G.R. No. 191455. March 12, 2014.

*
DREAMLAND HOTEL RESORT and WESTLEY J.
PRENTICE, President, petitioners, vs. STEPHEN B.
JOHNSON, respondent.

Procedural Rules and Technicalities; The relaxation of

procedural rules, or saving a particular case from the operation of
techni-

_______________

* FIRST DIVISION.

30

calities when substantial justice requires it, as in the instant case,

should no longer be subject to cavil.·While it is desirable that the
Rules of Court be faithfully observed, courts should not be so strict
about procedural lapses that do not really impair the proper
administration of justice. If the rules are intended to ensure the
proper and orderly conduct of litigation, it is because of the higher
objective they seek which are the attainment of justice and the
protection of substantive rights of the parties. Thus, the relaxation
of procedural rules, or saving a particular case from the operation of
technicalities when substantial justice requires it, as in the instant
case, should no longer be subject to cavil.
Same; It is true that procedural rules may be waived or
dispensed with in the interest of substantial justice.·Time and
again, this Court has emphasized that procedural rules should be
treated with utmost respect and due regard, since they are designed
to facilitate the adjudication of cases to remedy the worsening
problem of delay in the resolution of rival claims and in the
administration of justice. „From time to time, however, we have
recognized exceptions to the Rules but only for the most compelling
reasons where stubborn obedience to the Rules would defeat rather
than serve the ends of justice.‰ „It is true that procedural rules may
be waived or dispensed with in the interest of substantial justice.‰
Labor Law; The consistent rule is that if doubt exists between
the evidence presented by the employer and that by the employee, the
scales of justice must be tilted in favor of the latter.·As it could not
be determined with absolute certainty whether or not Johnson
rendered the services he mentioned during the material time, doubt
must be construed in his favor for the reason that „the consistent
rule is that if doubt exists between the evidence presented by the
employer and that by the employee, the scales of justice must be
tilted in favor of the latter.‰ What is clear upon the records is that
Johnson had already taken his place in the hotel since July 2007.
Same; Termination of Employment; Illegal Dismissals;
Reinstatement; Backwages; Separation Pay; The normal
consequences of respondentsÊ illegal dismissal, then, are
reinstatement without loss of seniority rights, and payment of
backwages computed from the time compensation was withheld up
to the date of actual reinstatement. Where reinstatement is no longer
viable as an option, separation pay

31

equivalent to one (1) month salary for every year of service should be
awarded as an alternative.·The above preceding statement only
goes to show that while it was Johnson who tendered his
resignation, it was due to the petitionersÊ acts that he was
constrained to resign. The petitioners cannot expect Johnson to
tolerate working for them without any compensation. Since Johnson
was constructively dismissed, he was illegally dismissed. As to the
reliefs granted to an employee who is illegally dismissed, Golden
Ace Builders v. Talde, 620 SCRA 283 (2010), referring to Macasero
v. Southern Industrial Gases Philippines, 577 SCRA 500 (2009), is
instructive: Thus, an illegally dismissed employee is entitled
to two reliefs: backwages and reinstatement. The two reliefs
provided are separate and distinct. In instances where
reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay is granted.
In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no
longer viable, and backwages. The normal consequences of
respondentsÊ illegal dismissal, then, are reinstatement
without loss of seniority rights, and payment of backwages
computed from the time compensation was withheld up to
the date of actual reinstatement. Where reinstatement is no
longer viable as an option, separation pay equivalent to one
(1) month salary for every year of service should be awarded
as an alternative. The payment of separation pay is in
addition to payment of backwages.
Same; Same; Doctrine of Strained Relations; Under the doctrine
of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no
longer desirable or viable.·The case of Golden Ace further provides:
„The accepted doctrine is that separation pay may avail in
lieu of reinstatement if reinstatement is no longer practical
or in the best interest of the parties. Separation pay in lieu of
reinstatement may likewise be awarded if the employee decides not
to be reinstated.‰ x x x Under the doctrine of strained relations, the
payment of separation pay is considered an acceptable alternative
to reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from
what could be a highly oppressive work environment. On the other
hand, it releases the employer from the grossly unpalatable
obligation of maintaining in its employ a worker it could no

32

longer trust. In the present case, the NLRC found that due to the
strained relations between the parties, separation pay is to be
awarded to Johnson in lieu of his reinstatement.
Same; Same; Separation Pay; Separation pay is computed from
the commencement of employment up to the time of termination,
including the imputed service for which the employee is entitled to
backwages.·Accordingly, the award of backwages should be
computed from November 3, 2007 to August 1, 2010 · which is
three years from August 1, 2007. Furthermore, separation pay is
computed from the commencement of employment up to the time of
termination, including the imputed service for which the employee
is entitled to backwages. As one-month salary is awarded as
separation pay for every year of service, including imputed service,
Johnson should be paid separation pay equivalent to his three-
month salary for the three-year contract.

PETITION for review on certiorari of the resolutions of the

Court of Appeals.
The facts are stated in the opinion of the Court.
Rodolfo G. Palattao & Associates Law Office for
petitioners.
Princess B. Principe for private respondent.

REYES, J.:
Before the Court is a Petition for Review on Certiorari[1]
assailing the December 14, 2009[2] and February 11,
2010[3] Resolutions of the Court of Appeals (CA) in C.A.-
G.R. S.P. No. 111693 which dismissed outright the petition
for certiorari on technical grounds.

_______________
[1] Rollo, pp. 3-25.
[2] Penned by Associate Justice Marlene Gonzales-Sison, with
Associate Justices Andres B. Reyes, Jr. (now CA Presiding Justice) and
Vicente S. E. Veloso, concurring; id., at pp. 28-29.
[3] Id., at pp. 31-32.

33

Dreamland Hotel Resort (Dreamland) and its President,

Westley J. Prentice (Prentice) (petitioners) alleged the
following facts in the instant petition:

9. Dreamland is a corporation duly registered with the

Securities and Exchange Commission on January 15, 2003 to exist
for a period of fifty [50] years with registration number SEC A 1998-
6436. Prentice is its current President and Chief Executive Officer.
It is engaged in the hotel, restaurant and allied businesses.
Dreamland is presently undertaking operations of its business at
National Highway, Sto. Tomas, Matain, Subic, Zambales, 2209.
10. Respondent Stephen B. Johnson is an Australian citizen
who came to the Philippines as a businessman/investor without the
authority to be employed as the employee/officer of any business as
he was not able to secure his Alien Employment Permit [„AEP‰ for
brevity], which fact was duly supported by the Certification dated
March 14, 2008 of the Department of Labor and Employment
[„DOLE‰ for brevity] Regional Director, Regional Office No. III, San
Fernando City, Pampanga, x x x.
11. As a fellow Australian citizen, Johnson was able to convince
Prentice to accept his offer to invest in Dreamland and at the same
time provide his services as Operations Manager of Dreamland with
a promise that he will secure an AEP and Tax Identification
Number [„TIN‰ for brevity] prior to his assumption of work.
12. Sometime on June 21, 2007, Prentice and Johnson entered
into an Employment Agreement, which stipulates among others,
that the [sic] Johnson shall serve as Operations Manager of
Dreamland from August 1, 2007 and shall serve as such for a period
of three (3) years.
13. Before entering into the said agreement[,] Prentice required
the submission of the AEP and TIN from Johnson. Johnson
promised that the same shall be supplied within one (1) month from
the signing of the

34

contract because the application for the TIN and AEP were still
under process. Thus[,] it was agreed that the efficacy of the said
agreement shall begin after one (1) month or on August 1, 2007.
x x x.
14. On or about October 8, 2007, Prentice asked on several
occasions the production of the AEP and TIN from Johnson.
Johnson gave excuses and promised that he is already in possession
of the requirements. Believing the word of Johnson, Dreamland
commenced a dry run of its operations.
15. Johnson worked as a hotel and resort Operations Manager
only at that time. He worked for only about three (3) weeks until he
suddenly abandoned his work and subsequently resigned as
Operations Manager starting November 3, 2007. He never reported
back to work despite several attempts of Prentice to clarify his
issues. x x x.[4]

On the other hand, respondent Stephen B. Johnson

(Johnson) averred that:

4. There is also no truth to the allegation that it was [Johnson]

who „offered‰ and „convinced‰ petitioner Prentice to „invest‰ in and
provide his services to petitioner Dreamland Hotel Resort x x x. The
truth of the matter is that it was petitioners who actively advertised
for a resort manager for Dreamland Hotel. x x x
5. It was in response to these advertisements that private
respondent Johnson contacted petitioners to inquire on the terms
for employment offered. It was Prentice who offered employment
and convinced Johnson to give out a loan, purportedly so the resort
can be completed and operational by August 2007. Believing the
representations of petitioner Prentice, private respondent Johnson
accepted the employment as Resort Manager and loaned money to
petitioners [consisting of] his retirement pay in

_______________
[4] Id., at pp. 5-6.

35

the amount of One Hundred Thousand US Dollars (USD

100,000.00) to finish construction of the resort. x x x.
6. From the start of August 2007, as stipulated in the
Employment Agreement, respondent Johnson already reported for
work. It was then that he found out to his dismay that the resort
was far from finished. However, he was instructed to supervise
construction and speak with potential guests. He also undertook the
overall preparation of the guestrooms and staff for the opening of
the hotel, even performing menial tasks (i.e., inspected for cracked
tiles, ensured proper grout installation, proper lighting and air-
conditioning unit installation, measured windows for curtain width
and showers for shower curtain rods, unloaded and installed
mattresses, beddings, furniture and appliances and even ironed and
hung guest room curtains).
xxxx
8. As [Johnson] remained unpaid since August 2007 and he has
loaned all his money to petitioners, he asked for his salary after the
resort was opened in October 2007 but the same was not given to
him by petitioners. [Johnson] became very alarmed with the
situation as it appears that there was no intention to pay him his
salary, which he now depended on for his living as he has been left
penniless. He was also denied the benefits promised him as part of
his compensation such as service vehicles, meals and insurance.
9. [Johnson] was also not given the authority due to him as
resort manager. Prentice countermanded his orders to the staff at
every opportunity. Worse, he would even be berated and
embarrassed in front of the staff. Prentice would go into drunken
tiffs, even with customers and [Johnson] was powerless to prohibit
Prentice. It soon became clear to him that he was only used for the
money he loaned and there was no real intention to have him as
resort manager of Dreamland Hotel.
10. Thus, on November 3, 2007, after another embarrassment
was handed out by petitioner Prentice in front

36

of the staff, which highlighted his lack of real authority in the hotel
and the disdain for him by petitioners, respondent Johnson was
forced to submit his resignation, x x x. In deference to the
Employment Agreement signed, [Johnson] stated that he was
willing to continue work for the three month period stipulated
therein.
11. However, in an SMS or text message sent by Prentice to
[Johnson] on the same day at around 8:20 pm, he was informed that
„⁄ I consider [yo]ur resignation as immediate.‰ Despite demand,
petitioners refused to pay [Johnson] the salaries and benefits due
him.[5]

On January 31, 2008, Johnson filed a Complaint for

illegal dismissal and nonpayment of salaries, among
others, against the petitioners.
On May 23, 2008, the Labor Arbiter (LA) rendered a
Decision[6] dismissing JohnsonÊs complaint for lack of merit
with the finding that he voluntarily resigned from his
employment and was not illegally dismissed. We quote:

There [is] substantial evidence on record that [Johnson] indeed

resigned voluntarily from his position by his mere act of tendering
his resignation and immediately abandoned his work as Operations
Manager from the time that he filed said resignation letter on
November 3, 2007 and never returned to his work up to the filing of
this case. Evidence on record also show that [Johnson] only served
as Operations Manager for a period of three (3) weeks after which
he tendered his voluntary resignation and left his job. This fact was
not denied or questioned by him. His claim that there was breach of
employment contract committed by the respondents and that he
was not refunded his alleged investment with the respondent
Dreamland Hotel and Resort were not properly supported with
substantial evidence and besides

_______________
[5] Id., at pp. 210-212.
[6] Id., at pp. 98-106.

37

these issues are not within the ambit of jurisdiction of this

Commission.
There being competent, concrete and substantial evidence to
confirm the voluntary resignation of [Johnson] from his
employment, there was no illegal dismissal committed against him
and for him to be entitled to reinstatement to his former position
and backwages.
xxxx
WHEREFORE, premises considered, let this case be as it
is hereby ordered DISMISSED for lack of merit.
All the money claims of the complainant are likewise
ordered dismissed for lack of legal basis.
SO ORDERED.[7]

Dissatisfied, Johnson appealed to the National Labor

Relations Commission (NLRC). The NLRC rendered its
Decision[8] on April 30, 2009, the dispositive portion of
which reads:

WHEREFORE, the decision appeared from is hereby

REVERSED. Respondent Wes[t]ley Prentice and/or Dreamland
Resort & Hotel, Inc[.] are hereby ordered to pay [Johnson] the
following:
1. Backwages computed at [P]60,000.00 monthly
from November 3, 2007 up to the finality of this
decision;
2. Separation pay equivalent to one monthÊs
salary, or [P]60,000.00;
3. Unpaid salaries from August 1, 2007 to
November 1, 2007 amounting to a total of
 [P]172,800.00.
SO ORDERED.[9]

_______________
[7] Id., at pp. 104-106.
[8] Id., at pp. 144-154.
[9] Id., at p. 153.

38

The NLRC also noted the following:

Insofar as the charge of abandonment against [Johnson] is

concerned, it is significant that the contention that [Johnson]
received a total of [P]172,000.00 from the [petitioners] since July
2007 is not supported by the evidence x x x submitted by the
[petitioners]. Except for a promissory note x x x for [P]2,200.00, the
pieces of evidence in question do not bear [JohnsonÊs] signature, and
do not therefore constitute proof of actual receipt by him of the
amounts stated therein. Thus, based on the evidence and on the
admission by [Johnson] that he received the amount of [P]5,000.00
from the [petitioners], it appears that [Johnson] received a total of
only [P]7,200.00 from the [petitioners]. Since based on the
Employment Agreement, his employment commenced on August 1,
2007, it follows that as of November 3, 2007, when he tendered his
resignation, the [petitioners] had failed to pay him a total of
[P]172,800.00 representing his unpaid salaries for three months
([P]60,000.00 x 3 mos. = [P]180,000.00 – [P]7,200 = [P]172,800.00).
Even the most reasonable employee would consider quitting his job
after working for three months and receiving only an insignificant
fraction of his salaries. There was, therefore, not an abandonment
of employment nor a resignation in the real sense, but a
constructive dismissal, which is defined as an involuntary
resignation resorted to when continued employment is rendered
impossible, unreasonable or unlikely x x x. Consequently, [Johnson]
is entitled to reinstatement with full backwages. However, due to
the strained relation between the parties, which renders his
reinstatement inadvisable, separation pay may be awarded in lieu
of reinstatement.[10]

Consequently, the petitioners elevated the NLRC

decision to the CA by way of Petition for Certiorari with
Prayer for the Issuance of a Temporary Restraining Order
and/or Writ of Preliminary Injunction under Rule 47.

_______________
[10] Id., at pp. 151-152.
 39

In the assailed Resolution[11] dated December 14, 2009,

the CA dismissed the petition for lack of proof of authority
and affidavit of service of filing as required by Section 13 of
the 1997 Rules of Procedure. The subsequent motion for
reconsideration filed by the petitioners was likewise denied
by the CA in a Resolution[12] dated February 11, 2010.
Undaunted, the petitioners filed before this Court the
present Petition for Review on Certiorari, raising the
following issues, viz.:

A.
THE HONORABLE [CA] COMMITTED A REVERSIBLE ERROR
IN PROMULGATING ITS FIRST RESOLUTION (DECEMBER 14,
2009) WHICH OUTRIGHTLY DISMISSED PETITIONERSÊ
PETITION FOR CERTIORARI.
B.
THE HONORABLE [CA] COMMITTED A REVERSIBLE ERROR
IN PROMULGATING ITS SECOND RESOLUTION (FEBRUARY
11, 2010) WHICH DENIED FOR LACK OF MERIT PETITIONERSÊ
MOTION FOR RECONSIDERATION.
C.
THE HONORABLE [CA] COMMITTED A REVERSIBLE ERROR
IN NOT GIVING DUE CONSIDERATION TO THE MERITS OF
THE PETITIONERSÊ PETITION AND IN NOT GRANTING THEIR
PRAYER FOR TEMPORARY RESTRAINING ORDER[.][13]
The petition is partially granted.

_______________
[11] Id., at pp. 28-29.
[12] Id., at pp. 31-32.
[13] Id., at p. 10.

40

At its inception, the Court takes note of the Resolutions

dated December 14, 2009 and February 11, 2010 of the CA
dismissing the Petition for Certiorari due to the following
infirmities:

1. The affiant has no proof of authority to file the petition in behalf

of petitioner Dreamland.
2. The petition has no appended affidavit of service to show proof
of service of filing as required by Sec. 13 of the 1997 Rules of Civil
Procedure.[14]

To justify their stance that the CA should have

considered the merits of the case, instead of dismissing
merely on procedural grounds, the petitioners cited
numerous cases wherein the Court has decided to waive
the strict application of the Rules in the interest of
substantial justice.[15] While „[u]tter disregard of [the rules
of procedure] cannot justly be rationalized by harking on
the policy of liberal construction,‰[16] the Court recognizes
badges of inequity present in the case at bar, which would
be seemingly branded with approval should the Court turn
a blind eye and dismiss this petition on procedural grounds
alone.
„While it is desirable that the Rules of Court be
faithfully observed, courts should not be so strict about
procedural lapses that do not really impair the proper
administration of justice. If the rules are intended to
ensure the proper and orderly conduct of litigation, it is
because of the higher objec-

_______________
[14] Id., at p. 28.
[15] Barnes v. Hon. Quijano Padilla, 500 Phil. 303; 461 SCRA 533
(2005); R.P. Dinglasan Construction, Inc. v. Atienza, G.R. No. 156104,
June 29, 2004, 433 SCRA 263; Vda. de Dela Rosa v. Court of Appeals, 345
Phil. 678; 280 SCRA 444 (1997); A-One Feeds, Inc. v. Court of Appeals,
188 Phil. 577; 100 SCRA 590 (1980); Gregorio v. Court of Appeals, 164
Phil. 129; 73 SCRA 608 (1976).
[16] Lapid v. Judge Laurea, 439 Phil. 887, 897; 391 SCRA 277, 286
(2002).

41

tive they seek which are the attainment of justice and the
protection of substantive rights of the parties. Thus, the
relaxation of procedural rules, or saving a particular case
from the operation of technicalities when substantial
justice requires it, as in the instant case, should no longer
be subject to cavil.‰[17]
Time and again, this Court has emphasized that
procedural rules should be treated with utmost respect and
due regard, since they are designed to facilitate the
adjudication of cases to remedy the worsening problem of
delay in the resolution of rival claims and in the
administration of justice. „From time to time, however, we
have recognized exceptions to the Rules but only for the
most compelling reasons where stubborn obedience to the
Rules would defeat rather than serve the ends of
justice.‰[18] „It is true that procedural rules may be waived
or dispensed with in the interest of substantial justice.‰[19]
Brushing aside technicalities, in the utmost interest of
substantial justice and taking into consideration the
varying and conflicting factual deliberations by the LA and
the NLRC, the Court shall now delve into the merits of the
case.
The petitioners contend that the employment of Johnson
as operations manager commenced only on October 8, 2007
and not on August 1, 2007. However, the employment
contract

_______________
[17] Vette Industrial Sales Co., Inc. v. Cheng, 539 Phil. 37, 48; 509
SCRA 532, 543 (2006); Nazareno v. Court of Appeals, 428 Phil. 32, 42-43;
378 SCRA 28, 36-37 (2002).
[18] Osmeña v. Commission on Audit, G.R. No. 188818, May 31, 2011,
649 SCRA 654, 660.
[19] Calipay v. National Labor Relations Commission, G.R. No.
166411, August 3, 2010, 626 SCRA 409, 417, citing Tiger Construction
and Development Corporation v. Abay, G.R. No. 164141, February 26,
2010, 613 SCRA 721, 731 and Iligan Cement Corporation v. ILIASCOR
Employees and Workers Union-Southern Philippines Federation of Labor
(IEWU-SPFL), G.R. No. 158956, April 24, 2009, 586 SCRA 449, 461.

42

categorically stated that the „term of employment shall

commence on [August 1, 2007].‰ Furthermore, the factual
allegations of Johnson that he actually worked from
August 1, 2007 were neither sufficiently rebutted nor
denied by the petitioners. As Johnson has specifically set
forth in his reply before the LA:

Although the resort did not open until approximately 8th October
2007, [JohnsonÊs] employment began, as per Employment
Agreement, on 1st August 2007. During the interim period[,
Johnson] was frequently instructed by [Prentice] to supervise the
construction staff and speak with potential future guests who
visited the site out of curiosity. Other duties carried out by
[Johnson] prior to [the] opening included the overall preparation of
the guest rooms for eventual occupation ensuring cracked tiles were
replaced, ensuring grout was properly installed between tiles,
ensuring all lighting and air conditioning [were] functioning,
measuring windows for curtain width, measuring showers for
shower curtain rods and installing shower curtains. Other duties
included the unloading, carrying and installation of mattresses,
bedding[s], TVÊs, refrigerators and other furnishings and ironing
curtains x x x.[20]

Notably, it was only in their Motion for

Reconsideration[21] of the NLRC decision where the
petitioners belatedly disagreed that Johnson performed the
above-mentioned tasks and argued that had Johnson done
the tasks he enumerated, those were tasks foreign and
alien to his position as operations manager and [were done]
without their knowledge and consent.[22] Nevertheless,
Prentice did not deny that he ordered Johnson to speak
with potential guests of the hotel. In fact, the petitioners
admitted and submitted documents[23] which

_______________
[20] Rollo, pp. 68-69.
[21] Id., at pp. 156-165.
[22] Id., at p. 160.
[23] Id., at pp. 137-143.

43

showed that Johnson has already taken his residence in

the hotel as early as July 2007 · a part of JohnsonÊs
remuneration as the hotel operations manager. In
presenting such documents, the petitioners would want to
impress upon the Court that their act of accommodating
Johnson was merely due to his being a fellow Australian
national.
As it could not be determined with absolute certainty
whether or not Johnson rendered the services he
mentioned during the material time, doubt must be
construed in his favor for the reason that „the consistent
rule is that if doubt exists between the evidence presented
by the employer and that by the employee, the scales of
justice must be tilted in favor of the latter.‰[24] What is
clear upon the records is that Johnson had already taken
his place in the hotel since July 2007.
For the petitionersÊ failure to disprove that Johnson
started working on August 1, 2007, as stated on the
employment contract, payment of his salaries on said date,
even prior to the opening of the hotel is warranted.
 The petitioners also maintain that they have paid the
amount of P7,200.00 to Johnson for his three weeks of
service from October 8, 2007 until November 3, 2007, the
date of JohnsonÊs resignation,[25] which Johnson did not
controvert. Even so, the amount the petitioners paid to
Johnson as his three-week salary is significantly deficient
as JohnsonÊs monthly salary as stipulated in their contract
is P60,000.00.[26] Thus, the amount which Johnson should
have been paid is P45,000.00 and not P7,200.00. In light of
this deficiency, there is more reason to believe that the
petitioners withheld the salary of Johnson without a valid
reason. If they indeed believed that Johnson deserves to be
paid only for three-week

_______________
[24] SHS Perforated Materials, Inc. v. Diaz, G.R. No. 185814, October
13, 2010, 633 SCRA 258, 275.
[25] Rollo, p. 21.
[26] Id., at p. 36.

44

worth of service as operations manager, then they should

still have paid him the amount due for three weeks of work
rendered.
Another argument posited by the petitioners is that the
employment contract executed by the parties is
inefficacious because the employment contract is subject to
the presentation of Johnson of his Alien Employment
Permit (AEP) and Tax Identification Number (TIN).
Again, this statement is wanting of merit.
Johnson has adduced proof that as a permanent
resident, he is exempted from the requirement of securing
an AEP as expressed under Department Order No. 75-06,
Series of 2006 of the Department of Labor and Employment
(DOLE), which we quote:

Rule I · Coverage and Exemption

xxxx
2. Exemption.·The following categories of foreign nationals are
exempt from securing an employment permit:
xxxx
2.7 Resident foreign nationals
 Furthermore, Johnson submitted a Certification[27] from
DOLE Regional Office III, stating that he is exempted from
securing an AEP as a holder of Permanent Resident Visa.
Consequently, the condition imposed upon JohnsonÊs
employment, if there is any, is in truth without effect to its
validity.
Anent the requirement of securing a TIN to make the
contract of employment efficacious, records show that
Johnson secured his TIN only on December 2007[28] after
his resignation

_______________
[27] Issued by Regional Director Nathaniel V. Lacambra, dated March
31, 2008, id., at p. 76.
[28] Id., at p. 83.

45

as operations manager. Nevertheless, this does not negate

the fact that the contract of employment had already
become effective even prior to such date.
In addition to the foregoing, there is no stipulation in
the employment contract itself that the same shall only be
effective upon the submission of AEP and TIN. The
petitioners did not present any proof to support this
agreement prior to the execution of the employment
contract. In the case of Ortañez v. CA,[29] the Court held:

Spoken words could be notoriously unreliable unlike a written

contract which speaks of a uniform language. Thus, under the
general rule in Section 9 of Rule 130 of the Rules of Court, when the
terms of an agreement were reduced to writing, as in this case, it is
deemed to contain all the terms agreed upon and no evidence of
such terms can be admitted other than the contents thereof. x x x.
[30] (Citations omitted)

As regards the NLRC findings that Johnson was

constructively dismissed and did not abandon his work, the
Court is in consonance with this conclusion with the
following basis:

Even the most reasonable employee would consider quitting his job
after working for three months and receiving only an insignificant
fraction of his salaries. There was, therefore, not an abandonment
of employment nor a resignation in the real sense, but a
constructive dismissal, which is defined as an involuntary
resignation resorted to when continued employment is rendered
impossible, unreasonable or unlikely x x x.[31]

The petitioners aver that considering that Johnson

tendered his resignation and abandoned his work, it is his
bur-

_______________
[29] 334 Phil. 514; 266 SCRA 561 (1997).
[30] Id., at p. 518; p. 565.
[31] Rollo, p. 152.

46

den to prove that his resignation was not voluntary on his

part.[32]
With this, the Court brings to mind its earlier ruling in
the case of SHS Perforated Materials, Inc. v. Diaz[33] where
it held that:

„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.‰[34]

It is impossible, unreasonable or unlikely that any

employee, such as Johnson would continue working for an
employer who does not pay him his salaries. Applying the
CourtÊs pronouncement in Duldulao v. CA,[35] the Court
construes that the act of the petitioners in not paying
Johnson his salaries for three months has become
unbearable on the latterÊs part that he had no choice but to
cede his employment with them. The Court quotes the
pertinent sections of JohnsonÊs resignation letter which
reflects the real reason why he was resigning as operations
manager of the hotel:

I hereby tender my resignation to you, Mr[.] Wes Prentice,

Dreamland Resort, Subic, Zambales, Philippines.
Since joining Dreamland Resort & Hotel over three months ago I
have put my heart and soul into the business. I have donated many
hours of my personal time. I have frequently worked seven days a
week and twelve to
_______________
[32] Id., at p. 17.
[33] G.R. No. 185814, October 13, 2010, 633 SCRA 258.
[34] Id., at p. 276, citing Duldulao v. Court of Appeals, 546 Phil. 22, 30; 517
SCRA 191, 199 (2007).
[35] 546 Phil. 22; 517 SCRA 191 (2007).

47

thirteen hours a day. I am now literally penniless, due totally

to the fact that I have lent you and your resort/hotel well
over $200,000AU (approx 8 million pesos) and your
nonpayment of wages to me from 1st August 2007 as per
Employment Agreement. x x x.[36] (Emphasis and underscoring
ours)

The above preceding statement only goes to show that

while it was Johnson who tendered his resignation, it was
due to the petitionersÊ acts that he was constrained to
resign. The petitioners cannot expect Johnson to tolerate
working for them without any compensation.
Since Johnson was constructively dismissed, he was
illegally dismissed. As to the reliefs granted to an employee
who is illegally dismissed, Golden Ace Builders v. Talde[37]
referring to Maca​sero v. Southern Industrial Gases
Philippines[38] is instructive:

Thus, an illegally dismissed employee is entitled to two

reliefs: backwages and reinstatement. The two reliefs provided
are separate and distinct. In instances where reinstatement is no
longer feasible because of strained relations between the employee
and the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.
The normal consequences of respondentsÊ illegal
dismissal, then, are reinstatement without loss of seniority
rights, and payment of backwages computed from the time
compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as
an option, separation pay equivalent to one (1) month salary

_______________
[36] Rollo, p. 39.
[37] G.R. No. 187200, May 5, 2010, 620 SCRA 283.
[38] G.R. No. 178524, January 30, 2009, 577 SCRA 500.
 48

for every year of service should be awarded as an

alternative. The payment of separation pay is in addition to
payment of backwages.[39] (Emphasis and underscoring
supplied)

The case of Golden Ace further provides:

„The accepted doctrine is that

separation pay may avail in lieu of
reinstatement if reinstatement is no longer
practical or in the best interest of the
parties. Separation pay in lieu of reinstatement
may likewise be awarded if the employee decides
not to be reinstated.‰ x x x
Under the doctrine of strained relations, the payment of
separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from
what could be a highly oppressive work environment. On the other
hand, it releases the employer from the grossly unpalatable
obligation of maintaining in its employ a worker it could no longer
trust.[40]

In the present case, the NLRC found that due to the

strained relations between the parties, separation pay is to
be awarded to Johnson in lieu of his reinstatement.
The NLRC held that Johnson is entitled to backwages
from November 3, 2007 up to the finality of the decision;
separation pay equivalent to one month salary; and unpaid
salaries from August 1, 2007 to November 1, 2007
amounting to a total of P172,800.00.[41]

_______________
[39] Supra note 37, citing Macasero v. Southern Industrial Gases
Philippines, id., at p. 507.
[40] Id., at pp. 289-290, citing Velasco v. NLRC, 525 Phil. 749, 761; 492
SCRA 686, 698 (2006) and Coca-Cola Bottlers Phils., Inc. v. Daniel, 499
Phil. 491, 511; 460 SCRA 494, 512 (2005).
[41] Rollo, p. 153.

49

While the Court agrees with the NLRC that the award
of separation pay and unpaid salaries is warranted, the
Court does not lose sight of the fact that the employment
contract states that JohnsonÊs employment is for a term of
three years.
 Accordingly, the award of backwages should be computed
from November 3, 2007 to August 1, 2010 · which is three
years from August 1, 2007. Furthermore, separation pay is
computed from the commencement of employment up to
the time of termination, including the imputed service for
which the employee is entitled to backwages.[42] As one-
month salary is awarded as separation pay for every year
of service, including imputed service, Johnson should be
paid separation pay equivalent to his three-month salary
for the three-year contract.
WHEREFORE, the Resolutions dated December 14,
2009 and February 11, 2010 of the Court of Appeals in
C.A.-G.R. S.P. No. 111693 are hereby SET ASIDE. The
Decision of the NLRC dated April 30, 2009 in NLRC LAC
No. 07-002711-08 is REINSTATED and AFFIRMED with
MODIFICATIONS in the computation of backwages and
separation pay. Dreamland Hotel Resort and Westley
Prentice are ORDERED to PAY Stephen Johnson
backwages of P60,000.00 per month which should be
computed from November 3, 2007 to August 1, 2010 less
the P7,200.00 already paid to him. Likewise, separation
pay of P180,000.00, representing Stephen JohnsonÊs three-
year contract should be awarded.
SO ORDERED.

Sereno (CJ., Chairperson), Leonardo-De Castro,

Bersamin and Villarama, Jr., JJ., concur.

Resolutions set aside.

_______________
[42] Aliling v. Feliciano, G.R. No. 185829, April 25, 2012, 671 SCRA
186, 215; Sarona v. National Labor Relations Commission, G.R. No.
185280, January 18, 2012, 663 SCRA 394, 421.

50

Notes.―Separation pay may be awarded to an illegally

dismissed employee in lieu of reinstatement. (Session
Delights Ice Cream and Fast Foods vs. Court of Appeals,
612 SCRA 10 [2010])
When there is doubt between the evidence submitted by
the employer and that submitted by the employee, the
scales of justice must be tilted in favor of the employee.
(Misamis Oriental II Electric Service Cooperative
[MORESCO II] vs. Cagalawan, 680 SCRA 127 [2012])
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