The PNB rightfully separated her from work for willful breach of the trust that it reposed in her under the Labor Code. Her defense that the PNB did not suffer any loss is of no moment. The focal point is that she betrayed the trust of the bank in her fidelity to its interest and rules.

Ang claims that she is entitled to the monetary value of her leave credits, gratuity benefits, retirement pay, rights and interests in the provident fund, and other benefits due her as of May 26, 1996.

Although the transformation of the PNB from a government-owned corporation to a private one did not result in a break in its life as juridical person, the same idea of continuity cannot be said of its employees. Section 27 of Presidential Proclamation 50 provided for the automatic termination of employer-employee relationship upon privatization of a

government-owned and controlled corporation. Further, such privatization cannot deprive the government employees involved of their accrued benefits or compensation. Thus:

Sec. 27. Automatic Termination of Employer-Employee Relations. — Upon the sale or other disposition of the ownership and/or controlling interest of the government in a corporation held by the Trust, or all or substantially all of the assets of such corporation, the employer-employee relations between the government and the officers and other personnel of such corporations shall terminate by operation of law. None of such officers or employees shall retain any vested right to future employment in the privatized or disposed corporation, and the new owners or controlling interest holders thereof shall have full and absolute discretion to retain or dismiss said officers and employees and to hire the replacement or replacements of any one or all of them as the pleasure and confidence of such owners or controlling interest holders may dictate.

Nothing in this section shall, however, be construed to deprive said officers and employees of their vested entitlements in accrued benefits or the compensation and other benefits incident to their employment or attaching to termination under applicable employment contracts, collective bargaining agreements, and applicable legislation.

Here, when PNB was privatized, Ang’s employment with it as a government-owned corporation ceased. Indeed, the PNB already computed the retirement and other benefits to which she was entitled as a result of the cessation of her employment. Since she had no pending administrative case on the day she ceased to be a PNB employee and had been cleared of any accountability,20 all those benefits already accrued to her on the date of her termination.

Of course, the PNB rehired her immediately but that is another story. In the eyes of the law, her record as employee of the government-owned PNB was untarnished at the time of her separation from it. In fact, the PNB already computed the benefits to which she was entitled and readied their payment. The GSIS rule that the PNB now relies on applied only to employees with pending administrative charge at the time of their retirement. Since Ang had none of that, the cited rule did not apply to her. The Court sees no reason why she should not receive the benefits which she earned or which accrued to her as of May 26, 1996.

As for possible benefits accruing to Ang after May 26, 1996, the same should be deemed governed by the Labor Code since the PNB that rehired her on May 27, 1996 has become a private corporation. Under the Omnibus Rules Implementing the Labor Code, Book VI, Rule I, Section 7, the employee’s separation from work for a just cause does not entitle her to termination pay. Thus, the PNB may rightfully withhold Ang’s termination pay that accrued beginning on May 27, 1996 because of her dismissal.

23 ANABEL BENJAMIN and RENATO CONSOLACION vs. AMELLAR CORPORATION

G.R. No. 183383 April 5, 2010

CARPIO MORALES, J.:

FACTS:

Amellar Corporation (respondent) provides information technology services to local government units (LGUs) including computerizing their system and operations. In October 1999, respondent hired petitioner Anabel Benjamin (Anabel) who, since March 26, 2001, was the Project Data Controller of its Content Build Up (CBU) Department.

The CBU Department of respondent collates and cleanses all the paper data gathered from the LGU-client which are then encoded and fed into the designed operating system.

In 2003, the municipal assessor of Mabini, Batangas informed the manager of respondent that its real property tax administration database was not "100% complete," contrary to the report of respondent’s supervising data controller Evangeline Repiano.

Melvin Tandoc (Tandoc), respondent’s Technology Manager, thus sent Anabel a memorandum informing them of complaints received from their clients. Anabel thereupon required Consolacion and Evangeline to explain in writing the alleged incidents subject of Tandoc’s memorandum. Consolacion gave the following explanation: “If we are still going to accommodate the latest payments and posted [sic] from time to time posting of collection will never end. I

have instructed the Land Tax Division, Treasurer[’]s Office to separate those recently posted with new payments to update later in order to have a systematic flow of mass updating of payments.”

Tandoc directed Anabel to inform Consolacion and Evangeline that the formal hearing on the issues raised in his March 27, 2003 memorandum would proceed at 1:45 P.M. of said date. Respondent, alleging that Anabel did not inform Consolacion of the hearing, preventively suspended her for three days starting April 25, 2003 for "obstructing the conduct of due process." She was also subsequently suspended for three working days starting April 30, 2003 for not obeying a direct order.

Anabel thereupon filed a complaint for illegal suspension before the National Labor Relations Commission (NLRC) against respondent and/or Tandoc.

As for Evangeline, respondent cleared her of any wrongdoing, it concluding that the written complaint from the municipal assessor of Mabini was "more likely due to miscommunication." Respondent even commended Evangeline for her "care and diligence expected from a responsible supervisor."

Tandoc later sent Anabel a memorandum of May 6, 2003 dimissing her for willful Breach of Trust, Gross and Habitual Neglect of Duties, Willful Disobedience of Lawful Orders in Connection with Work She was directed to submit within 72 hours your written answer on why she should not be dismissed on the said grounds. Tandoc issued Anabel a Notice on Decision to Dismiss.

Anabel amended her Complaint, adding as causes of action illegal dismissal, damages, and attorney’s fees. Consolacion also filed a complaint for illegal dismissal, non-payment of overtime pay and service incentive leave, damages, and attorney’s fees. Both cases were consolidated.

Labor Arbiter Felipe P. Pati, finding that petitioners were illegally dismissed. NLRC affirmed the Labor Arbiter’s decision, prompting respondent to file a petition for certiorari before the Court of Appeals.

The Court of Appeals reversed the NLRC Decision and dismissed petitioners’ complaints, hence, the present petition, assailing the appellate court’s decision,

ISSUE:

WON there is substantial proof of Gross and Habitual Neglect of duties or Loss of Trust and Confidence

HELD:

To terminate the services of an employee for loss of trust and confidence, two requisites must concur: (1) the employee concerned 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.

Consolacion occupied a position imbued with trust and confidence, he being a supervising data controller. It was his primary duty to monitor and report the performance of the data controllers in relation to the scope of work contracted out to respondent. Respondent thus banks heavily on the report of Consolacion to monitor the output quality and quantity of its data controllers. On the basis of this report, respondent assesses its employees and bills its clients for work done.

Evidently, the immediately stated acts of non-compliance are too general and can encompass just about any malfeasance. Nowhere in the Notice was there a detailed narration of the facts and circumstances that would serve as bases to terminate Consolacion, thus leaving to surmise what those procedures, standards and orders were.

King of Kings Transport v. Mamac explains the importance of the first written notice:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days

from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees.

Respecting Anabel who was dismissed for willful breach of trust, gross and habitual neglect of duties, and willful disobedience to lawful orders, she, like Consolacion, occupied a position of trust and confidence, she being the officer-in-charge of the CBU Department.

Respondent, however, failed to prove even a single act ─ basis of its loss of trust and confidence in Anabel. Apart from its self-serving assertions, respondent had not offered any piece of documentary evidence to lend truth to its allegations. It harps on supposed "numerous" complaints it received on their projects, yet only one written complaint on the Mabini project was presented. Note that the Mabini project had been determined to be completed and the accountable data controller, Evangeline, had been absolved from any liability. Suffice it to state that respondent contented itself with conjectures and surmises as proofs of its charges.

Respondent also faults Anabel for gross and habitual neglect of duties for "failure to institute existing standards and procedures both written and unwritten" and "failure to monitor and correct the errors of [her] subordinates." Despite Anabel’s May 14, 2003 letter for particulars, however, respondent never addressed what were the standards and procedures she violated and errors she failed to monitor. Respondent instead sent her a dismissal notice.

It bears stressing in dismissing an employee for gross and habitual neglect of duties, the negligence should not merely be gross. It should also be habitual. There being nothing in the records to identify what specific duties Anabel violated and whether the violations were gross and habitual, any discussion herein is an exercise in futility.

As did the NLRC, the Court finds that respondent erred in preventively suspending petitioner Anabel for lack of basis, there being no serious and imminent threat to its life and property or to her co-workers. And so does the Court find erroneous the suspension penalty imposed on Anabel for violating her right to due process. Respondent cannot suspend Anabel without hearing her side for her alleged disobedience since suspension in this instance was a penalty. Respondent should thus be made to reimburse Anabel for her suspension without pay covering three (3) working days.

WHEREFORE, the assailed Decision of the Court of Appeals is REVERSED and SET ASIDE. Respondent, Amellar Corporation, is ORDERED to reinstate petitioners, Anabel Benjamin and Renato Consolacion, to their former positions or their equivalent, without loss of seniority rights and privileges, and to pay them full backwages inclusive of allowances and other benefits or their monetary equivalent, from the time of their dismissal until actual reinstatement. If reinstatement is no longer feasible, respondent is directed to give them separation pay equivalent to at least one month salary for every year of service, computed from the time of engagement of their services up to the finality of this decision.

Respondent is further DIRECTED to pay Anabel Benjamin her wages covering three working days for her illegal suspension.

The records of this case are REMANDED to the Labor Arbiter for computation of petitioners’ respective monetary claims.

No costs.

SO ORDERED.

ALIVIADO, et al. vs. PROCTER & GAMBLE PHILS., INC. and PROMM-GEM, INC.G.R. No. 160506, March 9, 2010Del Castillo, J.:

DOCTRINE: Loss of trust and confidence, as a ground for dismissal, must be based on the willful breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. A breach of trust is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Loss of trust and confidence, as a cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence. In order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to work for the employer.

FACTS: Petitioners filed a complaint against P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later amended to include the matter of their subsequent dismissal.

Petitioners insist that they are employees of P&G. They claim that they were recruited by the salesmen of P&G and were engaged to undertake merchandising chores for P&G long before the existence of Promm-Gem and/or SAPS. Petitioners further assert that Promm-Gem and SAPS are labor-only contractors providing services of manpower to their client. They claim that the contractors have neither substantial capital nor tools and equipment to undertake independent labor contracting. Petitioners insist that since they had been engaged to perform activities which are necessary or desirable in the usual business or trade of P&G, then they are its regular employees.

The termination letters given by Promm-Gem to its employees uniformly specified the cause of dismissal as grave misconduct and breach of trust, as follows: This informs you that effective May 5, 1992, your employment with our company, Promm-Gem, Inc. has been terminated. We find your expressed admission, that you considered yourself as an employee of Procter & Gamble Phils., Inc…. and assailing the integrity of the Company as legitimate and independent promotion firm, is deemed as an act of disloyalty prejudicial to the interests of our Company : serious misconduct and breach of trust reposed upon you as employee of our Company which constitute just cause for the termination of your employment.

ISSUE: Whether the dismissal based on willful breach of trust was proper.

RULING: We find no valid cause for the dismissal of petitioners-employees of Promm-Gem. Loss of trust and confidence, as a ground for dismissal, must be based on the willful breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. A breach of trust is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Loss of trust and confidence, as a cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence. As such, he must be invested with confidence on delicate matters, such as custody, handling or care and protection of the property and assets of the employer. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to work for the employer. In the instant case, the petitioners-employees of Promm-Gem have not been shown to be occupying positions of responsibility or of trust and confidence. Neither is there any evidence to show that they are unfit to continue to work as merchandisers for Promm-Gem.

BIBIANA FARMS AND MILLS, INC. vs. LADO, ARTUROG.R. No. 157861, February 2, 2010Brion, J.:

DOCTRINE: The guidelines for the application of loss of trust and confidence as a just cause for dismissal of an employee from the service are: a) loss of confidence should not be simulated; b) it should not be used as subterfuge for causes which are improper, illegal or unjustified; c) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.

FACTS: Background: Manzo transacted with Manalo, the petitioner’s cashier, for the purchase of 3,000 pieces of empty sacks. Manalo quoted the price at P3.50 per sack. Manalo then gave Manzo a note containing the number and words “3,000/mix-mix” and told her to proceed to the warehouse. Manzo did and showed the note to Lado. The latter in turn showed her the bundles of empty sacks (50 pieces per bundle) available for sale. At Manzo’s request, Lado loaded 68 bundles (or 3,400 pieces of empty sacks) in the dump truck for unloading at the gate after payment. Upon payment, however, Manalo only accepted the cash payment for 60 bundles (3,000 pieces) and refused to accept Manzo’s personal check for the excess; thus, Manzo only paid for the original 60 bundles purchased. Instead of personally overseeing the segregation and unloading of the excess 8 bundles on being informed (through the delivery receipt and the gate pass) that only 60 bundles were paid for, Lado allegedly delegated the task. The excess 8 bundles, however, were not removed from the truck and the whole lot was unloaded at the gate. When Manalo passed by the gate on her way home, she saw the sacks “dumped outside the guardhouse.” She asked for a count of the sacks as they appeared

to be more than the 60 bundles that Manzo purchased. She confirmed that there were 68 bundles outside the guardhouse. Controversy: Petitioner’s General Operations Manager/Production Supervisor, Peter L. Lim (Lim directed Lado to submit his written explanation on: (1) the release of 3,400 pieces of empty sacks when only 3,000 pieces were duly paid for and covered by receipt, and (2) the release of one-use sack when Manalo’s note expressly authorized the release of mix-use sacks. Lado submitted to Lim a detailed explanation. He stated that when the buyer learned that 68 bundles were available, she expressed her intention to buy all the 68 instead of just 60 bundles. He explained that the buyer only paid for 60 bundles because her cash was only sufficient for 60 bundles and would have paid the excess by a personal check, but Manalo refused to accept payment by check. Lim issued Lado a Notice of Termination, dismissing him from the service effective upon receipt, for “serious misconduct, dishonesty, willful breach of trust, fraud, loss of confidence and other grounds.” Lado filed a complaint for illegal dismissal against the petitioner and Lim.

ISSUE: Whether the dismissal based on willful breach of trust was proper.

RULING: YES. Based on the following considerations, we can only conclude that Lado has become unfit to remain in employment with the petitioner.

1. Lado was no ordinary rank-and-file employee. As warehouseman, his duties involved the handling of incoming and outgoing feed ingredients, classifying feed ingredients, classifying and controlling feeds empty sacks, and supervising feed mill laborers. He had access to company property. The petitioner tasked Lado with the close monitoring and handling of company property, especially the outflow of full sacks of feeds destined for the stations and the return of empty sacks, to avoid or minimize losses. Lado held a position of trust and confidence. It was this trust that he had to uphold when Manzo purchased the company’s empty sacks.

2. After considering the parties’ submission, we are convinced that Lado’s acts that almost led to the loss of 400 empty sacks, constituted not only a violation of company rules and regulations, but also a serious infraction resulting in his employer’s loss of trust and confidence in him. His act of loading 68 bundles of empty sacks, despite the authority to deliver only 60 bundles, was not just in anticipation of the possible purchase by Manzo of the entire lot of empty sacks; it was part of a scheme to transport the entire lot, a part of which was unpaid, out of company premises. This is the only conclusion that we can draw when Lado had all the 68 bundles loaded into the truck after Manzo presented to him Manalo’s note clearly stating “3,000 mix-mix.” This note clearly indicated that Manzo and Manalo agreed that Manzo was only buying 3,000 pieces of empty sacks. Yet, Lado disregarded this note on the justification that Manzo expressed the desire to purchase the entire lot shown to her. Lado, in fact, was subsequently presented with the receipt and gate pass for only 3,000 empty sacks, yet again failed to act on this clear evidence of the purchase and the overloading that he had made.

3. When he disregarded Manalo’s note, Lado violated company procedures, laying the company open to the possibility of loss. This is already serious misconduct for which he should be held accountable. When he failed to unload despite the clear obligation to do so, he consummated his end of the deal that would have led to the loss of company property and thereby violated his fiduciary duty as custodian of company property.

In. Fungo v. Lourdes School of Mandaluyong, we restated the guidelines for the application of loss of trust and confidence as a just cause for dismissal of an employee from the service, thus: a) loss of confidence should not be simulated; b) it should not be used as subterfuge for causes which are improper, illegal or unjustified; c) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith. We find these guidelines complied with in the present case. To reiterate, Lado held a position of trust and confidence and was given access to and authority over company property with clear tasks and guidelines laid down very early in his employment. Like any business entity, the petitioner has every right to protect itself from actual threats to the viability of its operations. Lado, given what happened, not only violated the company’s trust and confidence; he had become a threat to the viability of company operations and to rule that he should be reinstated would be oppressive to the petitioner. The law, in protecting the rights of the employee, authorizes neither the oppression nor the self-destruction of the employer.

Ancheta v. Destiny Plans

Facts: Respondent Destiny plans, a pre-need insurance company, hired petitioner Ancheta on November 2002 as Head of the Marketing Group because of the latter’s experience and expertise in the field of pre-need insurance.

On February 2004, Ancheta was surprised to learn because in one Marketing Committee meeting, his boss announced that he (Ancheta) will resign (not dismissed). He eventually received a letter from the company asking him why he should not be dismissed from work for loss of confidence, mainly because of the poor sales performance of the Marketing group. He aired his side and gave his reasons: that he organized and created the Marketing group; it is difficult to reach the sales target in the 1st and even 2nd year; that his behavior is not alarming; and that the loss of confidence has no factual and legal basis, among others. On February 17, the BOD of Destiny terminated petitioner due to loss of confidence. On March 16, 2004, petitioner filed a case of illegal complaint to the Labor Arbiter, the latter finding in its decision that there was indeed illegal dismissal. The NLRC however, upon appeal, reversed the LA’s decision. The CA affirmed the NLRC’s decision with modification- P100,000 as nominal damages to petitioner because the respondent company did not observe due process in terminating Ancheta.

Isssue: WON there was valid termination because of loss of confidence

Held: Yes. The two requisites of valid dismissal are present: 1.) just cause under Art. 282 of the Labor Code and 2.) opportunity given to the employee to be heard and defend himself. The requisites of the doctrine of loss of confidence are also present: 1.) the same is not simulated; 2.) it’s not used to subterfuge for illegal causes; 3.)not arbitrarily asserted; 4.) genuine and not a mere afterthought and 5.) the employee holds a position of trust and confidence. Petitioner holds a managerial position, and was practically the lifeblood of the company. Because of the poor performance of the petitioner which causes financial losses to the respondent, it will not be wise for the latter to continue the former’s services. However, since the respondent did not comply with the “TWO NOTICE” requirement in dismissing petitioner, it is liable for nominal damages amounting to P30,000.

LOSS OF CONFIDENCE

Coca-Cola v. Gacayan

Facts: Respondent Gacayan started to work for petitioner company from October 1985 until her termination on April 1995 as a Senior Financial Accountant. The company has a policy of reimbursing to its employees their transpo and meal expenses for a maximum of P150 per day, whenever the employees had overtime work. The respondent submitted three receipts to the company for reimbursement- one from McDo, and two from Shakey’s Pizza. The company however, noticed and eventually learned that the receipts were altered- the Mcdo and one Shakey’s receipt’s date were altered, and the other Shakey’s receipt’s itemization of order was altered. Upon confirmation of such alterations, the company sent successive memos to Gacayan asking her to explain her side. She aired her comments through letters and eventually, the company invited her for a hearing and formal investigation. Gacayan attended the first hearing but absented herself from the subsequent ones. The company dismissed her on April 4, 1995. Consequently, Gacayan filed an illegal dismissal complaint to the Labor Arbiter. Both the LA and the NLRC dismissed the case. The CA, reversed the decision of the NLRC holding that the penalty of dismissal from work was too harsh.

Issue: WON there was a valid dismissal due to loss of confidence

Held: No, the dismissal was not anchored on any of the causes under Art. 282 of the Labor Code. “Trust and Confidence” is restricted to employees in managerial positions, which has the ff. requisites: 1.) primary duty is to manage the establishment or its sub-division; 2.) regularly directs the work of two or more employees; 3.) they have the authority to hire and fire. In the instant case, the respondent was not a managerial employee. As regards the contention of the company that Gacayan committed a “serious misconduct”, the issue was raised only in the petitioner’s reply on 2002, and the respondent did not commit it because there was no wrongful intent for her to commit a serious misconduct nor injury to petitioner, as a matter of fact, she was entitled to the privilege of reimbursement . The Ca correctly stated that the penalty of dismissal was too harsh for the acts of the respondent.

PHILIPPINE AIRLINES, INC., vs. NATIONAL LABOR RELATIONS COMMISSION and AIDA M. QUIJANO, G.R. No. 123294

FACTS: Complainant Quijano rose from the ranks starting as accounting clerk in December 1967 until she became effective September 1, 1984, Manager-Agents Services Accounting Division (ASAD), the specific unit in PAL charged with the processing, verification, reconciliation, and validation of all claims for commission filed by agents worldwide, which is under the direct supervision and control of the Vice President-Comptroller, and within the scope of the audit program of the Vice President-Internal Audit & Control.

On May 5, 1989, an investigating committee formally charged Quijano (and suspended her while investigation is on-going) as Manager-ASAD for failure on the job and gross negligence resulting in loss of trust and confidence to uncover or detect and report or grossly disregarded the fraud although the commissions vis-à-vis production were scandalously high in her department in connection with the processing and payment of commission claims to Goldair Pty. Ltd. (Goldair for short) wherein PAL overpaid commissions to the latter amounting to several million Australian dollars during the period 1984-1987. In her answer, she claimed that during her years of service as ASAD’s manager, there have been 4 prestigious auditing/accounting firms which examined their accounting processes and that there were no audit findings which imply fraud or mistake on their part. Furthermore, before Quijano’s term, a new set of procedures were adopted, and upon her assumption as manager, she was made to understand that these were the official procedures in contrast with the actual procedures. Unknowingly and trustingly, she became a participant in the mess.

As a result, PAL dismissed her from its employ. Quijano filed a complaint before the Labor Arbiter on illegal suspension and illegal dismissal. The Labor Arbiter dismissed the case for lack of merit and absolved PAL from liability. On appeal, NLRC reversed the decision and ordered PAL to pay Quijano her separation pay. PAL’s motion for reconsideration was denied, hence this petition for certiorari.

ISSUES: 1) WoN there has been a valid dismissal for loss of trust and confidence.

WoN Quijano is entitled to separation pay.

HELD: 1) YES. 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.

The Resolution of PAL underscored her acts of mismanagement and gross incompetence which made her fail to detect the irregularities in the Goldair account that resulted in huge financial losses for petitioner. Admittedly, the said findings are not backed by proof beyond reasonable doubt but are, nevertheless, given credence since they have been adopted by both the labor arbiter and the NLRC and are supported by substantial evidence. As we have consistently held, the degree of proof required in labor cases is not as stringent as in other types of cases.

2) YES. The language of Article 279 of the Labor Code is pregnant with the implication that a legally dismissed employee is not entitled to separation pay. However, in exceptional cases, this Court has granted separation pay to a legally dismissed employee as an act of “social justice” or based on “equity.” 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 or would involve moral turpitude. In the case at bar, the transgressions imputed to private respondent have never been firmly established as deliberate and willful acts clearly directed at making petitioner lose millions of pesos. At the very most, they can only be characterized as unintentional, albeit major, lapses in professional judgment. Likewise, the same cannot be described as morally reprehensible actions. Thus, private respondent may be granted separation pay on the ground of equity which this Court had defined as “justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law. It is grounded on the precepts of conscience and not on any sanction of positive law, for equity finds no room for application where there is law.”

Leandro Alcantara vs. PCIBG.R. No. 151349

FACTS: Alcantara, rose from the ranks of PCIB from 1974 until he became a branch manager of the PCIB’s branch in Rizal Avenue, Manila. On December 1997, a certain Romy Espiritu called PCIB’s Customer Care Department reporting the alleged involvement of the petitioner with a big syndicate. Two Certificates of Time Deposit (CTD) issued by PCIB were allegedly being used by the syndicate in their illegal activities. It appears that on December 23, 1997, the petitioner prepared two (2) CTD’s with an aggregate amount of P538,000.00 and P360,000.00. The CTDs were signed by the petitioner and Guillerma F. Alcantara, the head of Sales. However, the CTDs were unbooked and the duplicate control copy and PCIAV Input Document Copy do not state the due dates and term of the two (2) CTDs. Petitioner was the one who prepared and processed the CTDs.

As a result, petitioner was dismissed from employment for taking advantage of the trust and confidence reposed in his position as branch manager and “falsified Bank records in order to facilitate a transaction amounting to P538,360,000.00 that was prejudicial to the welfare and interest of the Bank”.

Petitioner filed with the Regional Arbitration Branch of the NLRC a complaint for illegal dismissal; illegal suspension; payment of backwages; and other benefits. This was dismissed for lack of merit. Likewise, the case was dismissed on appeal before the NLRC and the CA. Hence, this petition.

ISSUES: 1) WoN petitioner’s dismissal was valid.

2) WoN petitioner’s right to due process was violated.HELD: 1) YES. 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.

We cannot give credence to petitioner’s claim that the Labor Arbiter and the NLRC decided his case purely on the basis of respondent’s evidence. A perusal of petitioner’s own pleadings and evidence readily showed his admission that he personally processed the two CTDs at issue, despite his knowledge that they were unfunded. In fact, he admittedly issued them even before he received the purported manager’s checks that would fund the time deposits and, again by his own allegation, he had to cancel the CTDs when the promised checks were not delivered to him at the appointed time. To be sure, it is incomprehensible why petitioner was so eager to issue the CTDs (which may be used as evidence of the existence of time deposits in the names of petitioner’s clients for the total amount of P538,360,000.00) on the mere verbal representations of the clients and the expedient of being shown a passbook from a different bank. We hardly find it believable that petitioner was, as he averred, motivated by a noble desire to generate more business for the respondent bank. If he truly had the bank’s best interests at heart, with more reason that he would exercise caution before issuing CTDs for enormous amounts by waiting for the funds to be actually deposited instead of exposing his employer to great risk. The fact that petitioner had the unfunded CTDs eventually cancelled is of no moment. He should have never issued those CTDs in the first place since, through those documents, he was in effect certifying the existence of time deposits in his branch that were actually fictitious. Thus, it can be said that his obvious laxity or negligence in the issuance of the said CTDs was even tainted with dishonesty. We can come to no other conclusion but that respondent bank was justified in terminating petitioner’s employment on the ground of loss of trust and confidence.

2) NO. It is settled that notice and hearing constitute the essential elements of due process in the dismissal of employees. The employer must furnish the employee with two written notices before termination of employment can be legally effected. The first apprises the employee of the particular acts or omissions for which his dismissal is sought. The second informs the employee of the employer’s decision to dismiss him. With regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and indispensably be held.

It is apt to conclude that respondent more than acted in accordance with the due process required in the termination of an employee. It gave petitioner considerable leeway with regard to the submission of his written explanation by allowing multiple extensions of time to submit the same and by furnishing him the documents used in respondent’s investigation. Ultimately, even assuming that he was not fully heard during the employer’s investigation, it was petitioner’s fault because of his misguided insistence on having a trial-type hearing despite established jurisprudence stating that the mere opportunity to be heard would suffice as due process in administrative proceedings. In any event, petitioner was given full opportunity to prove his claim of illegal dismissal before the Labor Arbiter and the NLRC but he still failed to discharge his burden of proof.

LIMA LAND vs. MARLYN CUEVASG.R. No. 169523; June 16, 2010; Peralta

Facts:

Lima Land, Inc. (Lima) is a company engaged in the real estate business and a member of the Alcantara Group of Companies (Alcantara Group). Petitioners Leandro D. Javier [Javier] and Premy Ann G. Beloy [Beloy] are Lima's Executive Vice-President and Operating Officer, and Assistant Corporate Secretary, respectively. Petitioner Sylvia M.

Duque [Duque] is the Vice-President-Director of the Human Resources Department of the Alcantara Group. Private respondent Marlyn G. Cuevas [Cuevas] was the Finance and Administration Manager of Lima. In 1996, Lima entered into several lease agreements known as “arriendo contracts” with different persons whereby [the former transferred to the latter] its right to harvest [coconuts as well as other fruits planted on the lands it owned] in consideration of certain monetary equivalent. The collection of the proceeds were under the direct supervision of Jonas Senia [Senia], Operation and Estate Manager at the Lima Land Estate, Batangas City. He was assisted by Flor San Gabriel [San Gabriel], Site Assistant and Imelda Melo [Melo], Liaison Assistant. The arriendo collections were, thereafter, remitted to the Head Office in Makati and booked as company income.

In February 2000, irregularities in [the] arriendo collections were discovered. Petitioners formed an investigating panel to conduct a thorough investigation on the status of the collections. The initial findings of the investigating panel revealed fraudulent activities and irregularities committed by the Private Respondent relative to the Company funds. Consequently, Private Respondent was served with a notice to explain and was placed under preventive suspension on May 22, 2002. She was, thereafter, ordered to turn over all documents and keys in her possession to Mrs. Venus Quieta. On May 23, 2002, Private Respondent received another notice charging her with the following: 1) failure to exercise reasonable diligence to inquire about the status of the unremitted arriendo collections; 2) approving a patently false request for reimbursement of representation expenses; and 3) failure to institute sufficient accounting standards. During the initial hearing scheduled on May 24, 2002, Private Respondent failed to appear. Petitioners gave her until May 30, 2002 to submit her written reply. Private Respondent requested that the hearing be conducted on June 5, 2002, but she again failed to attend. Private Respondent submitted her written reply on June 4, 2002. Although Petitioners gave her until June 14, 2002 to submit additional evidence, Private Respondent did not submit any. On June 21, 2002, Petitioners dismissed Private Respondent on the ground of loss of trust and confidence effective May 22, 2002, the date of her preventive suspension. The notice of termination was received by the Private Respondent on the same date. On July 3, 2002, Private Respondent filed a Complaint with the Labor Arbiter for illegal suspension, illegal dismissal, and non-payment of salaries, holiday pay, service incentive leave pay and 13 th month pay against the Petitioners. She also prayed for her reinstatement, payment of backwages, damages, attorney's fees and other monetary claims. The Labor Arbiter dismissed the action but was overturned by the NLRC. The CA affirmed the assailed decision.

Issues:

Whether Lima Land validly dismissed Cuevas?

Ruling:

As to the Requirements of Procedural Due Process:

In dismissing an employee, the employer has the burden of proving that the former worker has been served two notices: (1) one to apprise him of the particular acts or omissions for which his dismissal is sought, and (2) the other to inform him of his employer’s decision to dismiss him. The first notice must state that dismissal is sought for the act or omission charged against the employee, otherwise, the notice cannot be considered sufficient compliance with the rules.

The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint.[Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, were violated and/or which among the grounds under Article 282 is being charged against the employees. In the case before the Court, the requirements of procedural due process were complied with by petitioners when they sent a notice dated May 23, 2002 informing respondent of the specific charges leveled against her and giving her the opportunity to be heard and to present evidence in her defense, with the aid of counsel if she so chooses, in a hearing which was supposed to be held on May 24, 2002. Respondent failed to appear on the scheduled date but was given the chance to submit a written reply until May 30, 2002. Upon request of respondent, the scheduled hearing was again moved to June 5, 2002. Respondent was finally able to submit her written reply on June 4, 2002. Subsequently, in a letter dated June 21, 2002, respondent was informed of her dismissal from employment.

As to the Substantial Findings:

The loss of trust and confidence must be based not on ordinary breach by the employee of the trust reposed in him by the employer, but, in the language of Article 282 (c) of the Labor Code, on willful breach. A 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. It must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. It should be genuine and not simulated; nor should it appear as a mere afterthought to justify earlier action taken in bad faith or a subterfuge for causes which are improper, illegal or unjustified. There must, therefore, be an actual breach of duty committed by the employee which must be established by substantial evidence. Moreover, the burden of proof required in labor cases must be amply discharged.

Respondent’s negligence or carelessness in handling the arriendo collections, however, are not justifiable grounds for petitioners' loss of trust and confidence in her, especially in the absence of any malicious intent or fraud on respondent’s part. Loss of trust and confidence stems from a breach of trust founded on a dishonest, deceitful or fraudulent act. In the case at bar, respondent did not commit any act which was dishonest or deceitful. She did not use her authority as the Finance and Administration Manager to misappropriate company property nor did she abuse the trust reposed in her by petitioners with respect to her responsibility to implement company rules. The most that can be attributed to respondent is that she was remiss in the performance of her duties. This, though, does not constitute dishonest or deceitful conduct which would justify the conclusion of loss of trust and confidence. There was no demonstration of moral perverseness that would justify the claimed loss of trust and confidence attendant to respondent's job. As such, she does not deserve the penalty of dismissal from employment, especially in the absence of any showing that she has committed prior infractions in her six years of service to petitioner company before her dismissal. There has been no showing nor allegation that respondent had been previously found guilty of any misconduct or had violated established company rules that would warrant the charge of gross negligence and failure to exercise extraordinary diligence as basis for the petitioner company's loss of trust and confidence in her.

Philippine Journalist, Inc. vs. Leozar Dela Cruz y Balobal, G.R. No. 187120; February 16, 2010; Brion

Facts:

PJI is a corporation engaged in the publication of People's Journal, People's Journal Tonight, People's Journal International, People's Taliba, Women's Journal, and Insider. In December 1978, it employed respondent Eduardo S. Rivera (Rivera) as proof reader. Rivera rose from the ranks over the years, becoming purchasing manager in 1998. His primary duty involved the canvassing and purchase of paper and other materials for PJI's day-to-day operations. He received a monthly salary of P25,000.00, exclusive of allowances and other benefits.

Sometime in November 2002, Women's Journal implemented a calendar insertion project requiring paper-coated materials. Rivera canvassed and purchased 68,500 sheets of C25 120 coated paper, 170 gsm size 23” x 27” from the Nation Paper Products Corporation (NAPPCO) at P6.50 a sheet for the total amount of P445,250.00.

On January 8, 2003, PJI's Corporate Secretary and Chief Legal Counsel, Atty. Ruby Ruiz-Bruno (Ruiz-Bruno), issued a memorandum requiring Rivera to explain in writing why he “should not be terminated from employment for defrauding or attempting to defraud the Company x x x” in the canvassing and purchase of Women’s Journal’s paper requirements. The memo alluded to a “reliable quotation from NAPPCO for 68,000 sheets of this kind of paper with exactly the same specifications, shows a price of only P3.40/sheet.” Pending investigation of the matter, PJI placed Rivera under preventive suspension. On January 10, 2003, PJI's Audit Supervisor, Nepthalie E. Hernandez (Hernandez), submitted a report to PJI President Bobby Dela Cruz (Dela Cruz) about the canvass of the price of the Women’s Journal paper requirements. The canvass showed: a price of P3.91/sheet from Security Commercial although no quotation from the supplier was secured; the lowest price with quotation was P4.12/sheet from Purity Enterprises Co.; and, a telephone canvass with NAPPCO revealed an offer of P3.80/sheet.

On January 13, 2003, Rivera submitted his written explanation, denying that he defrauded or attempted to defraud PJI. In support of his position, he attached a letter dated January 9, 2003 from NAPPCO's Vice-President Kenneth Chong (Chong) to Dela Cruz. Chong denied in his letter giving a quotation of P3.40/sheet for PJI's paper requirement. He explained that NAPPCO quoted a price of P5.80 cash on delivery (COD), but since PJI could not meet its terms, it quoted a price of P6.50 at 30-90 days credit. Rivera, in a letter dated January 31, 2003 addressed to Dela Cruz, explained the details of the purchase transaction with NAPPCO. As a result of this letter-explanation, Ruiz-Bruno issued a memorandum on the same day to Assistant Purchasing Manager Jean Alvarado (Alvarado), requiring her to explain the difference in the quotation of P6.50 from NAPPCO and P4.26/piece (23x27) and P4.68/piece (25x27) from LAMCO, another supplier.

On the same day, Alvarado submitted her explanation, stating that she signed the canvass sheet as instructed by Rivera, but she was not aware that Rivera included LAMCO. She claimed that the canvass sheet (No. 20800) itself showed that the figures were written by Rivera himself. In a memorandum dated February 7, 2003, Ruiz-Bruno notified Rivera of the termination of his service effective February 8, 2003, “on the ground of loss of confidence” after finding Rivera's “acts and omissions are indicative of fraud and a clear manifestation of your inability as a Manager to protect the Company's interests.” On October 14, 2003, Rivera filed a complaint for illegal dismissal against PJI, Dela Cruz, Executive Vice-President Arnold Banares and Ruiz-Bruno.Issue: Whether or not Rivera was dismissed for just cause?

Ruling: YES. The canvass of prices of production supplies is routine work for any purchasing department. It was Rivera’s duty as purchasing manager, and that of his department, to look for prices that would be most advantageous to the company. Rivera failed to perform this duty. He allowed the purchase of materials at a price considerably higher than the quotations of other suppliers in the market. For his own reasons, he settled on one supplier on the pretext that the purchase was certified as a “rush job” by the company's advertising department, and that the material was a special kind of paper readily available from NAPPCO, the supplier of his choice.

Granting that the purchase was a “rush” request, a meaningful canvass could still have been made, had Rivera and his department exerted genuine efforts to undertake one, for even a phone canvass would do, as noted not only by Rivera, but also by Alvarado, Hernandez and Ruiz-Bruno. In fact, PJI's audit department conducted a canvass and, in no time, came out with a pricing considerably lower than P6.50 even at credit terms. He did not have to canvass twenty (20) or so suppliers as Rivera put it, to make a real canvass. A representative sampling of the market certainly would have served the purpose. If only for his failure to conduct a real canvass, PJI cannot be blamed for losing its trust and confidence in Rivera.

Rivera did not only fail to canvass the market for the company's paper requirement. Worse than this, he made it appear that he conducted a canvass, undoubtedly to reflect on paper that a canvass had been made, to enable him to comply with a basic purchase requirement and tie the company, for his own reasons, to a higher purchase cost from his favored supplier.

As we look at the total picture, we are convinced that a pattern of concealment and dishonesty marred the purchase of paper materials for the Women’s Journal’s special project, with Rivera playing the principal and most active role. There is no question in our mind that he failed to make a reasonable canvass of the prices of the paper materials required by a company’s special project, resulting in substantial losses to the company. As we previously stated, that a rush job was involved, is no excuse as a canvass could be done even in a day's time as shown by the audit department’s canvass. That Rivera was responsible for concealment and omissions also appears clear to us; he failed to seasonably disclose to PJI, under dubious circumstances, material information with financial impact on the purchase transaction. Thus, we cannot but conclude that substantial evidence exists justifying Rivera’s dismissal for a just cause – loss of trust and confidence. For loss of trust and confidence to be a ground for dismissal, the law requires only that there be at least some basis to justify the dismissal.

ABANDONMENT

HARPOON MARINE SERVICES, Inc. and JOSE LIDO T. ROSIT, vs. FERNAN H. FRANCISCO,DEL CASTILLO, J.

DOCTRINE: Jurisprudence provides for two essential requirements for abandonment of work to exist, to wit: (1) the "failure to report for work or absence without valid or justifiable reason" and (2) "clear intention to sever the employer-employee relationship manifested by some overt acts”. Further, the employee’s deliberate and unjustified refusal to resume his employment without any intention of returning should be established and proven by the employer.

FACTS: Petitioner, a company engaged in ship building and ship repair, with Rosit as its President and CEO, hired respondent in 1992 as its Yard Supervisor tasked to oversee and supervise all projects of the company. On June 15, 2001, respondent averred that he was unceremoniously dismissed by petitioner Rosit. He was informed that the company could no longer afford his salary and that he would be paid his separation pay and accrued commissions. Respondent nonetheless continued to report for work. A few days later, however, he was barred from entering the company premises. Relying on the promise of petitioner Rosit, respondent went to the office to receive his separation pay and commissions, but petitioner Rosit offered only his separation pay which respondent refused to receive. Despite repeated demands, petitioner refused to pay respondent his commissions for the seven boats constructed and repaired under his supervision amounting to P70,000. Petitioners claimed that they indeed talked to respondent on June 15, 2001 not to dismiss him but only to remind and warn him of his excessive absences and tardiness, as

evinced by his Time Card covering the period June 1-15, 2001. Instead of improving his work behavior, respondent continued to absent himself and sought employment with another company engaged in the same line of business, thus, creating serious damage in the form of unfinished projects. Petitioners denied having terminated respondent as the latter voluntarily abandoned his work after going on Absence Without Official Leave beginning June 22, 2001. Petitioners contended that when respondent’s absences persisted, several memoranda informing him of his absences were sent to him by ordinary mail and were duly filed with the DOLE on August 13, 2001. Upon respondent’s continuous and deliberate failure to respond to these memoranda, a Notice of Termination dated July 30, 2001 was later on issued to him.

In view of the foregoing, on October 24, 2001, respondent filed an illegal dismissal complaint praying for the payment of his backwages, separation pay, unpaid commissions, moral and exemplary damages and attorney’s fees. On May 17, 2002, the Labor Arbiter rendered a Decision holding that respondent was validly dismissed due to his unjustified absences and tardiness. The Labor Arbiter also found respondent entitled to the payment of commissions by giving credence to the check vouchers presented by respondent as well as attorney’s fees for withholding the payment of commissions pursuant to Article 111 of the Labor Code. On appeal to the NLRC, it reversed the Labor Arbiters decision in that respondents are found to have illegally dismissed complainant Fernan H. Francisco. The CA affirmed the NLRC’s decision. Hence this petition.

ISSUE: Whether or not the CA erred in not ruling that respondent has abandoned his work.

HELD: NO. A scrutiny of the time card and payroll discloses that respondent incurred only three days of absence and no record of tardiness. As aptly held by the NLRC, the time card and payroll presented by petitioners do not show gross and habitual absenteeism and tardiness especially since respondent’s explanation of his three-day absence was not denied by petitioners at the first instance before the Labor Arbiter. No other evidence was presented to show the alleged absences and tardiness. On the other hand, Solares, a co-worker of respondent has stated under oath that, as their supervisor, respondent was diligent in reporting for work until June 20, 2001 when they heard the news concerning respondent’s termination from his job. Oddly, petitioners deemed it fit to give respondent his separation pay despite their assertion that there is just cause for his dismissal on the ground of habitual absences. This inconsistent stand of petitioners bolsters the fact that they wanted to terminate respondent, thus giving more credence to respondent’s protestation that he was barred and prevented from reporting for work.

Jurisprudence provides for two essential requirements for abandonment of work to exist, to wit: (1) the "failure to report for work or absence without valid or justifiable reason" and (2) "clear intention to sever the employer-employee relationship manifested by some overt acts”. Further, the employee’s deliberate and unjustified refusal to resume his employment without any intention of returning should be established and proven by the employer. Petitioners failed to prove that it was respondent who voluntarily refused to report back for work by his defiance and refusal to accept the memoranda and the notices of absences sent to him. The CA correctly ruled that petitioners failed to present evidence that they sent these notices to respondent’s last known address for the purpose of warning him that his continued failure to report would be construed as abandonment of work. In other words, despite being stamped as received, the memoranda do not bear any signature of respondent to indicate that he actually received the same. There was no proof on how these notices were given to respondent. Neither was there any other cogent evidence that these were properly received by respondent. Hence, the contention of petitioner must fail.

G.R. No. 182070 February 16, 2011E.G & I. CONSTRUCTION CORPORATION and EDSEL GALEOSvs. ANANIAS P. SATO, et al.NACHURA, J.

DOCTRINE: For abandonment to exist, it is essential (a) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (b) that there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts. The employer has the burden of proof to show the employee's deliberate and unjustified refusal to resume his employment without any intention of returning. Mere absence is not sufficient. There must be an unequivocal intent on the part of the employee to discontinue his employment.

FACTS: Respondent Sato was hired in October 1990 by petitioner as a grader operator, which is considered as technical labor. In April 2004, Sato discovered that petitioner corporation had not been remitting his premium contributions to the SSS. When Sato reminded petitioner about this, he was removed as a grader operator and made to perform manual labor, such as tilling the land in a private cemetery and/or digging earthworks in petitioner corporation’s construction projects. In July 2004, an inspection team from the SSS went to petitioner’s office to check its compliance with the SSS law. On July 22, 2004, petitioners told Sato that they could no longer afford to pay his wages, and he was advised to look for employment in other construction companies. Sato, however, found difficulty in finding a job because he had been blacklisted in other construction companies and was prevented from entering the project sites of petitioners.

Respondent Berdin was hired by petitioners in March 1991 as a steelman/laborer; respondent Parantar, Sr. was hired in February 1997 as a steelman; and respondent Lacida, Jr. was hired in March 2001 as a laborer. At the start

of their employment, they were required by petitioners to sign several documents purporting to be employment contracts. However, on July 24, 2004, the project engineer of respondents Berdin, Parantar, and Lacida instructed them to affix their signatures on various documents. They refused to sign the documents because they were written in English, a language that they did not understand. Irked by their disobedience, the project engineer terminated their employment. On the same date, they were given their weekly wages. However, the wages that were paid to them were short of three (3) days’ worth of wages, as penalty for their refusal to sign the documents. The following day, they were not allowed to enter the work premises. Thus, on July 26, 2004, respondents filed their respective complaints with the Regional Arbitration Branch of Cebu City for illegal dismissal, underpayment of wages, holiday pay, thirteenth month pay, and service incentive leave pay.

According to petitioners, respondents abandoned their work when they failed to report for work starting on July 22, 2004. Petitioner corporation sent letters advising respondents to report for work, but they refused. Petitioner corporation maintained that respondents are still welcome, if they desire to work.

On July 27, 2005, the Labor Arbiter rendered a decision finding that respondents were illegally dismissed from employment. On appeal, NLRC reversed the ruling of the Labor Arbiter in a decision dated July 31, 2006. In reversing the decision of the Labor Arbiter, the NLRC ratiocinated that, other than respondents’ bare allegation that they were dismissed, they failed to present a written notice of dismissal, and that respondents’ individual complaints opted for the payment of separation pay instead of reinstatement. The NLRC opined that illegal dismissal was inconsistent with the prayer for separation pay instead of reinstatement. On appeal, the CA reversed the NLRC’s ruling and reinstated the Labor Arbiter’s. Hence, this petition.

ISSUE: Whether or not the CA erred in not ruling that respondents have abandoned their work.

HELD: NO. Petitioner Corporation failed to prove that respondents were dismissed for just or authorized cause. In an illegal dismissal case, the onus probandi rests on the employer to prove that the dismissal of an employee is for a valid cause. For abandonment to exist, it is essential (a) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (b) that there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts. The employer has the burden of proof to show the employee's deliberate and unjustified refusal to resume his employment without any intention of returning. Mere absence is not sufficient. There must be an unequivocal intent on the part of the employee to discontinue his employment.

In the case at bar, petitioner corporation claims that respondent Sato committed unexplained absences on May 20, 24, and 25, 2004 and on June 7, 18, and 23, 2004. However, based on the findings of fact of the CA, respondent Sato worked on May 20, June 18 and 23, 2004. This was based on the weekly time record and payroll of respondent Sato that were presented by petitioner corporation in its appeal before the NLRC. On respondent Sato’s alleged absences on May 24 and 25 and on June 7, 2004, no time record and payroll documents were presented by petitioner corporation. With regard to respondents Berdin, Lacida, and Parantar, petitioner corporation alleges that they failed to report for work starting on July 22, 2004, and that petitioner even sent them letters advising them to report for work, but to no avail. However, it was duly proved that the reason why respondents failed to report for work was because petitioner corporation barred them from entering its construction sites. It is a settled rule that failure to report for work after a notice to return to work has been served does not necessarily constitute abandonment. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. Petitioner corporation failed to show overt acts committed by respondents from which it may be deduced that they had no more intention to work. Respondents’ filing of the case for illegal dismissal barely four days from their alleged abandonment is totally inconsistent with our known concept of what constitutes abandonment.

ELPIDIO CALIPAY VS. NLRC, TRIANGLE ACE CORPORATIONAND JOSE LEE

G.R. NO. 166411, AUGUST 3, 2010

DOCTRINE: Dismissal; abandonment. Time and again, the Supreme Court has held that abandonment is

totally inconsistent with the immediate filing of a complaint for illegal dismissal , more so if the same is

accompanied by a prayer for reinstatement

FACTS

• On July 16, 1999, Petitioner filed a complaint for illegal dismissal and several other protests against private

respondents. Calipay and the other complainants alleged in their Position Paper that in the course of their

employment, they were not given any specific work assignment; they performed various kinds of work; they

were required by Lee to work for nine (9) hours a day,

with a break of one hour at 12:00 noon; and several other complaints.

In their Position Paper, private respondents countered that the termination of Calipay and the other

complainants was for a valid or just cause and that due process was observed. They claimed, among others,

that Calipay was on absence without leave (AWOL) status from November 2, 1998 up to November 17, 1998 ; a

memorandum dated November 17, 1998, requiring him to explain why his services should not be terminated,

was sent by mail but he refused to receive the same; for failure to explain his side, another memorandum dated

December 11, 1998 was issued terminating Calipay’s employment on the ground of abandonment of work;

there is no unfair labor practice because there is no union; and there is full compliance with the law regarding

payment of wages and other benefits due to their employees.

The Labor Arbiter handling the case dismissed the complaint for lack of merit; On appeal to the NLRC, the

decision appeal from was modified, ordering the respondent to reinstate the complainants and to pay them full

back wages plus attorney’s fee; Respondent filed a MR which the NLRC granted. As a result, the LA’s decision

was reinstated and affirmed. On appeal by petitioner to the CA: the CA dismissed the petition due to failure to

timely file his appeal with the NLRC; and subsequently, also denied the MR of petitioner.

ISSUE

Whether or not the petitioner had abandoned his work.

HELD

Yes. In the instant case, petitioner Calipay had failed to report for work for unknown reasons. His continued

absences without the private respondents’ approval constituted gross and habitual neglect which is a just

cause for termination under Article 282 of the Labor Code. In addition, the Court arrives at the conclusion that

the filing of the complaint for illegal dismissal appears only as a convenient afterthought on the part of

petitioner and the other complainants after they were dismissed in accordance with law.

. In the present case, however, petitioner filed his complaint more than one year after his alleged termination

from employment. Moreover, petitioner didnot ask for reinstatement in the complaint form, which he personally

filled up and filed with the NLRC.The prayer for reinstatement is made only in the Position Paper that was later

prepared by his counsel.This is an indication that petitioner never had the intention or desire to return to his job

Philippine Rural Reconstruction vs. VirgilioPulgar, G.R. No. 169227. July 5, 2010

DOCTRINE: Although under normal circumstances, an employee’s act of filing an illegal dismissal complaint against his

employer is inconsistent with abandonment; in the present case, we simply cannot use that one act to conclude that

Pulgar did not terminate his employment with PRRM, and in the process ignore the clear, substantial evidence

presented by PRRM that proves otherwise.

FACTS: PRRM is a non-stock, non-profit, non-governmental organization. Pulgar was the manager of PRRM’s branch office – the Tayabas Bay Field Office (TBFO) – in Quezon Province. When Pulgar was reassigned to PRRM’s central office, PRRM, through Goyena Solis (Solis), conducted an investigation into alleged financial anomalies committed at the TBFO. In her investigation report, Solis stated that part of the funds allotted to the TBFO was missing or not properly accounted for. The report also stated that some of the receipts that the TBFO submitted to liquidate the organization’s financial transactions were fictitious and manufactured.[4]The PRRM management sent Pulgar a copy of the report, together with a memorandum, asking him to explain these findings.[5]

Pulgar admitted that TBFO’s reported expenses did not reflect its actual expenses . He explained that as field manager,

he presumed he had the discretion to determine when and how the funds would be used, as long as the use was

devoted to the implementation of TBFO projects. Thus, there were instances when he used the funds intended for one

project to sustain the activities of other projects. PRRM maintains that while the investigation was ongoing, Pulgar went

on leave on March 3-10, March 20-25, and April 1-15, 1997. After the lapse of his last leave on April 15, 1997, Pulgar

no longer reported to work, leading PRRM to believe that Pulgar had abandoned his work to evade any liability arising

from the investigation. PRRM was therefore surprised to learn that Pulgar had filed an illegal dismissal case on April

3, 1997.

Pulgar tells another tale. According to him, on March 17, 1997, he submitted a letter to PRRM to complain that

he was not given the right to confront and question Solis, [8] but his letter went unanswered. Thereafter, on March 31,

1997, he was not allowed to enter the premises of the organization. Pulgar also alleges that PRRM’s representatives

removed his personal properties and records from his office, placed them in boxes and kept them in

storage. Believing he was constructively dismissed by PRRM’s actions, Pulgar filed a complaint against PRRM

on April 3, 1997 for illegal dismissal

ISSUE:

Whether or not the petitioner had abandoned his work or was not constructively dismissed from

employment.

HELD:Yes. when Pulgar filed an illegal dismissal complaint on April 3, 1997, he was still on leave from the organization. In other words, from PRRM’s standpoint, Pulgar was still its employee when he filed the illegal dismissal case against the organization.

Pulgar claims that he was forced to file an illegal dismissal complaint against PRRM while he was on

leave because he was not allowed to enter the office premises on March 31, 1997. But aside from making this

allegation, Pulgar failed to provide any other details on how he was prevented from entering the premises. Was he

physically prevented from entering the premises by a security guard? Did the senior officers of PRRM refuse to let

him into the office when he reported to work? We are left to guess the particulars of how PRRM prevented Pulgar

from entering the premises, leaving us to doubt the veracity of this allegation. While Pulgar claims he was

constructively dismissed when he was barred from the premises on March 31, 1997, he still filed his application for

leave for April 1-15, 1997. The fact alone that Pulgar was able to return to the office to file his application for leave

for April 1-15, 1997 raises doubt as to his purported ban from the premises. More importantly, if Pulgar truly believed

that he had already been constructively dismissed on March 31, 1997, reason dictates that he would no longer bother

to apply for a leave of absence from PRRM for April 1-15, 1997. The fact that he did belies his contention that he

believed he had already been constructively dismissed on March 31, 1997.

Although under normal circumstances, an employee’s act of filing an illegal dismissal complaint against

his employer is inconsistent with abandonment; in the present case, we simply cannot use that one act to

conclude that Pulgar did not terminate his employment with PRRM, and in the process ignore the clear,

substantial evidence presented by PRRM that proves otherwise.

Cobarrubias v. Saint Louis University, Inc.G.R. No. 176717, March 17, 2010Carpio-Morales, J.:

DOCTRINE:Petitioner forgets that her complaint for "illegal dismissal" which she filed on June 5, 2003 sprang, not from her dismissal on December 6, 2003 due to abandonment but, from her suspension during the first semester of school year 2003-2004. While the filing of a complaint with a prayer for reinstatement negates an intention to sever the employer-employee relationship, the same contemplates an action made subsequent to dismissal.

FACTS:Evangeline Cobarrubias was a faculty member at St. Louis University (SLU) in Baguio City. She received a letter dated May 23, 2003 from SLU wherein she was informed that she failed to meet the required minimum evaluation

rating for faculty members during the 5 year period beginning school year 1998 until 2003, thus, she was placed on a forced leave during the first semester of school year 2003-2004 which would result to the suspension of her benefits following the provision on the CBA. In the same letter, she was advised to inform in writing her readiness and availability to teach during the second semester on or before September 12, 2003.

During the first semester, Cobarrubias attempted to report for work but she was not given teaching load because she was on forced leave. Thus, on June 5, 2003, she filed a complaint for illegal dismissal with prayer for reinstatement and damages.

A letter dated October 13, 2003 was sent to Cobarrubias informing her that a 24-unit workload was prepared for her for the second semester. As there was no reply from Cobarrubias, a letter dated November 8, 2003 was again sent to her urging her to report for work until November 10, 2003. Still later, a letter dated November 12, 2003 was sent asking her to explain in writing why she should not be deemed to have abandoned her work and another final letter dated November 28, 2003 giving her opportunity to explain why she should not be terminated due to abandonment. Cobarrubias never responded to any of these letters, thus, she was dismissed for abandonment through a letter dated December 6, 2003.

ISSUE:Whether or not there was abandonment of work despite the pendency of illegal dismissal filed by the petitioner against the respondent.

HELD:Yes. Petitioner was, for five times, notified in writing by respondent to resume teaching for the second semester of school year 2003-2004 following the service of her suspension during the first semester. She was advised that a teaching load had already been prepared for her. Petitioner never ever replied to those notices.

Petitioner’s justification for her failure to respond to the notices – that her acceptance of the offer could be constituted as a waiver of her claims – is not indeed a valid excuse.

At all events, petitioner contends that her filing of a complaint for illegal dismissal was a manifestation of her desire to return to her job and negated any intention to sever the employer-employee relationship, citing Del Monte Philippines, Inc. v. National Labor Relations Commission which held:. . . Thus we cannot conceive how private respondent could abandon her job and give up the benefits she has earned from years of hard work. Finally, her filing of an illegal dismissal case contradicts petitioner’s allegations that she abandoned her job.

Petitioner forgets that her complaint for "illegal dismissal" which she filed on June 5, 2003 sprang, not from her dismissal on December 6, 2003 due to abandonment but, from her suspension during the first semester of school year 2003-2004. While the filing of a complaint with a prayer for reinstatement negates an intention to sever the employer-employee relationship, the same contemplates an action made subsequent to dismissal.

CRC Agricultural Trading vs. National Labor Relations CommissionG.R. No. 177664, December 23, 2009Brion, J.:

DOCTRINE:The jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal acts. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intent, manifested through overt acts, to sever the employer-employee relationship.

FACTS:Roberto Obias was hired by the petitioners CRC Agricultural Trading and Rolando Catindig as a driver and offered him to stay inside the company’s premises. The petitioners gave him a P3,000.00 loan to help him build a hut for his family. Sometime in March 2003, the petitioners ordered him to have the alternator of one of its vehicles repaired. He brought the vehicle to a repair shop and subsequently gave the petitioners two receipts issued by the repair shop. The latter suspected that the receipts were falsified and stopped talking to him and giving him work assignments. The petitioners, however, still paid him P700.00 and P500.00 on April 15 and 30, 2004, respectively, but no longer gave him any salary after that. As a result, Obias and his family moved out of the petitioners’ compound and relocated to a nearby place.

Obias filed a complaint for illegal dismissal against petitioners CRC Agricultural Trading and its owner, Rolando B. Catindig (collectively, petitioners), before the Labor Arbiter on June 22, 2004. He claimed that the petitioners paid him a daily wage of P175.00, but did not give him service incentive leave, holiday pay, rest day pay, and overtime pay. He also alleged that the petitioners did not send him a notice of termination. The petitioners argued that Obias was a seasonal driver and that he had abandoned his work and that an employee who had abandoned his work, like Obias, is no different from one who voluntarily resigned

ISSUE:

Whether or not there was abandonment of work.

HELD:No. Abandonment of work, or the deliberate and unjustified refusal of an employee to resume his employment, is a just cause for the termination of employment under paragraph (b) of Article 282 of the Labor Code, since it constitutes neglect of duty. The jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal acts. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intent, manifested through overt acts, to sever the employer-employee relationship. The employer bears the burden of showing a deliberate and unjustified refusal by the employee to resume his employment without any intention of returning.

In the present case, the petitioners did not adduce any proof to show that the respondent clearly and unequivocally intended to abandon his job or to sever the employer-employee relationship. Moreover, the respondent’s filing of the complaint for illegal dismissal on June 22, 2004 strongly speaks against the petitioners’ charge of abandonment; it is illogical for an employee to abandon his employment and, thereafter, file a complaint for illegal dismissal.

As we held in Samarca v. Arc-Men Industries, Inc.: “Abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts. To constitute abandonment, there must be clear proof of deliberate and unjustified intent to sever the employer-employee relationship. Clearly, the operative act is still the employee’s ultimate act of putting an end to his employment.”

CLOSURE OF BUSINESS

Peñafrancia Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento and Ricardo S. Catimbang,G.R. No. 178397, October 20, 2010.NACHURA, J.:

FACTS: Joselito Sarmiento and Ricardo Catimbang worked as a bus inspector of petitioner Peñafrancia Tours and Travel Transport, Inc. until October 2002. Their services were terminated on the ground of Petitioner’s alleged irreversible business losses. As a result, they filed a complaint for illegal dismissal on November 26, 2002. Respondests averred that, in the middle of October 2002, a meeting was called by petitioner’s President and General Manager, Bonifacio Cu, wherein respondents were introduced to Alfredo Perez, the owner of ALPS Transportation, as the new owner of petitioner, having allegedly bought the same. On the part of petitioner, he alleged that respondents submitted their application for reemployment but, after evaluation, the new owners opted not to hire respondents. He also argued that the matter of rehiring respondents rested on the sound discretion of its new owners, and the latter could not be compelled to absorb petitioner’s former employees since the same was not part of the deal. Respondents, however, learned that, several days after their termination, Bonifacio Cu continued to operate petitioner bus company. While respondents’ case for illegal dismissal was pending before the Labor Arbiter (LA), a notice was issued by Edilberto Perez to all employees of petitioner, stating that, effective February 11, 2003, the management of the company shall revert to its former President, Bonifacio Cu. On February 28, 2003, Bonifacio Cu wrote Alfredo Perez relative to the latter’s failure to comply with their agreement and the decision to rescind the sale involving petitioner. Thereafter, sometime in March 2003, Bonifacio Cu entered into a transaction, denominated as a “ Deed of Sale with Assignment of Franchise (By Way of Dation in Payment),” with Southern Comfort Bus Co., Inc. (SCBC), represented by its President and General Manager, Willy Deterala. Labor Arbiter ruled in favor of Petitioner. However, NLRC and C.A. reversed said decision.

ISSUE: Whether respondents were legally terminated from employment by reason of the sale of the business enterprise and the consequent change or transfer of ownership/management.

HELD: YES

Closure of business is the reversal of fortune of the employer whereby there is a complete cessation of business operations and/or an actual locking-up of the doors of the establishment, usually due to financial losses. Closure of business, as an authorized cause for termination of employment, aims to prevent further financial drain upon an employer who can no longer pay his employees since business has already stopped. Closure or cessation of operation of the establishment is an authorized cause for terminating an employee, as provided in Article 283 of the Labor Code. On this ground, petitioner terminated the employment of respondents. However, what petitioner apparently made was a transfer of ownership. It is true that, as invoked by petitioner, in Manlimos, et al. v. NLRC, et al., we held that a change of ownership in a business concern is not proscribed by law. Lest petitioner forget, however, we also held therein that the sale or disposition must be motivated by good faith as a condition for exemption from liability. Thus, where the charge of ownership is done in bad faith, or is used to defeat the rights of labor, the successor-employer is deemed to have absorbed the employees and is held liable for the transgressions of his or her predecessor. But, in this case, there is no successor-employer because there was no actual change of ownership. We sustain the uniform factual finding of both the NLRC and the CA that no actual sale transpired and, as

such, there is no closure or cessation of business that can serve as an authorized cause for the dismissal of respondents.

SolidBank Corporation vs. National Labor Relations Commission, et al.,G.R. No. 165951, March 30, 2010 . Peralta, J.

FACTS:

Sometime in May 2000, petitioner decided to cease its commercial banking operations and forthwith surrendered to the Bangko Central ng Pilipinas its expanded banking license. As a result of petitioner’s decision to cease its operations, 1,867 of its employees would be terminated. On July 25, 2000, petitioner sent individual letters to its employees, including respondents, advising them of its decision to cease operations and informing them that their employment would be terminated. On July 31, 2000, petitioner sent to the Department of Labor and Employment a letter dated July 28, 2000, informing said office of the termination of its employees. Petitioner granted to its employees separation pay equivalent to 150% of gross monthly pay per year of service, and cash equivalent of earned and accrued vacation and sick leaves as a result of their dismissal. Upon receipt of their separation pay, the employees of petitioner, including respondents, individually signed a “Release, Waiver, and Quitclaim.” On September 27, 2000, respondents filed with the Labor Arbiter (LA) complaints for illegal dismissal, underpayment of separation pay, plus damages and attorney’s fees, LA rendered a Decision ruling that respondents were validly terminated from employment as a result of petitioner’s decision to cease its banking operations. The LA, however, inspired by compassionate justice, awarded financial assistance of one month’s salary to respondents. Both parties appealed the LA’s Decision to the National Labor Relations Commission (NLRC). NLRC rendered a Decision affirming the findings of the LA that respondents were validly terminated. The NLRC ruled that the closure of a business is an authorized cause sanctioned under Article 283 of the Labor Code and one that is ultimately a management prerogative. The NLRC, however, modified the LA’s Decision by increasing the amount of financial assistance to two month’s salary out of compassionate justice . Aggrieved by the NLRC Decision, petitioner then appealed to the CA, specifically questioning the grant of financial assistance to respondents. CA rendered a Decision reversing the Decision of the NLRC. The CA shared the view of the LA.

ISSUE: WON the respondents are entitled to a two month’s salary out of compassionate justice.

HELD: No.

Based on Article 283, in case of cessation of operations, the employer is only required to pay his employees a separation pay of one month pay or at least one-half month pay for every year of service, whichever is higher. That is all that the law requires. In the case at bar, petitioner paid respondents the following: (a) separation pay computed at 150% of their gross monthly pay per year of service; and (b) cash equivalent of earned and accrued vacation and sick leaves. Clearly, petitioner had gone over and above the requirements of the law. Despite this, however, petitioner has been ordered to pay respondents an additional amount, equivalent to one month’s salary, as a form of financial assistance.

The LA awarded the financial assistance out of “compassionate justice.” The CA affirmed such grant also out of “compassionate justice” and as a form of “equitable relief” for the employees who were suddenly dismissed due to exigencies of business. After a thorough consideration of the circumstances at bar, this Court finds that the award of financial assistance is bereft of legal basis and serves to penalize petitioner who has complied with the requirements of the law.

A review of jurisprudence relating to the application of “compassionate and social justice” in granting financial assistance in labor cases shows that the same has been generally used in instances when an employee has been dismissed for a just cause under Article 282 of the Labor Code and not when an employee has been dismissed for an authorized cause under Article 283. As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not entitled to separation pay. Although by way of exception, the grant of separation pay or some other financial assistance may be allowed to an employee dismissed for just causes on the basis of equity. The reason that the law does not statutorily grant separation pay or financial assistance in instances of termination due to a just cause is precisely because the cause for termination is due to the acts of the employee. In such instances, however, this Court, inspired by compassionate and social justice, has in the past awarded financial assistance to dismissed employees when circumstances warranted such an award.

REDUNDANCY

Culili v. Eastern Telecommunications Philippines, Inc.G.R. No. 165381, February 9, 2011Leonardo-De Castro, J.:

DOCTRINE:The determination of whether or not an employee’s services are still needed or sustainable properly belongs to the employer. 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. 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, such as but not limited to: preferred status, efficiency, and seniority.

FACTS:Petitioner Nelson A. Culili was employed by Eastern Telecommunications Philippines, Inc. (ETPI) as a Senior Technician in the Customer Premises Equipment Management Unit of the Service Quality Department. Respondent Eastern Telecommunications, on the other hand, was a telecommunications company and an authorized IGF operator. As such ETPI was required, under RA. No. 7925 and EO No. 109, to establish landlines in Metro Manila and certain provinces. However, due to interconnection problems with 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.

Due to business troubles and losses, ETPI was thus compelled to implement a Right-Sizing Program. As part of the first phase, ETPI 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 (2½) months’ salary for every year of service. After a series of negotiations with the Eastern Telecommunications Employees’ Union (ETEU),102 employees qualified to avail of the program. Of said employees, only petitioner Culili rejected the offer. The second phase of the program necessitated the abolition, transfer and merger of a number of ETPI’s departments. Among the departments abolished was the Service Quality Department. As a result, Culili’s position was abolished due to redundancy and his functions were absorbed by Andre Andrada, another employee already with the Business and Consumer Accounts Department.

As such, Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor practice, and money claims before the Labor Arbiter. The Labor Arbiter rendered a decision finding ETPI guilty of illegal dismissal and unfair labor practice. On appeal, the NLRC affirmed the Labor Arbiter’s decision with a modification to exemplary and moral damages. ETPI filed a petition for certiorari with the CA, which partially granted its petition. The CA held that Culili’s position was validly abolished due to redundancy. Hence, this petition.

ISSUE:Whether or not Eastern Telecommunications Philippines, Inc. validly dismissed Nestor Culili by reason of redundancy.

HELD:Under Article 283 of the Labor Code, an employer may terminate an employee due to redundancy, among others. 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.

The Court has been consistent in holding that the determination of whether or not an employee’s services are still needed or sustainable properly belongs to the employer. 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. 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, such as but not limited to: preferred status, efficiency, and seniority. The 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.

In the case at bar, ETPI was upfront with its employees about its plan to implement a Right-Sizing Program. In deciding which positions to retain and which to abolish, ETPI chose on the basis of efficiency, economy, versatility and flexibility. 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.

Furthermore, in ETPI’s new table of organization, one hundred twelve (112) employees were redeployed and nine (9) positions were declared redundant. 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 Culili’s 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 Culili’s 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.

Coca Cola Bottlers, Inc. v. VillarG.R. No. 165381, February 9, 2011.Leonardo-De Castro, J

DOCTRINE:The determination that the employee's services are no longer necessary or sustainable and, therefore, properly terminable for being redundant is an exercise of business judgment of the employer. The wisdom or soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such redundancy to justify the dismissal of the affected employees. As such an employer may proffer "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" as evidence of redundancy.

FACTS:While serving as Transportation Services Manager for petitioner Coca-Cola Bottlers Philippines, Inc, Respondent Angel U. del Villar submitted a Report dated January 4, 1996 to the Company President, Natale J. Di Cosmo, detailing an alleged fraudulent scheme undertaken by certain Company officials in conspiracy with local truck manufacturers, overpricing the trucks purchased by the Company by as much as P70,000.00 each. In the same Report, Del Villar implicated San Juan and Jose L. Pineda, Jr., among other Company officials, as part of the conspiracy. Pineda then served as the Executive Assistant in the Business Logistic Directorate in charge of the Refrigeration Services of the Company. In 1996, the Company embarked on a reorganization of the Business Logistic Directorate. As a result Pineda was appointed as the Corporate Purchasing and Materials Control Manager, while Del Villar as Pineda’s Staff Assistant. Although as the Staff Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar continued to receive the same salary as Transportation Services Manager, but his car and other privileges were withdrawn and he spent his time at his new post sitting "at a desk with no meaningful work whatsoever."

Thus, Del Villar filed with the Arbitration Branch of the NLRC, on November 11, 1996, a complaint against the Company for illegal demotion and forfeiture of company privileges. The Labor Arbiter ruled in favor of Del Villar. On appeal, the NLRC reversed such decision. Thus, Del Villar filed a petition for certiorari with the CA which ruled in this favor. Hence, this petition.

Meanwhile, Coca Cola actually terminated Del Villar’s services effective May 31, 1998, alleging that his position was no longer necessary or was considered redundant due to the reorganization of the Business Logistic Directorate.

ISSUE:Whether or not respondent Angel U. Del Villar was illegally dismissed.

HELD:YES. Redundancy is one of the authorized causes for the dismissal of an employee pursuant to Article 283 of the Labor Code. 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 determination that the employee's services are no longer necessary or sustainable and, therefore, properly terminable for being redundant is an exercise of business judgment of the employer. The wisdom or soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such redundancy to justify the dismissal of the affected employees. As such an employer may proffer "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" as evidence of redundancy.

In this case however, other than its own bare and self-serving allegation that Del Villar’s position as Staff Assistant of Corporate Purchasing and Materials Control Manager had already become redundant, no other evidence was presented by the Company. Neither did the Company present proof that it had complied with the procedural requirement in Article 283 of prior notice to the Department of Labor and Employment (DOLE) of the termination of Del Villar’s employment due to redundancy one month prior to May 31, 1998. The notice to the DOLE would have afforded the labor department the opportunity to look into and verify whether there is truth as to the claim of the Company that Del Villar’s position had

become redundant "with the implementation of new distribution systems, utilization of improved operational processes, and functional reorganization" of the Company. Compliance with the required notices would have also established that the Company abolished Del Villar’s position in good faith.

Furthermore, Del Villar’s poor employee performance is irrelevant as regards the issue on redundancy. Redundancy arises because there is no more need for the employee’s position in relation to the whole business organization, and not because the employee unsatisfactorily performed the duties and responsibilities required by his position. There being no authorized cause for the termination of Del Villar’s employment, then he was illegally dismissed.

LAMBERT PAWNBROKERS and JEWELRY CORPORATION vs. HELEN BINAMIRAG.R. No. 170464 July 12, 2010Del Castillo, J.:

DOCTRINE: It must be shown that the function is superfluous or that the business was suffering from a serious downturn that would warrant redundancy.

FACTS: Lambert Pawnbrokers and Jewelry Corporation – Tagbilaran Branch hired Helen as an appraiser in July 1995 and designated her as Vault Custodian in 1996.On September 14, 1998, Helen received a letter from Lim terminating her employment effective that same day. Lim cited business losses necessitating retrenchment as the reason for the termination.

Helen thus filed a case for illegal dismissal against petitioners docketed as NLRC RAB-VII CASE NO. 01-0003-99-B alleging that she was dismissed without cause and the benefit of due process. She claimed that she was a mere casualty of the war of attrition between Lim and the Binamira family. Moreover, she claimed that there was no proof that the company was suffering from business losses.

In their Position Paper, petitioners asserted that they had no choice but to retrench respondent due to economic reverses. The corporation suffered a marked decline in profits as well as substantial and persistent increase in losses. In its Statement of Income and Expenses, its gross income for 1998 dropped from P1million toP665,000.00.

ISSUES:1. Whether or not there was a valid dismissal based on retrenchment2. Whether or not there was a valid dismissal based on redundancy

HELD:

1. NO. Retrenchment is the termination of employment initiated by the employer through no fault of and without prejudice to the employees. It is resorted to during periods of business recession, industrial depression, seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant to a new production program, or automation. It is a management prerogative resorted to avoid or minimize business losses, and is recognized by Article 283 of the Labor Code.

To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious and real, or only if expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) the employer serves written notice both to the employee/s concerned and the DOLE at least one month before the intended date of retrenchment; (3) the employer pays the retrenched employee separation pay in an amount prescribed by the Code; (4) the employer exercises its prerogative to retrench in good faith; and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or retained.

The losses must be supported by sufficient and convincing evidence. The normal method of discharging this is by the submission of financial statements duly audited by independent external auditors. In this case, however, the Statement of Income and Expenses for the year 1997-1998 submitted by the petitioners was prepared only on January 12, 1999. Thus, it is highly improbable that the management already knew on September 14, 1998, the date of Helen’s retrenchment, that they would be incurring substantial losses.

There is no evidence at all that the company was suffering from business losses. In fact, in their Position Paper, petitioners merely alleged a sharp drop in its income in 1998 from P1million to only P665,000.00. This is not the

business losses contemplated by the Labor Code that would justify a valid retrenchment. A mere decline in gross income cannot in any manner be considered as serious business losses. It should be substantial, sustained and real.

There was also no showing that petitioners adopted other cost-saving measures before resorting to retrenchment. They also did not use any fair and reasonable criteria in ascertaining who would be retrenched. Finally, no written notices were served on the employee and the DOLE prior to the implementation of the retrenchment. Helen received her notice only on September 14, 1998, the day when her termination would supposedly take effect. This is in clear violation of the Labor Code provision which requires notice at least one month prior to the intended date of termination.

2. NO. Redundancy, on the other hand, exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the enterprise. A redundant position is one rendered superfluous by any number of factors, such as over hiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company, or phasing out of a service activity previously undertaken by the business. Under these conditions, the employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business.

For the implementation of a redundancy program to be valid, the employer must comply with the following requisites: (1) written notice served on both the employees and the DOLE at least one month prior to the intended date of termination of employment; (2) payment of separation pay equivalent to at least one month pay for every year of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.

In this case, there is no proof that the essential requisites for a valid redundancy program as a ground for the termination of the employment of respondent are present. There was no showing that the function of respondent is superfluous or that the business was suffering from a serious downturn that would warrant redundancy considering that such serious business downturn was the ground cited by petitioners in the termination letter sent to respondent.

HERRERA v NATIONAL POWER CORP.G.R. No. 166570 December 18, 2009DEL CASTILLO, J.:

DOCTRINE: Absent clear and unequivocal statutory authority, the grant of both separation pay and retirement benefits violates the constitutional proscription on additional compensation.

FACTS: RA No. 9136 was enacted on June 8, 2001 to provide a framework for the restructuring of the electric power industry, including the privatization of NPC’s assets and liabilities. One necessary consequence of the reorganization was the displacement of employees from the Department of Energy, the Energy Regulatory Board, the National Electrification Administration and the NPC. To soften the blow from the severance of employment, Congress provided in Section 63 of the EPIRA, for a separation package superior than those provided under existing laws.

SEC. 63. Separation Benefits of Officials and Employees of Affected Agencies. – National government employees displaced or separated from the service as a result of the restructuring of the [electric power] industry and privatization of NPC assets pursuant to this Act, shall be entitled to either a separation pay and other benefits in accordance with existing laws, rules or regulations or be entitled to avail of the privileges provided under a separation plan which shall be one and one-half month salary for every year of service in the government: Provided, however, That those who avail of such privilege shall start their government service anew if absorbed by any government-owned successor company. In no case shall there be any diminution of benefits under the separation plan until the full implementation of the restructuring and privatization. x x x

On February 28, 2003, all NPC employees, including the petitioners, were separated from the service. As a result, all the employees who held permanent positions at the NPC as of June 26, 2001 opted for and were paid the corresponding separation pay equivalent to one and a half months’ salary per year of service. Nonetheless, in addition to the separation package mandated by the EPIRA, a number of NPC employees also claimed retirement benefits under CA No. 186, as amended by RA No. 6607 and RA No. 1616. Under these laws, government employees who have rendered at least 20 years of service are entitled to a gratuity equivalent to one month’s salary for every year of service for the first 20 years, one and a half months’ salary for every year of service over 20 but below 30 years, and two months’ salary for every year of service in excess of 30 years.

ISSUE: Whether or not NPC employees who were separated from the service because of the reorganization of the electric power industry and who received their separation pay under RA No. 9136 are still entitled to receive retirement benefits under CA No. 186, as amended.

HELD: NO. Section 8 of Article IX(B) of the Constitution provides that "[n]o elective or appointive public officer or employee shall receive additional, double, or indirect compensation, unless specifically authorized by law". In prior decisions, the court ruled that there must be a clear and unequivocal statutory provision to justify the grant of both separation pay and retirement benefits to an employee. Here, absent an express provision of law, the grant of both separation and retirement benefits would amount to double compensation from one single act of separation from employment.

Petitioners claim that Section 9 of RA No. 6656 amounts to sufficient statutory basis for the grant of both retirement benefits and separation pay. Unfortunately for the petitioners, their interpretation has little legal precedent. The CSC has previously ruled that employees similarly situated to petitioners herein were not entitled to both separation pay and retirement benefits; instead, the concerned employee must either avail of the separation benefit or opt to retire if qualified under existing laws.

In CSC Resolution No. 021112, the CSC interpreted the phrase "separation pay and retirement" in RA No. 6656 as follows: x x x While the aforequoted provision of law used the conjunctive "and" between the words "separation pay" and "retirement", this does not mean that both benefits shall be given to an affected employee. This interpretation is supported by the phrase "if entitled thereto" found before the phrase "be paid the appropriate separation pay and retirement and other benefits under existing laws". Thus, payment of both separation and retirement benefits is not absolute.

Also, in CSC Resolution No. 00-1957,24 the CSC declared: The aforequoted provision of law says: ‘separation pay and retirement and other benefits under existing laws’. Be it noted that the conjunctive ‘and’ is used between ‘separation pay and retirement’, which in its elementary sense would mean that they are to be taken jointly. (Ruperto G. Martin, Statutory Construction, sixth edition, p. 88) Obviously, therefore, ‘separation pay and retirement’ refer to only one benefit, of which an employee affected by the reorganization, if entitled thereto, must be paid plus other benefits under existing laws, i.e. terminal leave pay, etc.

Nothing in the EPIRA justifies the grant of both the separation package and retirement benefits. A careful reading of Section 63 of the EPIRA affirms that said law did not authorize the grant of both separation pay and retirement benefits. Indeed, the option granted was either to "a separation pay and other benefits in accordance with existing laws, rules and regulations" or to "a separation plan which shall be one and one-half months’ salary for every year of service in the government". The options were alternative, not cumulative. Having chosen the separation plan, they cannot now claim additional retirement benefits under CA No. 186.

This position finds further support in Section 3(f), Rule 33 of RA No. 9136’s Implementing Rules and Regulations, which provides: (f) likewise, "separation" or "displacement" refers to the severance of employment of any official or employee, who is neither qualified under existing laws, rules and regulations nor has opted to retire under existing laws, as a result of the restructuring of the electric power industry or privatization of NPC assets pursuant to the act.

As worded, Rule 33, Section 3(f) of the Implementing Rules and Regulations of RA No. 9136 precludes the receipt of both separation and retirement benefits. A separated or displaced employee, as defined by the implementing rules, does not include one who is qualified or has opted to retire under existing laws. Consequently, a separated employee must choose between retirement under applicable laws or separation pay under the EPIRA.

Thus, absent an express provision of law to the contrary, separation due to reorganization gives rise to two possible scenarios: first, when the separated employee is not yet entitled to retirement benefits, second, when the employee is qualified to retire. In the first case, the employee’s separation pay shall be computed based on the period of service rendered in the government prior to the reorganization. In the second case, where an employee is qualified to retire, he or she may opt to claim separation or retirement benefits.

RETRENCHMENT

45. Plastimer Industrial Corporation and TeoKee Bin v. Natalia C. Gopo, et al.

G.R. No. 183390, February 16, 2011.

CARPIO, J.:

FACTS:

The Personnel and Administration Manager of Plastimer Industrial Corporation (Plastimer) issued a Memorandum informing all its employees of the decision of the Board of Directors to downsize and reorganize its business operations due to withdrawal of investments and shares of stocks which resulted in the change of its corporate structure. The employees of Plastimer were served written notices of their termination effective 13 June 2004. Thereafter, Plastimer and Plastimer Industrial Corporation Christian Brotherhood (PICCB), the incumbent sole and exclusive collective bargaining representative of all rank and file employees, entered into a Memorandum of Agreement (MOA) relative to the terms and conditions that would govern the retrenchment of the affected employees. Plastimer submitted to the Department of Labor and Employment (DOLE) an Establishment Termination Report containing the list of the employees affected by the reorganization and downsizing. The affected employees, including respondents, signed individual “Release Waiver and Quitclaim.”

A complaint was filed against Plastimer for illegal dismissal. Respondents claimed that: 1) they did not voluntarily relinquish their jobs and that they were required to sign the waivers and quitclaims without giving them an opportunity to read them and without explaining their contents; and 2) Plastimer failed to establish the causes/valid reasons for the retrenchment and to comply with the one-month notice to the DOLE as well as the standard prescribed under the Collective Bargaining Agreement between Plastimer and the employees. On the other hand, petitioners, countered that the retrenchment was a management prerogative and that respondents got their retrenchment or separation pay even before the effective date of their separation from service.

The court ruled that there was no valid cause for retrenchment that while Plastimer claimed financial losses from 2001 to 2004, records showed an improvement of its finances in 2003; and that Plastimer failed to use a reasonable and fair standard or criteria in ascertaining who would be dismissed and who would be retained among its employees. The Court of Appeals ruled that the MOA between Plastimer and PICCB only recognized the need for partial retrenchment and the computation of retrenchment pay without disclosing the criteria in the selection of the employees to be retrenched.

ISSUE:

Whether respondents were illegally retrenched by petitioners.

HELD:

NO. The fact that there was a net income in 2003 does not justify the Court of Appeals’ ruling that there was no valid reason for the retrenchment. Records showed that the net income of P6,185,707.05 for 2003 was not even enough for petitioners to recover from the P52,904,297.88 loss in 2002. Article 283 of the Labor Code recognizes retrenchment to prevent losses as a right of the management to meet clear and continuing economic threats or during periods of economic recession to prevent losses. There is no need for the employer to wait for substantial losses to materialize before exercising ultimate and drastic option to prevent such losses.

46. Manila Mining Corp. Employees Association, et al. vs. Manila Mining corp, et al.

G.R. Nos. 178222-23, September 29, 2010.

PEREZ, J.:

FACTS:

Manila Mining Corporation (MMC) is a publicly-listed corporation engaged in large-scale mining for gold and copper ore. MMC is required by law to maintain a tailings containment facility to store the waste material generated by its mining operations. Consequently, MMC constructed several tailings dams to treat and store its waste materials. One of these dams was Tailings Pond No. 7 (TP No. 7), which was constructed in 1993 and was operated under a permit issued by the Department of Environment and Natural Resources (DENR), through its Environmental Management Bureau (EMB).

Eleven (11) rank-and-file employees of MMC attended the organizational meeting of MMC-Makati Employees Association-Federation of Free Workers Chapter (Union). The Union acquired its legitimate registration status on 30 March 2000. Subsequently, it submitted letters to MMC relating its intention to bargain collectively. On 11 July 2001, the Union submitted its Collective Bargaining Agreement (CBA) proposal to MMC.

Upon expiration of the tailings permit, DENR-EMB did not issue a permanent permit due to the inability of MMC to secure an Environmental Compliance Certificate (ECC). An essential component of an ECC is social acceptability or the consent of the residents in the community to allow TP No. 7 to operate, which MMC failed to obtain. Hence, it was compelled to temporarily shut down its mining operations, resulting in the temporary lay-off of more than 400 employees

in the mine site. On 30 July 2001, MMC called for the suspension of negotiations on the CBA with the Union until resumption of mining operations.

In their position paper, complainants claimed that: 1) MMC was not suffering from business losses; 2) MMC did not want to bargain collectively with the Union;3) there was no showing that cost-cutting measures were taken by MMC;4) no criteria were employed in choosing which employees to lay-off; 5) the individuals laid-off were those who signed the attendance sheet of the union organizational meeting; and 6) they were denied due process because they were not given a 30-day notice informing them of the lay-off. Neither was the DOLE informed of this lay-off, as mandated by law. Respondents justified the temporary lay-off as bona fide in character and a valid management prerogative pending the issuance of the permit to continuously operate TP No. 7.

ISSUE:

Whether or not the lay-off is valid and legal and if so, are the laid off employees entitled to separation pay.

HELD:

YES. Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation at all to the laid-off employees. The validity of its act of suspending its operations does not excuse it from paying separation pay.

Article 286 of the Labor Code allows the bona fide suspension of operations for a period not exceeding six (6) months. During the suspension, an employee is not deemed terminated. As a matter of fact, the employee is entitled to be reinstated once the employer resumes operations within the 6-month period. However, Article 286 is silent with respect to the rights of the employee if the suspension of operations lasts for more than 6 months.

We observe that MMC was forced by the circumstances; hence, it resorted to a temporary suspension of its mining and milling operations. It is clear that MMC had no choice. It would be well to reiterate at this juncture that the reason for such suspension cannot be attributed to DENR-EMB. It is thus, evident, that the MMC declared temporary suspension of operations to avert further losses.

The decision to suspend operation ultimately lies with the employer, who in its desire to avert possible financial losses, declares, as here, suspension of operations.

The non-issuance of a permit forced MMC to permanently cease its business operations, as confirmed by the Court of Appeals. Under Article 283, the employer can lawfully close shop anytime as long as cessation of or withdrawal from business operations is bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long as he pays his employees their termination pay in the amount corresponding to their length of service. The cessation of operations, in the case at bar is of such nature. It was proven that MMC stopped its operations precisely due to failure to secure permit to operate a tailings pond. Separation pay must nonetheless be given to the separated employees.

SHIMIZU PHILS. CONTRACTORS, INC. vs. VIRGILIO P. CALLANTAG.R. No. 165923 September 29, 2010DEL CASTILLO, J.:

FACTS:

Respondent then filed an illegal dismissal complaint against petitioner assailing his dismissal as without any valid cause. Petitioner advanced that respondent’s services were terminated in accordance with a valid retrenchment program due to the financial crisis that plague the construction industry. As proof, petitioner presented financial statements and other documents. Petitioner alleged that in order not to jeopardize the completion of its projects, the abolition of several departments and the concomitant termination of some employees were implemented as each project is completed. When respondent’s Honda Project was completed, petitioner offered respondent his separation pay which the latter refused to accept and instead filed an illegal dismissal complaint.

Respondent claimed that petitioner failed to comply with the requirements called for by law before implementing a retrenchment program. First, the notice sent to the Department of Labor and Employment (DOLE) did not conform to the 30-day prior notice requirement. Second, petitioner failed to use fair and reasonable criteria in determining which employees shall be retrenched or retained. As shown in the termination report submitted to DOLE, he was the only one dismissed out of 333 employees. Worse, junior and inexperienced employees were appointed/assigned in his stead to new projects, thus also ignoring seniority in hiring and firing employees.

Petitioner argued that there was already substantial compliance with the notice requirement and that the termination report is only for July 1997 and cannot be deemed as evidence of the total number of employees affected by the retrenchment program. Petitioner also claimed that respondent has violated several company rules, such that petitioner’s decision to appoint more competent and more senior employees in his stead cannot be questioned.

The Labor Arbiter held that respondent was validly retrenched. The NLRC upheld the ruling but held that petitioner violated respondent’s right to procedural due process due to noncompliance with the 30-day prior notice to the DOLE and that there is no proof that petitioner used fair and reasonable criteria in the selection of employees to be retrenched. Thus, Shimizu was ordered to pay Callanta his separation pay and an indemity equivalent to 1 month salary.

The Court of Appeals, on the other hand, opined that petitioner failed to prove that there were other employees similarly dismissed and that respondent’s alleged replacements held much higher ranks and were more deserving employees. Moreover, petitioner did not employ fair and reasonable criteria in determining which employees to retrench. Consequently, the CA invalidated the retrenchment, held respondent to have been illegally dismissed, and ordered respondent’s reinstatement and payment of backwages.

ISSUES: Whether petitioner failed to observe fair and reasonable standards or criteria in effecting the dismissal of the respondent

HELD: No. There was substantial compliance for a valid retrenchment; petitioner used fair and reasonable criteria in effecting retrenchment.

Under Article 283, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence:

(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure; and

(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, x x x efficiency, seniority, physical fitness, age, and financial hardship for certain workers.25

In implementing its retrenchment scheme, petitioner was constrained to streamline its operations and to downsize its complements in a progressive manner in order not to jeopardize the completion of its projects. Thus, several departments were abolished in the early part of 1996 and thereafter the Structural Steel Division, of which respondent was an Administrator. Respondent was among the last batch of employees who were retrenched and by the end of year 1997, all of the employees of the Structural Steel Division were severed from employment.

Moreover, the petitioner’s monthly termination report for the month of July 1997 filed with the DOLE does not prove that respondent was the only one retrenched. It merely serves as notice to DOLE of the names of employees terminated/retrenched only for the month of July.

Respondent then claimed that petitioner did not observe seniority in retrenching him and that he was more qualified than those retained by petitioner. However, the records do not bear any proof that these allegations were substantiated. On the contrary, the Labor Arbiter found respondent’s notoriety due to pieces of evidence showing numerous company violations imputed against respondent.

Petitioner implemented its retrenchment program in good faith because it undertook several measures in cutting down its costs, to wit, withdrawing certain privileges of petitioner’s executives and expatriates; limiting the grant of additional monetary benefits to managerial employees and cutting down expenses; selling of company vehicles; and infusing fresh capital into the company.

In fine, we hold that petitioner was able to prove that it incurred substantial business losses, that it offered to pay respondent his separation pay, that the retrenchment scheme was arrived at in good faith, and lastly, that the criteria or standard used in selecting the employees to be retrenched was work efficiency which passed the test of fairness and reasonableness.

The termination notice sent to DOLE did not comply with the 30-day notice requirement, thus, respondent is entitled to indemnity for violation of due process. The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of termination. Non-compliance with this rule clearly violates the employee’s right to statutory due process. Consequently, we affirm the NLRC’s award of indemnity to respondent for want of sufficient due notice.

FRANCIS RAY TALAM vs. NLRCG.R. No. 175040 April 6, 2010BRION, J.

FACTS:

In the latter part of 2001 and in 2002, the respondent, The Software Factory, Inc. (TSFI), suffered financial reverses. Its external financial auditor advised that it cut on its payroll expenses, which accounted for 41% of its total operating costs. Thus, TSFI decided to retrench some of its employees, using as basis its employees' service income and contribution margins to the company. Talam was was one of two employees with the least or with no income contribution for the year 2002. Consequently, Grapilon (Office Manager) and Wolfgang Hermle (CEO) verbally informed Talam that his services with the company would be terminated 30 days after September 27, 2002. Thereafter, TSFI notified Talam in writing of the termination of his employment. On November 6, 2002, or after a month, Talam signed a Release and Quitclaim in consideration and receipt of P89,954.00 in compensation and other benefits.

On November 29, 2002, Talam filed a complaint for illegal dismissal and illegal deduction, with claims for service incentive leave pay, damages and attorney's fees against TSFI, Grapilon and Hermle, before the National Labor Relations Commission (NLRC) in Cebu City.

The Labor Arbiter declared that Talam's dismissal illegal and directed TSFI to pay Talam separation benefits, backwages and 13th month pay. The arbiter held that TSFI had not adopted a retrenchment program and there was also no evidence showing clearly that Talam should be retrenched. He disregarded the release and quitclaim executed by Talam declaring that he was compelled to accept ithe monetary consideration behind it out of necessity.

TSFI appealed to the NLRC. Like the Labor Arbiter, it nullified the release and quitclaim signed by Talam. The NLRC found Talam's dismissal valid by reason of retrenchment, but deleted the award of separation pay " in view of payment."

On motion for reconsideration, the NLRC deleted the award of backwages and 13th month pay, but ordered the company to pay Talam P30,000.00 as nominal damages for violating his right to procedural due process.

The Court of Appeals found the retrenchment to be valid. However, it ruled that the company failed to give Talam the notice required by law. The CA also noted that Talam's employment contract provided for two month's notice. Thus, it increased to P50,000.00 the nominal damages.

The matter was elevated to the Supreme Court.

Talam contends that the financial statements relied upon by the company do not show that TSFI was in dire financial straits nor was it suffering drastic business losses. The alleged losses were not imminent as there were only 2 employees who were retrenched. Furthermore, there were 5 probationary employees who became regular employees on October 1, 2002. He also argues that the basis of having the least contribution margin to the company is not a

valid cause for dismissal under Articles 282 and 283 of the Labor Code; be that as it may, he did not have the highest negative contribution margin.

TSFI maintains that it did not only expect but had already suffered substantial losses, as reported by its external auditor and as established by its financial records. The fact that it retrenched only 2 employees did not mean its losses were not imminent. TSFI also explains that the 5 probationary employees were working on a project that was then in mid-stream and, considering their know-how in the project, could not just be assigned to Talam.

It also argues that Talam had the highest negative contribution margin. It submits that Talam was not chosen by any of its clients as shown by the fact that since January 2002 until his separation, he had no service income. It posits that it cannot be expected to maintain an employment consultant whose services the clients do not need. It insists that the contribution margin or service income is a fair and reasonable criterion in deciding who to retrench.

ISSUE:

Whether there was a valid cause for Talam’s dismissal.

HELD:

Yes. First, the decision to retrench had a basis. The decision was upon the recommendation of the company’s external auditor.

Second. The cost-cutting measure recommended involved reduction of TSFI’s payroll expense account which, as the auditor found, makes up 41% of the company’s total operating expenses. Absent any showing of bad faith, the choice of who should be retrenched must be conceded to the company as long as there exists a basis for it.

In the present case, we note that the auditor suggested that TSFI "review the contribution margin per consultant and compensation packages of personnel in the executive and support group." Again, absent any showing of bad faith, we cannot fault the company for choosing the option of looking at the margins of contribution of the consultants to the income of the company as primary retrenchment standard. Talam himself admitted that he had no contribution income for 2002. Management explained that TSFI’s clients did not choose him or ask for his services – a management claim Talam did not dispute.

Third. Talam was dismissed due to a cause authorized by law – retrenchment to prevent losses. At that time, TSFI’s financial condition, as found by the external auditor, showed that it had already suffered a net income loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00.

Fourth. TSFI resorted to other measures to abate its losses. It claimed that during the crises period, it used as an office a small-room (a mere cubicle) with only a two-person support staff in the persons of Grapilon and Hermle; it reduced the salaries of its employees by as much as 30%.

On the whole, we find that TSFI satisfied the requisites for a valid retrenchment.

The release and quitclaim was a valid and binding undertaking that should have been recognized by the labor authorities and the CA. A legitimate waiver representing a voluntary settlement of a laborer's claims should be respected by the courts as the law between the parties. In executing the release and quitclaim, Talam had unquivocably signified his acceptance of his separation from the service. Thus, we find the filing of the illegal dismissal case tainted with bad faith on his part.

Given the release and quitclaim, we do not see how TSFI can be made to answer for failure to afford Talam procedural due process. The release and quitclaim, to our mind, erased whatever infirmities there might have been in the notice of termination as Talam had already voluntarily accepted his dismissal through the release and quitclaim.

ANABE vs. ASIAN CONSTRUCTION (ASIAKONSTRUKT)G.R. No. 183233. December 23, 2009. Carpio Morales, J.

DOCTRINE: To effect a valid dismissal on the ground of retrenchment, the losses must be supported by sufficient and convincing evidence, the normal method of discharging which is the submission of financial statements duly audited by independent external auditors.

FACTS: Petitioner Virgilio Anabe was hired by respondent company (Asiakonstrukt) as radio technician/operator sometime in 1993. On September 8, 1999, he was notified by the latter that his services would be, as he was in fact, terminated effective a month thereafter, on the ground of retrenchment. Petitioner filed a complaint for illegal dismissal and illegal deduction and payment of fringe benefits. The Labor Arbiter found that Asiakonstrukt failed to submit financial statements to prove losses, and thus ruled that Anabe was illegally dismissed. Upon appeal, Asiakonstrukt submitted certified true copies of its audited financial statements in 1998-2000. Considering the same, NLRC ruled that Anabe was not illegally dismissed. The CA affirmed the finding of NLRC, noting that the latter is not precluded from receiving evidence on appeal as technical rules of procedure are not binding in labor cases. Hence, this petition.

ISSUE: Whether Anabe was validly dismissed based on the ground of retrenchment.

HELD: NO. Retrenchment is the termination of employment initiated by the employer through no fault of and without prejudice to the employees. It is resorted to during periods of business recession, industrial depression, or seasonal fluctuations or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery or of automation. It is a management prerogative resorted to, to avoid or minimize business losses. To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, and real, or only if expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) the employer serves written notice both to the employee/s concerned and the Department of Labor and Employment at least a month before the intended date ofretrenchment; (3) the employer pays the retrenched employee separation pay in an amount prescribed by the Code; (4) the employer exercises its prerogative to retrench in good faith; and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or retained.

Prescinding from the foregoing, the Court noted that the losses must be supported by sufficient and convincing evidence, the normal method of discharging which is the submission of financial statements duly audited by independent external auditors. In the present case, Asiakonstrukt failed to submit its audited financial statements within the two years that the case was pending before the Labor Arbiter. It submitted them only after it received the adverse judgment of the Labor Arbiter. While the NLRC is not indeed precluded from receiving evidence, the delay in the submission of evidence should be clearly explained and should adequately prove the employer’s allegation of the cause for termination. Asiakonstrukt proffered no explanation behind the belated submission. Also, the financial statements were prepared only in 2001. Note that Anabe was dismissed in 1999. It begs the question then of how the company knew that it was suffering big losses in 1999 when the financial statements were only accomplished 2 years thereafter. Furthermore, Asiakonstrukt had also failed to submit its financial statements to the SEC for the year 1998-2000 and 2003-2005. The Court thus gave credence to petitioner’s theory that the statements might have been fabricated. Hence, the Court held that the dismissal of petitioner on account of retrenchment is unjustified for failure of Asiakonstrukt to clearly and satisfactorily substantiate its financial losses.

HOTEL ENTERPRISES OF THE PHILIPPINES (HEPI) vs. SAMAHAN NG MGA MANGGAGAWA SA HYATT-NATIONAL UNION OF WORKERS IN THE HOTEL AND RESTAURANT AND ALLIED INDUSTRIES (SAMASAH)

G.R. No. 165756. June 5, 2009. Nachura, J.

DOCTRINE: Retrenchment and redundancy are valid management prerogatives, provided they are done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence. An employer’s good faith in implementing a redundancy program is not necessarily destroyed by availment of the services of an independent contractor to replace the services of the terminated employees.

FACTS: Respondent Union is the certified collective bargaining agent of the rank-and-file employees of Hyatt Regency Manila, a hotel owned by petitioner HEPI. In 2001, HEPI’s hotel business suffered big financial losses. An audited financial report made by SGV indicated that the hotel suffered an operating loss amounting to over P16M. HEPI alleged that it initially decided to cost-cut by implementing energy-saving schemes. In 2002, HEPI decided to implement a downsizing scheme to determine the areas where it could obtain significant savings. After evaluation, it found some positions to be redundant. The Union opposed the downsizing scheme of petitioner arguing that the latter failed to prove that it is incurring heavy financial losses. Despite the Union’s opposition, notices of termination were served to 48 employees whose positions were identified to be redundant. Thereafter, the hotel engaged the services of independent job contractors to perform the services of the dismissed employees. Later, the Union filed a notice of strike based on unfair labor practice against HEPI. The labor arbiter found the strike to be legal. Upon appeal, the

NLRC gave credence to the financial report of SGV & Co. that the hotel had incurred huge financial losses necessitating the adoption of a downsizing scheme. The CA reversed the NLRC decision. Hence, this petition.

ISSUE: Whether the downsizing scheme, i.e. retrenchment and redundancy, adopted by petitioner was valid.

HELD: YES. Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and wages. Redundancy, on the other hand, exists where the number of employees is in excess of what is reasonably demanded by the actual requirements of the enterprise. Retrenchment and redundancy are valid management prerogatives, provided they are done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence. For a valid retrenchment, the following requisites must be complied with: (1) the retrenchment is necessary to prevent losses and such losses are proven; (2) written notice to the employees and to the DOLE at least one month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one-month pay or at least one-half month pay for every year of service, whichever is higher. In case of redundancy, the employer must prove that: (1) a written notice was served on both the employees and the DOLE at least one month prior to the intended date of retrenchment; (2) separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher, has been paid; (3) good faith in abolishing the redundant positions; and (4) adoption of fair and reasonable criteria in ascertaining which positions are to be declared redundant and accordingly abolished.

In the present case, the Court appreciated the financial statements submitted by SGV in favor of petitioner’s claims. The Court noted that while the hotel has earned in 2001 around P12M, if provisions for hotel rehabilitation as well as replacement of and additions to the hotel’s furnishings and equipments are included, the result is indeed a staggering deficit of more than P16 million. The Court noted that the financial statements submitted by petitioner were audited by a reputable auditing firm and are clear and substantial enough to prove that the company was in a precarious financial condition.

Our labor laws only allow retrenchment or downsizing as a valid exercise of management prerogative if all other else fail. But in this case, it was found that petitioner did implement various cost-saving measures and even transferred some of its employees to other viable positions just to avoid the premature termination of employment of its affected workers. It was when the same proved insufficient and the amount of loss became certain that petitioner had to resort to drastic measures to stave off P9,981,267.00 in losses, and be able to survive. An employer’s good faith in implementing a redundancy program is not necessarily destroyed by availment of the services of an independent contractor to replace the services of the terminated employees. The reduction of the number of workers in a company made necessary by the introduction of the services of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. Thus, the Court ruled that the downsizing scheme implemented by petitioner was valid. Accordingly, the termination of the 48 employees was legal.

FLOATING STATUS

BEBINA SALVALOZA vs. NLRC, GULF PACIFIC SECURITY AGENCY, INC., and ANGEL QUIZONG.R. No. 182086, November 24, 2010NACHURA, J.:

DOCTRINE: When a "floating status" lasts for more than six (6) months, the employee may be considered to have been constructively dismissed.

FACTS: Gregorio Salvaloza was employed by Gulf Pacific as a security guard. He filed a complaint on March 6, 2002 for illegal dismissal before the NLRC-NCR. On the other hand, Gulf Pacific and Quizon argued that Gregorio was not illegally dismissed, but was only placed on floating status due to his failure to comply with the Memorandum dated August 2, 2001, requiring him to complete the requirements for his 201 file. They pointed out that Gregorio submitted a spurious security guard license, as rebutted by the Certification dated June 13, 2002, issued by the Security Agencies and Guards Supervision Division of the Philippine National Police (PNP).

On June 30, 2004, the Labor Arbiter rendered a decision in favor of Gregorio. Aggrieved, Gulf Pacific and Quizon appealed to the NLRC which promulgated its decision reversing the LA decision, and dismissing Gregorio’s complaint for lack of merit. Gregorio then filed a petition for certiorari before the CA, which rendered its decision affirming the NLRC Second Division decision and resolution.

ISSUE: Whether Gregorio was constructively dismissed by when he was put on floating status.

HELD: Yes. Temporary "off-detail" or "floating status" is the period of time when security guards are in between assignments or when they are made to wait after being relieved from a previous post until they are transferred to a new one. It takes place when the security agency’s clients decide not to renew their contracts with the agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its roster. It also happens in instances where contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it even for want of cause, such that the replaced security guard may be placed on temporary "off-detail" if there are no available posts under the agency’s existing contracts. During such time, the security guard does not receive any salary or any financial assistance provided by law. It does not constitute a dismissal, as the assignments primarily depend on the contracts entered into by the security agencies with third parties, so long as such status does not continue beyond a reasonable time. When such a "floating status" lasts for more than six (6) months, the employee may be considered to have been constructively dismissed.

There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice except to forego continued employment. It exists when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as an offer involving a demotion in rank and a diminution in pay.

It should be pointed out that, per his service record, Gregorio was thrice put on "floating status" by Gulf Pacific: (1) from October 22, 1996 to April 13, 1997, or a total of 174 days, or six (6) days less than six (6) months; (2) from July 14, 1999 to May 2, 2001, or a total of almost 22 months; and (3) indefinitely, starting from August 30, 2001.

Of the three instances when Gregorio was temporarily "off-detailed," we find that the last two already ripened into constructive dismissal. While we acknowledge that Gregorio’s service record shows that his performance as a security guard was below par, we join the LA in his finding that Gulf Pacific never issued any memo citing him for the alleged repeated errors, inefficiency, and poor performance while on duty, and instead continued to assign him to various posts. This amounts to condonation by Gulf Pacific of whatever infractions Gregorio may have committed. Even assuming the reasons behind Gregorio’s being relieved as indicated in his service record to be true, it was incumbent upon Gulf Pacific to be vigilant in its compliance with labor laws. Although we understand that it could have been difficult for Gulf Pacific to post Gregorio given his age, about 50 years old, and his service record, still the agency should not have allowed him to wait indefinitely for an assignment if its clients were in truth less likely to accept him. If, indeed, Gregorio was undesirable as an employee, Gulf Pacific could just have dismissed him for cause. The unreasonable lengths of time that Gregorio was not posted inevitably resulted in his being constructively dismissed from employment.

However, with respect to Gregorio’s "off-detail" starting from August 30, 2001, we hold that it should only be counted up to June 13, 2002, and not up to the promulgation of the decision of the LA, considering that, on that date, it was legally impossible for Gulf Pacific to deploy him for lack of a valid security guard license.

CONSTRUCTIVE DISMISSAL

COCA-COLA BOTTLERS PHILIPPINES, INC., vs. ANGEL U. DEL VILLAR

G.R. No. 163091, October 6, 2010

LEONARDO-DE CASTRO, J.:

DOCTRINE: It is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such redundancy to justify the dismissal of the affected employees. An employee’s performance is irrelevant as regards the issue on redundancy. Redundancy arises because there is no more need for the employee’s position in relation to the whole business organization, and not because the employee unsatisfactorily performed the duties and responsibilities required by his position.

FACTS: The Company initially hired respondent Angel U. del Villar (Del Villar) as Physical Distribution Fleet Manager with a job grade of S-7 and monthly salary of P50,000.00, aside from the use of a company car, gasoline allowance, and annual foreign travel, among other benefits. Del Villar submitted a Report to the Company President detailing an alleged fraudulent scheme undertaken by certain Company officials in conspiracy with local truck manufacturers, overpricing the trucks purchased by the Company.

Seven months after the submission of his Report he received a Memorandum informing him he was designated as Staff Assistant to the Corporate Purchasing and Materials Control Manager, with a job grade of NS-VII; he ceased to be entitled to the benefits accruing to an S-7 position under existing company rules and policies; and he was to turn over the vehicle assigned to him as Transportation Services Manager to Pineda.

Del Villar believed that he was demoted by the Company to force him to resign. Unable to endure any further the harassment, Del Villar filed with the Arbitration Branch of the NLRC a complaint against the Company for illegal demotion and forfeiture of company privileges. The Labor Arbiter rendered a Decision in Del Villar’s favor. The Company expectedly appealed to the NLRC. While the case was still pending appeal before the NLRC, Del Villar received a letter, signed by one Virgilio B. Jimeno for the Company, informing him that his position has been determined as no longer necessary due and thus, considered separated from the Company effective May 31, 1998. In a Decision dated February 26, 1999, the NLRC reversed the Labor Arbiter. Unsatisfied, Del Villar brought his case before the Court of Appeal which rendered its decision favoring Del Villar.

ISSUE: Whether or not the Company validly terminated the services of Del Villar.

HELD: No. The Company actually terminated Del Villar’s services effective May 31, 1998, as his position was no longer necessary or was considered redundant due to the reorganization of the Business Logistic Directorate. Redundancy is one of the authorized causes for the dismissal of an employee. 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. The determination that the employee's services are no longer necessary or sustainable and, therefore, properly terminable for being redundant is an exercise of business judgment of the employer. The wisdom or soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such redundancy to justify the dismissal of the affected employees.

In this case, other than its own bare and self-serving allegation that Del Villar’s position as Staff Assistant of Corporate Purchasing and Materials Control Manager had already become redundant, no other evidence was presented by the Company. Neither did the Company present proof that it had complied with the procedural requirement in Article 283 of prior notice to the Department of Labor and Employment (DOLE) of the termination of Del Villar’s employment due to redundancy one month prior to May 31, 1998. The notice to the DOLE would have afforded the labor department the opportunity to look into and verify whether there is truth as to the claim of the Company that Del Villar’s position had become redundant “with the implementation of new distribution systems, utilization of improved operational processes, and functional reorganization” of the Company. Compliance with the required notices would have also established that the Company abolished Del Villar’s position in good faith.

Del Villar’s poor employee performance is irrelevant as regards the issue on redundancy. Redundancy arises because there is no more need for the employee’s position in relation to the whole business organization, and not because the employee unsatisfactorily performed the duties and responsibilities required by his position. Thus, there being no authorized cause for the termination of Del Villar’s employment, then he was illegally dismissed.

SHS Perforated Materials, Inc., Winfried Hartmannshenn (President) and Hinrich Johann Schumacher (EVP) vs. Manuel F. Diaz

G.R. No. 185814. October 13, 2010Mendoza, J.:

DOCTRINE: Although management prerogative refers to “the right to regulate all aspects of employment,” it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the employee.

FACTS:Respondent Diaz was hired by petitioner as Manager for Business Development on probationary status

from July 18, 2005 to January 18, 2006. Respondent and SHS President (who was often abroad and had been expressing his dissatisfaction with respondent’s poor performance) dealt with each other via e-mails or phone calls and personal meetings when the latter was in the Philippines. When SHS President went to Philippines and respondent allegedly did not meet with him, the former, on November 29, 2005 ordered the withholding of the latter’s salary. The following day respondent served SHS a resignation letter with a demand of his salary covering November 16-30. When SHS failed to pay him, respondent filed a Complaint against the petitioners for illegal dismissal; non-payment of salaries/wages and 13th month pay with prayer for reinstatement and full backwages; exemplary damages, and attorney’s fees, costs of suit, and legal interest.

LA – respondent was constructively dismissed because withholding of his salary is contrary to Article 116, Labor Code. NLRC – modified LA’s decision. It dismissed the complaint for illegal dismissal and other claims; but it ordered SHS to pay the salary covered by the subject period. The withholding of the salary is a management prerogative. CA – reversed NLRC’s decision. The withholding is not a management prerogative. The malicious withholding of respondent’s salary made it impossible or unacceptable for respondent to continue working, thus, compelling him to resign.

ISSUE: Whether or not respondent was constructively dismissed from employment.

HELD:YES. Respondent was forced to resign and was, thus, constructively dismissed. There is constructive

dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice by him except to forego his continued employment. It exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.

What made it impossible, unreasonable or unlikely for respondent to continue working for SHS was the unlawful withholding of his salary. It is significant to note that the respondent prepared and served his resignation letter right after he was informed that his salary was being withheld. In fact, in his resignation letter, respondent cited petitioners’ “illegal and unfair labor practice as his cause for resignation. It would be absurd to require respondent to tolerate the unlawful withholding of his salary for a longer period before his employment can be considered as so impossible, unreasonable or unlikely as to constitute constructive dismissal. Even granting that the withholding of respondent’s salary on November 30, 2005, would not constitute an unlawful act, the continued refusal to release his salary after the payroll period was clearly unlawful.

Although management prerogative refers to “the right to regulate all aspects of employment,” it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the employee. Otherwise, it would be contrary to Article 116 of the Labor Code. 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. Absent a showing that the withholding of complainant’s wages falls under the exceptions provided in Article 113, the withholding thereof is thus unlawful.

Petitioners’ evidence insufficient to prove that respondent did not work during the subject period. From the contract of probationary employment itself, respondent’s duties as manager called for meetings with prospective clients outside the office rather than reporting for work on a regular schedule. In other words, the nature of respondent’s job did not allow close supervision and monitoring by petitioners. Respondent was constructively dismissed and, therefore, illegally dismissed. Although respondent was a probationary employee, he was still entitled to security of tenure. (NOTE: The doctrine of strained relations was also discussed in this case)

Estrella Velasco vs. Transit Automotive Supply, Inc. and Antonio De Dios (President and GM)G.R. No. 171327. June 18, 2010Carpio, J.:

DOCTRINE: 1. Absent any evidence of bad faith, it is within the exercise of respondents’ management prerogative to transfer some of petitioner’s duties if in their judgment, it would be more beneficial to the corporation. 2. The quantum of proof required is substantial evidence.

FACTS:Petitioner, employee of respondent corporation, was originally hired as accounting clerk and later

became the head of the Accounting Department while concurrently the Secretary to the President and General Manager, and Comptroller. Petitioner alleged that in January 1993, she was asked to resign as Comptroller and to

concentrate on the preparation of respondent’s Income Statement. When petitioner refused, her office table, things and personal belongings were allegedly transferred without her consent. Petitioner took a leave of absence for the month of February 1993. On March 5, 1993, respondent called petitioner’s attention that she had been absent without official leave since March 1, 1993; and required petitioner to explain her absence otherwise, her absence would be considered an abandonment of her duties and responsibilities. Petitioner answered that she had nothing to explain because in February 1993, she was verbally informed by the corporation’s President and GM, De Dios to resign from her employment as Comptroller. Petitioner then filed an action for constructive dismissal against respondents.

LA – dismissed the complaint. Respondents only exercised their management prerogative.NLRC – petitioner was constructively dismissed from employment. Later modified the said decision and

ruled that petitioner’s transfer was a demotion (managerial function to clerical task).CA – set aside NLRC’s decision, affirmed LA’s decision (insufficient evidence to support constructive

dismissal).

ISSUE:Whether or not petitioner was constructively dismissed from work.

HELD:NO. In this case, it is undisputed that petitioner was holding three positions: Head of the Accounting

Department, Secretary to the President and General Manager, and Comptroller. She was asked to relinquish her duties as Comptroller. Constructive dismissal is defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely, or when there is a demotion in rank or a diminution of pay. It exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment.

Here, there was no diminution of petitioner’s salary and other benefits. There was no evidence that she was harassed or discriminated upon, or that respondents made it difficult for her to continue with her other duties. Absent any evidence of bad faith, it is within the exercise of respondents’ management prerogative to transfer some of petitioner’s duties if in their judgment, it would be more beneficial to the corporation. There was no basis for the NLRC’s finding that from performing managerial functions; petitioner was reduced to performing clerical tasks.

Respondents allowed petitioner to take a leave of absence for the whole month of February 1993. It was only on March 5, 1993 when respondents called her attention that she had been absent without official leave since March 1, 1993. Respondents required petitioner to explain her absence within three days from receipt of the letter. However, it was only on March 31, 1993 when petitioner answered that she had nothing to explain because in February 1993, she was verbally informed by De Dios to resign from her employment as Comptroller. Petitioner’s belated reply showed her lack of intention to report back to work and to perform her other responsibilities. Instead, she filed a case for constructive dismissal against respondents which we find to be without factual and legal basis.(NOTE: In administrative proceedings, the quantum of proof required is substantial evidence, which is more than a mere scintilla of evidence, but such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion)

Elsa S. Malig-on v. Equitable General Services, Inc.G.R. No. 185269, June 29, 2010Abad, J.

DOCTRINE: The Court has repeatedly ruled, the act of “off-detailing” was not the equivalent of dismissal so long as her floating status did not continue beyond a reasonable time.

FACTS: Equitable General Services, Inc. hired Malig-on on March 4, 1996 as janitress in its janitorial services. After six years (February 15, 2002) Malig-on’s immediate supervisor told her that the company would be assigning her to another client. However, despite she made several follow-ups, the assignment was not done. Eight months later Malig-on was advised that she had to file a resignation letter before EGSI could reassign her. She complied but the company reneged on its undertaking, prompting Malig-on to file a complaint against it for illegal dismissal.

Respondent company claimed, however, that she just stopped reporting for work on February 16, 2002 without giving any reason. Consequently, respondent company wrote her two letters, first on August 23, 2002 and again on September 2, 2002, asking her to explain her continued absence. On October 15, 2002 Malig-on showed up at the company’s office and submitted her resignation letter. LA: found Malig-on’s resignation valid and binding; pay ECOLA and the balance of her 13th month pay. NLRC: reversed LA’s decision; found that respondent company constructively dismissed her; reinstatement with full backwages from the time the company illegally dismissed her up to the date of the finality of its decision. CA: reversed NLRC’s decision, reinstated LA’s decision.

ISSUE: WON PETITIONER MALIG-ON’S OFF-DETAILING WAS A CASE OF CONSTRUCTIVE DISMISSAL.

HELD: Yes. First, when Malig-on reportedly dropped out of sight and the company had no idea about the reason for it, the natural and right thing for it to do was investigate why she had suddenly vanished. Indeed, the company needed to write Malig-on immediately and ask her to explain in writing why she should not be considered to have abandoned her job so the company may be cleared of its responsibility as employer. This did not happen here.

Second, if Malig-on had abandoned her work and had no further interest in it, there was no reason for her to suddenly show up at her former place of work after eight months and file her resignation letter. Her action would make sense only if, as she claimed, she had been on floating status for over six months and the company promised to give her a new assignment if she would go through the process of resigning and reapplying.

And, third, that Malig-on went to the NLRC to file a complaint for unjust dismissal just three days after she filed her alleged resignation letter is inconsistent with genuine resignation. It would make sense only if, as Malig-on claims, the company tricked her into filing for resignation upon a promise to give her a new work assignment and failed to deliver such promise.

The company evidently placed Malig-on on floating status after being relieved as janitress in a client’s workplace. But, as the Court has repeatedly ruled, such act of “off-detailing” Malig-on was not the equivalent of dismissal so long as her floating status did not continue beyond a reasonable time. But, when it ran up to more than six months, the company may be considered to have constructively dismissed her from work, that is, as of August 16, 2002. Thus, her purported resignation on October 15, 2002 could not have been legally possible.

The company of course claims that it gave Malig-on notices on August 23, 2002 and September 2, 2002, asking her to explain her failure to report for work and informing her that the company would treat such failure as lack of interest in it, respectively. But these notices cannot possibly take the place of the notices required by law. They came more than six months after the company placed her on floating status and, consequently, the company gave her those notices after it had constructively dismissed her from work.

NOTE: Strained Relations Doctrine was applied here, thus, separation pay instead of reinstatement was awarded to Malig-on by the SC.

Gualberto Aguanza v. Asian Terminal, Inc., Keith James, Richard Barclay, and Atty. Rodolfo CorviteG.R. No. 163505, August 14, 2009CARPIO, J.

DOCTRINE: The transfer of an employee may constitute constructive dismissal "when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.”

FACTS: Petitioner Gualberto Aguanza was employed with respondent company Asian Terminal, Inc. from April 15, 1989 to October 1997. He was initially employed as Derickman or Crane Operator and was assigned as such aboard Bismark IV, a floating crane barge owned by respondent company, based at the port of Manila.

September 1997: The said floating crane barge, together with its crew, was temporarily assigned at a port in Mariveles, Bataan.

October 20, 1997: Respondent Keith issued a memo to the crew of Bismark IV stating that the barge had been permanently transferred to the Mariveles terminal beginning October 1, 1997, thus, its crew would no longer be entitled to out of port benefits of 16 hours overtime and P200 a day allowance.

Petitioner, together with four other members of the crew, stated that they did not object to the transfer of, but they objected to the reduction of their benefits. When they objected to the reduction of their benefits, they were told by James Keith to report to the Manila office only to be told to report back to Bataan. On both occasions, petitioner was not given any work assignment.

After being shuttled between Manila and Bataan, petitioner was constrained to write respondent Atty. Corvite for clarification of his status, at the same time informing the latter of his willingness to work either in Manila or Bataan.

While he did not agree with private respondents’ terms and conditions, he was nonetheless willing to continue working without prejudice to taking appropriate action to protect his rights. All members of the crew except petitioner accepted the new assignment and its terms and conditions.

Because of private respondents’ refusal to give him any work assignment and pay his salary, petitioner filed a complaint for illegal dismissal against respondents. LA: Respondents illegally dismissed Aguanza. NLRC: Reversed LA’s decision. CA: Affirmed NLRC’s decision.

ISSUE: WON THE TRANSFER OF AGUANZA FROM MANILA TO BATAAN CAN BE CONSIDERED AS A CASE OF CONSTRUCTIVE DISMISSAL.

HELD: No. ATI’s transfer of Bismark IV’s base from Manila to Bataan was, contrary to Aguanza’s assertions, a valid exercise of management prerogative. The transfer of employees has been traditionally among the acts identified as a management prerogative subject only to limitations found in law, collective bargaining agreement, and general principles of fair play and justice. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.

Aguanza’s continued employment was not impossible, unreasonable or unlikely; neither was there a clear discrimination against him. Among the employees assigned to Bismark IV, it was only Aguanza who did not report for work in Bataan. Aguanza’s assertion that he was not allowed to "time in" in Manila should be taken on its face: Aguanza reported for work in Manila, where he wanted to work, and not in Bataan, where he was supposed to work. There was no demotion in rank, as Aguanza would continue his work as Crane Operator. Furthermore, despite Aguanza’s assertions, there was no diminution in pay.

Aguanza did not contest his transfer, but the reduction in his take-home pay. Aguanza even asserted, contrary to his acts, that he bound himself to work in such place where ATI might assign or transfer him. ATI did not dismiss Aguanza; rather, Aguanza refused to report to his proper workplace.

NOTES ON THE ALLEGED DIMINUTION OF BENEFITS: The circumstances of the case made no mention of the salary structure in case Bismark IV being assigned work outside of Bataan; however, we surmise that it would not be any different from the salary structure applied for work done out-of-port. We, thus, agree with the NLRC and the appellate court when they stated that the fixed overtime of 16 hours, out-of-port allowance and meal allowance previously granted to Aguanza were merely supplements or employment benefits given on condition that Aguanza’s assignment was out-of-port. The fixed overtime and allowances were not part of Aguanza’s basic salary.

RESIGNATION

G.R. No. 185269

ELSA S. MALIG-ON, Petitioner, - versus - EQUITABLE GENERAL SERVICES, INC., Respondent.

June 29, 2010

The Facts and the Case

Petitioner Elsa Malig-on (Malig-on) claimed that on March 4, 1996 respondent Equitable General Services, Inc. (the company) hired her as janitress in its janitorial services. The company paid her P250.00 per day for a nine-hour work. After six years or on February 15, 2002 Malig-on’s immediate supervisor told her that the company would be assigning her to another client. But it never did despite several follow-ups that she made. Eight months later or on October 15, 2002 the company told Malig-on that she had to file a resignation letter before it would reassign her. She complied but the company reneged on its undertaking, prompting Malig-on to file a complaint against it for illegal dismissal.

The company denied Malig-on’s allegations. It claimed that she just stopped reporting for work on February 16, 2002 without giving any reason. Consequently, the company wrote her two letters, first on August 23, 2002 and

again on September 2, 2002, asking her to explain her continued absence. On October 15, 2002 Malig-on showed up at the company’s office and submitted her resignation letter.

On January 26, 2004 the Labor Arbiter (LA) rendered a decision, finding Malig-on’s resignation valid and binding. On February 28, 2005 the National Labor Relations Commission (NLRC) reversed the LA’s decision and ruled that the company had constructively dismissed Malig-on. The NLRC ordered the company to reinstate Malig-on with full backwages. The respondent company went up to the Court of Appeals (CA) to challenge the NLRC decision. On July 16, 2008 the CA reversed the NLRC’s ruling and reinstated that of the LA.

The Issue Presented

The issue in this case is whether or not the CA erred in holding that petitioner Malig-on abandoned her work and eventually resigned from it rather than that respondent company constructively dismissed her.

The Rulings of the Court

The rule in termination cases is that the employer bears the burden of proving that he dismissed his employee for a just cause. And, when the employer claims that the employee resigned from work, the burden is on the employer to prove that he did so willingly. Whether that is the case would largely depend on the circumstances surrounding such alleged resignation. Those circumstances must be consistent with the employee’s intent to give up work.

Here, the company claims that Malig-on voluntarily resigned, gave a letter of resignation that she wrote with her own hand, used the vernacular language, and signed it. But these are not enough. They merely prove that she wrote that letter, a thing that she did not deny. She was quick to point out that she wrote it after being told that she needed to resign so she could be cleared for her next assignment.

According to the company, Malig-on simply dropped out of sight one day on February 16, 2002 for no reason at all. Eight months later or on October 15, 2002 she appeared at the company’s office and tendered her resignation. To the company’s surprise, three days later or on October 18, 2002 she went to the NLRC office and filed her complaint against the company for illegal dismissal. Clearly, however, these circumstances do not sound consistent with resignation freely made.

First, when Malig-on reportedly dropped out of sight and the company had no idea about the reason for it, the natural and right thing for it to do was investigate why she had suddenly vanished. Indeed, the company needed to write Malig-on immediately and ask her to explain in writing why she should not be considered to have abandoned her job so the company may be cleared of its responsibility as employer. This did not happen here.

Second, if Malig-on had abandoned her work and had no further interest in it, there was no reason for her to suddenly show up at her former place of work after eight months and file her resignation letter. Her action would make sense only if, as she claimed, she had been on floating status for over six months and the company promised to give her a new assignment if she would go through the process of resigning and reapplying.

And, third, that Malig-on went to the NLRC to file a complaint for unjust dismissal just three days after she filed her alleged resignation letter is inconsistent with genuine resignation. It would make sense only if, as Malig-on claims, the company tricked her into filing for resignation upon a promise to give her a new work assignment and failed to deliver such promise.

The company evidently placed Malig-on on floating status after being relieved as janitress in a client’s workplace. But, as the Court has repeatedly ruled, such act of “off-detailing” Malig-on was not the equivalent of dismissal so long as her floating status did not continue beyond a reasonable time. But, when it ran up to more than six months, the company may be considered to have constructively dismissed her from work, that is, as of August 16, 2002. Thus, her purported resignation on October 15, 2002 could not have been legally possible.

The company of course claims that it gave Malig-on notices on August 23, 2002 and September 2, 2002, asking her to explain her failure to report for work and informing her that the company would treat such failure as lack of interest in it, respectively. But these notices cannot possibly take the place of the notices required by law. They came more than six months after the company placed her on floating status and, consequently, the company gave

her those notices after it had constructively dismissed her from work.

An illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. Still, the Court has held that the grant of separation pay, rather than reinstatement, may be proper especially when the latter is no longer practical or will be for the best interest of the parties.

After just three days from tendering her resignation, Malig-on hastened to the NLRC and accused her employer of illegal dismissal. Under the circumstances, her reinstatement to her former position would only result in a highly hostile work environment for the parties and might further worsen their relations which are already scarred by the present case.

Backwages represent compensation that should have been earned but were not collected because of the unjust dismissal. Malig-on can be said to be entitled to reinstatement from the time she was constructively dismissed in August 2002 until the NLRC ordered her immediate reinstatement in February 2005, a period of two years and six months. For this she is entitled to backwages. But since, as already stated, the circumstances already rule out actual reinstatement, she is entitled to separation pay at the rate of one month for every year of service from 1996, when she began her employment to 2005, when she is deemed to have been actually separated from work, a period of nine years, both amounts—the backwages and the separation pay—to bear interest of 6 percent per annum until fully paid.

MANOLO A. PEÑAFLOR, vs. OUTDOOR CLOTHING MANUFACTURING CORPORATION, NATHANIEL T. SYFU, President, MEDYLENE M. DEMOGENA, Finance Manager, and PAUL LEE, Chairman, G.R. No. 177114 April 13, 2010

FACTS:

Peñaflor was hired as probationary HRD Manager of Outdoor Clothing on September 2, 1999. On March 13, 2000, more than six months from the time he was hired, Peñaflor learned that Outdoor Clothing’s President, Nathaniel Syfu (Syfu), appointed Edwin Buenaobra (Buenaobra) as the concurrent HRD and Accounting Manager. After enduring what he claimed as discriminatory treatment at work, Peñaflor considered the appointment of Buenaobra to his position as the last straw, and thus filed his irrevocable resignation from Outdoor Clothing effective at the close of office hours on March 15, 2000. He thereafter filed an illegal dismissal complaint with the labor arbiter claiming that he had been constructively dismissed. The labor arbiter agreed with Peñaflor and issued a decision in his favor on August 15, 2001. The NLRC, on appeal, however receresed the decision of the labor arbiter, finding that there was no constructive dismissal on the respondent’s part. Thus, the Supreme Court in its January 2010 decision, ruled that petitioner was indeed constructively dismissed because the records of the case showed that petitioner indeed filed his resignation after the alleged appointment of Buenaobra and that the memoranda submitted by the respondent, showing that petitioner resigned on March 1 2000 was not actually received by petitioner and was only raised during the appeal with the NLRC. Thus, this petition filed as motion for reconsideration on the ruling of the Court.

In its motion for reconsideration, respondent raised that the resignation of petitioner was irrevocable and voluntary; and that nothing legally prevented them from submitting additional documents in the NLRC; that petitioner has the burden of proof that his resignation was involuntary

ISSUE: Whether or not petitioner was constructively dismissed

HELD: Yes. While the letter states that Peñaflor’s resignation was irrevocable, it does not necessarily signify that it was also voluntarily executed. Precisely because of the attendant hostile and discriminatory working environment, Peñaflor decided to permanently sever his ties with Outdoor Clothing. This falls squarely within the concept of constructive dismissal that jurisprudence defines, among others, as involuntarily resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to the employee. The gauge for constructive dismissal is whether a reasonable person in the employee’s position would feel compelled to give up his employment under the prevailing circumstances. With the appointment of Buenaobra to the position he then still occupied, Peñaflor felt that he was being eased out and this perception made him decide to leave the company.

The fact of filing a resignation letter alone does not shift the burden of proving that the employee’s dismissal was for a just and valid cause from the employer to the employee. Outdoor Clothing did not discharge this burden by belatedly presenting the three memoranda it relied on. If these memoranda were authentic, they would have shown that Peñaflor’s resignation preceded the appointment of Buenaobra.

With regard to the solidary liability of Outdoor Clothing’s corporate officers, malice or bad faith on the part of the Syfu, Demogena, and Lee was not sufficiently proven to justify a ruling holding them solidarily liable with Outdoor Clothing.

59.Baltazar L. Payno vs. Orizon TradingCorp./ Orata Trading and Flordeliza Legaspi, G.R. No. 175345, August 19, 2009

Facts:

Petitioner Baltazar L. Payno was employed as electrician by Orata Trading. petitioner was informed by the personnel manager that Orata Trading would cease its business operations and

that Orizon Trading Corporation was taking over.

Petitioner asked about the status of his employment, and further inquired if he would be receiving separation pay due to the closure of Orata Trading.

He was told that no separation pay was forthcoming, since Orizon Trading Corporation was merely absorbing Orata.

He was, however, informed that he would have to sign a new employment contract with Orizon Trading Corporation.

Perturbed with the new set-up, petitioner filed a complaint against Orizon Trading for payment of separation pay due to the closure of Orata Trading. Petitioner, nonetheless, continued to work with Orizon Trading Corporation.

petitioner was called to the office, and was told not to report for work anymore if he did not sign the employment contract. The general manager, respondent Flordeliza Legaspi, offered him the amount of P7,000.00 as separation pay. Petitioner refused since it was insufficient.

petitioner filed an Amended Complaint to include “illegal dismissal” as another cause of action

respondents alleged that petitioner already thought of resigning from his job when he learned that separation pay could not be expected as a result of the takeover of Orata Trading by Orizon Trading Corporation. This intention was eventually effected when petitioner refused to continue to work on June 3, 2000. Since he voluntarily resigned, he was not entitled to separation pay

Issue: whether or not petitioner was illegally dismissed.

Ruling: Yes

In termination cases, it is incumbent upon the employer to prove either the non-existence or the validity of dismissal. Inasmuch as respondents alleged petitioner’s resignation as the cause of his separation from work, respondents had the burden to prove the same. The case of the employer must stand or fall on its own merits and not on the weakness of the employee’s defense.

Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one who has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining whether, in fact, he intended to sever his employment.

In this case, we find no overt act on the part of petitioner that he was ready to sever his employment ties. The alleged resignation was actually premised by respondents only on the filing of the complaint for separation pay, but this alone is not sufficient proof that petitioner intended to resign from the company. What strongly negates the claim of resignation is the fact that petitioner filed the amended complaint for illegal dismissal immediately after he was not allowed to report for work on June 3, 2000. Resignation is inconsistent with the filing of the complaint for illegal dismissal.1[11] It would have been illogical for petitioner to resign and then file a complaint

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for illegal dismissal later on.2[12] If petitioner was determined to resign, as respondents posited, he would not have commenced the action for illegal dismissal. Undeniably, petitioner was unceremoniously dismissed in this case.

2