G.R. No.

80609 August 23, 1988 do not in any way approve of complainants (private respondent) mal
feasance, for which she is to suffer the penalty of dismissal, it is for
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner, reasons of equity and compassion that we resolve to uphold the
vs. award of financial assistance in her favor. 5
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN
ABUCAY, respondents. The position of the petitioner is simply stated: It is conceded that an employee illegally
dismissed is entitled to reinstatement and backwages as required by the labor laws.
Nicanor G. Nuevas for petitioner. However, an employee dismissed for cause is entitled to neither reinstatement nor
backwages and is not allowed any relief at all because his dismissal is in accordance
with law. In the case of the private respondent, she has been awarded financial
assistance equivalent to ten months pay corresponding to her 10 year service in the
company despite her removal for cause. She is, therefore, in effect rewarded rather
CRUZ, J.: than punished for her dishonesty, and without any legal authorization or justification.
The award is made on the ground of equity and compassion, which cannot be a
The only issue presented in the case at bar is the legality of the award of financial substitute for law. Moreover, such award puts a premium on dishonesty and
assistance to an employee who had been dismissed for cause as found by the public encourages instead of deterring corruption.
respondent.
For its part, the public respondent claims that the employee is sufficiently punished with
Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, her dismissal. The grant of financial assistance is not intended as a reward for her
was accused by two complainants of having demanded and received from them the offense but merely to help her for the loss of her employment after working faithfully
total amount of P3,800.00 in consideration of her promise to facilitate approval of their with the company for ten years. In support of this position, the Solicitor General cites
applications for telephone installation. 1 Investigated and heard, she was found guilty the cases of Firestone Tire and Rubber Company of the Philippines v. Lariosa 6 and
as charged and accordingly separated from the service.2 She went to the Ministry of Soco v. Mercantile Corporation of Davao, 7 where the employees were dismissed for
Labor and Employment claiming she had been illegally removed. After consideration of cause but were nevertheless allowed separation pay on grounds of social and
the evidence and arguments of the parties, the company was sustained and the compassionate justice. As the Court put it in the Firestone case:
complaint was dismissed for lack of merit. Nevertheless, the dispositive portion of labor
arbiter's decision declared: In view of the foregoing, We rule that Firestone had valid grounds to
dispense with the services of Lariosa and that the NLRC acted with
WHEREFORE, the instant complaint is dismissed for lack of merit. grave abuse of discretion in ordering his reinstatement. However,
considering that Lariosa had worked with the company for eleven
years with no known previous bad record, the ends of social and
Considering that Dr. Helen Bangayan and Mrs. Consolacion compassionate justice would be served if he is paid full separation
Martinez are not totally blameless in the light of the fact that the deal pay but not reinstatement without backwages by the NLRC.
happened outhide the premises of respondent company and that
their act of giving P3,800.00 without any receipt is tantamount to
corruption of public officers, complainant must be given one month In the said case, the employee was validly dismissed for theft but the NLRC
pay for every year of service as financial assistance. 3 nevertheless awarded him full separation pay for his 11 years of service with the
company. In Soco, the employee was also legally separated for unauthorized use of a
company vehicle and refusal to attend the grievance proceedings but he was just the
Both the petitioner and the private respondent appealed to the National Labor Relations same granted one-half month separation pay for every year of his 18-year service.
Board, which upheld the said decision in toto and dismissed the appeals. 4 The private
respondent took no further action, thereby impliedly accepting the validity of her
dismissal. The petitioner, however, is now before us to question the affirmance of the Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly
above- quoted award as having been made with grave abuse of discretion. dismissed for preferring certain dealers in violation of company policy but was allowed
separation pay for his 2 years of service. In Metro Drug Corporation v. NLRC, 9 the
employee was validly removed for loss of confidence because of her failure to account
In its challenged resolution of September 22, 1987, the NLRC said: for certain funds but she was awarded separation pay equivalent to one-half month's
salary for every year of her service of 15 years. In Engineering Equipment, Inc. v.
... Anent the award of separation pay as financial assistance in NLRC, 10 the dismissal of the employee was justified because he had instigated labor
complainant's favor, We find the same to be equitable, taking into unrest among the workers and had serious differences with them, among other
consideration her long years of service to the company whereby she grounds, but he was still granted three months separation pay corresponding to his 3-
had undoubtedly contributed to the success of respondent. While we year service. In New Frontier Mines, Inc. v. NLRC, 11 the employee's 3- year service
was held validly terminated for lack of confidence and abandonment of work but he was There should be no question that where it comes to such valid but not iniquitous causes
nonetheless granted three months separation pay. And in San Miguel Corporation v. as failure to comply with work standards, the grant of separation pay to the dismissed
Deputy Minister of Labor and Employment, et al ., 12 full separation pay for 6, 10, and employee may be both just and compassionate, particularly if he has worked for some
16 years service, respectively, was also allowed three employees who had been time with the company. For example, a subordinate who has irreconcilable policy or
dismissed after they were found guilty of misappropriating company funds. personal differences with his employer may be validly dismissed for demonstrated loss
of confidence, which is an allowable ground. A working mother who has to be frequently
The rule embodied in the Labor Code is that a person dismissed for cause as defined absent because she has also to take care of her child may also be removed because
therein is not entitled to separation pay. 13 The cases above cited constitute the of her poor attendance, this being another authorized ground. It is not the employee's
exception, based upon considerations of equity. Equity has been defined as justice fault if he does not have the necessary aptitude for his work but on the other hand the
outside law, 14 being ethical rather than jural and belonging to the sphere of morals than company cannot be required to maintain him just the same at the expense of the
of law. 15 It is grounded on the precepts of conscience and not on any sanction of efficiency of its operations. He too may be validly replaced. Under these and similar
positive law. 16 Hence, it cannot prevail against the expressed provision of the labor circumstances, however, the award to the employee of separation pay would be
laws allowing dismissal of employees for cause and without any provision for separation sustainable under the social justice policy even if the separation is for cause.
pay.
But where the cause of the separation is more serious than mere inefficiency, the
Strictly speaking, however, it is not correct to say that there is no express justification generosity of the law must be more discerning. There is no doubt it is compassionate
for the grant of separation pay to lawfully dismissed employees other than the abstract to give separation pay to a salesman if he is dismissed for his inability to fill his quota
consideration of equity. The reason is that our Constitution is replete with positive but surely he does not deserve such generosity if his offense is misappropriation of the
commands for the promotion of social justice, and particularly the protection of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A
rights of the workers. The enhancement of their welfare is one of the primary concerns security guard found sleeping on the job is doubtless subject to dismissal but may be
of the present charter. In fact, instead of confining itself to the general commitment to allowed separation pay since his conduct, while inept, is not depraved. But if he was in
the cause of labor in Article II on the Declaration of Principles of State Policies, the new fact not really sleeping but sleeping with a prostitute during his tour of duty and in the
Constitution contains a separate article devoted to the promotion of social justice and company premises, the situation is changed completely. This is not only inefficiency
human rights with a separate sub- topic for labor. Article XIII expressly recognizes the but immorality and the grant of separation pay would be entirely unjustified.
vital role of labor, hand in hand with management, in the advancement of the national
economy and the welfare of the people in general. The categorical mandates in the We hold that henceforth separation pay shall be allowed as a measure of social justice
Constitution for the improvement of the lot of the workers are more than sufficient basis only in those instances where the employee is validly dismissed for causes other than
to justify the award of separation pay in proper cases even if the dismissal be for cause. serious misconduct or those reflecting on his moral character. Where the reason for the
valid dismissal is, for example, habitual intoxication or an offense involving moral
The Court notes, however, that where the exception has been applied, the decisions turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not
have not been consistent as to the justification for the grant of separation pay and the be required to give the dismissed employee separation pay, or financial assistance, or
amount or rate of such award. Thus, the employees dismissed for theft in the Firestone whatever other name it is called, on the ground of social justice.
case and for animosities with fellow workers in the Engineering Equipment case were
both awarded separation pay notnvithstanding that the first cause was certainly more A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
serious than the second. No less curiously, the employee in the Soco case was allowed rather than punishing the erring employee for his offense. And we do not agree that the
only one-half month pay for every year of his 18 years of service, but in Filipro the award punishment is his dismissal only and that the separation pay has nothing to do with the
was two months separation pay for 2 years service. In Firestone, the emplovee was wrong he has committed. Of course it has. Indeed, if the employee who steals from the
allowed full separation pay corresponding to his 11 years of service, but in Metro, the company is granted separation pay even as he is validly dismissed, it is not unlikely
employee was granted only one-half month separation pay for every year of her 15year that he will commit a similar offense in his next employment because he thinks he can
service. It would seem then that length of service is not necessarily a criterion for the expect a like leniency if he is again found out. This kind of misplaced compassion is not
grant of separation pay and neither apparently is the reason for the dismissal. going to do labor in general any good as it will encourage the infiltration of its ranks by
those who do not deserve the protection and concern of the Constitution.
The Court feels that distinctions are in order. We note that heretofore the separation
pay, when it was considered warranted, was required regardless of the nature or The policy of social justice is not intended to countenance wrongdoing simply because
degree of the ground proved, be it mere inefficiency or something graver like immorality it is committed by the underprivileged. At best it may mitigate the penalty but it certainly
or dishonesty. The benediction of compassion was made to cover a multitude of sins, will not condone the offense. Compassion for the poor is an imperative of every humane
as it were, and to justify the helping hand to the validly dismissed employee whatever society but only when the recipient is not a rascal claiming an undeserved privilege.
the reason for his dismissal. This policy should be re-examined. It is time we Social justice cannot be permitted to be refuge of scoundrels any more than can equity
rationalized the exception, to make it fair to both labor and management, especially to be an impediment to the punishment of the guilty. Those who invoke social justice may
labor. do so only if their hands are clean and their motives blameless and not simply because
they happen to be poor. This great policy of our Constitution is not meant for the I am in accord with the opinion of Justice Sarmiento that we should not rationalize
protection of those who have proved they are not worthy of it, like the workers who have compassion and that of Justice Padilla that the awards of financial assistance should
tainted the cause of labor with the blemishes of their own character. be left to the discretion of the National Labor Relations Commission as may be
warranted by the "environmental facts" of the case.
Applying the above considerations, we hold that the grant of separation pay in the case
at bar is unjustified. The private respondent has been dismissed for dishonesty, as PADILIA, J., separate opinion
found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly
admitted. The fact that she has worked with the PLDT for more than a decade, if it is to I concur in the decision penned by Mr. Justice Cruz when it disallows separation pay,
be considered at all, should be taken against her as it reflects a regrettable lack of as financial assistance, to the private respondent, since the ground for termination of
loyalty that she should have strengthened instead of betraying during all of her 10 years employment is dishonesty in the performance of her duties.
of service with the company. If regarded as a justification for moderating the penalty of
dismissal, it will actually become a prize for disloyalty, perverting the meaning of social
justice and undermining the efforts of labor to cleanse its ranks of all undesirables. I do not, however, subscribe to the view that "the separation pay, if found due under
the circumstances of each case, should be computed at the rate of one month salary
for every year of service, assuming the length of such service is deemed material."
The Court also rules that the separation pay, if found due under the circumstances of (p.11, Decision). It is my considered view that, except for terminations based on
each case, should be computed at the rate of one month salary for every year of dishonesty and serious misconduct involving moral turpitude-where no separation pay
service, assuming the length of such service is deemed material. This is without should be allowed--in other cases, the grant of separation pay, i.e. the amount thereof,
prejudice to the application of special agreements between the employer and the as financial assistance to the terminated employee, should be left to the judgment of
employee stipulating a higher rate of computation and providing for more benefits to the administrative agency concemed which is the NLRC. It is in such cases- where the
the discharged employee. 17 termination of employment is for a valid cause without, however, involving dishonesty
or serious misconduct involving moral turpitude-that the Constitutional policy of
WHEREFORE, the petition is GRANTED. The challenged resolution of September affording protection to labor should be allowed full play; and this is achieved by leaving
22,1987, is AFFIRMED in toto except for the grant of separation pay in the form of to the NLRC the primary jurisdiction and judgment to determine the amount of
financial assistance, which is hereby DISALLOWED. The temporary restraining order separation pay that should be awarded to the terminated employee in accordance with
dated March 23, 1988, is LIFTED. It is so ordered. the "environmental facts" of each case.

Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin, It is further my view that the Court should not, as a rule, disturb or alter the amount of
Sarmiento, Cortes and Medialdea, JJ., concur. separation pay awarded by the NLRC in such cases of valid termination of employment
but with the financial assistance, in the absence of a demonstrated grave abuse of
Separate Opinions discretion on the part of the NLRC.

FERNAN, C.J., dissenting: GRIÑO AQUINO, J., dissent:

The majority opinion itself declares that the reason for granting separation pay to We should not rationalize compassion. I vote to affirm the grant of financial assistance.
lawfully dismissed employees is that "our Constitution is replete with positive
commands for the promotion of social justice, and particularly the protection of the
rights of the workers." 1
.
It is my firm belief that providing a rigid mathematical formula for determining the
amounts of such separation pay will not be in keeping with these constitutional
directives. By computing the allowable financial assistance on the formula suggested,
we shall be closing our eyes to the spirit underlying these constitutional mandates that
"those who have less in life should have more in law." It cannot be denied that a low
salaried employee who is separated from work would suffer more hardship than a well-
compensated one. Yet, if we follow the formula suggested, we would in effect be
favoring the latter instead of the former, as it would be the low- salaried employee who
would encounter difficulty finding another job.
G.R. Nos. 158786 & 158789 October 19, 2007 TOYOTA MOTOR PHILIPPINES CORPORATION, Petitioner,
vs.
TOYOTA MOTOR PHILS. CORP. WORKERS ASSOCIATION (TMPCWA), ED TOYOTA MOTOR PHILIPPINES CORP. WORKERS ASSOCIATION
CUBELO, EDWIN ALARANA, ALEX ALEJO, ERWIN ALFONSO, MELVIN (TMPCWA), Respondent.
APOSTOL, DANIEL AROLLADO, DOMINADOR ARRIOLA, LESTER ATUN,
ROLANDO BALUYOT, RODERICK BAYANI, ABEL BERCES, BENNY BERING, DECISION
MELCHOR BLANCO, JERRY BOLOCON, ELMER BULAN, NELSON CABAHUG,
JESSIE CABATAY, MARCELO CABEZAS, ROQUE CANDELARIO, JR., LORENZO VELASCO, JR., J.:
CARAQUEO, DENNIS CARINGAL, GIENELL CASABA, CHRISTOPHER
CATAPUSAN, RICO CATRAL, JULIUS COMETA, JAY ANTONIO CORAL,
REYNALDO CUEVAS, BENIGNO DAVID, JR., JOEY DE GUZMAN, LEONARDO DE The Case
LEON, ROGELIO DELOS SANTOS, JOSELITO DE OCAMPO, FRANK MANUEL
DIA, ANTONIO DIMAYUGA, ARMANDO ERCILLO, DELMAR ESPADILLA, DENNIS In the instant petition under Rule 45 subject of G.R. Nos. 158786 and 158789, Toyota
ESPELOA, JASON FAJILAGUTAN, JOHN FAJURA, MELENCIO FRANCO, Motor Philippines Corporation Workers Association (Union) and its dismissed officers
DEXTER FULGAR, EDUARDO GADO, ERWIN GALANG, ROBIN GARCES, ARIEL and members seek to set aside the February 27, 2003 Decision 1 of the Court of Appeals
GARCIA, RONALD GASPI, ANGELO GAVARRA, REYNALDO GOJAR, EDGAR (CA) in CA-G.R. SP Nos. 67100 and 67561, which affirmed the August 9, 2001
HILANGA, EUGENE JAY HONDRADA, ALEJANDRO IMPERIAL, FERDINAND Decision2 and September 14, 2001 Resolution3 of the National Labor Relations
JAEN, JOEY JAVILLONAR, BASILIO LAQUI, ALBERTO LOMBOY, JUDE Commission (NLRC), declaring illegal the strikes staged by the Union and upholding
JONOBELL LOZADA, JOHNNY LUCIDO, ROMMEL MACALINDONG, NIXON the dismissal of the 227 Union officers and members.
MADRAZO, ROGELIO MAGISTRADO, JR., PHILIP JOHN MAGNAYE, ALLAN
JOHN MALABANAN, ROLANDO MALALUAN, JR., PAULINO MALEON, MANUEL On the other hand, in the related cases docketed as G.R. Nos. 158798-99, Toyota
MANALO, JR., JONAMAR MANAOG, JOVITO MANECLANG, BAYANI MANGUIL, Motor Philippines Corporation (Toyota) prays for the recall of the award of severance
JR., CARLITO MARASIGAN, ROMMEL MARIANO, BOBIT MENDOZA, ERICSON compensation to the 227 dismissed employees, which was granted under the June 20,
MONTERO, MARLAW MONTERO, EDWIN NICANOR, RODERICK NIERVES, 2003 CA Resolution4 in CA-G.R. SP Nos. 67100 and 67561.
LOLITO NUNEZ, FELIMON ORTIZ, EDWIN PECAYO, ERWIN PENA, JOWALD
PENAMANTE, JORGE POLUTAN, EDDIE RAMOS, ROLANDO REYES, PHILIP
ROXAS, DAVID SALLAN, JR., BERNARDO SALVADOR, BALDWIN SAN PABLO, In view of the fact that the parties are petitioner/s and respondent/s and vice-versa in
JEFFREY SANGALANG, BERNABE SAQUILABON, ALEX SIERRA, ROMUALDO the four (4) interrelated cases, they will be referred to as simply the Union and Toyota
SIMBORIO, EDWIN TABLIZO, PETRONIO TACLAN, JR., RODEL TOLENTINO, hereafter.
ROMMEL TOLENTINO, GRANT ROBERT TORAL, FEDERICO TORRES, JR.,
EMANNUEL TULIO, NESTOR UMITEN, JR., APOLLO VIOLETA, SR., DOMINADOR The Facts
ZAMORA, JR., ROMMEL ARCETA, ANTONIO BORSIGUE, EMILIO COMPLETO,
RANDY CONSIGNADO, BASILIO DELA CRUZ, ALEXANDER ESTEVA, NIKKO
The Union is a legitimate labor organization duly registered with the Department of
FRANCO, RODEL GAMIT, ROBERTO GONZALES, PHILIP JALEA, JOEY
Labor and Employment (DOLE) and is the sole and exclusive bargaining agent of all
LLANERA, GERONIMO LOPEZ, RUEL MANEGO, EDWIN MANZANILLA,
Toyota rank and file employees.5
KENNETH NATIVIDAD, LARRY ORMILLA, CORNELIO PLATON, PAUL ARTHUR
SALES, ALEJANDRO SAMPANG, LAURO SULIT, ROLANDO TOMAS, JOSE
ROMMEL TRAZONA, MICHAEL TEDDY YANGYON, MAXIMINO CRUZ, VIRGILIO Toyota, on the other hand, is a domestic corporation engaged in the assembly and sale
COLANDOG, ROMMEL DIGMA, JOSELITO HUGO, and RICKY of vehicles and parts.6 It is a Board of Investments (BOI) participant in the Car
CHAVEZ, Petitioners, Development Program and the Commercial Vehicle Development Program. It is
vs. likewise a BOI-preferred non-pioneer export trader of automotive parts and is under the
NATIONAL LABOR RELATIONS COMMISSION, (NLRC-2ND DIVISION), HON. "Special Economic Zone Act of 1995." It is one of the largest motor vehicle
COMMISSIONERS: VICTORINO CALAYCAY, ANGELITA GACUTAN, and RAUL manufacturers in the country employing around 1,400 workers for its plants in Bicutan
AQUINO, TOYOTA MOTOR PHILIPPINES CORPORATION, TAKESHI FUKUDA, and Sta. Rosa, Laguna. It is claimed that its assets amount to PhP 5.525 billion, with
and DAVID GO, Respondents, net sales of PhP 14.646 billion and provisions for income tax of PhP 120.9 million.

x - - - - - - - - - - - - - - - - - - - - - - -x On February 14, 1999, the Union filed a petition for certification election among the
Toyota rank and file employees with the National Conciliation and Mediation Board
(NCMB), which was docketed as Case No. NCR-OD-M-9902-001. Med-Arbiter Ma.
G.R. Nos. 158798-99
Zosima C. Lameyra denied the petition, but, on appeal, the DOLE Secretary granted
the Union’s prayer, and, through the June 25, 1999 Order, directed the immediate Meanwhile, a February 27, 2001 Manifesto was circulated by the Union which urged its
holding of the certification election.7 members to participate in a strike/picket and to abandon their posts, the pertinent
portion of which reads, as follows:
After Toyota’s plea for reconsideration was denied, the certification election was
conducted. Med-Arbiter Lameyra’s May 12, 2000 Order certified the Union as the sole YANIG sa kanyang komportableng upuan ang management ng TOYOTA. And dating
and exclusive bargaining agent of all the Toyota rank and file employees. Toyota takot, kimi, at mahiyaing manggagawa ay walang takot na nagmartsa at nagprotesta
challenged said Order via an appeal to the DOLE Secretary. 8 laban sa desperadong pagtatangkang baguhin ang desisyon ng DOLE na pabor sa
UNYON. Sa tatlong araw na protesta, mahigit sa tatlong daang manggagawa ang
In the meantime, the Union submitted its Collective Bargaining Agreement (CBA) lumahok.
proposals to Toyota, but the latter refused to negotiate in view of its pending appeal.
Consequently, the Union filed a notice of strike on January 16, 2001 with the NCMB, xxxx
docketed as NCMB-NCR-NS-01-011-01, based on Toyota’s refusal to bargain. On
February 5, 2001, the NCMB-NCR converted the notice of strike into a preventive HANDA na tayong lumabas anumang oras kung patuloy na ipagkakait ng
mediation case on the ground that the issue of whether or not the Union is the exclusive management ang CBA. Oo maari tayong masaktan sa welga. Oo, maari tayong
bargaining agent of all Toyota rank and file employees was still unresolved by the DOLE magutom sa piketlayn. Subalit may pagkakaiba ba ito sa unti-unting pagpatay sa atin
Secretary. sa loob ng 12 taong makabaling likod ng pagtatrabaho? Ilang taon na lang ay
magkakabutas na ang ating mga baga sa mga alipato at usok ng welding. Ilang taon
In connection with Toyota’s appeal, Toyota and the Union were required to attend a na lang ay marupok na ang ating mga buto sa kabubuhat. Kung dumating na ang
hearing on February 21, 2001 before the Bureau of Labor Relations (BLR) in relation panahong ito at wala pa tayong CBA, paano na? Hahayaan ba nating ang kumpanya
to the exclusion of the votes of alleged supervisory employees from the votes cast lang ang makinabang sa yamang likha ng higit sa isang dekadang pagpapagal natin?
during the certification election. The February 21, 2001 hearing was cancelled and reset
to February 22, 2001. On February 21, 2001, 135 Union officers and members failed to HUWAG BIBITIW SA NASIMULANG TAGUMPAY!
render the required overtime work, and instead marched to and staged a picket in front
of the BLR office in Intramuros, Manila.9 The Union, in a letter of the same date, also
requested that its members be allowed to be absent on February 22, 2001 to attend PAIGTINGIN ANG PAKIKIBAKA PARA SA ISANG MAKATARUNGANG CBA!
the hearing and instead work on their next scheduled rest day. This request however
was denied by Toyota. HIGIT PANG PATATAGIN ANG PAGKAKAISA NG MGA MANGGAGAWA SA
TOYOTA!12 (Emphasis supplied.)
Despite denial of the Union’s request, more than 200 employees staged mass actions
on February 22 and 23, 2001 in front of the BLR and the DOLE offices, to protest the On the next day, the Union filed with the NCMB another notice of strike docketed as
partisan and anti-union stance of Toyota. Due to the deliberate absence of a NCMB-NCR-NS-02-061-01 for union busting amounting to unfair labor practice.
considerable number of employees on February 22 to 23, 2001, Toyota experienced
acute lack of manpower in its manufacturing and production lines, and was unable to On March 1, 2001, the Union nonetheless submitted an explanation in compliance with
meet its production goals resulting in huge losses of PhP 53,849,991. the February 27, 2001 notices sent by Toyota to the erring employees. The Union
members explained that their refusal to work on their scheduled work time for two
Soon thereafter, on February 27, 2001, Toyota sent individual letters to some 360 consecutive days was simply an exercise of their constitutional right to peaceably
employees requiring them to explain within 24 hours why they should not be dismissed assemble and to petition the government for redress of grievances. It further argued
for their obstinate defiance of the company’s directive to render overtime work on that the demonstrations staged by the employees on February 22 and 23, 2001 could
February 21, 2001, for their failure to report for work on February 22 and 23, 2001, and not be classified as an illegal strike or picket, and that Toyota had already condoned
for their participation in the concerted actions which severely disrupted and paralyzed the alleged acts when it accepted back the subject employees. 13
the plant’s operations.10 These letters specifically cited Section D, paragraph 6 of the
Company’s Code of Conduct, to wit: Consequently, on March 2 and 5, 2001, Toyota issued two (2) memoranda to the
concerned employees to clarify whether or not they are adopting the March 1, 2001
Inciting or participating in riots, disorders, alleged strikes, or concerted actions Union’s explanation as their own. The employees were also required to attend an
detrimental to [Toyota’s] interest. investigative interview,14 but they refused to do so.

1st offense – dismissal.11 On March 16, 2001, Toyota terminated the employment of 227 employees 15 for
participation in concerted actions in violation of its Code of Conduct and for misconduct
under Article 282 of the Labor Code. The notice of termination reads:
After a careful evaluation of the evidence on hand, and a thorough assessment of your Bicutan and Sta. Rosa plants. The strikers prevented workers who reported
explanation, TMP has concluded that there are overwhelming reasons to terminate for work from entering the plants. In his Affidavit, Mr. Eduardo Nicolas III,
your services based on Article 282 of the Labor Code and TMP’s Code of Conduct. Security Department Head, stated that:

Your repeated absences without permission on February 22 to 23, 2001 to participate 3. On March 17, 2001, members of the Toyota Motor Philippines Corporation
in a concerted action against TMP constitute abandonment of work and/or very serious Workers Association (TMPCWA), in response to the dismissal of some two
misconduct under Article 282 of the Labor Code. hundred twenty seven (227) leaders and members of TMPCWA and without
observing the requirements mandated by the Labor Code, refused to report
The degree of your offense is aggravated by the following circumstances: for work and picketed TMPC premises from 8:00 a.m. to 5:00 p.m. The strikers
badmouthed people coming in and hurled invectives such as "bakeru" at
Japanese officers of the company. The strikers likewise pounded the officers’
1. You expressed to management that you will adopt the union’s letter dated vehicle as they tried to enter the premises of the company.
March 1, 2001, as your own explanation to the charges contained in the Due
Process Form dated February 27, 2001. It is evident from such explanation
that you did not come to work because you deliberately participated together 4. On March 28, 2001, the strikers intensified their picketing and barricaded
with other Team Members in a plan to engage in concerted actions detrimental the gates of TMPC’s Bicutan and Sta. Rosa plants, thus, blocking the free
to TMP’s interest. As a result of your participation in the widespread ingress/egress to and from the premises. Shuttle buses and cars containing
abandonment of work by Team Members from February 22 to 23, 2001, TMP TMPC employees, suppliers, dealers, customers and other people having
suffered substantial damage. business with the company, were prevented by the strikers from entering the
plants.
It is significant that the absences you incurred in order to attend the
clarificatory hearing conducted by the Bureau of Labor Relations were 5. As a standard operating procedure, I instructed my men to take
unnecessary because the union was amply represented in the said hearings photographs and video footages of those who participated in the strike. Seen
by its counsel and certain members who sought and were granted leave for on video footages taken on various dates actively participating in the strike
the purpose. Your reason for being absent is, therefore, not acceptable; and were union officers Emilio C. Completo, Alexander Esteva, Joey Javellonar
and Lorenzo Caraqueo.
2. Your participation in the organized work boycott by Team Members on
February 22 and 23 led to work disruptions that prevented the Company from 6. Based on the pictures, among those identified to have participated in the
meeting its production targets, resulting [in] foregone sales of more than eighty March 28, 2001 strike were Grant Robert Toral, John Posadas, Alex Sierra,
(80) vehicles, mostly new-model Revos, valued at more than Fifty Million Allan John Malabanan, Abel Bersos, Ernesto Bonavente, Ariel Garcia, Pablito
Pesos (50,000,000.00). Adaya, Feliciano Mercado, Charlie Oliveria, Philip Roxas, June Lamberte,
Manjolito Puno, Baldwin San Pablo, Joseph Naguit, Federico Torres, Larry
Gerola, Roderick Bayani, Allan Oclarino, Reynaldo Cuevas, Jorge Polutan,
The foregoing is also a violation of TMP’s Code of Conduct (Section D, Arman Ercillo, Jimmy Hembra, Albert Mariquit, Ramil Gecale, Jimmy Palisoc,
Paragraph 6) to wit: Normandy Castalone, Joey Llanera, Greg Castro, Felicisimo Escrimadora,
Rodolfo Bay, Ramon Clemente, Dante Baclino, Allan Palomares, Arturo
"Inciting or participating in riots, disorders, illegal strikes or concerted actions Murillo and Robert Gonzales. Attached hereto as Annexes "1" to "18" are the
detrimental to TMP’s interest." pictures taken on March 28, 2001 at the Bicutan and Sta. Rosa plants.

Based on the above, TMP Management is left with no other recourse but to 7. From March 29 to 31, 2001, the strikers continued to barricade the
terminate your employment effective upon your receipt thereof. entrances to TMPC’s two (2) plants. Once again, the strikers hurled nasty
remarks and prevented employees aboard shuttle buses from entering the
[Sgd.] plants. Among the strikers were Christopher Saldivar, Basilio Laqui, Sabas
JOSE MARIA ALIGADA Bernabise, Federico Torres, Freddie Olit, Josel Agosto, Arthur Parilla, Richard
Calalang, Ariel Garcia, Edgar Hilaga, Charlie Oliveria, Ferdinand Jaen,
Wilfredo Tagle, Alejandro Imperial, Manjolito Puno, Delmar Espadilla,
Deputy Division Manager16 Domingo Javier, Apollo Violeta and Elvis Tabinao.17

In reaction to the dismissal of its union members and officers, the Union went On March 29, 2001, Toyota filed a petition for injunction with a prayer for the issuance
on strike on March 17, 2001. Subsequently, from March 28, 2001 to April 12, of a temporary restraining order (TRO) with the NLRC, which was docketed as NLRC
2001, the Union intensified its strike by barricading the gates of Toyota’s NCR Case No. INJ-0001054-01. It sought free ingress to and egress from its Bicutan
and Sta. Rosa manufacturing plants. Acting on said petition, the NLRC, on April 5, certiorari with the CA assailing the validity of the DOLE Secretary’s Assumption of
2001, issued a TRO against the Union, ordering its leaders and members as well as its Jurisdiction Order.
sympathizers to remove their barricades and all forms of obstruction to ensure free
ingress to and egress from the company’s premises. In addition, the NLRC rejected the Thereafter, on June 19, 2001, the NLRC issued an Order, reiterating its previous order
Union’s motion to dismiss based on lack of jurisdiction. 18 for both parties to submit their respective position papers on or before June 2, 2001.
The same Order also denied the Union’s verbal motion to defer hearing on the certified
Meanwhile, Toyota filed a petition to declare the strike illegal with the NLRC arbitration cases.
branch, which was docketed as NLRC NCR (South) Case No. 30-04-01775-01, and
prayed that the erring Union officers, directors, and members be dismissed.19 On June 27, 2001, the Union filed a Motion for Reconsideration of the NLRC’s June 19,
2001 Order, praying for the deferment of the submission of position papers until its
On April 10, 2001, the DOLE Secretary assumed jurisdiction over the labor dispute and petition for certiorari is resolved by the CA.
issued an Order20 certifying the labor dispute to the NLRC. In said Order, the DOLE
Secretary directed all striking workers to return to work at their regular shifts by April On June 29, 2001, only Toyota submitted its position paper. On July 11, 2001, the
16, 2001. On the other hand, it ordered Toyota to accept the returning employees under NLRC again ordered the Union to submit its position paper by July 19, 2001, with a
the same terms and conditions obtaining prior to the strike or at its option, put them warning that upon failure for it to do so, the case shall be considered submitted for
under payroll reinstatement. The parties were also enjoined from committing acts that decision.
may worsen the situation.1âwphi1
Meanwhile, on July 17, 2001, the CA dismissed the Union’s petition for certiorari in CA-
The Union ended the strike on April 12, 2001. The union members and officers tried to G.R. SP No. 64998, assailing the DOLE Secretary’s April 10, 2001 Order.
return to work on April 16, 2001 but were told that Toyota opted for payroll-
reinstatement authorized by the Order of the DOLE Secretary.
Notwithstanding repeated orders to file its position paper, the Union still failed to submit
its position paper on July 19, 2001. Consequently, the NLRC issued an Order directing
In the meantime, the Union filed a motion for reconsideration of the DOLE Secretary’s the Union to submit its position paper on the scheduled August 3, 2001 hearing;
April 10, 2001 certification Order, which, however, was denied by the DOLE Secretary otherwise, the case shall be deemed submitted for resolution based on the evidence
in her May 25, 2001 Resolution. Consequently, a petition for certiorari was filed before on record.
the CA, which was docketed as CA-G.R. SP No. 64998.
During the August 3, 2001 hearing, the Union, despite several accommodations, still
In the intervening time, the NLRC, in compliance with the April 10, 2001 Order of the failed to submit its position paper. Later that day, the Union claimed it filed its position
DOLE Secretary, docketed the case as Certified Case No. 000203-01. paper by registered mail.

Meanwhile, on May 23, 2001, at around 12:00 nn., despite the issuance of the DOLE Subsequently, the NLRC, in its August 9, 2001 Decision, declared the strikes staged
Secretary’s certification Order, several payroll-reinstated members of the Union staged by the Union on February 21 to 23, 2001 and May 23 and 28, 2001 as illegal. The
a protest rally in front of Toyota’s Bicutan Plant bearing placards and streamers in decretal portion reads:
defiance of the April 10, 2001 Order.
WHEREFORE, premises considered, it is hereby ordered:
Then, on May 28, 2001, around forty-four (44) Union members staged another protest
action in front of the Bicutan Plant. At the same time, some twenty-nine (29) payroll-
reinstated employees picketed in front of the Santa Rosa Plant’s main entrance, and (1) Declaring the strikes staged by the Union to be illegal.
were later joined by other Union members.
(2) Declared [sic] that the dismissal of the 227 who participated in the illegal
On June 5, 2001, notwithstanding the certification Order, the Union filed another notice strike on February 21-23, 2001 is legal.
of strike, which was docketed as NCMB-NCR-NS-06-150-01. On June 18, 2001, the
DOLE Secretary directed the second notice of strike to be subsumed in the April 10, (3) However, the Company is ordered to pay the 227 Union members, who
2001 certification Order. participated in the illegal strike severance compensation in an amount
equivalent to one month salary for every year of service, as an alternative
In the meantime, the NLRC, in Certified Case No. 000203-01, ordered both parties to relief to continued employment.
submit their respective position papers on June 8, 2001. The union, however, requested
for abeyance of the proceedings considering that there is a pending petition for
 (4) Declared [sic] that the following Union officers and directors to have However, in its June 20, 2003 Resolution,28 the CA modified its February 27, 2003
forfeited their employment status for having led the illegal strikes on February Decision by reinstating severance compensation to the dismissed employees based on
21-23, 2001 and May 23 and 28, 2001: Ed Cubelo, Maximino Cruz, Jr., Ricky social justice.
Chavez, Joselito Hugo, Virgilio Colandog, Rommel Digma, Federico Torres,
Emilio Completo, Alexander Esteva, Joey Javellonar, Lorenzo Caraqueo, The Issues
Roderick Nieres, Antonio Borsigue, Bayani Manguil, Jr., and Mayo Mata. 21
Petitioner Union now comes to this Court and raises the following issues for our
SO ORDERED.22 consideration:

The NLRC considered the mass actions staged on February 21 to 23, 2001 illegal as I. Whether the mere participation of ordinary employees in an illegal strike is
the Union failed to comply with the procedural requirements of a valid strike under Art. enough reason to warrant their dismissal.
263 of the Labor Code.
II. Whether the Union officers and members’ act of holding the protest rallies
After the DOLE Secretary assumed jurisdiction over the Toyota dispute on April 10, in front of the BLR office and the Office of the Secretary of Labor and
2001, the Union again staged strikes on May 23 and 28, 2001. The NLRC found the Employment on February 22 and 23, 2001 should be held as illegal strikes. In
strikes illegal as they violated Art. 264 of the Labor Code which proscribes any strike relation hereto, whether the protests committed on May 23 and 28, 2001,
or lockout after jurisdiction is assumed over the dispute by the President or the DOLE should be held as illegal strikes. Lastly, whether the Union violated the
Secretary. Assumption of Jurisdiction Order issued by the Secretary of Labor and
Employment.
The NLRC held that both parties must have maintained the status quo after the DOLE
Secretary issued the assumption/certification Order, and ruled that the Union did not III. Whether the dismissal of 227 Union officers and members constitutes
respect the DOLE Secretary’s directive. unfair labor practice.

Accordingly, both Toyota and the Union filed Motions for Reconsideration, which the IV. Whether the CA erred in affirming the Decision of the NLRC which
NLRC denied in its September 14, 2001 Resolution.23 Consequently, both parties excluded the Union’s Position Paper which the Union filed by mail. In the same
questioned the August 9, 2001 Decision24 and September 14, 2001 Resolution of the vein, whether the Union’s right to due process was violated when the NLRC
NLRC in separate petitions for certiorari filed with the CA, which were docketed as CA- excluded their Position Paper.
G.R. SP Nos. 67100 and 67561, respectively. The CA then consolidated the petitions.
V. Whether the CA erred in dismissing the Union’s Petition for Certiorari.
In its February 27, 2003 Decision,25 the CA ruled that the Union’s petition is defective
in form for its failure to append a proper verification and certificate of non-forum
shopping, given that, out of the 227 petitioners, only 159 signed the verification and Toyota, on the other hand, presents this sole issue for our determination:
certificate of non-forum shopping. Despite the flaw, the CA proceeded to resolve the
petitions on the merits and affirmed the assailed NLRC Decision and Resolution with a I. Whether the Court of Appeals erred in issuing its Resolution dated June 20, 2003,
modification, however, of deleting the award of severance compensation to the partially modifying its Decision dated February 27, 2003, and awarding severance
dismissed Union members. compensation to the dismissed Union members.

In justifying the recall of the severance compensation, the CA In sum, two main issues are brought to the fore:

considered the participation in illegal strikes as serious misconduct. It defined serious (1) Whether the mass actions committed by the Union on different occasions
misconduct as a transgression of some established and definite rule of action, a are illegal strikes; and
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and
not mere error in judgment. It cited Panay Electric Company, Inc. v. NLRC,26 where we (2) Whether separation pay should be awarded to the Union members who
revoked the grant of separation benefits to employees who lawfully participated in an participated in the illegal strikes.
illegal strike based on Art. 264 of the Labor Code, which states that "any union officer
who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared The Court’s Ruling
to have lost his employment status."27
The Union contends that the NLRC violated its right to due process when it disregarded considered as verification of the petition by the other 68 named petitioners unless the
its position paper in deciding Toyota’s petition to declare the strike illegal. latter gave written authorization to the 159 petitioners to sign the verification on their
behalf. Thus, in Loquias v. Office of the Ombudsman, we ruled that the petition satisfies
We rule otherwise. the formal requirements only with regard to the petitioner who signed the petition but
not his co-petitioner who did not sign nor authorize the other petitioner to sign it on his
behalf.32 The proper ruling in this situation is to consider the petition as compliant with
It is entirely the Union’s fault that its position paper was not considered by the NLRC. the formal requirements with respect to the parties who signed it and, therefore, can be
Records readily reveal that the NLRC was even too generous in affording due process given due course only with regard to them. The other petitioners who did not sign the
to the Union. It issued no less than three (3) orders for the parties to submit its position verification and certificate against forum shopping cannot be recognized as petitioners
papers, which the Union ignored until the last minute. No sufficient justification was have no legal standing before the Court. The petition should be dismissed outright with
offered why the Union belatedly filed its position paper. In Datu Eduardo Ampo v. The respect to the non-conforming petitioners.
Hon. Court of Appeals, it was explained that a party cannot complain of deprivation of
due process if he was afforded an opportunity to participate in the proceedings but
failed to do so. If he does not avail himself of the chance to be heard, then it is deemed In the case at bench, however, the CA, in the exercise of sound discretion, did not
waived or forfeited without violating the constitutional guarantee.29 Thus, there was no strictly apply the ruling in Loquias and instead proceeded to decide the case on the
violation of the Union’s right to due process on the part of the NLRC. merits.

On a procedural aspect, the Union faults the CA for treating its petition as an unsigned The alleged protest rallies in front of the offices of BLR and DOLE Secretary and
pleading and posits that the verification signed by 159 out of the 227 petitioners has at the Toyota plants constituted illegal strikes
already substantially complied with and satisfied the requirements under Secs. 4 and 5
of Rule 7 of the Rules of Court. When is a strike illegal?

The Union’s proposition is partly correct. Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike,
viz:
Sec. 4 of Rule 7 of the Rules of Court states:
(1) [when it] is contrary to a specific prohibition of law, such as strike by
Sec. 4. Verification.—Except when otherwise specifically required by law or rule, employees performing governmental functions; or
pleadings need not be under oath, verified or accompanied by affidavit.
(2) [when it] violates a specific requirement of law[, such as Article 263 of the
A pleading is verified by an affidavit that the affiant has read the pleading and that the Labor Code on the requisites of a valid strike]; or
allegations therein are true and correct of his personal knowledge or based on authentic
records. (3) [when it] is declared for an unlawful purpose, such as inducing the
employer to commit an unfair labor practice against non-union employees; or
A pleading required to be verified which contains a verification based on "information
and belief" or upon "knowledge, information and belief," or lacks a proper verification, (4) [when it] employs unlawful means in the pursuit of its objective, such as a
shall be treated as an unsigned pleading. widespread terrorism of non-strikers [for example, prohibited acts under Art.
264(e) of the Labor Code]; or
The verification requirement is significant, as it is intended to secure an assurance that
the allegations in the pleading are true and correct and not the product of the (5) [when it] is declared in violation of an existing injunction[, such as
imagination or a matter of speculation.30 This requirement is simply a condition affecting injunction, prohibition, or order issued by the DOLE Secretary and the NLRC
the form of pleadings, and noncompliance with the requirement does not necessarily under Art. 263 of the Labor Code]; or
render it fatally defective. Indeed, verification is only a formal and not a jurisdictional
requirement.31 (6) [when it] is contrary to an existing agreement, such as a no-strike clause
or conclusive arbitration clause.33
In this case, the problem is not the absence but the adequacy of the Union’s verification,
since only 159 out of the 227 petitioners executed the verification. Undeniably, the Petitioner Union contends that the protests or rallies conducted on February 21 and 23,
petition meets the requirement on the verification with respect to the 159 petitioners 2001 are not within the ambit of strikes as defined in the Labor Code, since they were
who executed the verification, attesting that they have sufficient knowledge of the truth legitimate exercises of their right to peaceably assemble and petition the government
and correctness of the allegations of the petition. However, their signatures cannot be for redress of grievances. Mainly relying on the doctrine laid down in the case
of Philippine Blooming Mills Employees Organization v. Philippine Blooming Mills Co., Toyota to finally acknowledge the Union as the sole bargaining agent of the company.
Inc.,34 it argues that the protest was not directed at Toyota but towards the Government This is not a legal and valid exercise of the right of assembly and to demand redress of
(DOLE and BLR). It explains that the protest is not a strike as contemplated in the Labor grievance.
Code. The Union points out that in Philippine Blooming Mills Employees Organization,
the mass action staged in Malacañang to petition the Chief Executive against the We sustain the CA’s affirmance of the NLRC’s finding that the protest rallies staged on
abusive behavior of some police officers was a proper exercise of the employees’ right February 21 to 23, 2001 were actually illegal strikes. The illegality of the Union’s mass
to speak out and to peaceably gather and ask government for redress of their actions was succinctly elaborated by the labor tribunal, thus:
grievances.
We have stated in our questioned decision that such mass actions staged before the
The Union’s position fails to convince us. Bureau of Labor Relations on February 21-23, 2001 by the union officers and members
fall squarely within the definition of a strike (Article 212 (o), Labor Code). These
While the facts in Philippine Blooming Mills Employees Organization are similar in concerted actions resulted in the temporary stoppage of work causing the latter
some respects to that of the present case, the Union fails to realize one major substantial losses. Thus, without the requirements for a valid strike having been
difference: there was no labor dispute in Philippine Blooming Mills Employees complied with, we were constrained to consider the strike staged on such dates as
Organization. In the present case, there was an on-going labor dispute arising from illegal and all employees who participated in the concerted actions to have
Toyota’s refusal to recognize and negotiate with the Union, which was the subject of consequently lost their employment status.
the notice of strike filed by the Union on January 16, 2001. Thus, the Union’s reliance
on Phililippine Blooming Mills Employees Organization is misplaced, as it cannot be If we are going to stamp a color of legality on the two (2) [day-] walk out/strike of
considered a precedent to the case at bar. respondents without filing a notice of strike, in effect we are giving license to all the
unions in the country to paralyze the operations of their companies/employers every
A strike means any temporary stoppage of work by the concerted action of employees time they wish to hold a demonstration in front of any government agency. While we
as a result of an industrial or labor dispute. A labor dispute, in turn, includes any recognize the right of every person or a group to peaceably assemble and petition the
controversy or matter concerning terms or conditions of employment or the association government for redress of grievances, the exercise of such right is governed by existing
or representation of persons in negotiating, fixing, maintaining, changing, or arranging laws, rules and regulations.
the terms and conditions of employment, regardless of whether the disputants stand in
the proximate relation of the employer and the employee. 35 Although the respondent union admittedly made earnest representations with the
company to hold a mass protest before the BLR, together with their officers and
In Bangalisan v. Court of Appeals, it was explained that "[t]he fact that the conventional members, the denial of the request by the management should have been heeded and
term ‘strike’ was not used by the striking employees to describe their common course ended their insistence to hold the planned mass demonstration. Verily, the violation of
of action is inconsequential, since the substance of the situation and not its appearance, the company rule cannot be dismissed as mere absences of two days as being
will be deemed controlling."36 The term "strike" has been elucidated to encompass not suggested by the union [are but] concerted actions detrimental to Petitioner Toyota’s
only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts interest.38 (Emphasis supplied.)
to damage, destroy, or sabotage plant equipment and facilities, and similar activities.37
It is obvious that the February 21 to 23, 2001 concerted actions were undertaken
Applying pertinent legal provisions and jurisprudence, we rule that the protest actions without satisfying the prerequisites for a valid strike under Art. 263 of the Labor Code.
undertaken by the Union officials and members on February 21 to 23, 2001 are not The Union failed to comply with the following requirements: (1) a notice of strike filed
valid and proper exercises of their right to assemble and ask government for redress of with the DOLE 30 days before the intended date of strike, or 15 days in case of unfair
their complaints, but are illegal strikes in breach of the Labor Code. The Union’s position labor practice;39 (2) strike vote approved by a majority of the total union membership in
is weakened by the lack of permit from the City of Manila to hold "rallies." Shrouded as the bargaining unit concerned obtained by secret ballot in a meeting called for that
demonstrations, they were in reality temporary stoppages of work perpetrated through purpose; and (3) notice given to the DOLE of the results of the voting at least seven
the concerted action of the employees who deliberately failed to report for work on the days before the intended strike. These requirements are mandatory and the failure of
convenient excuse that they will hold a rally at the BLR and DOLE offices in Intramuros, a union to comply with them renders the strike illegal. 40 The evident intention of the law
Manila, on February 21 to 23, 2001. The purported reason for these protest actions was in requiring the strike notice and the strike-vote report is to reasonably regulate the right
to safeguard their rights against any abuse which the med-arbiter may commit against to strike, which is essential to the attainment of legitimate policy objectives embodied
their cause. However, the Union failed to advance convincing proof that the med-arbiter in the law.41 As they failed to conform to the law, the strikes on February 21, 22, and
was biased against them. The acts of the med-arbiter in the performance of his duties 23, 2001 were illegal.
are presumed regular. Sans ample evidence to the contrary, the Union was unable to
justify the February 2001 mass actions. What comes to the fore is that the decision not Moreover, the aforementioned February 2001 strikes are in blatant violation of Sec. D,
to work for two days was designed and calculated to cripple the manufacturing arm of par. 6 of Toyota’s Code of Conduct which prohibits "inciting or participating in riots,
Toyota. It becomes obvious that the real and ultimate goal of the Union is to coerce disorders, alleged strikes or concerted actions detrimental to [Toyota’s] interest." The
penalty for the offense is dismissal. The Union and its members are bound by the Further, the parties are hereby ordered to cease and desist from committing any act
company rules, and the February 2001 mass actions and deliberate refusal to render that might lead to the worsening of an already deteriorated situation.42 (Emphasis
regular and overtime work on said days violated these rules. In sum, the February 2001 supplied.)
strikes and walk-outs were illegal as these were in violation of specific requirements of
the Labor Code and a company rule against illegal strikes or concerted actions. It is explicit from this directive that the Union and its members shall refrain from
engaging in any activity that might exacerbate the tense labor situation in Toyota, which
With respect to the strikes committed from March 17 to April 12, 2001, those were certainly includes concerted actions.
initially legal as the legal requirements were met. However, on March 28 to April 12,
2001, the Union barricaded the gates of the Bicutan and Sta. Rosa plants and blocked This was not heeded by the Union and the individual respondents who staged illegal
the free ingress to and egress from the company premises. Toyota employees, concerted actions on May 23 and 28, 2001 in contravention of the Order of the DOLE
customers, and other people having business with the company were intimidated and Secretary that no acts should be undertaken by them to aggravate the "already
were refused entry to the plants. As earlier explained, these strikes were illegal because deteriorated situation."
unlawful means were employed. The acts of the Union officers and members are in
palpable violation of Art. 264(e), which proscribes acts of violence, coercion, or
intimidation, or which obstruct the free ingress to and egress from the company While it may be conceded that there was no work disruption in the two Toyota plants,
premises. Undeniably, the strikes from March 28 to April 12, 2001 were illegal. the fact still remains that the Union and its members picketed and performed concerted
actions in front of the Company premises. This is a patent violation of the assumption
of jurisdiction and certification Order of the DOLE Secretary, which ordered the parties
Petitioner Union also posits that strikes were not committed on May 23 and 28, 2001. "to cease and desist from committing any act that might lead to the worsening of an
The Union asserts that the rallies held on May 23 and 28, 2001 could not be considered already deteriorated situation." While there are no work stoppages, the pickets and
strikes, as the participants were the dismissed employees who were on payroll concerted actions outside the plants have a demoralizing and even chilling effect on
reinstatement. It concludes that there was no work stoppage. the workers inside the plants and can be considered as veiled threats of possible
trouble to the workers when they go out of the company premises after work and of
This contention has no basis. impending disruption of operations to company officials and even to customers in the
days to come. The pictures presented by Toyota undoubtedly show that the company
It is clear that once the DOLE Secretary assumes jurisdiction over the labor dispute officials and employees are being intimidated and threatened by the strikers. In short,
and certifies the case for compulsory arbitration with the NLRC, the parties have to the Union, by its mass actions, has inflamed an already volatile situation, which was
revert to the status quo ante (the state of things as it was before). The intended explicitly proscribed by the DOLE Secretary’s Order. We do not find any compelling
normalcy of operations is apparent from the fallo of the April 10, 2001 Order of then reason to reverse the NLRC findings that the pickets on May 23 and 28, 2001 were
DOLE Secretary Patricia A. Sto. Tomas, which reads: unlawful strikes.

WHEREFORE, PREMISES CONSIDERED, this Office hereby CERTIFIES the labor From the foregoing discussion, we rule that the February 21 to 23, 2001 concerted
dispute at Toyota Motors Philippines Corporation to the [NLRC] pursuant to Article 263 actions, the March 17 to April 12, 2001 strikes, and the May 23 and 28, 2001 mass
(g) of the Labor Code, as amended. This Certification covers the current labor cases actions were illegal strikes.
filed in relation with the Toyota strike, particularly, the Petition for Injunction filed with
the National Labor Relations Commission entitled Toyota Motor Philippines Union officers are liable for unlawful strikes or illegal acts during a strike
Corporation vs. Toyota Motor Philippines Corporation Workers Association
(TMPCWA), Ed Cubelo, et al., NLRC Injunction Case No. 3401054-01; Toyota Motor Art. 264 (a) of the Labor Code provides:
Philippines Corporation vs. Toyota Motor Philippines Corporation Workers Association,
et al., NLRC NCR Case No. 3004-01775-01, and such other labor cases that the parties
may file relating to the strike and its effects while this Certification is in effect. ART. 264. PROHIBITED ACTIVITIES

As provided under Article 2634(g) of the Labor Code, all striking workers are directed (a) x x x
to return to work at their regular shifts by April 16, 2001; the Company is in turn directed
to accept them back to work under the same terms and conditions obtaining prior to the Any worker whose employment has been terminated as a consequence of an unlawful
work stoppage, subject to the option of the company to merely reinstate a worker or lockout shall be entitled to reinstatement with full backwages. Any union officer who
workers in the payroll in light of the negative emotions that the strike has generated and knowingly participates in an illegal strike and any worker or union officer who knowingly
the need to prevent the further deterioration of the relationship between the company participates in the commission of illegal acts during a strike may be declared to have
and its workers. lost his employment status: Provided, That mere participation of a worker in a lawful
strike shall not constitute sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful strike.
Art. 264(a) sanctions the dismissal of a union officer who knowingly participates in an the strike is legal or illegal, we find that the same is irrelevant. As long as the members
illegal strike or who knowingly participates in the commission of illegal acts during a commit illegal acts, in a legal or illegal strike, then they can be terminated. 48 However,
lawful strike. when union members merely participate in an illegal strike without committing any
illegal act, are they liable?
It is clear that the responsibility of union officials is greater than that of the members.
They are tasked with the duty to lead and guide the membership in decision making on This was squarely answered in Gold City Integrated Port Service, Inc. v. NLRC, 49 where
union activities in accordance with the law, government rules and regulations, and it was held that an ordinary striking worker cannot be terminated for mere participation
established labor practices. The leaders are expected to recommend actions that are in an illegal strike. This was an affirmation of the rulings in Bacus v. Ople 50 and
arrived at with circumspection and contemplation, and always keep paramount the best Progressive Workers Union v. Aguas,51 where it was held that though the strike is
interests of the members and union within the bounds of law. If the implementation of illegal, the ordinary member who merely participates in the strike should not be meted
an illegal strike is recommended, then they would mislead and deceive the membership loss of employment on the considerations of compassion and good faith and in view of
and the supreme penalty of dismissal is appropriate. On the other hand, if the strike is the security of tenure provisions under the Constitution. In Esso Philippines, Inc. v.
legal at the beginning and the officials commit illegal acts during the duration of the Malayang Manggagawa sa Esso (MME), it was explained that a member is not
strike, then they cannot evade personal and individual liability for said acts. responsible for the union’s illegal strike even if he voted for the holding of a strike which
became illegal.52
The Union officials were in clear breach of Art. 264(a) when they knowingly participated
in the illegal strikes held from February 21 to 23, 2001, from March 17 to April 12, 2001, Noted labor law expert, Professor Cesario A. Azucena, Jr., traced the history relating
and on May 23 and 28, 2001. We uphold the findings of fact of the NLRC on the to the liability of a union member in an illegal strike, starting with the "rule of vicarious
involvement of said union officials in the unlawful concerted actions as affirmed by the liability," thus:
CA, thus:
Under [the rule of vicarious liability], mere membership in a labor union serves as basis
As regards to the Union officers and directors, there is overwhelming justification to of liability for acts of individuals, or for a labor activity, done on behalf of the union. The
declare their termination from service. Having instigated the Union members to stage union member is made liable on the theory that all the members are engaged in a
and carry out all illegal strikes from February 21-23, 2001, and May 23 and 28, 2001, general conspiracy, and the unlawful acts of the particular members are viewed as
the following Union officers are hereby terminated for cause pursuant to Article 264(a) necessary incidents of the conspiracy. It has been said that in the absence of statute
of the Labor Code: Ed Cubelo, Maximino Cruz, Jr., Ricky Chavez, Joselito Hugo, providing otherwise, the rule of vicarious liability applies.
Virgilio Colandog, Rommel Digma, Federico Torres, Emilio Completo, Alexander
Esteva, Joey Javellonar, Lorenzo Caraqueo, Roderick Nieres, Antonio Borsigue, Even the Industrial Peace Act, however, which was in effect from 1953 to 1974, did not
Bayani Manguil, Jr., and Mayo Mata.43 adopt the vicarious liability concept. It expressly provided that:

The rule is well entrenched in this jurisdiction that factual findings of the labor tribunal, No officer or member of any association or organization, and no association or
when affirmed by the appellate court, are generally accorded great respect, even organization participating or interested in a labor dispute shall be held responsible or
finality.44 liable for the unlawful acts of individual officers, members, or agents, except upon proof
of actual participation in, or actual authorization of, such acts or of ratifying of such acts
Likewise, we are not duty-bound to delve into the accuracy of the factual findings of the after actual knowledge thereof.
NLRC in the absence of clear showing that these were arbitrary and bereft of any
rational basis.45 In the case at bench, the Union failed to convince us that the NLRC Replacing the Industrial Peace Act, the Labor Code has not adopted the vicarious
findings that the Union officials instigated, led, and knowingly participated in the series liability rule.53
of illegal strikes are not reinforced by substantial evidence. Verily, said findings have to
be maintained and upheld. We reiterate, as a reminder to labor leaders, the rule that
"[u]nion officers are duty bound to guide their members to respect the law." 46 Contrarily, Thus, the rule on vicarious liability of a union member was abandoned and it is only
if the "officers urge the members to violate the law and defy the duly constituted when a striking worker "knowingly participates in the commission of illegal acts during
authorities, their dismissal from the service is a just penalty or sanction for their unlawful a strike" that he will be penalized with dismissal.
acts."47
Now, what are considered "illegal acts" under Art. 264(a)?
Member’s liability depends on participation in illegal acts
No precise meaning was given to the phrase "illegal acts." It may encompass a number
Art. 264(a) of the Labor Code provides that a member is liable when he knowingly of acts that violate existing labor or criminal laws, such as the following:
participates in an illegal act "during a strike." While the provision is silent on whether
 (1) Violation of Art. 264(e) of the Labor Code which provides that "[n]o person available under the circumstances, which may justify the imposition of the
engaged in picketing shall commit any act of violence, coercion or intimidation penalty of dismissal, may suffice.
or obstruct the free ingress to or egress from the employer’s premises for
lawful purposes, or obstruct public thoroughfares"; In the landmark case of Ang Tibay vs. CIR, the court ruled "Not only must there be
some evidence to support a finding or conclusion, but the evidence must be
(2) Commission of crimes and other unlawful acts in carrying out the ‘substantial.’ Substantial evidence is more than a mere scintilla. It means such
strike;54 and relevant evidence that a reasonable mind might accept as sufficient to support a
conclusion."55 (Emphasis supplied.)
(3) Violation of any order, prohibition, or injunction issued by the DOLE
Secretary or NLRC in connection with the assumption of Thus, it is necessary for the company to adduce proof on the participation of the striking
jurisdiction/certification Order under Art. 263(g) of the Labor Code. employee in the commission of illegal acts during the strikes.

As earlier explained, this enumeration is not exclusive and it may cover other breaches After a scrutiny of the records, we find that the 227 employees indeed joined the
of existing laws. February 21, 22, and 23, 2001 rallies and refused to render overtime work or report for
work. These rallies, as we earlier ruled, are in reality illegal strikes, as the procedural
In the cases at bench, the individual respondents participated in several mass actions, requirements for strikes under Art. 263 were not complied with. Worse, said strikes
viz: were in violation of the company rule prohibiting acts "in citing or participating in riots,
disorders, alleged strikes or concerted action detrimental to Toyota’s interest."
(1) The rallies held at the DOLE and BLR offices on February 21, 22, and 23,
2001; With respect to the February 21, 22, and 23, 2001 concerted actions, Toyota submitted
the list of employees who did not render overtime work on February 21, 2001 and who
did not report for work on February 22 and 23, 2001 as shown by Annex "I" of Toyota’s
(2) The strikes held on March 17 to April 12, 2001; and Position Paper in NLRC Certified Case No. 000203-01 entitled In Re: Labor Dispute at
Toyota Motor Philippines Corp. The employees who participated in the illegal concerted
(3) The rallies and picketing on May 23 and 28, 2001 in front of the Toyota actions were as follows:
Bicutan and Sta. Rosa plants.
1. Aclan, Eugenio; 2. Agosto, Joel; 3. Agot, Rodelio; 4. Alarana, Edwin; 5. Alejo, Alex;
Did they commit illegal acts during the illegal strikes on February 21 to 23, 2001, from 6. Alfonso, Erwin; 7. Apolinario, Dennis; 8. Apostol, Melvin; 9. Arceta, Romel; 10.
March 17 to April 12, 2001, and on May 23 and 28, 2001? Arellano, Ruel; 11. Ariate, Abraham; 12. Arollado, Daniel; 13. Arriola, Dominador; 14.
Atun, Lester; 15. Bala, Rizalino; 16. Baluyut, Rolando; 17. Banzuela, Tirso Jr.; 18.
The answer is in the affirmative. Bayani, Roderick; 19. Benabise, Sabas Jr.; 20. Berces, Abel; 21. Bering, Benny; 22.
Birondo, Alberto; 23. Blanco, Melchor; 24. Bolanos, Dexter; 25. Bolocon, Jerry; 26.
Borebor, Rurel; 27. Borromeo, Jubert; 28. Borsigue, Antonio; 29. Bulan, Elmer; 30.
As we have ruled that the strikes by the Union on the three different occasions were Busano, Freddie; 31. Bustillo, Ernesto Jr.; 32. Caalim, Alexander; 33. Cabahug,
illegal, we now proceed to determine the individual liabilities of the affected union Nelson; 34. Cabatay, Jessie; 35. Cabezas, Marcelo; 36. Calalang, Richard; 37.
members for acts committed during these forbidden concerted actions. Candelario, Roque Jr.; 38. Capate, Leo Nelson; 39. Carandang, Resty; 40. Caraqueo,
Lorenzo; 41. Caringal, Dennis; 42. Casaba, Gienell; 43. Catapusan, Christopher; 44.
Our ruling in Association of Independent Unions in the Philippines v. NLRC lays down Catral, Rico; 45. Cecilio, Felipe; 46. Cinense, Joey; 47. Cometa, Julius; 48. Completo,
the rule on the liability of the union members: Emilio; 49. Consignado, Randy; 50. Coral, Jay Antonio; 51. Correa, Claudio Jr.; 52.
Cuevas, Reynaldo; 53. Dacalcap, Albert; 54. Dakay, Ryan; 55. Dalanon, Herbert; 56.
Dalisay, Rene; 57. David, Benigno Jr.; 58. De Guzman, Joey; 59. Dela Cruz, Basilio;
Decisive on the matter is the pertinent provisions of Article 264 (a) of the Labor Code
60. Dela Cruz, Ferdinand; 61. Dela Torre, Heremo; 62. De Leon, Leonardo; 63. Delos
that: "[x x x] any worker [x x x] who knowingly participates in the commission of illegal
Santos, Rogelio; 64. De Ocampo, Joselito; 65. De Silva, Leodegario; 66. Del Mundo,
acts during a strike may be declared to have lost his employment status. [x x x]" It can
Alex; 67. Del Rio, Rey; 68. Dela Ysla, Alex; 69. Dia, Frank Manuel; 70. Dimayuga,
be gleaned unerringly from the aforecited provision of law in point, however, that an
Antonio; 71. Dingcong, Jessiah; 72. Dumalag, Jasper; 73. Duyag, Aldrin; 74. Ercillo,
ordinary striking employee can not be terminated for mere participation in an illegal
Armando; 75. Espadilla, Delmar; 76. Espejo, Lionel; 77. Espeloa, Dennis; 78. Esteva,
strike. There must be proof that he committed illegal acts during the strike and
Alexander; 79. Estole, Francisco; 80. Fajardo, George; 81. Fajilagutan, Jason; 82.
the striker who participated in the commission of illegal act[s] must be identified.
Fajura, John; 83. Franco, Melencio; 84. Franco, Nikko; 85. Fulgar, Dexter; 86. Fulo,
But proof beyond reasonable doubt is not required. Substantial evidence
Dante; 87. Gado, Eduardo; 88. Galang, Erwin; 89. Gamit, Rodel; 90. Garces, Robin;
91. Garcia, Ariel; 92. Gaspi, Ronald; 93. Gavarra, Angelo; 94. Gerola, Genaro Jr.; 95.
Gerola, Larry; 96. Gohilde, Michael; 97. Gojar, Regino; 98. Gojar, Reynaldo; 99. Anent the March 28 to April 12, 2001 strikes, evidence is ample to show commission of
Gonzales, Roberto; 100. Gutierrez, Bernabe; 101. Hilaga, Edgar; 102. Hilanga, illegal acts like acts of coercion or intimidation and obstructing free ingress to or egress
Melchor; 103. Hondrada, Eugene Jay; 104. Imperial, Alejandro; 105. Jaen, Ferdinand; from the company premises. Mr. Eduardo Nicolas III, Toyota’s Security Chief, attested
106. Jalea, Philip; 107. Javillonar, Joey; 108. Julve, Frederick; 109. Lalisan, Victorio; in his affidavit that the strikers "badmouthed people coming in and shouted invectives
110. Landicho, Danny; 111. Laqui, Basilio; 112. Lavide, Edgar; 113. Lazaro, Orlando; such as bakeru at Japanese officers of the company." The strikers even pounded the
114. Legaspi, Noel; 115. Lising, Reynaldo Jr.; 116. Llanera, Joey; 117. Lomboy, vehicles of Toyota officials. More importantly, they prevented the ingress of Toyota
Alberto; 118. Lopez, Geronimo; 119. Lozada, Jude Jonobell; 120. Lucido, Johny; 121. employees, customers, suppliers, and other persons who wanted to transact business
Macalindong, Rommel; 122. Madrazo, Nixon; 123. Magbalita, Valentin; 124. with the company. These were patent violations of Art. 264(e) of the Labor Code, and
Magistrado, Rogelio Jr.; 125. Magnaye, Philip John; 126. Malabanan, Allan John; 127. may even constitute crimes under the Revised Penal Code such as threats or coercion
Malabrigo, Angelito; 128. Malaluan, Rolando Jr.; 129. Malate, Leoncio Jr.; 130. Maleon, among others.
Paulino; 131. Manaig, Roger; 132. Manalang, Joseph Patrick; 133. Manalo, Manuel Jr.;
134. Manaog, Jonamar; 135. Manaog, Melchor; 136. Mandolado, Melvin; 137. On March 28, 2001, the following have committed illegal acts––blocking the ingress to
Maneclang, Jovito; 138. Manego, Ruel; 139. Manguil, Bayani Jr.; 140. Manigbas, June; or egress from the two (2) Toyota plants and preventing the ingress of Toyota
141. Manjares, Alfred; 142. Manzanilla, Edwin; 143. Marasigan, Carlito; 144. Marcial, employees on board the company shuttle–– at the Bicutan and Sta. Rosa Plants, viz:
Nilo; 145. Mariano, Rommel; 146. Mata, Mayo; 147. Mendoza, Bobit; 148. Mendoza,
Roberto; 149. Milan, Joseph; 150. Miranda, Eduardo; 151. Miranda, Luis; 152. Montero,
Ericson; 153. Montero, Marlaw; 154. Montes, Ruel; 155. Morales, Dennis; 156. 1. Grant Robert Toral; 2. John Posadas; 3. Alex Sierra; 4. Allan John Malabanan; 5.
Natividad, Kenneth; 157. Nava, Ronaldo; 158. Nevalga, Alexander; 159. Nicanor, Abel Berces; 6. Ariel Garcia; 7. Charlie Oliveria; 8. Manjolito Puno; 9. Baldwin San
Edwin; 160. Nierves, Roderick; 161. Nunez, Alex; 162. Nunez, Lolito; 163. Obe, Victor; Pablo; 10. Federico Torres; 11. Larry Gerola; 12. Roderick Bayani; 13. Allan Oclarino;
164. Oclarino, Alfonso; 165. Ojenal, Leo; 166. Olit, Freddie; 167. Oliver, Rex; 168. 14. Reynaldo Cuevas; 15. George Polutan; 16. Arman Ercillo; 17. Joey Llanera; and
Oliveria, Charlie; 169. Operana, Danny; 170. Oriana, Allan; 171. Ormilla, Larry; 172. 18. Roberto Gonzales
Ortiz, Felimon; 173. Paniterce, Alvin; 174. Parallag, Gerald; 175. Pecayo, Edwin; 176.
Pena, Erwin; 177. Penamante, Jowald; 178. Piamonte, Melvin; 179. Piamonte, Rogelio; Photographs were submitted by Toyota marked as Annexes "1" through "18" of its
180. Platon, Cornelio; 181. Polutan, Jorge; 182. Posada, John; 183. Puno, Manjolito; Position Paper, vividly showing the participation of the aforelisted employees in illegal
184. Ramos, Eddie; 185. Reyes, Rolando; 186. Roxas, Philip; 187. Sales, Paul Arthur; acts.57
188. Sallan, David Jr.; 189. Salvador, Bernardo; 190. Sampang, Alejandro; 191. San
Pablo, Baldwin; 192. Sangalang, Jeffrey; 193. Santiago, Eric; 194. Santos, Raymond; To further aggravate the situation, a number of union members committed illegal acts
195. Sapin, Al Jose; 196. Saquilabon, Bernabe; 197. Serrano, Ariel; 198. Sierra, Alex; (blocking the ingress to and egress from the plant) during the strike staged on March
199. Simborio, Romualdo; 200. Sulit, Lauro; 201. Tabirao, Elvisanto; 202. Tablizo, 29, 2001 at the Toyota plant in Bicutan, to wit:
Edwin; 203. Taclan, Petronio; 204. Tagala, Rommel; 205. Tagle, Wilfredo Jr.; 206.
Tecson Alexander; 207. Templo, Christopher; 208. Tenorio, Roderick; 209. Tolentino,
Rodel; 210. Tolentino, Rommel; 211. Tolentino, Romulo Jr.; 212. Tomas, Rolando; 213. 1. Basilio Laqui; 2. Sabas Benabise; 3. Federico Torres; 4. Freddie Olit; and 5. Joel
Topaz, Arturo Sr.; 214. Toral, Grant Robert; 215. Torres, Dennis; 216. Torres, Federico; Agosto
217. Trazona, Jose Rommel; 218. Tulio, Emmanuel; 219. Umiten, Nestor Jr.; 220.
Vargas, Joseph; 221. Vergara, Allan; 222. Vergara, Esdwin; 223. Violeta, Apollo Sr.; Pictures marked as Annexes "21" to "22" of Toyota’s Position Paper reveal the illegal
224. Vistal, Alex; 225. Yangyon, Michael Teddy; 226. Zaldevar, Christopher; and 227. acts committed by the aforelisted workers.58
Zamora, Dominador Jr.
On the next day, March 30, 2001, several employees again committed illegal acts
Toyota’s Position Paper containing the list of striking workers was attested to as true (blocking ingress to and egress from the plant) during the strike at the Bicutan plant, to
and correct under oath by Mr. Jose Ma. Aligada, First Vice President of the Group wit:
Administration Division of Toyota. Mr. Emerito Dumaraos, Assistant Department
Manager of the Production Department of Toyota, likewise submitted a June 29, 2001
1. Ariel Garcia; 2. Edgar Hilaga; 3. Charlie Oliveria; 4. Ferdinand Jaen; 5. Wilfredo
Affidavit56 confirming the low attendance of employees on February 21, 22, and 23,
Tagle; 6. Alejandro Imperial; 7. Manjolito Puno; 8. Delmar Espadilla; 9. Apollo Violeta;
2001, which resulted from the intentional absences of the aforelisted striking workers.
and 10. Elvis Tabirao
The Union, on the other hand, did not refute Toyota’s categorical assertions on the
participation of said workers in the mass actions and their deliberate refusal to perform
their assigned work on February 21, 22, and 23, 2001. More importantly, it did not deny Pictures marked as Annexes "25" to "26" and "28" of Toyota’s Position Paper show the
the fact of absence of the employees on those days from the Toyota manufacturing participation of these workers in unlawful acts.59
plants and their deliberate refusal to render work. Their admission that they participated
in the February 21 to 23, 2001 mass actions necessarily means they were absent from
their work on those days.
On April 5, 2001, seven (7) Toyota employees were identified to have committed illegal Geronimo Lopez; (39) Rommel Macalindog; (40) Nixon Madrazo; (41) Valentin
acts (blocking ingress to and egress from the plant) during the strike held at the Bicutan Magbalita; (42) Allan Jon Malabanan; (43) Jonamar Manaog; (44) Bayani Manguil; (45)
plant, to wit: June Manigbas; (46) Alfred Manjares; (47) Edwin Manzanilla; (48) Mayo Mata; (49) Leo
Ojenal; (50) Allan Oriana; (51) Rogelio Piamonte; (52) George Polutan; (53) Eric
1. Raymund Santos; 2. Elvis Tabirao; 3. Joseph Vargas; 4. Bernardo Salvador; 5. Santiago; (54) Bernabe Saquilabon; (55) Alex Sierra; (56) Romualdo Simborio; (57)
Antonio Dimayuga; 6. Rurel Borebor; and 7. Alberto Lomboy Lauro Sulit; (58) Elvisanto Tabirao; (59) Edwin Tablizo; (60) Emmanuel Tulio; (61)
Nestor Umiten; (62) Joseph Vargas; (63) Edwin Vergara; and (64) Michael Teddy
Yangyon.
The participations of the strikers in illegal acts are manifest in the pictures marked as
Annexes "32" and "33" of Toyota’s Position Paper.60
Toyota presented photographs which show said employees conducting mass pickets
and concerted actions.64
On April 6, 2001, only Rogelio Piamonte was identified to have committed illegal acts
(blocking ingress to and egress from the Toyota plant) during the strike at the Toyota
Santa Rosa plant.61 Then, on April 9, 2001, Alvin Paniterce, Dennis Apolinario, and Anent the grant of severance compensation to legally dismissed union members,
Eduardo Miranda62 were identified to have committed illegal acts (blocking ingress to Toyota assails the turn-around by the CA in granting separation pay in its June 20,
and egress from the Toyota plant) during the strike at the Toyota Santa Rosa plant and 2003 Resolution after initially denying it in its February 27, 2003 Decision. The company
were validly dismissed by Toyota. asseverates that based on the CA finding that the illegal acts of said union members
constitute gross misconduct, not to mention the huge losses it suffered, then the grant
of separation pay was not proper.
Lastly, the strikers, though on payroll reinstatement, staged protest rallies on May 23,
2001 and May 28, 2001 in front of the Bicutan and Sta. Rosa plants. These workers’
acts in joining and participating in the May 23 and 28, 2001 rallies or pickets were patent The general rule is that when just causes for terminating the services of an employee
violations of the April 10, 2001 assumption of jurisdiction/certification Order issued by under Art. 282 of the Labor Code exist, the employee is not entitled to separation pay.
the DOLE Secretary, which proscribed the commission of acts that might lead to the The apparent reason behind the forfeiture of the right to termination pay is that
"worsening of an already deteriorated situation." Art. 263(g) is clear that strikers who lawbreakers should not benefit from their illegal acts. The dismissed employee,
violate the assumption/certification Order may suffer dismissal from work. This was the however, is entitled to "whatever rights, benefits and privileges [s/he] may have under
situation in the May 23 and 28, 2001 pickets and concerted actions, with the following the applicable individual or collective bargaining agreement with the employer or
employees who committed illegal acts: voluntary employer policy or practice"65 or under the Labor Code and other existing
laws. This means that the employee, despite the dismissal for a valid cause, retains the
right to receive from the employer benefits provided by law, like accrued service
a. Strikers who joined the illegal pickets on May 23, 2001 were (1) Dennis Apolinario; incentive leaves. With respect to benefits granted by the CBA provisions and voluntary
(2) Abel Berces; (3) Benny Bering; (4) Dexter Bolaños; (5) Freddie Busano; (6) Ernesto management policy or practice, the entitlement of the dismissed employees to the
Bustillo, Jr.; (7) Randy Consignado; (8) Herbert Dalanon; (9) Leodegario De Silva; (10) benefits depends on the stipulations of the CBA or the company rules and policies.
Alexander Esteva; (11) Jason Fajilagutan; (12) Nikko Franco; (13) Genaro Gerola, Jr.;
(14) Michael Gohilde; (15) Rogelio Magistrado; (16) Rolando Malaluan, Jr.; (17)
Leoncio Malate, Jr.; (18) Edwin Manzanilla; (19) Nila Marcial; (20) Roderick Nierves; As in any rule, there are exceptions. One exception where separation pay is given even
(21) Larry Ormilla; (22) Filemon Ortiz; (23) Cornelio Platon; (24) Alejandro Sampang; though an employee is validly dismissed is when the court finds justification in applying
(25) Eric Santiago; (26) Romualdo Simborio; (27) Lauro Sulit; and (28) Rommel Tagala. the principle of social justice well entrenched in the 1987 Constitution. In Phil. Long
Distance Telephone Co. (PLDT) v. NLRC, the Court elucidated why social justice can
validate the grant of separation pay, thus:
Pictures show the illegal acts (participation in pickets/strikes despite the issuance of a
return-to-work order) committed by the aforelisted strikers.63
The reason is that our Constitution is replete with positive commands for the promotion
of social justice, and particularly the protection of the rights of the workers. The
b. Strikers who participated in the May 28, 2001 were (1) Joel Agosto; (2) Alex Alejo; enhancement of their welfare is one of the primary concerns of the present charter. In
(3) Erwin Alfonso; (4) Dennis Apolinario; (5) Melvin Apostol; (6) Rommel Arceta; (7) fact, instead of confining itself to the general commitment to the cause of labor in Article
Lester Atun; (8) Abel Berces; (9) Benny Bering; (10) Dexter Bolanos; (11) Marcelo II on the Declaration of Principles of State Policies, the new Constitution contains a
Cabezas; (12) Nelson Leo Capate; (13) Lorenzo Caraqueo; (14) Christopher separate article devoted to the promotion of social justice and human rights with a
Catapusan; (15) Ricky Chavez; (16) Virgilio Colandog; (17) Claudio Correa; (18) Ed separate sub-topic for labor. Article XIII expressly recognizes the vital role of labor,
Cubelo; (19) Reynaldo Cuevas; (20) Rene Dalisay; (21) Benigno David, Jr.; (22) Alex hand in hand with management, in the advancement of the national economy and the
Del Mundo; (23) Basilio Dela Cruz; (24) Roel Digma; (25) Aldrin Duyag; (26) Armando welfare of the people in general. The categorical mandates in the Constitution for the
Ercillo; (27) Delmar Espadilla; (28) Alexander Esteva; (29) Nikko Franco; (30) Dexter improvement of the lot of the workers are more than sufficient basis to justify the award
Fulgar; (31) Dante Fulo; (32) Eduardo Gado; (33) Michael Gohilde; (34) Eugene Jay of separation pay in proper cases even if the dismissal be for cause. 66
Hondrada II; (35) Joey Javillonar; (36) Basilio Laqui; (37) Alberto Lomboy; (38)
In the same case, the Court laid down the rule that severance compensation shall be (which can be considered as breach of trust), she was not worthy of compassion as to
allowed only when the cause of the dismissal is other than serious misconduct or that deserve separation pay based on her length of service. In Gustilo v. Wyeth Phils.,
which reflects adversely on the employee’s moral character. The Court succinctly Inc.,70 this Court found no exceptional circumstance to warrant the grant of financial
discussed the propriety of the grant of separation pay in this wise: assistance to an employee who repeatedly violated the company’s disciplinary rules
and regulations and whose employment was thus terminated for gross and habitual
We hold that henceforth separation pay shall be allowed as a measure of social justice neglect of his duties. In the doctrinal case of San Miguel v. Lao,71 this Court reversed
only in those instances where the employee is validly dismissed for causes other than and set aside the ruling of the CA granting retirement benefits or separation pay to an
serious misconduct or those reflecting on his moral character. Where the reason for the employee who was dismissed for willful breach of trust and confidence by causing the
valid dismissal is, for example, habitual intoxication or an offense involving moral delivery of raw materials, which are needed for its glass production plant, to its
turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not competitor. While a review of the case reports does not reveal a case involving a
be required to give the dismissed employee separation pay, or financial assistance, or termination by reason of the commission of a crime against the employer or his/her
whatever other name it is called, on the ground of social justice. family which dealt with the issue of separation pay, it would be adding insult to injury if
the employer would still be compelled to shell out money to the offender after the harm
done.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his offense. And we do not agree that the
punishment is his dismissal only and that the separation pay has nothing to do with the In all of the foregoing situations, the Court declined to grant termination pay because
wrong he has committed. Of course it has. Indeed, if the employee who steals from the the causes for dismissal recognized under Art. 282 of the Labor Code were serious or
company is granted separation pay even as he is validly dismissed, it is not unlikely grave in nature and attended by willful or wrongful intent or they reflected adversely on
that he will commit a similar offense in his next employment because he thinks he can the moral character of the employees. We therefore find that in addition to serious
expect a like leniency if he is again found out. This kind of misplaced compassion is not misconduct, in dismissals based on other grounds under Art. 282 like willful
going to do labor in general any good as it will encourage the infiltration of its ranks by disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and
those who do not deserve the protection and concern of the Constitution. commission of a crime against the employer or his family, separation pay should not be
conceded to the dismissed employee.
The policy of social justice is not intended to countenance wrongdoing simply because
it is committed by the underprivileged. At best it may mitigate the penalty but it certainly In analogous causes for termination like inefficiency, drug use, and others, the NLRC
will not condone the offense. Compassion for the poor is an imperative of every humane or the courts may opt to grant separation pay anchored on social justice in consideration
society but only when the recipient is not a rascal claiming an undeserved privilege. of the length of service of the employee, the amount involved, whether the act is the
Social justice cannot be permitted to be refuge of scoundrels any more than can equity first offense, the performance of the employee and the like, using the guideposts
be an impediment to the punishment of the guilty. Those who invoke social justice may enunciated in PLDT on the propriety of the award of separation pay.
do so only if their hands are clean and their motives blameless and not simply because
they happen to be poor. This great policy of our Constitution is not meant for the In the case at bench, are the 227 striking employees entitled to separation pay?
protection of those who have proved they are not worthy of it, like the workers who have
tainted the cause of labor with the blemishes of their own character.67 In the instant case, the CA concluded that the illegal strikes committed by the Union
members constituted serious misconduct.72
Explicit in PLDT are two exceptions when the NLRC or the courts should not grant
separation pay based on social justice¾serious misconduct (which is the first ground The CA ratiocinated in this manner:
for dismissal under Art. 282) or acts that reflect on the moral character of the employee.
What is unclear is whether the ruling likewise precludes the grant of separation pay
when the employee is validly terminated from work on grounds laid down in Art. 282 of Neither can social justice justify the award to them of severance compensation or any
the Labor Code other than serious misconduct. other form of financial assistance. x x x

A recall of recent cases decided bearing on the issue reveals that when the termination xxxx
is legally justified on any of the grounds under Art. 282, separation pay was not allowed.
In Ha Yuan Restaurant v. NLRC,68 we deleted the award of separation pay to an Considering that the dismissal of the employees was due to their participation in the
employee who, while unprovoked, hit her co-worker’s face, causing injuries, which then illegal strikes as well as violation of the Code of Conduct of the company, the same
resulted in a series of fights and scuffles between them. We viewed her act as serious constitutes serious misconduct. A serious misconduct is a transgression of some
misconduct which did not warrant the award of separation pay. In House of Sara Lee established and definite rule of action, a forbidden act, a dereliction of duty, willful in
v. Rey,69 this Court deleted the award of separation pay to a branch supervisor who character, and implies wrongful intent and not mere error in judgment. In fact, in Panay
regularly, without authorization, extended the payment deadlines of the company’s Electric Company, Inc. v. NLRC, the Supreme Court nullified the grant of separation
sales agents. Since the cause for the supervisor’s dismissal involved her integrity benefits to employees who unlawfully participated in an illegal strike in light of Article
264, Title VIII, Book V of the Labor Code, that, "any union officer who knowingly strike, but again, without awarding separation pay or financial assistance to the erring
participates in an illegal strike and any worker or union officer who knowingly employees. In Samahang Manggagawa sa Sulpicio Lines, Inc. v. Sulpicio Lines,77 this
participates in the commission of illegal acts during a strike may be declared to have Court upheld the dismissal of union officers who participated in an illegal strike sans
lost his employment status." any award of separation pay. Earlier, in Grand Boulevard Hotel v. Genuine Labor
Organization of Workers in Hotel, Restaurant and Allied Industries,78 we affirmed the
The constitutional guarantee on social justice is not intended only for the poor but for dismissal of the Union’s officers who participated in an illegal strike without awarding
the rich as well. It is a policy of fairness to both labor and management.73 (Emphasis separation pay, despite the NLRC’s declaration urging the company to give financial
supplied.) assistance to the dismissed employees.79 In Interphil Laboratories Union-FFW, et al. v.
Interphil Laboratories, Inc.,80 this Court affirmed the dismissal of the union officers who
led the concerted action in refusing to render overtime work and causing "work
In disposing of the Union’s plea for reconsideration of its February 27, 2003 Decision, slowdowns." However, no separation pay or financial assistance was allowed.
the CA however performed a volte-face by reinstating the award of separation pay. In CCBPI Postmix Workers Union v. NLRC,81 this Court affirmed the dismissal of union
officers who participated in the strike and the union members who committed illegal
The CA’s grant of separation pay is an erroneous departure from our ruling in Phil. Long acts while on strike, without awarding them separation pay or financial assistance. In
Distance Telephone Co. v. NLRC that serious misconduct forecloses the award of 1996, in Allied Banking Corporation v. NLRC,82 this Court affirmed the dismissal of
separation pay. Secondly, the advertence to the alleged honest belief on the part of the Union officers and members, who staged a strike despite the DOLE Secretary’s
227 employees that Toyota committed a breach of the duty to bargain collectively and issuance of a return to work order but did not award separation pay. In the earlier but
an abuse of valid exercise of management prerogative has not been substantiated by more relevant case of Chua v. NLRC,83 this Court deleted the NLRC’s award of
the evidence extant on record. There can be no good faith in intentionally incurring separation benefits to an employee who participated in an unlawful and violent strike,
absences in a collective fashion from work on February 22 and 23, 2001 just to attend which strike resulted in multiple deaths and extensive property damage. In Chua, we
the DOLE hearings. The Union’s strategy was plainly to cripple the operations and bring viewed the infractions committed by the union officers and members as a serious
Toyota to its knees by inflicting substantial financial damage to the latter to compel misconduct which resulted in the deletion of the award of separation pay in
union recognition. The Union officials and members are supposed to know through conformance to the ruling in PLDT. Based on existing jurisprudence, the award of
common sense that huge losses would befall the company by the abandonment of their separation pay to the Union officials and members in the instant petitions cannot be
regular work. It was not disputed that Toyota lost more than PhP 50 million because of sustained.
the willful desertion of company operations in February 2001 by the dismissed union
members. In addition, further damage was experienced by Toyota when the Union One last point to consider—it is high time that employer and employee cease to view
again resorted to illegal strikes from March 28 to April 12, 2001, when the gates of each other as adversaries and instead recognize that theirs is a symbiotic relationship,
Toyota were blocked and barricaded, and the company officials, employees, and wherein they must rely on each other to ensure the success of the business. When they
customers were intimidated and harassed. Moreover, they were fully aware of the consider only their own self-interests, and when they act only with their own benefit in
company rule on prohibition against concerted action inimical to the interests of the mind, both parties suffer from short-sightedness, failing to realize that they both have a
company and hence, their resort to mass actions on several occasions in clear violation stake in the business. The employer wants the business to succeed, considering the
of the company regulation cannot be excused nor justified. Lastly, they blatantly investment that has been made. The employee in turn, also wants the business to
violated the assumption/certification Order of the DOLE Secretary, exhibiting their lack succeed, as continued employment means a living, and the chance to better one’s lot
of obeisance to the rule of law. These acts indeed constituted serious misconduct. in life. It is clear then that they both have the same goal, even if the benefit that results
may be greater for one party than the other. If this becomes a source of conflict, there
A painstaking review of case law renders obtuse the Union’s claim for separation pay. are various, more amicable means of settling disputes and of balancing interests that
In a slew of cases, this Court refrained from awarding separation pay or financial do not add fuel to the fire, and instead open avenues for understanding and cooperation
assistance to union officers and members who were separated from service due to their between the employer and the employee. Even though strikes and lockouts have been
participation in or commission of illegal acts during strikes. In the recent case of Pilipino recognized as effective bargaining tools, it is an antiquated notion that they are truly
Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA),74 this beneficial, as they only provide short-term solutions by forcing concessions from one
Court upheld the dismissal of union officers who participated and openly defied the party; but staging such strikes would damage the working relationship between
return-to-work order issued by the DOLE Secretary. No separation pay or financial employers and employees, thus endangering the business that they both want to
assistance was granted. In Sukhothai Cuisine and Restaurant v. Court of succeed. The more progressive and truly effective means of dispute resolution lies in
Appeals,75 this Court declared that the union officers who participated in and the union mediation, conciliation, and arbitration, which do not increase tension but instead
members who committed illegal acts during the illegal strike have lost their employment provide relief from them. In the end, an atmosphere of trust and understanding has
status. In this case, the strike was held illegal because it violated agreements providing much more to offer a business relationship than the traditional enmity that has long
for arbitration. Again, there was no award of separation pay nor financial assistance. divided the employer and the employee.
In Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees
Union,76 the strike was declared illegal because the means employed was illegal. We WHEREFORE, the petitions in G.R. Nos. 158786 and 158789 are DENIED while those
upheld the validity of dismissing union members who committed illegal acts during the in G.R. Nos. 158798-99 are GRANTED.
The June 20, 2003 CA Resolution in CA-G.R. SP Nos. 67100 and 67561 restoring the
grant of severance compensation is ANNULLED and SET ASIDE.

The February 27, 2003 CA Decision in CA-G.R. SP Nos. 67100 and 67561, which
affirmed the August 9, 2001 Decision of the NLRC but deleted the grant of severance
compensation, is REINSTATED and AFFIRMED.

No costs.

SO ORDERED.
G.R. No. 215568, August 03, 2015
Subsequently, Villaseran conducted verification works with the Ticket Section of
RICHARD N. RIVERA, Petitioner, v. GENESIS TRANSPORT SERVICE, INC. AND Genesis' Cubao Main Office. Per his inquiries, the duplicate ticket surrendered by
RIZA A. MOISES, Respondents. Rivera to Genesis indicated only the unconnected amount of P198.00. It was also found
that Rivera remitted only P198.00.12
DECISION On July 20, 2010, Genesis served on Rivera a written notice 13 informing him that a
hearing of his case was set on July 23, 2010. Despite his explanations, Rivera's
LEONEN, J.: services were terminated through a written notice dated July 30, 2010. 14 Contending
that this termination was arbitrary and not based on just causes for terminating
This resolves a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of employment, he filed the Complaint15 for illegal dismissal, which is subject of this
Civil Procedure praying that the July 8, 2014 Decision1 and the November 20, 2014 Petition.16
Resolution2 of the Court of Appeals Fifth Division in CA-G.R. SP No. 130801 be
reversed and set aside, and that new judgment be entered finding petitioner Richard N. For their defense, Genesis and Riza A. Moises claimed that Rivera's misdeclaration of
Rivera to have been illegally dismissed and awarding to him his monetary claims. the amount in the bus ticket receipts and failure to remit the correct amount clearly
violated Genesis' policies and amounted to serious misconduct, fraud, and willful
The assailed July 8, 2014 Decision of the Court of Appeals dismissed the Petition breach of trust; thereby justifying his dismissal. 17
for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure filed by Richard N.
Rivera (Rivera) and affirmed the February 28, 2013 3 and April 30, 20134 Resolutions In a Decision18 dated June 26, 2012, Labor Arbiter Gaudencio P. Demaisip gave
of the National Labor Relations Commission Second Division. These Resolutions credence to respondents' appreciation of the gravity of Rivera's acts of misdeclaring
sustained the ruling of Labor Arbiter Gaudencio P. Demaisip, Jr. who, in his June 26, the amount of bus ticket receipts and failing to remit the correct amount. Thus, he
2012 Decision,5 dismissed Rivera's Complaint6 for illegal dismissal. dismissed Rivera's Complaint.

The assailed November 20, 2014 Resolution of the Court of Appeals denied Rivera's In a Resolution19 dated February 28, 2013, the National Labor Relations Commission
Motion for Reconsideration. Second Division affirmed the Decision of Labor Arbiter Demaisip. In a
Resolution20 dated April 30, 2013, the National Labor Relations Commission denied
Rivera was employed by respondent Genesis Transport Service, Inc. (Genesis) Rivera's Motion for Reconsideration.
beginning June 2002 as a bus conductor, assigned to the Cubao-Baler, Aurora route.
As part of the requisites for his employment, he was required to post a cash bond of Thereafter, Rivera filed a Rule 65 Petition before the Court of Appeals. In the assailed
P6,000.00. Respondent Riza A. Moises is Genesis' President and General Manager.7 July 8, 2014 Decision,21 the Court of Appeals Fifth Division sustained the rulings of
Labor Arbiter Demaisip and the National Labor Relations Commission. In the assailed
In his Position Paper before the Labor Arbiter, Rivera acknowledged that he was November 20, 2014 Resolution,22 the Court of Appeals denied Rivera's Motion for
dismissed by Genesis on account of a discrepancy in the amount he declared on bus Reconsideration.
ticket receipts. He alleged that on June 10, 2010, he received a Memorandum 8 giving
him twenty-four (24) hours to explain why he should not be sanctioned for reporting and Hence, this Petition was filed.
remitting the amount of P198.00 instead of the admittedly correct amount of P394.00
worth of bus ticket receipts. He responded that it was an honest mistake, which he was For resolution is the issue of whether petitioner Richard N. Rivera's employment was
unable to correct "because the bus encountered mechanical problems." 9 terminated for just cause by respondent Genesis Transport, Inc.

The discrepancy between the reported and remitted amount as against the correct As Riza A. Moises, Genesis' President and General Manager, has been impleaded,
amount was detailed in the "Irregularity Report" prepared by Genesis' Inspector, Arnel this court must also rule on her personal liability, should the termination of petitioner's
Villaseran (Villaseran).10 employment be found invalid.chanrobleslaw

According to Villaseran, on May 25, 2010, he conducted a "man to man" inspection on I

the tickets held by the passengers on board Bus No. 8286 who had transferred from
Bus No. 1820 in San Fernando, Pampanga. (Bus No. 1820 broke down.) In the course Our laws on labor, foremost of which is the Labor Code, are pieces of social legislation.
of his inspection, he noticed that Ticket No. 723374 VA had a written corrected amount They have been adopted pursuant to the constitutional recognition of "labor as a
of P394.00. However, the amount marked by perforations made on the ticket, which primary social economic force"23 and to the constitutional mandates for the state to
was the amount originally indicated by the bus conductor, was only P198.00. Upon "protect the rights of workers and promote their welfare" 24 and for Congress to "give
inquiring with the passenger holding the ticket, Villaseran found out that the passenger highest priority to the enactment of measures that protect and enhance the right of all
paid P500.00 to Rivera, who gave her change in the amount of P106.00. 11 the people to human dignity, [and] reduce social, economic, and political
inequalities."25cralawred
 (c) Fraud or willful breach by the employee of the trust reposed in him by his employer
They are means for effecting social justice, i.e., the "humanization of laws and the or duly authorized representative;
equalization of social and economic forces by the State so that justice in the rational (d) Commission of a crime or offense by the employee against the person of his
and objectively secular conception may at least be approximated." 26 employer or any immediate member of his family or his duly authorized
representative; and
Article XIII, Section 3 of the 1987 Constitution guarantees the right of workers to (e) Other causes analogous to the foregoing.
security of tenure. "One's employment, profession, trade or calling is a 'property Serious misconduct as a just cause for termination was discussed in Yabut v. Manila
right,'"27 of which a worker may be deprived only upon compliance with due process Electric Co.:29
requirements:chanRoblesvirtualLawlibrary Misconduct is defined as the "transgression of some established and definite rule of
It is the policy of the state to assure the right of workers to "security of tenure" (Article action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
XIII, Sec. 3 of the New Constitution, Section 9, Article II of the 1973 Constitution). The intent and not mere error in judgment." For serious misconduct to justify dismissal, the
guarantee is an act of social justice. When a person has no property, his job may following requisites must be present: (a) it must be serious; (b) it must relate to the
possibly be his only possession or means of livelihood. Therefore, he should be performance of the employee's duties; and (c) it must show that the employee has
protected against any arbitrary deprivation of his job. Article 280 of the Labor Code has become unfit to continue working for the employer.30 (Emphasis supplied, citation
construed security of tenure as meaning that "the employer shall not terminate the omitted)ChanRoblesVirtualawlibrary
services of an employee except for a just cause or when authorized by" the code.
Thus, it is not enough for an employee to be found to have engaged in improper or
Dismissal is not justified for being arbitrary where the workers were denied due process
wrongful conduct. To justify termination of employment, misconduct must be so severe
and a clear denial of due process, or constitutional right must be safeguarded against
as to make it evident that no other penalty but the termination of the employee's
at all times.28 (Citations omitted)ChanRoblesVirtualawlibrary
livelihood is viable.
Conformably, liberal construction of Labor Code provisions in favor of workers is
stipulated by Article 4 of the Labor Code:chanRoblesvirtualLawlibrary In Philippine Plaza Holdings v. Episcope,31 we discussed the requisites for valid
Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation dismissal on account of willful breach of trust:chanRoblesvirtualLawlibrary
of the provisions of this Code, including its implementing rules and regulations, shall be Among the just causes for termination is the employer's loss of trust and confidence in
resolved in favor of labor.ChanRoblesVirtualawlibrary its employee. Article 296 (c) (formerly Article 282 [c]) of the Labor Code provides that
an employer may terminate the services of an employee for fraud or willful breach of
This case is quintessentially paradigmatic of the need for the law to be applied in order
the trust reposed in him. But in order for the said cause to be properly invoked, certain
to ensure social justice. The resolution of this case should be guided by the
requirements must be complied with[,] namely[:] (1) the employee concerned must be
constitutional command for courts to take a preferential view in favor of labor in
holding a position of trust and confidence and (2) there must be an act that would justify
ambitious cases.
the loss of trust and confidence.32ChanRoblesVirtualawlibrary
This case revolves around an alleged discrepancy between the amounts indicated on Relating to the first requisite, Philippine Plaza Holdings clarified that two (2) classes of
a single ticket. For the paltry sum of P196.00 that petitioner failed to remit in his sole employees are considered to hold positions of trust:chanRoblesvirtualLawlibrary
documented instance of apparent misconduct, petitioner's employment was It is noteworthy to mention that there are two classes of positions of trust: on the one
terminated. He was deprived of his means of subsistence.chanrobleslaw hand, there are managerial employees whose primary duty consists of the
management of the establishment in which they are employed or of a department or a
II subdivision thereof, and to other officers or members of the managerial staff; on the
other hand, there are fiduciary rank-and-file employees, such as cashiers, auditors,
Misconduct and breach of trust are just causes for terminating employment only when property custodians, or those who, in the normal exercise of their functions, regularly
attended by such gravity as would leave the employer no other viable recourse but to handle significant amounts of money or property. These employees, though rank-and-
cut off an employee's livelihood. file, are routinely charged with the care and custody of the employer's money or
property, and are thus classified as occupying positions of trust and
The Labor Code recognizes serious misconduct, willful breach of trust or loss of confidence.33 (Emphasis supplied)ChanRoblesVirtualawlibrary
confidence, and other analogous causes as just causes for termination of The position an employee holds is not the sole criterion. More important than this
employment:chanRoblesvirtualLawlibrary formalistic requirement is that loss of trust and confidence must be justified. As with
Article 282. Termination by employer. An employer may terminate an employment for misconduct as basis for terminating employment, breach of trust demands that a
any of the following just causes: degree of severity attend the employee's breach of trust. In China City Restaurant
Corporation v. National Labor Relations Commission,34 this court emphasized the need
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of for caution:chanRoblesvirtualLawlibrary
his employer or representative in connection with his work; For loss of trust and confidence to be a valid ground for the dismissal of employees, it
(b) Gross and habitual neglect by the employee of his duties; must be substantial and not arbitrary, whimsical, capricious or concocted.
Irregularities or malpractices should not be allowed to escape the scrutiny of this Court. undermine the business of an employer.
Solicitude for the protection of the rights of the working class [is] of prime importance.
Although this is not [al license to disregard the rights of management, still the Court We fail to appreciate any of these in this case.
must be wary of the ploys of management to get rid of employees it considers as
undesirable.35 (Emphasis supplied)ChanRoblesVirtualawlibrary To reiterate, what is involved is a paltry amount of P196.00. All that has been proven is
the existence of a discrepancy. No proof has been adduced of ill-motive or even
ChanRoblesVirtualawlibrary
of gross negligence. From all indications, petitioner stood charged with a lone, isolated
III
instance of apparent wrongdoing.
The social justice suppositions underlying labor laws require that the statutory grounds
The records are bereft of evidence showing a pattern of discrepancies chargeable
justifying termination of employment should not be read to justify the view that bus
against petitioner. Seen in the context of his many years of service to his employer and
conductors should, in all cases, be free from any kind of error. Not every improper act
in the absence of clear proof showing otherwise, the presumption should be that he has
should be taken to justify the termination of employment.
performed his functions faithfully and regularly. It can be assumed that he has issued
the correct tickets and given accurate amounts of change to the hundreds or even
Concededly, bus conductors handle money. To this extent, their work may be
thousands of passengers that he encountered throughout his tenure. It is more
analogous to that of tellers, cashiers, and other similarly situated rank-and-file
reasonable to assume that—except for a single error costing a loss of only P196.00—
employees who occupy positions of trust and confidence. However, even granting that
the company would have earned the correct expected margins per passenger, per trip,
the first requisite for termination of employment on account of willful breach of trust has
and per bus that it allowed to travel.
been satisfied, we find it improper to sustain the validity of the termination of petitioner's
employment.
Absent any other supporting evidence, the error in a single ticket issued by petitioner
can hardly be used to justify the inference that he has committed serious misconduct
We take judicial notice of bus conductors' everyday work. Bus conductors receive,
or has acted in a manner that runs afoul of his employer's trust. More so, petitioner
exchange, and keep money paid by passengers by way of transportation fare. They
cannot be taken to have engaged in a series of acts evincing a pattern or a design to
keep track of payments and make computations down to the last centavo, literally on
defraud his employer. Terminating his employment on these unfounded reasons is
their feet while a bus is in transit.
manifestly unjust.
Regardless of whether a bus is driving through awkward spaces—through steep
To infer from a single error that petitioner committed serious misconduct or besmirched
inclines, rugged roads, or sharp turns—or of whether a bus is packed with standing
his employer's trust is grave abuse of discretion. It is an inference that is arbitrary and
passengers, the lonesome task of keeping track of the passengers' payments falls upon
capricious. It is contrary to the high regard for labor and social justice enshrined in our
a bus conductor.
Constitution and our labor laws.
Thus, while they do handle money, their circumstances are not at all the same as those
The Court of Appeals committed an error of law correctible by a petition for review under
of regular cashiers. They have to think quickly, literally on their feet. Regular cashiers,
Rule 45. It erred when it held that the National Labor Relations did not commit grave
on the other hand, have the time and comfort to deliberately and carefully examine the
abuse of discretion when the latter did not engage in the requisite scrutiny to review the
transactions of their employer.
inference and its bases.chanrobleslaw
However, handling passengers' fare payments is not their sole function. Bus conductors
assist drivers as they maneuver buses through tight spaces while they are in transit, IV
depart, or park. They often act as dispatchers in bus stops and other such places, assist
passengers as they embark and alight, and sometimes even help passengers load and As his employment was illegally and unjustly terminated, petitioner is entitled to full
unload goods and cargo. They manage the available space in a bus and ensure that backwages and benefits from the time of his termination until the finality of this Decision.
no space is wasted as the bus accommodates more passengers. Along with drivers, He is likewise entitled to separation pay in the amount of one (1) month's salary for
bus conductors commit to memory the destination of each passenger so that they can every year of service until the finality of this Decision, with a fraction of a year of at least
anticipate their stops. six (6) months being counted as one (1) whole year.

There are several ways to manifest the severity that suffices to qualify petitioner's As he was compelled to litigate in order to seek relief for the illegal and unjust
alleged misconduct or breach of trust as so grave that terminating his employment is termination of his employment, petitioner is likewise entitled to attorney's fees in the
warranted. It may be through the nature of the act itself: spanning an entire spectrum amount of 10% of the total monetary award.36
between, on one end, an overlooked error, made entirely in good faith; and, on another
end, outright larceny. It may be through the sheer amount mishandled. It may be "Moral damages are awarded in termination cases where the employee's dismissal was
through frequency of acts. It may be through other attendant circumstances, such as attended by bad faith, malice or fraud, or where it constitutes an act oppressive to labor,
attempts to destroy or conceal records and other evidence, or evidence of a motive to or where it was done in a manner contrary to morals, good customs or public
policy."37 Also, to provide an "example or correction for the public good," 38 exemplary
damages may be awarded.
SO ORDERED.chanroblesvirtuallawlibrary
However, we find no need to award these damages in favor of petitioner. While the
termination of his employment was invalid, we nevertheless do not find respondent
Genesis to have acted with such a degree of malice as to act out of a design to oppress
petitioner. It remains that a discrepancy and shortage chargeable to petitioner was
uncovered, although this discrepancy and shortage does not justify a penalty as grave
as termination of employment.chanrobleslaw

Respondent Riza A. Moises may not be held personally liable for the illegal termination
of petitioner's employment.

As we explained in Saudi Arabian Airlines v. Rebesencio:39

A corporation has a personality separate and distinct from those of the persons
composing it. Thus, as a rule, corporate directors and officers are not liable for the
illegal termination of a corporation's employees. It is only when they acted in bad faith
or with malice that they become solidarity liable with the corporation.

In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng Ever

Electrical, this court clarified that "[b]ad faith does not connote bad judgment or
negligence; it imports a dishonest purpose or some moral obliquity and conscious doing
of wrong; it means breach of a known duty through some motive or interest or ill will; it
partakes of the nature of fraud."40ChanRoblesVirtualawlibrary
Petitioner has not produced proof to show that respondent Riza A. Moises acted in bad
faith or with malice as regards the termination of his employment. Thus, she did not
incur any personal liability.

WHEREFORE, the Petition for Review on Certiorari is PARTIALLY GRANTED. The

assailed Decision dated July 8, 2014 and the assailed Resolution dated November 20,
2014 of the Court of Appeals Fifth Division in CA-G.R. SP No. 130801, which dismissed
the Petition for Certiorari filed by petitioner Richard N. Rivera and affirmed the February
28, 2013 and April 30, 2013 Resolutions of the National Labor Relations Commission
Second Division, as well as the June 26, 2012 Decision of Labor Arbiter Gaudencio P.
Demaisip, Jr., are REVERSED and SET ASIDE. Accordingly, respondent Genesis
Transport Service, Inc. is ordered to pay petitioner:

(1) Full backwages and other benefits computed from July 30, 2010, when petitioner's
employment was illegally terminated, until the finality of this Decision;
(2) Separation pay computed from June 2002, when petitioner commenced
employment, until the finality of this Decision, at the rate of one (1) month's salary
for every year of service, with a fraction of a year of at least six (6) months being
counted as one (1) whole year; and
(3) Attorney's fees equivalent to ten percent (10%) of the total award.

The case is REMANDED to the Labor Arbiter to make a detailed computation of the
amounts due to petitioner, which respondents should pay without delay.

The case is DISMISSED with respect to respondent Riza A. Moises.

G.R. No. 232888, August 14, 2019 24, 2013.11

JULIETA T. VERZONILLA, PETITIONER, v. EMPLOYEES' COMPENSATION Julieta elevated her claims to the Employees' Compensation Commission (ECC). In a
COMMISSION, RESPONDENT. decision dated August 7, 2013,12 the ECC affirmed the decision of the GSIS, noting that
while cardiovascular disease is listed as an occupational disease under Annex "A" of
the Amended Rules on Employees Compensation (EC), it is still subject to the
RESOLUTION conditions therein set. According to the ECC, Julieta failed to satisfy these conditions.
Further, the ECC held that Julieta failed to provide substantial evidence to show
CAGUIOA, J.:* reasonable connection between the cause of death of Reynaldo and his work and
working conditions.13
Before the Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of
Court assailing the Decision2 dated October 28, 2016 (Assailed Decision) and Hence, Julieta filed a Petition for Review with the CA. In the Assailed Decision, the CA
Resolution3 dated July 6, 2017 (Assailed Resolution) of the Court of Appeals (CA) agreed with the ECC that Julieta failed to prove, by substantial evidence, that the
Special Tenth Division and Former Special Tenth Division, respectively, in CA-G.R. SP conditions for compensability of cardiovascular diseases were met 14 or that Reynaldo's
No. 134846. risk of contracting the disease was increased by his working conditions. 15 The CA noted
that while Reynaldo was diagnosed to be hypertensive, no evidence was submitted to
show that this hypertension was controlled or that his heart disease worsened by the
Facts nature of his work.16 The CA held as well that there was no showing that Reynaldo was
performing strenuous activities prior to his death.17 The CA, thus, disposed of the case
Reynaldo I. Verzonilla (Reynaldo) was employed as a Special Operations Officer as follows:
(SOO) III in the Quezon City Department of Public Order and Safety since June 1, 1999 WHEREFORE, premises considered, the instant Appeal is DENIED. The
until his death on July 5, 2012: As such, he performed the following functions: appealed Decision dated August 7, 2013 by the Employees' Compensation
1. Assist the Special Operations Officer V in conducting seminars, training and [dry Commission in ECC Case No. GM-19162-0705-13 is hereby AFFIRMED.
runs] on disaster preparedness and first aid techniques relative to rescue and relief
operations. SO ORDERED.18
2. Assist the immediate supervisor in enhancing public awareness on disaster Julieta filed a motion for reconsideration but the same was denied in the Assailed
preparedness through tri-media information campaign. Resolution. Hence, the present recourse.

3. Conduct hazard, vulnerability, and risk assessment within the city. In assailing the findings of the CA, Julieta avers that: 1) there is a reasonable work
connection between Reynaldo's hypertension, cardiac arrest and abdominal pain, on
4. Attend meetings, seminars, and trainings on disaster prevention and preparedness. the one hand, and the pressures of his work, on the other; 19 2) PD 626 is a social
legislation, the purpose of which is to provide meaningful protection to the working
5. Render fieldwork in times of urgent need and coordinate with other government class,20 hence, doubts on compensability must be resolved in favor of labor; 21 and 3)
agencies/offices.4 Annex "A" of the Amended Rules on EC requires the concurrence of only one of the
conditions set forth and that paragraphs (a) and (b) of said conditions were satisfied in
Pursuant to a Memorandum dated June 29, 2012, Reynaldo attended the training "on the present case.22
the use of the Rapid Earthquake Damage Assessment System (REDAS) software" on
July 1-6, 2012 in Tagaytay City. Prior to this, he attended several other seminars. 5
Issue
On July 5, 2012, Reynaldo died due to "cardio pulmonary arrest, etiology
undetermined" at UniHealth-Tagaytay Hospital and Medical Center, Inc. (UTHMCI). His Whether the CA erred in affirming the ECC's denial of Julieta's claim for EC benefits in
Discharge Summary/Clinical Abstract6 shows that he complained of abdominal pain connection with the death of her late husband Reynaldo.
and chest pain. Records show that Reynaldo was previously diagnosed with
hypertension in 2002.7 Ruling

Thereafter, petitioner Julieta Verzonilla (Julieta), the surviving spouse of Reynaldo, filed There is merit in the petition.
a claim for compensation benefits before the Government Service Insurance System
(GSIS) under Presidential Decree (PD) 626.8 In a letter dated April 26, 2013,9 the GSIS Article 165 (1) of Title II, Book IV on Employees' Compensation and State Insurance
denied the claim of Julieta, stating that based on the documents submitted, the ailment Fund of the Labor Code, as amended by Section 1, PD 626, as amended, defines
of Reynaldo was not connected to his work and that no evidence was found that his "sickness" as "any illness definitely accepted as an occupational disease listed
duties as SOO III increased the risk of contracting said ailment.10 Julieta moved for a by the Commission, or any illness caused by employment, subject to proof that
reconsideration of the denial but the same was denied in the GSIS decision dated May the risk of contracting the same is increased by working conditions."
 having been diagnosed with such in 2002. However, she claims that this illness, as well
This is reiterated in the Amended Rules on EC, which implements PD 626 and which as the abdominal pain that Reynaldo suffered, was aggravated by the strenuous
requires that, "for the sickness and the resulting disability or death to be compensable, conditions of his work as SOO III, which ultimately led to his death. 27
the sickness must be the result of an occupational disease listed under Annex "A" of
[the] Rules with the conditions set therein satisfied, otherwise, proof must be shown To support her claim, Julieta lays down the series of alleged strenuous work Reynaldo
that the risk of contracting the disease is increased by the working conditions." 23 was subjected to, quoting thus:
x x x Mr. Verzonilla comes (sic) from Manila as his death certificate would show. He
In plainer terms, to be entitled to compensation, a claimant must show that the sickness therefore had to travel in perhaps about two (2) hours or more including traffic, to get
is either: (1) a result of an occupational disease listed under Annex "A" of the Amended to Tagaytay. Starting July 1, he started attending that day-long seminar. It cannot be
Rules on EC under the conditions Annex A sets forth; or (2) if not so listed, that the risk denied that seminars, especially one for earthquake assessment, would also involve
of contracting the disease is increased by the working conditions. 24 some physical activities. Then on the 4th day, Mr. Verzonilla and company went to at
least five (5) different places in Tagaytay for the use of the [Global Positioning System
Annex "A" of the Amended Rules on EC lists cardiovascular disease as an (GPS)] system. Inclusive of travel, this activity lasted for at least two and a half hours
"Occupational and Work-Related Disease" subject to certain conditions, thus: (2 1/2 hours). Thereafter, he continued on with attending the lectures for that day until
18. CARDIO-VASCULAR DISEASES. Any of the following conditions: 7:30 p.m. [a]nd then this was followed by a program which lasted at least until 10:00
a. If the heart disease was known to have been present during employment, there [p.m.] Not long after, he suffered a cardiac arrest and at 1:25 a.m. of July 5, 2012, he
must be proof that an acute exacerbation was clearly precipitated by the unusual died. His death occurred in less than x x x 24 hours since his last strenuous activities
strain by reasons of the nature of his/her work. in that seminar.

b. The strain of work that brings about an acute attack must be of sufficient And prior to this particular seminar, Mr. Verzonilla was also made to attend a Seminar
severity and must be followed within 24 hours by the clinical signs of a cardiac on Partnership Build for Disaster, Risk Reduction and Management Climate Change
insult to constitute causal relationship. also in Tagaytay City which lasted from June 18-20, 2012.28
The CA, in affirming the ECC decision denying the claim of Julieta, ruled out paragraph
c. If a person who was apparently asymptomatic before being subjected to strain at
(c), item 18 of the ECC Board Resolution, thus:
work showed signs and symptoms of cardiac impairment during the performance of
Here, though it was shown that Reynaldo was diagnosed to be hypertensive, it also
his/her work and such symptoms and signs persisted, it is reasonable to claim a causal
appears that his last consultation with Dr. Alonso was on December 22, 2003. There
relationship subject to the following conditions:
was no evidence adduced to show that his hypertension was controlled and that he
1. If a person is a known hypertensive, it must be proven that his hypertension was
was compliant with the treatment given, if any.29
controlled and that he was compliant with treatment.
Moreover, the CA pronounced that "although cardiovascular disease is a listed
2. If a person is not known to be hypertensive during his employment, his previous occupational disease, its compensability, nonetheless, requires compliance
health examinations must show normal results in all of the following, but not limited to: with all [the] conditions set forth in the rules,"30 giving the impression that Julieta is
blood pressure, chest X-ray, electrocardiogram (ECG)/treadmill exam, CBC and bound to prove the concurrence of ALL of the conditions in item number 18. This is
urynalysis. mistaken. A simple reading of the law shows that a claimant is required to prove merely
the existence of "any" of the conditions mentioned in the subject item, hence, only at
d. A history of substance abuse must be totally ruled out. (Emphasis supplied)
least one thereof.
It is well to recall that the first law on workmen's compensation, Act No. 3428, worked
upon the presumption of compensability which means that if the injury or disease arose Indeed, it appears that the CA failed to appreciate whether Reynaldo's case falls under
out of and in the course of employment, it was presumed that the claim for the paragraphs of Item 18 other than paragraph (c) thereof. Of particular importance is
compensation fell within the provisions of the law. PD 626 abandoned this paragraph (b) which speaks of a situation wherein the strain of work of the employee
presumption.25 Hence, for the sickness and resulting disability or death to be which caused an attack was severe and was followed within 24 hours by signs of a
compensable, the claimant has the burden of proof to show, by substantial evidence, cardiac insult. To the Court's mind, if the CA considered the foregoing, it would have
that the conditions for compensability is met. 26 not been so precipitate in dismissing Julieta's claim.

Hence, in the present case, the fact that cardiovascular disease is listed as an Julieta makes a valid point that from the evidence presented, substantial proof was
occupational disease does not mean automatic compensability. Julieta must show, by shown that Reynaldo's cardiac arrest falls under, at least, paragraph (b) of item 18. This
substantial evidence, that any of the conditions in item number 18 of the Amended merely requires that: 1) the strain of work that brings about an acute attack must be of
Rules on EC was satisfied or that the risk of Reynaldo in contracting his disease was sufficient severity and 2) it must be followed within 24 hours by the clinical signs of a
increased by his working conditions. cardiac insult. The series of strenuous activities Reynaldo underwent prior to his heart
attack is undisputed. Likewise, that the cardiac arrest and the resulting death happened
Julieta hinges her claim on paragraphs (a) and (b) of item number 18 of the ECC Board within 24 hours from such strain of work is clearly shown.
Resolution. She does not dispute that Reynaldo had a pre-existing hypertension,
There is likewise substantial proof to support that Reynaldo's pre-existing heart disease WHEREFORE, premises considered, the petition is GRANTED. The Assailed Decision
was exacerbated by the stresses of his work. Part of Reynaldo's job was to conduct dated October 28, 2016 and Resolution dated July 6, 2017 of the Court of Appeals in
and attend trainings and seminars and conduct hazard, vulnerability and risk CA-G.R. SP No. 134846 are REVERSED. The respondent Employees' Compensation
assessments.31 His job required him to render several hours of field work and, hence, Commission is hereby ordered to award death benefits due petitioner in relation to the
spend stressful and long hours travelling. Barely two weeks prior to his death, he death of Reynaldo I. Verzonilla. The award of death benefits shall earn interest at the
attended a two-day out-of-town seminar. He, in fact, died while in Tagaytay City, on the rate of 6% per annum from the date of extrajudicial demand until finality of this Decision
last day of a five-day seminar. He spent his last living hours going to five different places and the total amount thereof as of the finality of this Decision shall earn 6% interest per
and enduring hours of travel time. Upon his return to the hotel, he had to conduct annum from such date until full payment.
another lecture and attend a program which ended at about 10:00 p.m. About three
hours thereafter, he suffered the cardiac arrest which took his life. 32 Hence, up to his SO ORDERED.
death, Reynaldo was continuously exposed to stresses of his work which, at least,
contributed to his death.

In arriving at this conclusion, the Court stresses that in determining the compensability
of an illness, it is not necessary that the employment be the sole factor in the growth,
development, or acceleration of a claimant's illness to entitle him to compensation
benefits.33It is enough that his employment contributed, even in a small degree,
to the development of the disease.34 Moreover, the degree of proof in establishing at
least a small work-connection is merely substantial evidence. The Court has
pronounced in GSIS v. Capacite:35
x x x the case of GSIS v. Vicencio x x x particularly states:

It is well-settled that the degree of proof required under P.D. No. 626 is merely
substantial evidence, which means, such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion. What the law requires is a
reasonable work-connection and not a direct causal relation. It is enough that the
hypothesis on which the workman's claim is based is probable. Medical opinion to the
contrary can be disregarded especially where there is some basis in the facts for
inferring a work connection. Probability, not certainty, is the touchstone. It is not
required that the employment be the sole factor in the growth, development or
acceleration of a claimant's illness to entitle him to the benefits provided for. It is
enough that his employment contributed, even if to a small degree, to the
development of the disease.36 (Emphasis supplied)
In sum, the Court is convinced that Julieta was able to adduce substantial evidence to
support her claims for compensation benefits in relation to her late husband's death.

On a final note, it is well to recall that the constitutional guarantee of social justice
towards labor demands a liberal attitude in favor of the employee in deciding claims for
compensability.37 This holds true despite PD 626's abandonment of the presumption of
compensability under the previous Workmen's Compensation Act. The Court has ruled,
thus:
Presidential Decree No. 626, as amended, is said to have abandoned the presumption
of compensability and the theory of aggravation prevalent under the Workmens
Compensation Act. Despite such abandonment, however, the present law has not
ceased to be an employees' compensation law or a social legislation; hence, the
liberality of the law in favor of the working man and woman still prevails, and the
official agency charged by law to implement the constitutional guarantee of social
justice should adopt a liberal attitude in favor of the employee in deciding claims for
compensability, especially in light of the compassionate policy towards labor which the
1987 Constitution vivifies and enhances.38 (Emphasis and underscoring supplied)
G.R. No. 176985 April 1, 2013 payment by respondent of the amount of Ph₱496,016.67 covering the amount illegally
deducted.
RICARDO E. VERGARA, JR., Petitioner,
vs. The CA dismissed petitioner’s case on January 9, 2007 and denied his motion for
COCA-COLA BOTTLERS PHILIPPINES, INC., Respondent. reconsideration two months thereafter. Hence, this present petition to resolve the
singular issue of whether the SMI should be included in the computation of petitioner’s
DECISION retirement benefits on the ground of consistent company practice. Petitioner insistently
avers that many DSSs who retired without achieving the sales and collection targets
were given the average SMI in their retirement package.
PERALTA, J.:
We deny.
Before Us is a petition for review on certiorari under Rule 45 of the Rules of Civil
Procedure assailing the January 9, 2007 Decision 1 and March 6, 2007 Resolution2 of
the Court of Appeals (CA) in CA .. G.R. SP No. 94622, which affirmed the January 31, This case does not fall within any of the recognized exceptions to the rule that only
2006 Decision3 and March 8, 2006 Resolution4 of the National Labor Relations questions of law are proper in a petition for review on certiorari under Rule 45 of the
Commission (NLRC) modifying the September 30, 2003 Decision5 of the Labor Arbiter Rules of Court. Settled is the rule that factual findings of labor officials, who are deemed
(LA) by deleting the sales management incentives in the computation of petitioner's to have acquired expertise in matters within their respective jurisdiction, are generally
retirement benefits. accorded not only respect but even finality, and bind us when supported by substantial
evidence.13 Certainly, it is not Our function to assess and evaluate the evidence all over
again, particularly where the findings of both the CA and the NLRC coincide.
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers
Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a District Sales
Supervisor (DSS) for Las Piñas City, Metro Manila. As stipulated in respondent’s In any event, even if this Court would evaluate petitioner's arguments on its supposed
existing Retirement Plan Rules and Regulations at the time, the Annual Performance merits, We still find no reason to disturb the CA ruling that affirmed the NLRC. The
Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of findings and conclusions of the CA show that the evidence and the arguments of the
retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance parties had all been carefully considered and passed upon. There are no relevant and
Incentive (which is the total performance incentive earned during the year immediately compelling facts to justify a different resolution which the CA failed to consider as well
preceding ÷ 12 months) × No. of Years in Service.6 as no factual conflict between the CA and the NLRC decisions.

Claiming his entitlement to an additional Ph₱474,600.00 as Sales Management Generally, employees have a vested right over existing benefits voluntarily granted to
Incentives (SMI)7 and to the amount of Ph₱496,016.67 which respondent allegedly them by their employer.14 Thus, any benefit and supplement being enjoyed by the
deducted illegally, representing the unpaid accounts of two dealers within his employees cannot be reduced, diminished, discontinued or eliminated by the
jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the employer.15 The principle of non-diminution of benefits is actually founded on the
payment of his "Full Retirement Benefits, Merit Increase, Commission/Incentives, Constitutional mandate to protect the rights of workers, to promote their welfare, and to
Length of Service, Actual, Moral and Exemplary Damages, and Attorney’s Fees."8 afford them full protection.16 In turn, said mandate is the basis of Article 4 of the Labor
Code which states that "all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations, shall be rendered in favor of labor." 17
After a series of mandatory conference, both parties partially settled with regard the
issue of merit increase and length of service.9 Subsequently, they filed their respective
Position Paper and Reply thereto dealing on the two remaining issues of SMI There is diminution of benefits when the following requisites are present: (1) the grant
entitlement and illegal deduction. or benefit is founded on a policy or has ripened into a practice over a long period of
time; (2) the practice is consistent and deliberate; (3) the practice is not due to error in
the construction or application of a doubtful or difficult question of law; and (4) the
On September 30, 2003, the LA rendered a Decision10 in favor of petitioner, directing diminution or discontinuance is done unilaterally by the employer. 18
respondent to reimburse the amount illegally deducted from petitioner’s retirement
package and to integrate therein his SMI privilege. Upon appeal of respondent,
however, the NLRC modified the award and deleted the payment of SMI. To be considered as a regular company practice, the employee must prove by
substantial evidence that the giving of the benefit is done over a long period of time,
and that it has been made consistently and deliberately. 19 Jurisprudence has not laid
Petitioner then moved to partially execute the reimbursement of illegal deduction, which down any hard-and-fast rule as to the length of time that company practice should have
the LA granted despite respondent’s opposition.11 Later, without prejudice to the been exercised in order to constitute voluntary employer practice. 20 The common
pendency of petitioner’s petition for certiorari before the CA, the parties executed a denominator in previously decided cases appears to be the regularity and
Compromise Agreement12 on October 4, 2006, whereby petitioner acknowledged full deliberateness of the grant of benefits over a significant period of time. 21 It requires an
indubitable showing that the employer agreed to continue giving the benefit knowing be proven by the offering party who must allege and establish specific, repetitive
fully well that the employees are not covered by any provision of the law or agreement conduct that might constitute evidence of habit or company practice. 28
requiring payment thereof.22 In sum, the benefit must be characterized by regularity,
voluntary and deliberate intent of the employer to grant the benefit over a considerable To close, We rule that petitioner could have salvaged his case had he step up to
period of time.23 disprove respondent’s contention that he miserably failed to meet the collection
qualifiers of the SMI. Respondent argues that −
Upon review of the entire case records, We find no substantial evidence to prove that
the grant of SMI to all retired DSSs regardless of whether or not they qualify to the An examination of the Company’s aged trial balance reveals that petitioner did not meet
same had ripened into company practice. Despite more than sufficient opportunity the trade receivable qualifier. On the contrary, the said trial balance reveals that
given him while his case was pending before the NLRC, the CA, and even to this Court, petitioner had a large amount of uncollected overdue accounts. For the year 2001, his
petitioner utterly failed to adduce proof to establish his allegation that SMI has been percentage collection efficiency for current issuance was at an average of 13.5% a
consistently, deliberately and voluntarily granted to all retired DSSs without any month as against the required 70%. For the same, petitioner’s collection efficiency was
qualification or conditions whatsoever. The only two pieces of evidence that he at an average of 60.25% per month for receivables aged 1-30 days, which is again,
stubbornly presented throughout the entirety of this case are the sworn statements of way below the required 90%. For receivables aged 31-60 days during said year,
Renato C. Hidalgo (Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of petitioner’s collection efficiency was at an average of 56.17% per month, which is
respondent who retired in 2000 and 1998, respectively. They claimed that the SMI was approximately half of the required 100%. Worse, for receivables over 60 days old,
included in their retirement package even if they did not meet the sales and collection petitioner’s average collection efficiency per month was a reprehensively low 14.10%
qualifiers.24 However, juxtaposing these with the evidence presented by respondent as against the required 100%.29
would reveal the frailty of their statements.
The above data was repeatedly raised by respondent in its Rejoinder (To Complainant’s
The declarations of Hidalgo and Velazquez were sufficiently countered by respondent Reply) before the LA,30 Memorandum of Appeal31 and Opposition (To Complainant-
through the affidavits executed by Norman R. Biola (Biola), Moises D. Escasura Appellee’s Motion for Reconsideration)32 before the NLRC, and Comment (On the
(Escasura), and Ma. Vanessa R. Balles (Balles). 25 Biola pointed out the various stop- Petition),33 Memorandum (For the Private Respondent),34 and Comment (On the
gap measures undertaken by respondent beginning 1999 in order to arrest the Motion for Reconsideration)35 before the CA. Instead of frontally rebutting the data,
deterioration of its accounts receivables balance, two of which relate to the policies on petitioner treated them with deafening silence; thus, reasonably and logically implying
the grant of SMI and to the change in the management structure of respondent upon lack of evidence to support the contrary.
its re-acquisition by San Miguel Corporation. Escasura represented that he has
personal knowledge of the circumstances behind the retirement of Hidalgo and
Velazquez. He attested that contrary to petitioner’s claim, Hidalgo was in fact qualified WHEREFORE, the petition is DENIED. The January 9, 2007 Decision and March 6,
for the SMI. As for Velazquez, Escasura asserted that even if he (Velazquez) did not 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 94622, which affirmed the
qualify for the SMI, respondent’s General Manager in its Calamba plant still granted his January 31, 2006 Decision and March 8, 2006 Resolution of the NLRC deleting the
(Velazquez) request, along with other numerous concessions, to achieve industrial LA's inclusion of sales management incentives in the computation of petitioner's
peace in the plant which was then experiencing labor relations problems. Lastly, Balles retirement benefits, is hereby AFFIRMED.
confirmed that petitioner failed to meet the trade receivable qualifiers of the SMI. She
also cited the cases of Ed Valencia (Valencia) and Emmanuel Gutierrez (Gutierrez), SO ORDERED.
both DSSs of respondent who retired on January 31, 2002 and December 30, 2002,
respectively. She noted that, unlike Valencia, Gutierrez also did not receive the SMI as
part of his retirement pay, since he failed to qualify under the policy guidelines. The
verity of all these statements and representations stands and holds true to Us,
considering that petitioner did not present any iota of proof to debunk the same.1âwphi1

Therefore, respondent's isolated act of including the SMI in the retirement package of
Velazquez could hardly be classified as a company practice that may be considered an
enforceable obligation. To repeat, the principle against diminution of benefits is
applicable only if the grant or benefit is founded on an express policy or has ripened
into a practice over a long period of time which is consistent and deliberate; it
presupposes that a company practice, policy and tradition favorable to the employees
has been clearly established; and that the payments made by the company pursuant
to it have ripened into benefits enjoyed by them.26 Certainly, a practice or custom is, as
a general rule, not a source of a legally demandable or enforceable right. 27 Company
practice, just like any other fact, habits, customs, usage or patterns of conduct, must
G.R. No. 188949 July 26, 2010 Petitioner and respondent tried to thresh out their differences in accordance with the
grievance procedure as provided in their collective bargaining agreement. During the
CENTRAL AZUCARERA DE TARLAC, Petitioner, grievance meeting, the representative of petitioner explained that the change in the
vs. computation of the 13th-month pay was intended to rectify an error in the computation,
CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU, Respondent. particularly the concept of basic pay which should have included only the basic monthly
pay of the employees.6
DECISION
For failure of the parties to arrive at a settlement, respondent applied for preventive
mediation before the National Conciliation and Mediation Board. However, despite four
NACHURA, J.: (4) conciliatory meetings, the parties still failed to settle the dispute. On March 29, 2007,
respondent filed a complaint against petitioner for money claims based on the alleged
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of diminution of benefits/erroneous computation of 13th-month pay before the Regional
Court, assailing the Decision1 dated May 28, 2009, and the Resolution2 dated July 28, Arbitration Branch of the National Labor Relations Commission (NLRC).7
2009 of the Court of Appeals (CA) in CA-G.R. SP No. 106657.
On October 31, 2007, the Labor Arbiter rendered a Decision8 dismissing the complaint
The factual antecedents of the case are as follows: and declaring that the petitioner had the right to rectify the error in the computation of
the 13th-month pay of its employees.9 The fallo of the Decision reads:
Petitioner is a domestic corporation engaged in the business of sugar manufacturing,
while respondent is a legitimate labor organization which serves as the exclusive WHEREFORE, premises considered, the complaint filed by the complainants against
bargaining representative of petitioner’s rank-and-file employees. The controversy the respondents should be DISMISSED with prejudice for utter lack of merit.
stems from the interpretation of the term "basic pay," essential in the computation of
the 13th-month pay. SO ORDERED.10

The facts of this case are not in dispute. In compliance with Presidential Decree (P.D.) Respondents filed an appeal. On August 14, 2008, the NLRC rendered a
No. 851, petitioner granted its employees the mandatory thirteenth (13th) - month pay Decision11 reversing the Labor Arbiter. The dispositive portion of the Decision reads:
since 1975. The formula used by petitioner in computing the 13th-month pay was: Total
Basic Annual Salary divided by twelve (12). Included in petitioner’s computation of the
Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours WHEREFORE, the decision appealed is reversed and set aside and respondent-
overtime pay on Sunday and legal/special holiday; night premium pay; and vacation appellee Central Azucarera de Tarlac is hereby ordered to adhere to its established
and sick leaves for each year. Throughout the years, petitioner used this computation practice of granting 13th[-] month pay on the basis of gross annual basic which includes
until 2006.3 basic pay, premium pay for work in rest days and special holidays, night shift differential
and paid vacation and sick leaves for each year.
On November 6, 2004, respondent staged a strike. During the pendency of the strike,
petitioner declared a temporary cessation of operations. In December 2005, all the Additionally, respondent-appellee is ordered to observe the guaranteed one[-]month
striking union members were allowed to return to work. Subsequently, petitioner pay by way of 13th month pay.
declared another temporary cessation of operations for the months of April and May
2006. The suspension of operation was lifted on June 2006, but the rank-and-file SO ORDERED. 12
employees were allowed to report for work on a fifteen (15) day-per-month rotation
basis that lasted until September 2006. In December 2006, petitioner gave the Petitioner filed a motion for reconsideration. However, the same was denied in a
employees their 13th-month pay based on the employee’s total earnings during the Resolution dated November 27, 2008. Petitioner then filed a petition for certiorari under
year divided by 12.4 Rule 65 of the Rules of Court before the CA.13

Respondent objected to this computation. It averred that petitioner did not adhere to On May 28, 2009, the CA rendered a Decision 14 dismissing the petition, and affirming
the usual computation of the 13th-month pay. It claimed that the divisor should have the decision and resolution of the NLRC, viz.:
been eight (8) instead of 12, because the employees worked for only 8 months in 2006.
It likewise asserted that petitioner did not observe the company practice of giving its
employees the guaranteed amount equivalent to their one month pay, in instances WHEREFORE, the foregoing considered, the petition is hereby DISMISSED and the
where the computed 13th-month pay was less than their basic monthly pay.5 assailed August 14, 2008 Decision and November 27, 2008 Resolution of the NLRC,
are hereby AFFIRMED. No costs.
SO ORDERED.15 On November 16, 1987, the Revised Guidelines on the Implementation of the 13th-
Month Pay Law was issued. Significantly, under this Revised Guidelines, it was
Aggrieved, petitioner filed the instant petition, alleging that the CA committed a specifically stated that the minimum 13th-month pay required by law shall not be less
reversible error in affirming the Decision of the NLRC, and praying that the Decision of than one-twelfth (1/12) of the total basic salary earned by an employee within a
the Labor Arbiter be reinstated. calendar year.1avvphi1

The petition is denied for lack of merit. Furthermore, the term "basic salary" of an employee for the purpose of computing the
13th-month pay was interpreted to include all remuneration or earnings paid by the
employer for services rendered, but does not include allowances and monetary benefits
The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an which are not integrated as part of the regular or basic salary, such as the cash
additional income based on wage but not part of the wage. It is equivalent to one-twelfth equivalent of unused vacation and sick leave credits, overtime, premium, night
(1/12) of the total basic salary earned by an employee within a calendar year. All rank- differential and holiday pay, and cost-of-living allowances. However, these salary-
and-file employees, regardless of their designation or employment status and related benefits should be included as part of the basic salary in the computation of the
irrespective of the method by which their wages are paid, are entitled to this benefit, 13th-month pay if, by individual or collective agreement, company practice or policy,
provided that they have worked for at least one month during the calendar year. If the the same are treated as part of the basic salary of the employees.
employee worked for only a portion of the year, the 13th-month pay is computed pro
rata.16
Based on the foregoing, it is clear that there could have no erroneous interpretation or
application of what is included in the term "basic salary" for purposes of computing the
Petitioner argues that there was an error in the computation of the 13th-month pay of 13th-month pay of employees. From the inception of P.D. No. 851 on December 16,
its employees as a result of its mistake in implementing P.D. No. 851, an error that was 1975, clear-cut administrative guidelines have been issued to insure uniformity in the
discovered by the management only when respondent raised a question concerning interpretation, application, and enforcement of the provisions of P.D. No. 851 and
the computation of the employees’ its implementing regulations.

13th-month pay for 2006. Admittedly, it was an error that was repeatedly committed for As correctly ruled by the CA, the practice of petitioner in giving 13th-month pay based
almost thirty (30) years. Petitioner insists that the length of time during which an on the employees’ gross annual earnings which included the basic monthly salary,
employer has performed a certain act beneficial to the employees, does not prove that premium pay for work on rest days and special holidays, night shift differential pay and
such an act was not done in error. It maintains that for the claim of mistake to be holiday pay continued for almost thirty (30) years and has ripened into a company policy
negated, there must be a clear showing that the employer had freely, voluntarily, and or practice which cannot be unilaterally withdrawn.
continuously performed the act, knowing that he is under no obligation to do so.
Petitioner asserts that such voluntariness was absent in this case. 17
Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates
that benefits given to employees cannot be taken back or reduced unilaterally by the
The Rules and Regulations Implementing P.D. No. 851, promulgated on December 22, employer because the benefit has become part of the employment contract, written or
1975, defines 13th-month pay and basic salary as follows: unwritten. 18 The rule against diminution of benefits applies if it is shown that the grant
of the benefit is based on an express policy or has ripened into a practice over a long
Sec. 2. Definition of certain terms. - As used in this issuance: period of time and that the practice is consistent and deliberate. Nevertheless, the rule
will not apply if the practice is due to error in the construction or application of a doubtful
(a) "Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of or difficult question of law. But even in cases of error, it should be shown that the
an employee within a calendar year; (b) "Basic salary" shall include all correction is done soon after discovery of the error.19
remunerations or earnings paid by an employer to an employee for services
rendered but may not include cost-of-living allowances granted pursuant to The argument of petitioner that the grant of the benefit was not voluntary and was due
Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing to error in the interpretation of what is included in the basic salary deserves scant
payments, and all allowances and monetary benefits which are not considered consideration. No doubtful or difficult question of law is involved in this case. The
or integrated as part of the regular or basic salary of the employee at the time guidelines set by the law are not difficult to decipher. The voluntariness of the grant of
of the promulgation of the Decree on December 16, 1975. the benefit was manifested by the number of years the employer had paid the benefit
to its employees. Petitioner only changed the formula in the computation of the 13th-
On January 16, 1976, the Supplementary Rules and Regulations Implementing P.D. month pay after almost 30 years and only after the dispute between the management
No. 851 was issued. The Supplementary Rules clarifies that overtime pay, earnings, and employees erupted. This act of petitioner in changing the formula at this time
and other remuneration that are not part of the basic salary shall not be included in the cannot be sanctioned, as it indicates a badge of bad faith.
computation of the 13th-month pay.
Furthermore, petitioner cannot use the argument that it is suffering from financial losses
to claim exemption from the coverage of the law on 13th-month pay, or to spare it from
its erroneous unilateral computation of the 13th-month pay of its employees. Under
Section 7 of the Rules and Regulations Implementing P.D. No. 851, distressed
employers shall qualify for exemption from the requirement of the Decree only upon
prior authorization by the Secretary of Labor.20 In this case, no such prior authorization
has been obtained by petitioner; thus, it is not entitled to claim such exemption.

WHEREFORE, the Decision dated May 28, 2009 and the Resolution dated July 28,
2009 of the Court of Appeals in CA-G.R. SP No. 106657 are hereby AFFIRMED. Costs
against petitioner.

SO ORDERED.
G.R. No. 221813 Efren T. Genise, Alquin A. Franco, Pabio L. Aleman, Pepito G. Hepriana, Elias S.
Trespeces, Edgar M. Sobrino, Alejandro H. Sitchon, Nenet Arita, Dr. Welilmo T. Neri,
MARICALUM MINING CORPORATION, Petitioner Erlinda L. Fernandez, and Edgardo S. Pefiaflorida (complainants) in G.R. No. 222723.
vs.
ELY G. FLORENTINO, GLENN BUENVIAJE, RUDY J. GOMEZ, represented by his Both of these petitions are assailing the propriety of the October 29, 2014 Decision 2 of
heir THELMA GOMEZ, ALEJANDRO H. SITCHON, NENET ARITA, FERNANDO the Court of Appeals (CA) in CA-G.R. SP No. 06835. The CA upheld the November 29,
SIGUAN, DENNIS ABELIDA, NOEL S. ACCOLADOR,WILFREDO TAGANILE, SR., 2011 Decision3 and January 31, 2012 Resolution4 of the National Labor Relations
MARTIR S. AGSOY, SR., MELCHOR APUCA Y, DOMINGO LA VIDA, JESUS Commission (NLRC) in NLRC Case No. VAC-05-000412-11. In the present petitions,
MOSQUEDA, RUELITO A. VILLARMIA, SOFRONIO M. A YON, EFREN T. GENISE, complainants seek to reinstate the April 20, 2011 Decision 5 of the Labor Arbiter (LA) in
ALQUIN A. FRANCO, PABLO L. ALEMAN, PEPITO G. HEPRIANA, ELIAS S. consolidated cases NLRC RAB VI CASE No. 09-10755-10, NLRC RAB VI CASE No.
TRESPECES, EDGAR SOBRINO, Respondents 12-10915-10, NLRC RAB VI CASE No. 12-10916-10 and NLRC RAB VI CASE No. 12-
10917-10, which granted their joint complaints for monetary claims against G Holdings,
x-----------------------x Inc. (G Holdings); while Maricalum Mining seeks to have the case remanded to the LA
for proper computation of its total monetary liability to the complainants.
G.R. No. 222723
The Antecedents
ELY FLORENTINO, GLENN BUENVIAJE, RUDY J. GOMEZ, represented by his
heir THELMA GOMEZ, FERNANDO SIGUAN, DENNIS ABELIDA, NOEL S. The dispute traces its roots back to when the Philippine National Bank (PNB, a former
ACCOLADOR,WILFREDO TAGANILE, SR., MARTIR S. AGSOY, SR., MELCHOR government-owned-and-controlled corporation) and the Development Bank of the
APUCA Y, DOMINGO LA VIDA, JESUS MOSQUEDA, RUELITO A. VILLARMIA, Philippines (DBP) transferred its ownership of Maricalum Mining to the National
SOFRONIO M. A YON, EFREN T. GENISE, ALQUIN A. FRANCO, PABLO L. Government for disposition or privatization because it had become a non-performing
ALEMAN, PEPITO G. HEPRIANA, ELIAS S. TRESPECES, EDGAR SOBRINO, asset.6
ALEJANDRO H. SITCHON, NENET ARITA, WELILMO T. NERI, ERLINDA
FERNANDEZ, and EDGARDO PENAFLORIDA, Petitioners On October 2, 1992, the National Government thru the Asset Privatization
vs. Trust (APT) executed a Purchase and Sale Agreement (PSA) with G Holdings, a
NATIONAL LABOR RELATIONS COMMISSION – 7th DIVISION, CEBU CITY, "G" domestic corporation primarily engaged in the business of owning and holding shares
HOLDINGS, INC., and TEODORO G. BERNARDINO, ROLANDO DEGOJAS, of stock of different companies. G Holding bought 90% of Maricalum Mining's shares
MARICALUM MINING CORPORATION. Respondents and financial claims in the form of company notes. In exchange, the PSA obliged G
Holdings to pay APT the amount of ₱673,161,280.00, with a down payment of
DECISION ₱98,704,000.00 and with the balance divided into four tranches payable in installment
over a period of ten years.7 Concomitantly, G Holdings also assumed Maricalum
Mining's liabilities in the form of company notes. The said financial liabilities were
GESMUNDO, J.: converted into three (3) Promissory Notes (PNs) totaling ₱550,000,000.00
(₱114,715,360.00, ₱186,550,560.00 and ₱248,734,080.00), which were secured by
A subsidiary company's separate corporate personality may be disregarded only when mortgages over some of Maricalum Mining's properties. 8 These PNs obliged Maricalum
the evidence shows that such separate personality was being used by its parent or Mining to pay G Holdings the stipulated amount of ₱550,000,000.00.
holding corporation to perpetrate a fraud or evade an existing obligation.
Concomitantly, employees of a corporation have no cause of action for labor-related Upon the signing of the PSA and paying the stipulated down payment, G Holdings
claims against another unaffiliated corporation, which does not exercise control over immediately took physical possession of Maricalum Mining's Sipalay Mining Complex,
them. as well as its facilities, and took full control of the latter's management and operations. 9

The subjects of the instant consolidated cases are two (2) petitions for appeal On January 26, 1999, the Sipalay General Hospital, Inc. (Sipalay Hospital) was duly
by certiorari filed by the following petitioners: incorporated to provide medical services and facilities to the general public. 10

1) Maricalum Mining Corporation (Maricalum Mining) m G.R. No. 221813; and Afterwards, some of Maricalum Mining's employees retired and formed several
manpower cooperatives, 11 as follow:
2) Ely Florentino, Glenn Buenviaje, Rudy J. Gomez, 1 Fernando Siguan, Dennis
Abelida, Noel S. Acollador, Wilfredo C. Taganile, Sr., Martir S. Agsoy, Sr., Melchor B.
Apucay, Domingo Lavida, Jesus Mosqueda, Ruelito A. Villarmia, Sofronio M. Ayon, COOPERATIVE DATE OF REGISTRATION
 During the hearings, complainants presented the affidavits of Alejandro H. Sitchon and
San Jose Multi- December 8, 1998
Dennis Abelida which attested that, prior to the formation of the manpower
Purpose
cooperatives, their services were terminated by Maricalum Mining as part of its
Cooperative (SJMPC)
retrenchment program. 17 They claimed that, in 1999, they were called by the top
Centennial Multi- April 5, 1999 executives of Maricalum Mining and G Holdings and informed that they will have to
Purpose form a cooperative for the purpose of providing manpower services in view of the
Cooperative (CeMPC) retrenchment program. Thus, they were "rehired" only after their respective manpower
cooperative services were formed. Moreover, they also submitted the following
Sipalay Integrated April 5, 1999 documents: (a) Cash Vouchers 18 representing payments to the manpower
Multi-Purpose cooperatives; (b) a Payment Schedule19 representing G Holdings' payment of social
Cooperative (SIMPC) security contributions in favor of some Sipalay Hospital employees (c) Termination
Letters 20 written by representatives of G Holdings, which were addressed to
Allied Services Multi- July 23, 1999 complainants including those employed by Sipalay Hospital; and (d) Caretaker
Purpose Schedules21 prepared by G Holdings to prove the existence of employment relations.
Cooperative (ASMPC)
After the hearings were concluded, complainants presented their Position
Cansibit Multi- September 16, 1999 Paper22 claiming that: they have not received any increase in wages since they were
Purpose allegedly rehired; except for Sipalay Hospital's employees, they worked as an
Cooperative (CaMPC) augmentation force to the security guards charged with securing Maricalum Mining's
assets which were acquired by G Holdings; Maricalum Mining's assets have been
exposed to pilferage by some of its rank-and-file employees whose claims for collective
In 2000, each of the said cooperatives executed identical sets of Memorandum of
bargaining benefits were undergoing litigation; the Sipalay Hospital is purportedly
Agreement 12 with Maricalum Mining wherein they undertook, among others, to provide
"among the assets" of Maricalum Mining acquired by G Holdings; the payrolls for their
the latter with a steady supply of workers, machinery and equipment for a monthly fee.
wages were supposedly prepared by G Holdings' accounting department; since the
second half of April 2007, they have not been paid their salary; and some of their
On June 1, 2001, Maricalum Mining's Vice President and Resident Manager Jesus H. services were dismissed without any due process.
Bermejo wrote a Memorandum 13 to the cooperatives informing them that Maricalum
Mining has decided to stop its mining and milling operations effective July 1, 2001 in
Based on these factual claims, complainants posited that: the manpower cooperatives
order to avert continuing losses brought about by the low metal prices and high cost of
were mere alter egos of G Holdings organized to subvert the "tenurial rights" of the
production.
complainants; G Holdings implemented a retrenchment scheme to dismiss the
caretakers it hired before the foreclosure of Maricalum Mining's assets; and G Holdings
In July 2001, the properties of Maricalum Mining, which had been mortgaged to secure was their employer because it allegedly had the power to hire, pay wages, control
the PNs, were extrajudicially foreclosed and eventually sold to G Holdings as the working methods and dismiss them.
highest bidder on December 3, 2001. 14
Correspondingly, G Holdings filed its Position Paper 23 maintaining that: it was
On September 23, 2010, some of Maricalum Mining's workers, including complainants, Maricalum Mining who entered into an agreement with the manpower corporations for
and some of Sipalay General Hospital's employees jointly filed a Complaint15 with the the employment of complainants' services for auxiliary or seasonal mining activities;
LA against G Holdings, its president, and officer-in-charge, and the cooperatives and the manpower cooperatives were the ones who paid the wages, deducted social
its officers for illegal dismissal, underpayment and nonpayment of salaries, security contributions, withheld taxes, provided medical benefits and had control over
underpayment of overtime pay, underpayment of premium pay for holiday, nonpayment the working means and methods of complainants; despite Maricalum Mining's decision
of separation pay, underpayment of holiday pay, nonpayment of service incentive leave to stop its mining and milling operations, complainants still continued to render their
pay, nonpayment of vacation and sick leave, nonpayment of 13th month pay, moral services for the orderly winding down of the mines' operations; Maricalum Mining
and exemplary damages, and attorneys fees. should have been impleaded because it is supposed to be the indispensable party in
the present suit; (e) Marical um Mining, as well as the manpower cooperatives, each
On December 2, 2010, complainants and CeMPC Chairman Alejandro H. Sitchon have distinct legal personalities and that their individual corporate liabilities cannot be
surprisingly filed his complaint for illegal dismissal and corresponding monetary claims imposed upon each other; and there was no employer-employee relationship between
with the LA against G Holdings, its officer-in-charge and CeMPC. 16 G Holdings and complainants.

Thereafter, the complaints were consolidated by the LA. Likewise, the manpower cooperatives jointly filed their Position Paper 24 arguing that:
complainants had exhibited a favorable response when they were properly briefed of
 the nature and benefits of working under a cooperative setup; complainants received (13) Jesus Mosqueda 48,303.22 4,025.27
their fair share of benefits; complainants were entitled to cast their respective votes in
deciding the affairs of their respective cooperatives; complainants, as member of the (14) Alquin Franco 180,281.25 15,023.44
cooperatives, are also co-owners of the said cooperative and they cannot bargain for
higher labor benefits with other co-owners; and the LA has no jurisdiction over the case (15) Fabio Aleman 30,000.00 2,500.00
because there is no employer-employee relationship between a cooperative and its
(16) Elias Trespeces 180,000.00 15,000.00
members.
(17) Pepito Hedriana 18,000.00 1,500.00
The LA Ruling
(18) Dennis Abelida 149,941.00 12,945.08
In its decision dated April 28, 2011, the LA ruled in favor of complainants.1awp++i1 It (19) Melchor Apucay 371,587.01 30,965.58
held that G Holdings is guilty of labor-only contracting with the manpower cooperatives
thereby making all of them solidarily and directly liable to complainants. The LA (20) Martin Agsoy 128,945.08 10,745.42
reasoned that: G Holdings connived with Marcalum Mining in orchestrating the
(21) Ruelito Villarmia 224,486.95 18,707.25
formation of manpower cooperatives to circumvent complainants' labor standards
rights; it is highly unlikely that complainants (except Sipalay Hospital's employees) (22) Fernando Siguan 417,039.32 34,753.28
would spontaneously form manpower cooperatives on their own and in unison without
the guidance of G Holdings and Maricalum Mining; and complainants effectively (23) Alejandro Sitchon 380,423.16 31,701.93
became the employees of G Holdings because their work had changed from assisting
in the mining operations to safeguarding the properties in the Sipalay Mining Complex, (24) Welilmo Neri 456,502.36 38,041.86
which had already been acquired by G Holding. On the other hand, the LA denied the (25) Erlinda Fernandez 125,553.88 10,462.82
claims of complainants Nenet Arita and Domingo Lavida for lack of factual basis.
The fallo of the LA decision reads: (26) Edgardo Sobrino 112,521.40 9,376.78
(27) Wildredo Taganile 52,386.82 4,365.57
WHEREFORE, premises considered, judgment is hereby rendered DIRECTING
respondent "G" HOLDINGS, INC. to pay complainants as follows: (28) Bartholomew Jamboy 68,000.00 5,666.67
₱4,484,337.48 ₱373,694.79
Unpaid Salaries/ Wages 13th Month Pay
(1) Salvador Arceo ₱81,418.08 ₱6,784.84 and the amount of ₱485,803.23 as attorney's fees, or the total amount of FIVE MILLION
THREE HUNDRED FORTY-THREE THOUSAND EIGHT HUNDRED THIRTY-FIVE
(2) Sofronio Ayon 79,158.50 6,596.54
and 50/100 PESOS (₱5,343,835.50).
(3) Glenn Buenviaje 105,558.40 8,796.53
The other claims are DISMISSED for lack of merit.
(4) Ely Florentino 102,325.28 8,527.11
(5) Rogelio Fulo 99,352.23 8,279.35 Further, the complaints against respondents SIP ALA Y INTEGRATED MULTI-
PURPOSE COOPERATIVE, ALLIED SERVICES MULTI-COOPERATIVE, SAN JOSE
(6) Efren Genise 161,149.18 13,429.10 MULTI-PURPOSE COOPERATIVE, CANSIBIT MULTI-PURPOSE COOPERATIVE,
and CENTENNIAL MULTI-PURPOSE COOPERATIVE, being mere agents of
(7) Rudy Gomez 72,133.41 6,011.12
respondent "G" HOLDINGS, INC., are hereby DISMISSED.
(8) Jessie Magallanes 239,251.94 19,937.66
SO ORDERED.25
(9) Freddie Masicampo 143,415.85 11,951.32
(10) Edgardo Penaflorida 146,483.60 12,206.97 The parties filed their respective appeals to the NLRC.
(11) Noel Acollador 89,163.46 7,430.29
On July 18, 2011, Marical um Mining filed its Appeal-in-Intervention 26 seeking to: (a)
(12) Gorgonio Baladhay 220,956.10 18,413.01 reverse and set aside the Labor Arbiter's Decision; (b) declare Mari cal um Mining as
the true and proper party-in-interest; (c) remand the case back to the Labor Arbiter for
proper computation of the money claims of the complainants; and (d) give Maricalum Complainants and Maricalum Mining filed their respective motions for reconsideration
Mining the opportunity to settle with the complainants. before the NLRC. On January 31, 2012, it issued a resolution modifying its previous
decision. The dispositive portion of the NLRC resolution state:
The NLRC Ruling
WHEREFORE, premises considered, intervenor's Motion for Reconsideration is only
In its decision dated November 29, 2011, the NLRC modified the LA ruling. It held that PARTIALLY GRANTED. The Decision promulgated by the Commission on 29
Dr. Welilmo T. Neri, Erlinda L. Fernandez and Edgar M. Sobrino are not entitled to the November 2011 modifying the Labor Arbiter's decision as stated therein, is further
monetary awards because they were not able to establish the fact of their employment MODIFIED to the effect that the monetary awards adjudged in favor of complainants
relationship with G Holdings or Maricalum Mining because Sipalay Hospital has a Wilfredo Taganile and Bartholomew T. Jamboy are CANCELLED.
separate and distinct corporate personality. As to the remaining complainants, it found
that no evidence was adduced to prove that the salaries/wages and the 13 th month pay SO ORDERED.29
had been paid.
Undaunted, the parties filed their respective petitions for certiorari before the CA.
However, the NLRC imposed the liability of paying the monetary awards imposed by
the LA against Maricalum Mining, instead of G Holdings, based on the following The CA Ruling
observations that: it was Maricalum Mining-not G Holdings-who entered into service
contracts by way of a Memorandum of Agreement with each of the manpower
cooperatives; complainants continued rendering their services at the insistence of In its decision dated October 29, 2014, the CA denied the petitions and affirmed the
Maricalum Mining through their cooperatives; Maricalum Mining never relinquished decision of the NLRC. It ratiocinated that factual issues are not fit subjects for review
possession over the Sipalay Mining Complex; Maricalum Mining continuously availed via the extraordinary remedy of certiorari. The CA emphasized that the NLRC's factual
of the services of complainants through their respective manpower cooperatives; in G findings are conclusive and binding on the appellate courts when they are supported
Holdings, Inc. v. National Mines and Allied Workers Union Local 103 (NAMAWU), et by substantial evidence. Thus, it maintained that it cannot review and re-evaluate the
al. 27 (NAMA WU Case), the Court already held that G Holdings and Maricalum Mining evidence all over again because there was no showing that the NLRC's findings of facts
have separate and distinct corporate personalities. The dispositive portion of the NLRC were reached arbitrarily. The decretal portion of the CA decision states:
ruling states:
WHEREFORE, premises considered, the instant petition for certiorari is DENIED, and
WHEREFORE, premises considered, the Decision rendered by the Labor Arbiter on 20 the assailed Decision dated 29 December 2011 and two Resolutions both dated 31
April 2011 is hereby MODIFIED, to wit: January 2012 of the National Labor Relations Commission are hereby AFFIRMED in
all respects.
1) the monetary award adjudged to complainants Jessie Magallanes,
Rogelio E. Fulo, Salvador J. Arceo, Freddie Masicampo, Welilmo Costs against petitioners.
Neri, Erlinda Fernandez and Edgar Sobrino are CANCELLED;
SO ORDERED.30
2) the award of ten percent (10%) attorney's fees is ADJUSTED
commensurate to the award of unpaid salaries/wages and Hence, these consolidated petitions essentially raising the following issues:
13th month pay of the remaining complainants;
I
3) the directive for respondent "G" Holdings, Inc. to pay complainants
the monetary awards adjudged by the Labor Arbiter is CANCELLED; WHETHER THE COURT OF APPEALS ERRED IN REFUSING TO RE-EVALUATE
THE FACTS AND IN FINDING NO GRAVE ABUSE OF DISCRETION ON THE PART
4) it is intervenor that is, accordingly, directed to pay the remaining OF THE NLRC;
complainants their respective monetary awards.1âwphi1
II
In all other respects the Decision STANDS.
WHETHER THE COURT OF APPEALS ERRED IN AFFIRMING THE NLRC'S
SO ORDERED.28 FINDING OF SUBSTANTIAL EVIDENCE IN GRANTING THE COMPLAINANTS'
MONETARY AWARD AS WELL AS ITS REFUSAL TO REMAND THE CASE BACK
TO THE LABOR ARBITER FOR RE-COMPUTATION OF SUCH AWARD;
III shares of stock are owned by the APT; ( e) Joost Pekelharing-not Bernardino-is G
Holdings' president; (f) in the NAMA WU Case, it was already held that control over
WHETHER THE COURT OF APPEALS ERRED IN DISREGARDING THAT THE Maricalum Mining was exercised by the APT and not G Holdings; (g) the NLRC did not
NLRC ALLOWED MARICALUM MINING TO INTERVENE IN THE CASE ONLY ON commit any grave abuse of discretion when it allowed Maricalum Mining to intervene
APPEAL; after the LA's decision was promulgated; (h) the cash vouchers, payment schedule,
termination letters and caretaker schedules presented by complainants do not prove
the employment relationship with G Holdings because the signatories thereto were
IV either from Maricalum Mining or the manpower cooperatives; (i) this Court's
pronouncements in the NAMA WU Case and in Republic v. G Holdings, Inc. 31 prove
WHETHER THE COURT OF APPEALS ERRED IN AFFIRMING THE NLRC'S RULING that Maricalum Mining never relinquished possession of the Sipalay Mining Complex in
WHICH ALLOWED THE PIERCING OF THE CORPORA TE VEIL AGAINST favor of G Holdings; and (j) Dr. Welilmo T. Neri, Erlinda L. Fernandez, Edgar M. Sobrino
MARICALUM MINING BUT NOT AGAINST SIPALAY HOSPITAL. and Wilfredo C. Taganile, Sr. were employees of the Sipalay Hospital, which is a
separate business entity, and were not members in any of the manpower cooperatives,
Complainants argue that the CA committed several reversible errors because: (a) it which entered into a labor-only arrangement with Maricalum Mining.
refused to re-evaluate the facts of the case even if the factual findings of the NLRC and
the LA were conflicting; (b) it failed to consider that G Holdings had already acquired The Court's Ruling
all of Maricalum Mining's assets and that Teodoro G. Bernardino (Bernardino) was now
the president and controlling stockholder of both corporations; (c) it failed to take into It is basic that only pure questions of law should be raised in petitions for review
account that Maricalum Mining was allowed to intervene only on appeal even though it on certiorari under Rule 45 of the Rules of Court.32 It will not entertain questions of fact
was not a real party-in-interest; (d) it failed to appreciate the LA' s findings that as the factual findings of appellate courts are final, binding or conclusive on the parties
Maricalum Mining could not have hired complainants because G Holdings had already and upon this court when supported by substantial evidence.33 In labor cases, however,
acquired in an auction sale all the assets in the Sipalay Mining Complex; (e) it failed to the Court has to examine the CA' s Decision from the prism of whether the latter had
consider that all resident managers of the Sipalay Mining Complex were employed by correctly determined the presence or absence of grave abuse of discretion in the
G Holdings; (f) the foreclosure of the assets in the Sipalay Mining Complex was NLRC's Decision.34
intended to bring the said properties outside the reach of complainants; (g) the Sipalay
Hospital had been existing as a hospital for Maricalum Mining's employees long before
G Holdings arrived; (h) Dr. Welilmo T. Neri, Erlinda L. Fernandez, Edgar M. Sobrino In this case, the principle that this Court is not a trier of facts applies with greater force
and Wilfredo C. Taganile, Sr. were all hired by Maricalum Mining but were dismissed in labor cases. 35 Grave abuse must have attended the evaluation of the facts and
by G Holdings; (i) Sipalay Hospital existed without a board of directors and its evidence presented by the parties.36 This Court is keenly aware that the CA undertook
employees were receiving orders from Maricalum Mining and, later on, replaced by G a Rule 65 review-not a review on appeal-of the NLRC decision challenged before it. 37 It
Holdings' officer-in-charge; and (j) Maricalum Mining and G Holdings controlled the follows that this Court will not re-examine conflicting evidence, reevaluate the credibility
affairs of Sipalay Hospital. of witnesses, or substitute the findings of fact of the NLRC, an administrative body that
has expertise in its specialized field. 38 It may only examine the facts only for the
purpose of resolving allegations and determining the existence of grave abuse of
Maricalum Mining contends that the CA committed grave abuse of discretion because discretion. 39 Accordingly, with these procedural guidelines, the Court will now proceed
the monetary awards were improperly computed. It claims that complainants had to determine whether or not the CA had committed any reversible error in affirming the
stopped rendering their services since September 23, 2010, hence, their monetary NLRC's Decision.
claims covering the second half of April 2007 up to July 2007 have already prescribed
as provided pursuant to Article 291 of the Labor Code. Moreover, it also stressed that
the NLRC should have remanded the case to the LA for the determination of the Propriety of the Monetary Awards
manpower cooperatives' net surpluses and how these amounts were distributed to their
members to aid the proper determination of the total amount of the monetary award. Ordinarily, when there is sufficient evidence before the Court to enable it to resolve
Finally, Maricalum Mining avers that the awards in favor of some of the complainants fundamental issues, it will dispense with the regular procedure of remanding the case
are "improbable" and completely unfounded. to the lower court or appropriate tribunal in order to avoid a further delay in the
resolution of the case.40 A remand is only necessary when the proceedings below are
On the other hand, G Holdings argues that piercing the corporate veil of Maricalum grossly inadequate to settle factual issues. 41 This is in line with the Court's power to
Mining is not proper because: (a) it did not acquire all of Maricalum Mining's assets; (b) issue a process in order to enforce its own decrees and thus avoid circuitous actions
it is primarily engaged in the business of owning and holding shares of stocks of and vexatious litigation.42
different companies-not participating in the operations of its subsidiaries; (c) Maricalum
Mining, the actual employers of complainants, had already manifested its willingness In the case at bench, Maricalum Mining is seeking to have the case remanded because
to settle the correct money claims; (d) Bernardino is not a controlling stockholder of the LA allegedly miscomputed the amount of the monetary awards. However, it failed
Maricalum Mining because the latter's corporate records show that almost all of its to offer any reasonable argument or explanation why the proceedings conducted
before the NLRC or LA were "grossly inadequate to settle factual Intervention is a remedy by which a third party, who is not originally imp leaded in a
issues," especially as regards the computation of monetary awards. Its bare proceeding, becomes a litigant for purposes of protecting his or her right or interest that
allegations - that the monetary awards were improperly computed because prescribed may be affected by the proceedings.48 The factors that should be reckoned in
claims have been granted, that the net surpluses of the manpower cooperative were determining whether or not to allow intervention are whether intervention will unduly
not properly distributed, and that the awards in favor of some of the complainants were delay or prejudice the adjudication of the rights of the original parties and whether the
improbable - do not warrant the invocation of this Court's power to have the case intervenors rights may be fully protected in a separate proceeding. 49 A motion to
remanded back to the LA. Bare and unsubstantiated allegations do not constitute intervene may be entertained or allowed even if filed after judgment was rendered by
substantial evidence and have no probative value.43 the trial court, especially in cases where the intervenors are indispensable
parties.50 Parties may be added by order of the court on motion of the party or on its
Besides, it is not imperative for the Court to remand the case to the LA for the own initiative at any stage of the action and/or at such times as are just. 51
determination of the amounts of net surpluses that each of the manpower cooperatives
had received from Maricalum Mining. The records show that Maricalum Mining was In this case, it was never contested by complainants that it was Maricalum Mining-not
guilty of entering into a labor-only contracting arrangement with the manpower G Holdings-who executed several sets of memorandum of agreement with the
cooperatives, thus, all of them are solidarily liable to the complainants by virtue of manpower cooperatives. The contractual connection between Maricalum Mining and
Article 10644 of the Labor Code. In DOLE Philippines, Inc. v. Esteva, et al. 45 it was ruled the manpower cooperatives is crucial to the determination of labor-related liabilities
that a cooperative, despite having a personality separate from its members, 46 is especially when it involves a labor-only contracting arrangement. Accordingly,
engaged in a labor-only contracting arrangement based on the following indicators: Maricalum Mining will eventually be held solidarily liable with the manpower
cooperatives. In other words, it stands to be injured by the incontrovertible fact that it
1) The cooperative had a measly paid-up capital of ₱6,600.00 and had only managed entered into a labor-only arrangement with the manpower cooperatives. Thus,
to increase the same by continually engaging in labor-only contracting with its client; Maricalum Mining is an indispensable party and worthy of being allowed to intervene in
this case.52
2) The cooperative did not carry out an independent business from its client and its own
office and equipment were mainly used for administrative purposes; In order to properly analyze G Holdings's role in the instant dispute, the Court must
discuss its peculiar relationship (or lack thereof) with Maricalum Mining and Sipalay
Hospital.
3) The cooperative's members had to undergo instructions and pass the training
provided by the client's personnel before they could start working alongside regular
employees; G Holdings and Maricalum Mining

4) The cooperative was not engaged to perform a specific and special job or The doctrine of piercing the corporate veil applies only in three (3) basic areas, namely:
service; and (a) defeat of public convenience as when the corporate fiction is used as a vehicle for
the evasion of an existing obligation; (b) fraud cases or when the corporate entity is
used to justify a wrong, protect fraud, or defend a crime; or (c) alter ego cases, where
5) The cooperative's members performed activities directly related and vital to the a corporation is merely a farce since it is a mere alter ego or business conduit of a
principal business of its client. person, or where the corporation is so organized and controlled and its affairs are so
conducted as to make it merely an instrumentality, agency, conduit or adjunct of
Here, the virtually identical sets of memorandum of agreement with the manpower another corporation. 53 This principle is basically applied only to determine established
cooperatives state among others that: (a) the services covered shall consist of liability. 54 However, piercing of the veil of corporate fiction is frowned upon and must
operating loading, drilling and various auxiliary equipments; and (b) the cooperative be done with caution. 55 This is because a corporation is invested by law with a
members shall abide by the norms and standards of the Maricalum Mining. These personality separate and distinct from those of the persons composing it as well as from
services and guidelines are essential to the operations of Maricalum Mining. Thus, that of any other legal entity to which it may be related. 56
since the cooperative members perform the work vital to the operation of the Sipalay
Mining Complex, the they were being contracted in a labor-only arrangement. A parent57 or holding company58 is a corporation which owns or is organized to own a
Moreover, the burden of proving the supposed status of the contractor rests on the substantial portion of another company's voting59 shares of stock enough to control60 or
principal47 and Maricalum Mining, being the principal, also failed to present any influence the latter's management, policies or affairs thru election of the latter's board
evidence before the NLRC that each of the manpower cooperatives had an of directors or otherwise. However, the term "holding company" is customarily used
independent viable business. interchangeably with the term "investment company" which, in turn, is defined by
Section 4 (a) of Republic Act (R.A.) No. 262961 as "any issuer (corporation) which is or
Propriety of Maricalum Mining's Intervention holds itself out as being engaged primarily, or proposes to engage primarily, in the
business of investing, reinvesting, or trading in securities."
In other words, a "holding company" is organized and is basically conducting its The second prong is the "fraud" test. This test requires that the parent corporation's
business by investing substantially in the equity securities 62 of another company for the conduct in using the subsidiary corporation be unjust, fraudulent or wrongful. It
purposes of controlling their policies (as opposed to directly engaging in operating examines the relationship of the plaintiff to the corporation. It recognizes that piercing
activities) and "holding" them in a conglomerate or umbrella structure along with other is appropriate only if the parent corporation uses the subsidiary in a way that harms the
subsidiaries. Significantly, the holding company itself-being a separate entity-does not plaintiff creditor. As such, it requires a showing of "an element of injustice or
own the assets of and does not answer for the liabilities of the subsidiary 63 or fundamental unfairness."
affiliate. 64 The management of the subsidiary or affiliate still rests in the hands of its
own board of directors and corporate officers. It is in keeping with the basic rule a The third prong is the "harm" test. This test requires the plaintiff to show that the
corporation is a juridical entity which is vested with a legal personality separate and defendant's control, exerted in a fraudulent, illegal or otherwise unfair manner toward
distinct from those acting for and in its behalf and, in general, from the people it, caused the harm suffered. A causal connection between the fraudulent conduct
comprising it.65 The corporate form was created to allow shareholders to invest without committed through the instrumentality of the subsidiary and the injury suffered or the
incurring personal liability for the acts of the corporation. 66 damage incurred by the plaintiff should be established. The plaintiff must prove that,
unless the corporate veil is pierced, it will have been treated unjustly by the defendant's
While the veil of corporate fiction may be pierced under certain instances, mere exercise of control and improper use of the corporate form and, thereby, suffer
ownership of a subsidiary does not justify the imposition of liability on the parent damages.
company. 67 It must further appear that to recognize a parent and a subsidiary as
separate entities would aid in the consummation of a wrong. 68 Thus, a holding To summarize, piercing the corporate veil based on the alter ego theory requires the
corporation has a separate corporate existence and is to be treated as a separate concurrence of three elements: control of the corporation by the stockholder or
entity; unless the facts show that such separate corporate existence is a mere parent corporation, fraud or fundamental unfairness imposed on the plaintiff, and harm
sham, or has been used as an instrument for concealing the truth.69 or damage caused to the plaintiff by the fraudulent or unfair act of the corporation. The
absence of any of these elements prevents piercing the corporate veil. (emphases
In the case at bench, complainants mainly harp their cause on the alter ego theory. and underscoring supplied)
Under this theory, piercing the veil of corporate fiction may be allowed only if the
following elements concur: Again, all these three elements must concur before the corporate veil may be pierced
under the alter ego theory. Keeping in mind the parameters, guidelines and indicators
1) Control-not mere stock control, but complete domination-not only of finances, but of for proper piercing of the corporate veil, the Court now proceeds to determine whether
policy and business practice in respect to the transaction attacked, must have been Maricalum Mining's corporate veil may be pierced in order to allow complainants to
such that the corporate entity as to this transaction had at the time no separate mind, enforce their monetary awards against G Holdings.
will or existence of its own;
I. Control or Instrumentality Test
2) Such control must have been used by the defendant to commit a fraud or a wrong,
to perpetuate the violation of a statutory or other positive legal duty, or a dishonest and In Concept Builders, Inc. v. National Labor Relations Commission, et al., 72 the Court
an unjust act in contravention of plaintiffs legal right; and first laid down the first set of probative factors of identity that will justify the application
of the doctrine of piercing the corporate veil, viz:
3) The said control and breach of duty must have proximately caused the injury or
unjust loss complained of.70 1) Stock ownership by one or common ownership of both corporations.

The elements of the alter ego theory were discussed in Philippine National Bank v. 2) Identity of directors and officers.
Hydro Resources Contractors Corporation, 71 to wit:
3) The manner of keeping corporate books and records.
The first prong is the "instrumentality" or "control" test. This test requires that the
subsidiary be completely under the control and domination of the parent. It examines
the parent corporation's relationship with the subsidiary. It inquires whether a subsidiary 4) Methods of conducting the business.
corporation is so organized and controlled and its affairs are so conducted as to make
it a mere instrumentality or agent of the parent corporation such that its separate Later, in Philippine National Bank v. Ritratto Group Inc., et al., 73 the Court expanded
existence as a distinct corporate entity will be ignored. It seeks to establish whether the the aforementioned probative factors and enumerated a combination of any of the
subsidiary corporation has no autonomy and the parent corporation, though acting following common circumstances that may also render a subsidiary an instrumentality,
through the subsidiary in form and appearance, "is operating the business directly for to wit:
itself."
1) The parent corporation owns all or most of the capital stock of the subsidiary; II. Fraud Test

2) The parent and subsidiary corporations have common directors or officers; The corporate veil may be lifted only if it has been used to shield fraud, defend crime,
justify a wrong, defeat public convenience, insulate bad faith or perpetuate
3) The parent corporation finances the subsidiary; injustice.75 To aid in the determination of the presence or absence of fraud, the following
factors in the "Totality of Circumstances Test"76 may be considered, viz:
4) The parent corporation subscribes to all the capital stock of the subsidiary or
otherwise causes its incorporation; 1) Commingling of funds and other assets of the corporation with those of the
individual shareholders;
5) The subsidiary has grossly inadequate capital;
2) Diversion of the corporation's funds or assets to non-corporate uses (to the personal
uses of the corporation's shareholders);
6) The parent corporation pays the salaries and other expenses or losses of the
subsidiary;
3) Failure to maintain the corporate formalities necessary for the issuance of or
subscription to the corporation's stock, such as formal approval of the stock issue by
7) The subsidiary has substantially no business except with the parent corporation or the board of directors;
no assets except those conveyed to or by the parent corporation;
4) An individual shareholder representing to persons outside the corporation that he or
8) In the papers of the parent corporation or in the statements of its officers, the she is personally liable for the debts or other obligations of the corporation;
subsidiary is described as a department or division of the parent corporation, or its
business or financial responsibility is referred to as the parent corporation's own;
5) Failure to maintain corporate minutes or adequate corporate records;
9) The parent corporation uses the property of the subsidiary as its own;
6) Identical equitable ownership in two entities;
10) The directors or executives of the subsidiary do not act independently in the interest
of the subsidiary but take their orders from the parent corporation; and 7) Identity of the directors and officers of two entities who are responsible for
supervision and management (a partnership or sole proprietorship and a corporation
owned and managed by the same parties);
11) The formal legal requirements of the subsidiary are not observed.
8) Failure to adequately capitalize a corporation for the reasonable risks of the
In the instant case, there is no doubt that G Holdings-being the majority and controlling corporate undertaking;
stockholder-had been exercising significant control over Maricalum Mining. This is
because this Court had already upheld the validity and enforceability of the PSA
between the APT and G Holdings. It was stipulated in the PSA that APT shall transfer 9) Absence of separately held corporate assets;
90% of Mari cal um Mining's equity securities to G Holdings and it establishes the
presence of absolute control of a subsidiary's corporate affairs. Moreover, the Court 10) Use of a corporation as a mere shell or conduit to operate a single venture or some
evinces its observation that Maricalum Mining's corporate name appearing on the particular aspect of the business of an individual or another corporation;
heading of the cash vouchers issued in payment of the services rendered by the
manpower cooperatives is being superimposed with G Holding's corporate name. Due 11) Sole ownership of all the stock by one individual or members of a single family;
to this observation, it can be reasonably inferred that G Holdings is paying for Mari cal
um Mining's salary expenses. Hence, the presence of both circumstances of dominant
equity ownership and provision for salary expenses may adequately establish that 12) Use of the same office or business location by the corporation and its
Maricalum Mining is an instrumentality of G Holdings. individual shareholder(s);

However, mere presence of control and full ownership of a parent over a subsidiary is 13) Employment of the same employees or attorney by the corporation and its
not enough to pierce the veil of corporate fiction. It has been reiterated by this Court shareholder(s);
time and again that mere ownership by a single stockholder or by another
corporation of all or nearly all of the capital stock of a corporation is not of itself 14) Concealment or misrepresentation of the identity of the ownership, management or
sufficient ground for disregarding the separate corporate personality.74 financial interests in the corporation, and concealment of personal business activities
of the shareholders (sole shareholders do not reveal the association with a corporation, First, the transfer of some Maricalum Mining's assets in favor G Holdings was by virtue
which makes loans to them without adequate security); of the PSA as part of an official measure to dispose of the government's non-performing
assets-not to evade its monetary obligations to the complainants. Even before
15) Disregard of legal formalities and failure to maintain proper arm's length complainants' monetary claims supposedly existed in 2007, some of Maricalum
relationships among related entities; Mining's assets had already been validly extrajudicially foreclosed and eventually sold
to G Holdings in 2001. Thus, G Holdings could not have devised a scheme to avoid a
non-existent obligation. No fraud could be attributed to G Holdings because the transfer
16) Use of a corporate entity as a conduit to procure labor, services or merchandise for of assets was pursuant to a previously perfected valid contract.
another person or entity;
Settled is the rule that where one corporation sells or otherwise transfers all its assets
17) Diversion of corporate assets from the corporation by or to a stockholder or to another corporation for value, the latter is not, by that fact alone, liable for the debts
other person or entity to the detriment of creditors, or the manipulation of assets and liabilities of the transferor. 80 In other words, control or ownership of substantially
and liabilities between entities to concentrate the assets in one and the liabilities all of a subsidiary's assets is not by itself an indication of a holding company's fraudulent
in another; intent to alienate these assets in evading labor-related claims or liabilities. As discussed
earlier, the PSA was not designed to evade the monetary claims of the complainants.
18) Contracting by the corporation with another person with the intent to avoid Although there was proof that G Holdings has an office in Maricalum Mining's premises
the risk of nonperformance by use of the corporate entity; or the use of a and that that some of their assets have been commingled due to the PSA's unavoidable
corporation as a subterfuge for illegal transactions; and consequences, there was no fraudulent diversion of corporate assets to another
corporation for the sole purpose of evading complainants' claim.
19) The formation and use of the corporation to assume the existing liabilities of another
person or entity. Besides, it is evident that the alleged continuing depletion of Maricalum Mining's assets
is due to its disgruntled employees' own acts of pilferage, which was beyond the control
Aside from the aforementioned circumstances, it must be determined whether the of G Holdings. More so, complainants also failed to present any clear and convincing
transfer of assets from Maricalum Mining to G Holdings is enough to invoke the evidence that G Holdings was grossly negligent and failed to exercise the required
equitable remedy of piercing the corporate veil. The same issue was resolved in Y-1 degree of diligence in ensuring that Maricalum Mining's assets would be protected from
Leisure Phils., Inc., et al. v. Yu77 where this Court applied the "Nell pilferage. 81 Hence, no fraud can be imputed against G Holdings considering that there
Doctrine"78 regarding the transfer of all the assets of one corporation to another. It is no evidence in the records that establishes it systematically tried to alienate
was discussed in that case that as a general rule that where one corporation sells or Maricalum Mining's assets to escape the liabilities to complainants.
otherwise transfers all of its assets to another corporation, the latter is not liable for the
debts and liabilities of the transferor, except: Second, it was not proven that all of Maricalum Mining's assets were transferred to G
Holdings or were totally depleted. Complainants never offered any evidence to
1) Where the purchaser expressly or impliedly agrees to assume such debts; establish that Maricalum Mining had absolutely no substantial assets to cover for their
monetary claims. Their allegation that their claims will be reduced to a mere "paper
victory" has not confirmed with concrete proof. At the very least, substantial evidence
2) Where the transaction amounts to a consolidation or merger of the corporations; should be adduced that the subsidiary company's "net realizable value" 82 of "current
assets" 83 and "fair value" 84 of "non-current assets" 85 are collectively insufficient to
3) Where the purchasing corporation is merely a continuation of the selling corporation; cover the whole amount of its liability subject in the instant litigation.
and
Third, G Holdings purchased Mari cal um Mining's shares from the APT not for the
4) Where the transaction is entered into fraudulently in order to escape liability purpose of continuing the latter's existence and operations but for the purpose of
for such debts. investing in the mining industry without having to directly engage in the management
and operation of mining. As discussed earlier, a holding company's primary business
is merely to invest in the equity of another corporation for the purpose of earning from
If any of the above-cited exceptions are present, then the transferee corporation shall
the latter's endeavors. It generally does not undertake to engage in the daily operating
assume the liabilities of the transferor. 79
activities of its subsidiaries that, in turn, have their own separate sets of directors and
officers. Thus, there should be proof that a holding company had indeed fraudulently
In this case, G Holdings cannot be held liable for the satisfaction of labor-related claims used the separate corporate personality of its subsidiary to evade an obligation before
against Maricalum Mining under the fraud test for the following reasons: it can be held liable. Since G Holdings is a holding company, the corporate veil of its
subsidiaries may only be pierced based on fraud or gross negligence amounting to bad
faith.
Lastly, no clear and convincing evidence was presented by the complainants to Mining's assets, no proximate cause was successfully established. The transfer of
conclusively prove the presence of fraud on the part of G Holdings. Although the assets was pursuant to a valid and legal PSA between G Holdings and APT.
quantum of evidence needed to establish a claim for illegal dismissal in labor cases is
substantial evidence,86 the quantum need to establish the presence of fraud is clear Accordingly, complainants failed to satisfy the second and third tests to justify the
and convincing evidence.87 Thus, to disregard the separate juridical personality of a application of the alter ego theory. This inevitably shows that the CA committed no
corporation, the wrongdoing must be established clearly and convincingly-it cannot be reversible error in upholding the NLRC's Decision declaring Maricalum Mining as the
presumed.88 proper party liable to pay the monetary awards in favor of complainants.

Here, the complainants did not satisfy the requisite quantum of evidence to prove fraud G Holdings and Sipalay Hospital
on the part of G Holdings. They merely offered allegations and suppositions that, since
Maricalum Mining's assets appear to be continuously depleting and that the same
corporation is a subsidiary, G Holdings could have been guilty of fraud. As emphasized Sipalay Hospital was incorporated by Romulo G. Zafra, Eleanore B. Gutierrez, Helen
earlier, bare allegations do not prove anything. There must be proof that fraud-not Grace B. Fernandez, Evelyn B. Badajos and Helen Grace L. Arbolario. 92 However,
the inevitable effects of a previously executed and valid contract such as the PSA-was there is absence of indication that G Holdings subsequently acquired the controlling
the cause of the latter's total asset depletion. To be clear, the presence of control per interests of Sipalay Hospital. There is also no evidence that G Holdings entered into a
se is not enough to justify the piercing of the corporate veil. contract with Sipalay Hospital to provide medical services for its officers and
employees. This lack of stockholding or contractual connection signifies that Sipalay
Hospital is not affiliated93 with G Holdings. Thus, due to this absence of affiliation, the
III. Harm or Casual Connection Test Court must apply the tests used to determine the existence of an employee-employer
relationship; rather than piercing the corporate veil.
In WPM International Trading, Inc., et al. v. Labayen, 89 the Court laid down the criteria
for the harm or casual connection test, to wit: Under the four-fold test, the employer-employee relationship is determined if the
following are present: a) the selection and engagement of the employee; b) the
In this connection, we stress that the control necessary to invoke the instrumentality payment of wages; c) the power of dismissal; and d) the power to control the
or alter ego rule is not majority or even complete stock control but such domination of employee's conduct, or the so-called "control test."94 Here, the "control test" is the most
finances, policies and practices that the controlled corporation has, so to speak, no important and crucial among the four tests. 95 However, in cases where there is no
separate mind, will or existence of its own, and is but a conduit for its principal. The written agreement to base the relationship on and where the various tasks performed
control must be shown to have been exercised at the time the acts complained of took by the worker bring complexity to the relationship with the employer, the better
place. Moreover, the control and breach of duty must proximately cause the injury approach would therefore be to adopt a two-tiered test involving: a) the putative
or unjust loss for which the complaint is made. (emphases and underscoring supplied) employer's power to control the employee with respect to the means and methods by
which the work is to be accomplished; and b) the underlying economic realities of the
Proximate cause is defined as that cause, which, in natural and continuous sequence, activity or relationship.96
unbroken by any efficient intervening cause, produces the injury, and without which the
result would not have occurred.90 More comprehensively, the proximate legal cause is In applying the second tier, the determination of the relationship between employer and
that "acting first and producing the injury, either immediately or by setting other events employee depends upon the circumstances of the whole economic activity (economic
in motion, all constituting a natural and continuous chain of events, each having a close reality or multi-factor test), such as: a) the extent to which the services performed are
causal connection with its immediate predecessor, the final event in the chain an integral part of the employer's business; b) the extent of the worker's investment in
immediately effecting the injury as a natural and probable result of the cause which first equipment and facilities; c) the nature and degree of control exercised by the employer;
acted, under such circumstances that the person responsible for the first event should, d) the worker's opportunity for profit and loss; e) the amount of initiative, skill, judgment
as an ordinary prudent and intelligent person, have reasonable ground to expect at the or foresight required for the success of the claimed independent enterprise; f) the
moment of his act or default that an injury to some person might probably result permanency and duration of the relationship between the worker and the employer;
therefrom."91 Hence, for an act or event to be considered as proximate legal cause, it and g) the degree of dependency of the worker upon the employer for his continued
should be shown that such act or event had indeed caused injury to another. employment in that line of business. 97 Under all of these tests, the burden to prove by
substantial evidence all of the elements or factors is incumbent on the employee for he
In the case at bench, complainants have not yet even suffered any monetary injury. or she is the one claiming the existence of an employment relationship. 98
They have yet to enforce their claims against Maricalum Mining. It is apparent that
complainants are merely anxious that their monetary awards will not be satisfied In light of the present circumstances, the Court must apply the four-fold test for lack
because the assets of Maricalum Mining were allegedly transferred surreptitiously to G of relevant data in the case records relating to the underlying economic realities of the
Holdings. However, as discussed earlier, since complainants failed to show that G activity or relationship of Sipalay Hospital's employees.
Holdings's mere exercise of control had a clear hand in the depletion of Maricalum
To prove the existence of their employment relationship with G Holdings, complainants Under the control test, an employer-employee relationship exists where the person for
Dr. Welilmo T. Neri, Erlinda L. Fernandez, Edgar M. Sobrino and Wilfredo C. Taganile, whom the services are performed reserves the right to control not only the end
Sr. presented the following documents: achieved, but also the manner and means to be used in reaching that end. 106 As
applied in the healthcare industry, an employment relationship exists between a
1) Affidavit99 of Dr. Welilmo T. Neri attesting among others that he was the Medical physician and a hospital if the hospital controls both the means and the details of the
Director of Sipalay Hospital which is allegedly owned and operated by G process by which the physician is to accomplish his task. 107 But where a person who
Holdings/Maricalum Mining; works for another performs his job more or less at his own pleasure, in the manner he
sees fit, not subject to definite hours or conditions of work, and is compensated
according to the result of his efforts and not the amount thereof, no employer-employee
2) Several cash vouchers 100 issued by G Holdings!Maricalum Mining representing Dr. relationship exists. 108
Welilmo T. Neri's payment for services rendered to "various" personnel;
A corporation may only exercise its powers within the definitions provided by law and
3) Schedules of social security premium payments101 in favor of Dr. Welilmo T. Neri, its articles of incorporation. 109 Accordingly, in order to determine the presence or
Edgar M. Sobrino and Wilfredo C. Taganile, Sr. stamped paid by G Holdings; absence of an employment relationship between G Holdings and the employees of
Sipalay Hospital by using the control test, the Court deems it essential to examine the
4) Notice of termination102 dated July 3, 2010 issued by Rolando G. Degojas (OIC of salient portion of Sipalay Hospital's Articles of Incorporation imparting its 'primary
G-Holdings Inc.) issued to Dr. Welilmo T. Neri and some of his companions who are purpose,' 110 to wit:
not complainants in this case;
To own, manage, lease or operate hospitals or clinics offering and providing medical
5) Notice of termination103 addressed to Dr. Welilmo T. Neri, Erlinda L. Fernandez, services and facilities to the general public, provided that purely professional, medical
Edgar M. Sobrino and some of their co-employees who are not complainants in this or surgical services shall be performed by duly qualified physicians or surgeons who
case with a collatilla stating that the services of Dr. Welilmo T. Neri and nurse Erlinda may or may not be connected with the corporation and who shall be freely and
L. Fernandez will be engaged on per call basis; and individually contracted by patients. (emphasis supplied)

6) A "Statement of Unpaid Salaries of Employees of G Holdings, Inc. Assigned to the It is immediately apparent that Sipalay Hospital, even if its facilities are located inside
Sipalay General Hospital" 104 prepared by Dr. Welilmo T. Neri which included his own the Sipalay Mining Complex, does not limit its medical services only to the employees
along with complainants Erlinda L. Fernandez, Wilfredo C. Taganile, [Sr.] and Edgar M. and officers of Maricalum Mining and/or G Holdings. Its act of holding out services to
[Sobrino]. the public reinforces the fact of its independence from either Maricalum Mining or G
Holdings because it is free to deal with any client without any legal or contractual
A perusal of the aforementioned documents fails to show that the services of restriction. Moreover, G Holdings is a holding company primarily engaged in investing
complainants Dr. Welilmo T. Neri, Erlinda L. Fernandez, Edgar M. Sobrino and Wilfredo substantially in the stocks of another company-not in directing and managing the latter's
C. Taganile, Sr. were indeed selected and engaged by either Maricalum Mining or G daily business operations. Because of this corporate attribute, the Court can
Holdings. This gap in evidence clearly shows that the first factor of the four-fold reasonably draw an inference that G Holdings does not have a considerable
test, or the selection and engagement of the employee, was not satisfied and not ability to control means and methods of work of Sipalay Hospital
supported by substantial evidence. employees. Markedly, the records are simply bereft of any evidence that G Holdings
had, in fact, used its ownership to control the daily operations of Sipalay Hospital as
well as the working methods of the latter's employees. There is no evidence showing
However, the same cannot be said as to the second and third factors of the four-fold any subsequent transfer of shares from the original incorporators of Sipalay Hospital to
test (the payment of wages and the power of dismissal). Since substantial evidence is G Holdings. Worse, it appears that complainants Dr. Welilmo T. Neri, Erlinda L.
defined as that amount of relevant evidence which a reasonable mind might accept as Fernandez, Wilfredo C. Taganile, Sr. and Edgar M. Sobrino are trying to derive their
adequate to justify a conclusion, 105 the cash vouchers, social security payments and employment connection with G Holdings merely on an assumed premise that the latter
notices of termination are reasonable enough to draw an inference that G Holdings and owns the controlling stocks of Maricalum Mining.
Maricalum Mining may have had a hand in the complainants' payment of salaries and
dismissal.
On this score, the CA committed no reversible error in allowing the NLRC to delete the
monetary awards of Dr. Welilmo T. Neri, Erlinda L. Fernandez, Wilfredo C. Taganile,
Notwithstanding the absence of the first factor and the presence of the second and third Sr. and Edgar M. Sobrino imposed by the Labor Arbiter against G Holdings.
factors of the four-fold test, the Court still deems it best to examine the fourth factor-the
presence of control-in order to determine the employment connection of complainants
Dr. Welilmo T. Neri, Erlinda L. Fernandez, Edgar M. Sobrino and Wilfredo C. Taganile, Conclusion
Sr. with G Holdings.
A holding company may be held liable for the acts of its subsidiary only when it is
adequately proven that: a) there was control over the subsidiary; (b) such control was
used to protect a fraud (or gross negligence amounting to bad faith) or evade an
obligation; and c) fraud was the proximate cause of another's existing injury. Further,
an employee is duly-burdened to prove the crucial test or factor of control thru
substantial evidence in order to establish the existence of an employment relationship-
especially as against an unaffiliated corporation alleged to be exercising control.

In this case, complainants have not successfully proven that G Holdings fraudulently
exercised its control over Maricalum Mining to fraudulently evade any obligation. They
also fell short of proving that G Holdings had exercised operational control over the
employees of Sipalay Hospital. Due to these findings, the Court sees no reversible error
on the part of the CA, which found no grave abuse of discretion and affirmed in toto the
factual findings and legal conclusions of the NLRC.

WHEREFORE, the Court AFFIRMS in toto the October 29, 2014 Decision of the Court
of Appeals in CA-G.R. SP No. 06835.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 179652 March 6, 2012 extensive with the visitorial and enforcement power provided in Art. 128(b) of the Labor
Code, as amended by RA 7730. The National Labor Relations Commission (NLRC)
PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), Petitioner, was held to be the primary agency in determining the existence of an employer-
vs. employee relationship. This was the interpretation of the Court of the clause "in cases
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE where the relationship of employer-employee still exists" in Art. 128(b).5
REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON
JUEZAN, Respondents. From this Decision, the Public Attorney’s Office (PAO) filed a Motion for Clarification of
Decision (with Leave of Court). The PAO sought to clarify as to when the visitorial and
RESOLUTION enforcement power of the DOLE be not considered as co-extensive with the power to
determine the existence of an employer-employee relationship.6 In its Comment,7 the
DOLE sought clarification as well, as to the extent of its visitorial and enforcement
VELASCO, JR., J.: power under the Labor Code, as amended.

In a Petition for Certiorari under Rule 65, petitioner People’s Broadcasting Service, Inc. The Court treated the Motion for Clarification as a second motion for reconsideration,
(Bombo Radyo Phils., Inc.) questioned the Decision and Resolution of the Court of granting said motion and reinstating the petition.8 It is apparent that there is a need to
Appeals (CA) dated October 26, 2006 and June 26, 2007, respectively, in C.A. G.R. delineate the jurisdiction of the DOLE Secretary vis-à-vis that of the NLRC.
CEB-SP No. 00855.
Under Art. 129 of the Labor Code, the power of the DOLE and its duly authorized
Private respondent Jandeleon Juezan filed a complaint against petitioner with the hearing officers to hear and decide any matter involving the recovery of wages and
Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu City, for other monetary claims and benefits was qualified by the proviso that the complaint not
illegal deduction, nonpayment of service incentive leave, 13th month pay, premium pay include a claim for reinstatement, or that the aggregate money claims not exceed PhP
for holiday and rest day and illegal diminution of benefits, delayed payment of wages 5,000. RA 7730, or an Act Further Strengthening the Visitorial and Enforcement Powers
and noncoverage of SSS, PAG-IBIG and Philhealth.1 After the conduct of summary of the Secretary of Labor, did away with the PhP 5,000 limitation, allowing the DOLE
investigations, and after the parties submitted their position papers, the DOLE Regional Secretary to exercise its visitorial and enforcement power for claims beyond PhP 5,000.
Director found that private respondent was an employee of petitioner, and was entitled The only qualification to this expanded power of the DOLE was only that there still be
to his money claims.2 Petitioner sought reconsideration of the Director’s Order, but an existing employer-employee relationship.
failed. The Acting DOLE Secretary dismissed petitioner’s appeal on the ground that
petitioner submitted a Deed of Assignment of Bank Deposit instead of posting a cash
or surety bond. When the matter was brought before the CA, where petitioner claimed It is conceded that if there is no employer-employee relationship, whether it has been
that it had been denied due process, it was held that petitioner was accorded due terminated or it has not existed from the start, the DOLE has no jurisdiction. Under Art.
process as it had been given the opportunity to be heard, and that the DOLE Secretary 128(b) of the Labor Code, as amended by RA 7730, the first sentence reads,
had jurisdiction over the matter, as the jurisdictional limitation imposed by Article 129 "Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary,
of the Labor Code on the power of the DOLE Secretary under Art. 128(b) of the Code and in cases where the relationship of employer-employee still exists, the Secretary of
had been repealed by Republic Act No. (RA) 7730.3 Labor and Employment or his duly authorized representatives shall have the power to
issue compliance orders to give effect to the labor standards provisions of this Code
and other labor legislation based on the findings of labor employment and enforcement
In the Decision of this Court, the CA Decision was reversed and set aside, and the officers or industrial safety engineers made in the course of inspection." It is clear and
complaint against petitioner was dismissed. The dispositive portion of the Decision beyond debate that an employer-employee relationship must exist for the exercise of
reads as follows: the visitorial and enforcement power of the DOLE. The question now arises, may the
DOLE make a determination of whether or not an employer-employee relationship
WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and exists, and if so, to what extent?
the Resolution dated 26 June 2007 of the Court of Appeals in C.A. G.R. CEB-SP No.
00855 are REVERSED and SET ASIDE. The Order of the then Acting Secretary of the The first portion of the question must be answered in the affirmative.
Department of Labor and Employment dated 27 January 2005 denying petitioner’s
appeal, and the Orders of the Director, DOLE Regional Office No. VII, dated 24 May
2004 and 27 February 2004, respectively, are ANNULLED. The complaint against The prior decision of this Court in the present case accepts such answer, but places a
petitioner is DISMISSED.4 limitation upon the power of the DOLE, that is, the determination of the existence of an
employer-employee relationship cannot be co-extensive with the visitorial and
enforcement power of the DOLE. But even in conceding the power of the DOLE to
The Court found that there was no employer-employee relationship between petitioner determine the existence of an employer-employee relationship, the Court held that the
and private respondent. It was held that while the DOLE may make a determination of determination of the existence of an employer-employee relationship is still primarily
the existence of an employer-employee relationship, this function could not be co- within the power of the NLRC, that any finding by the DOLE is merely preliminary.
This conclusion must be revisited. It must also be remembered that the power of the DOLE to determine the existence of
an employer-employee relationship need not necessarily result in an affirmative finding.
No limitation in the law was placed upon the power of the DOLE to determine the The DOLE may well make the determination that no employer-employee relationship
existence of an employer-employee relationship. No procedure was laid down where exists, thus divesting itself of jurisdiction over the case. It must not be precluded from
the DOLE would only make a preliminary finding, that the power was primarily held by being able to reach its own conclusions, not by the parties, and certainly not by this
the NLRC. The law did not say that the DOLE would first seek the NLRC’s determination Court.
of the existence of an employer-employee relationship, or that should the existence of
the employer-employee relationship be disputed, the DOLE would refer the matter to Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully
the NLRC. The DOLE must have the power to determine whether or not an employer- empowered to make a determination as to the existence of an employer-employee
employee relationship exists, and from there to decide whether or not to issue relationship in the exercise of its visitorial and enforcement power, subject to judicial
compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by review, not review by the NLRC.
RA 7730.
There is a view that despite Art. 128(b) of the Labor Code, as amended by RA 7730,
The DOLE, in determining the existence of an employer-employee relationship, has a there is still a threshold amount set by Arts. 129 and 217 of the Labor Code when
ready set of guidelines to follow, the same guide the courts themselves use. The money claims are involved, i.e., that if it is for PhP 5,000 and below, the jurisdiction is
elements to determine the existence of an employment relationship are: (1) the with the regional director of the DOLE, under Art. 129, and if the amount involved
selection and engagement of the employee; (2) the payment of wages; (3) the power exceeds PhP 5,000, the jurisdiction is with the labor arbiter, under Art. 217. The view
of dismissal; (4) the employer’s power to control the employee’s conduct.9 The use of states that despite the wording of Art. 128(b), this would only apply in the course of
this test is not solely limited to the NLRC. The DOLE Secretary, or his or her regular inspections undertaken by the DOLE, as differentiated from cases under Arts.
representatives, can utilize the same test, even in the course of inspection, making use 129 and 217, which originate from complaints. There are several cases, however,
of the same evidence that would have been presented before the NLRC. where the Court has ruled that Art. 128(b) has been amended to expand the powers of
the DOLE Secretary and his duly authorized representatives by RA 7730. In these
The determination of the existence of an employer-employee relationship by the DOLE cases, the Court resolved that the DOLE had the jurisdiction, despite the amount of the
must be respected. The expanded visitorial and enforcement power of the DOLE money claims involved. Furthermore, in these cases, the inspection held by the DOLE
granted by RA 7730 would be rendered nugatory if the alleged employer could, by the regional director was prompted specifically by a complaint. Therefore, the initiation of a
simple expedient of disputing the employer-employee relationship, force the referral of case through a complaint does not divest the DOLE Secretary or his duly authorized
the matter to the NLRC. The Court issued the declaration that at least a prima facie representative of jurisdiction under Art. 128(b).
showing of the absence of an employer-employee relationship be made to oust the
DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, To recapitulate, if a complaint is brought before the DOLE to give effect to the labor
and it is the DOLE that will weigh it, to see if the same does successfully refute the standards provisions of the Labor Code or other labor legislation, and there is a finding
existence of an employer-employee relationship. by the DOLE that there is an existing employer-employee relationship, the DOLE
exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no
If the DOLE makes a finding that there is an existing employer-employee relationship, employer-employee relationship, the jurisdiction is properly with the NLRC. If a
it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement,
no jurisdiction only if the employer-employee relationship has already been terminated, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code,
or it appears, upon review, that no employer-employee relationship existed in the first which provides that the Labor Arbiter has original and exclusive jurisdiction over those
place. cases involving wages, rates of pay, hours of work, and other terms and conditions of
employment, if accompanied by a claim for reinstatement. If a complaint is filed with
the NLRC, and there is still an existing employer-employee relationship, the jurisdiction
The Court, in limiting the power of the DOLE, gave the rationale that such limitation is properly with the DOLE. The findings of the DOLE, however, may still be questioned
would eliminate the prospect of competing conclusions between the DOLE and the through a petition for certiorari under Rule 65 of the Rules of Court.
NLRC. The prospect of competing conclusions could just as well have been eliminated
by according respect to the DOLE findings, to the exclusion of the NLRC, and this We
believe is the more prudent course of action to take. In the present case, the finding of the DOLE Regional Director that there was an
employer-employee relationship has been subjected to review by this Court, with the
finding being that there was no employer-employee relationship between petitioner and
This is not to say that the determination by the DOLE is beyond question or private respondent, based on the evidence presented. Private respondent presented
review.1avvphi1 Suffice it to say, there are judicial remedies such as a petition for self-serving allegations as well as self-defeating evidence.10 The findings of the
certiorari under Rule 65 that may be availed of, should a party wish to dispute the Regional Director were not based on substantial evidence, and private respondent
findings of the DOLE. failed to prove the existence of an employer-employee relationship. The DOLE had no
jurisdiction over the case, as there was no employer-employee relationship present. Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
Thus, the dismissal of the complaint against petitioner is proper. conclusions in the above Resolution had been reached in consultation before the case
was assigned to the writer of the opinion of the Court.
WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby AFFIRMED,
with the MODIFICATION that in the exercise of the DOLE’s visitorial and enforcement RENATO C. CORONA
power, the Labor Secretary or the latter’s authorized representative shall have the Chief Justice
power to determine the existence of an employer-employee relationship, to the
exclusion of the NLRC.

SO ORDERED.
Footnotes
PRESBITERO J. VELASCO, JR.
Associate Justice * On official leave.

WE CONCUR: 1 People’s
Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the
Department of Labor and Employment, G.R. No. 179652, May 8, 2009, 587
RENATO C. CORONA SCRA 724, 738.
Chief Justice
2 Id. at 739.

TERESITA J. LEONARDO-DE 3 Id.

ANTONIO T. CARPIO at 740.
CASTRO
Associate Justice
Associate Justice
4 Id. at 763.

ARTURO D. BRION DIOSDADO M. PERALTA 5

Associate Justice Associate Justice Id. at 744-745.

6 Rollo, p. 329.
(On official leave)
LUCAS P. BERSAMIN
MARIANO C. DEL CASTILLO*
Associate Justice 7 Id. at 335.
Associate Justice

8 Resolution,People’s Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary

ROBERTO A. ABAD MARTIN S. VILLARAMA, JR.
of the Department of Labor and Employment, G.R. No. 179652, January 24,
Associate Justice Associate Justice
2011.

JOSE PORTUGAL PEREZ JOSE CATRAL MENDOZA 9 CRCAgricultural Trading v. National Labor Relations Commission, G.R. No.
Associate Justice Associate Justice 177664, December 23, 2009, 609 SCRA 138, 146.

10 People’s
MARIA LOURDES P. A. SERENO BIENVENIDO L. REYES Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the
Associate Justice Associate Justice Department of Labor and Employment, supra note 1, at 761.

ESTELA M. PERLAS-BERNABE The Lawphil Project - Arellano Law Foundation

Associate Justice

CERTIFICATION
CONCURRING OPINION Commission (NLRC) based on the clause "in cases where the relationship of employer-
(in the Result) employee still exists" in Article 128(b).

BRION, J.: The Dissent

I concur in the result in affirming with modification the Court’s Decision of May 8, 2009. The May 8, 2009 Court Decision was not unanimous. I wrote a Dissent and was joined
This Decision originally dismissed respondent Jandeleon Juezan’s money claims by Justice Conchita Carpio Morales. I took strong exception to the Court’s Decision for:
against the petitioner People’s Broadcasting Service (Bombo Radyo Phils., Inc.). The
present Resolution still affirms the ruling in favor of the petitioner, but more importantly 1. taking cognizance of Bombo Radyo’s Rule 65 petition for certiorari despite
to me, it recognizes the validity of the Department of Labor and Employment’s (DOLE’s) the fact that a Rule 45 appeal (petition for review on certiorari) was available
plenary power under Article 128(b) of the Labor Code, as amended by Republic Act to the company and would have been the proper recourse since errors of law
No. 7730, including its power to determine the existence of employer-employee against the CA were raised;
relationship in the exercise of its Article 128(b) powers.
2. allowing a Deed of Assignment of Bank Deposits as a substitute for a cash
Background or surety bond in perfecting an appeal to the Labor Secretary, in violation of
Article 128(b) of the Labor Code which requires only a cash or surety bond;
The case arose when the DOLE Regional Office No. VII conducted an inspection of
Bombo Radyo’s premises in response to Juezan’s money claims against the 3. re-examining the evidence and finding that there was no employer-
broadcasting company, resulting in an order for Bombo Radyo to rectify/restitute the employee relationship between Juezan and Bombo Radyo, thereby reversing
labor standards violations discovered during the inspection. Bombo Radyo failed to the DOLE Regional Director’s findings which had already lapsed into finality
make any rectification or restitution, prompting the DOLE to conduct a summary in view of the non-perfection of the appeal;
investigation. Bombo Radyo reiterated its position, made during the inspection, that
Juezan was not its employee. Both parties submitted evidence to support their
respective positions. 4. holding that while the Regional Director and the DOLE Secretary may
preliminarily determine the existence of an employer-employee relationship in
a labor standards case, they can be divested of jurisdiction over the issue by
DOLE Director Rodolfo M. Sabulao found Juezan to be an employee of Bombo Radyo. a mere prima facie showing of an absence of an employer-employee
Consequently, Director Sabulao ordered Bombo Radyo to pay Juezan ₱203,726.30 relationship.
representing his demanded money claims. Bombo Radyo moved for reconsideration
and submitted additional evidence, but Director Sabulao denied the motion. Bombo
Radyo then appealed to the DOLE Secretary, insisting that Juezan was not its The Public Attorney’s Office (PAO) moved, with leave of court, to clarify the Decision
employee as he was a drama talent hired on a per drama basis. The Acting DOLE on the question of when the visitorial and enforcement power of the DOLE can be
Secretary dismissed the appeal for non-perfection due to Bombo Radyo’s failure to put considered co-extensive or not co-extensive with the power to determine the existence
a cash or surety bond, as required by Article 128(b) of the Labor Code. of an employer-employee relationship. The DOLE, in its Comment, also sought to clarify
the extent of its visitorial and enforcement power under the Labor Code.
Bombo Radyo went to the Court of Appeals (CA) through a petition for certiorari under
Rule 65 of the Rules of Court. The CA dismissed the petition for lack of merit. Bombo The Court, treating the Motion for Clarification as a Second Motion for Reconsideration,
Radyo then sought relief from this Court, likewise through a Rule 65 petition, contending granted the motion and reinstated the petition.1
that the CA committed grave abuse of discretion in dismissing the petition. It justified
its recourse to a petition for certiorari instead of a Rule 45 appeal by claiming that there The Court’s Ruling
was no appeal or any plain and adequate remedy available to it in the ordinary course
of law. In a reversal of position, the present Resolution now recognizes that the determination
of the existence of an employer-employee relationship by the DOLE, in the exercise of
On May 8, 2009, the Court’s Second Division rendered a Decision reversing the CA its visitorial and enforcement power under Article 128(b) of the Labor Code, is entitled
rulings and dismissing Juezan’s complaint. It reviewed the evidence and found that to full respect and must be fully supported. It categorically states:
there was no employer-employee relationship between Juezan and Bombo Radyo. The
Court overruled the CA’s recognition of the DOLE’s power to determine the existence No limitation in the law was placed upon the power of the DOLE to determine the
of employer-employee relationship in a labor standards case under Article 128(b) of the existence of an employer-employee relationship. No procedure was laid down where
Labor Code. It stressed that the power to determine the existence of employer- the DOLE would only make a preliminary finding, that the power was primarily held by
employee relationship is primarily lodged with the National Labor Relations the NLRC. The law did not say that the DOLE would first seek the NLRC’s determination
of the existence of an employer-employee relationship, or that should the existence of Deposits to perfect an appeal to the Labor Secretary; this mode directly contravenes
the employer-employee relationship be disputed, the DOLE would refer the matter to the express terms of Article 128(b) of the Labor Code which requires only a cash or
the NLRC. The DOLE must have the power to determine whether or not an employer- surety bond. I do hope that the Court will consider this ruling an isolated one applicable
employee relationship exists, and from there to decide whether or not to issue only to the strict facts obtaining in the present case as this is a step backward in the
compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by DOLE’s bid for an orderly and efficient delivery of labor justice.
RA 7730.2
In light of these reservations, I cannot fully concur with the present Resolution and must
The determination of the existence of an employer-employee relationship by the DOLE only "concur in the result."
must be respected. The expanded visitorial and enforcement power of the DOLE
granted by RA 7730 would be rendered nugatory if the alleged employer could, by the ARTURO D. BRION
simple expedient of disputing the employer-employee relationship, force the referral of Associate Justice
the matter to the NLRC. The Court issued the declaration that at least a prima facie
showing of the absence of an employer-employee relationship be made to oust the
DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence,
and it is the DOLE that will weigh it, to see if the same does successfully refute the
existence of an employer-employee relationship.3

This is not to say that the determination by the DOLE is beyond question or review.
Suffice it to say, there are judicial remedies such as a petition for certiorari under Rule
65 that may be availed of, should a party wish to dispute the findings of the
DOLE.4 (underscoring ours)

In short, the Court now recognizes that the DOLE has the full power to determine the
existence of an employer-employee relationship in cases brought to it under Article
128(b) of the Labor Code. This power is parallel and not subordinate to that of the
NLRC.

Our present ruling on the authority of the DOLE with respect to Article 128(b) of the
Labor Code is, to my mind, a very positive development that cannot but benefit our
working masses, the vast majority of whom "are not organized and, therefore, outside
the protective mantle of collective bargaining."5

It should be welcome to the DOLE, too, as it will greatly boost its visitorial and
enforcement power, and serve as an invaluable tool in its quest to ensure that workers
enjoy minimum terms and conditions of employment. The DOLE’s labor inspection
program can now proceed without being sidetracked by unscrupulous employers who
could, as the Resolution acknowledges, render nugatory the "expanded visitorial and
enforcement power of the DOLE granted by RA 7730 xxxx by the simple expedient of
disputing the employer-employee relationship [and] force the referral of the matter to
the NLRC."6

But our Resolution does not fully go the DOLE’s way. The Court, at the same time,
confirms its previous finding that no employer-employee relationship exists between
Juezan and Bombo Radyo based on the evidence presented, 7 and that a Deed of
Assignment of Bank Deposits can be a substitute for a cash or surety bond in perfecting
an appeal to the Labor Secretary.

I continue to entertain strong reservations against the validity of these rulings,

particularly the ruling on the Court’s acceptance of a Deed of Assignment of Bank
G.R. No. 217575, June 15, 2016 the Secretary of Labor, raising two grounds: (1) denial of due process; and (2) lack of
factual and legal basis of the assailed Order.
SOUTH COTABATO COMMUNICATIONS CORPORATION AND GAUVAIN J.
BENZONAN, Petitioners, v. HON. PATRICIA STO. TOMAS, SECRETARY OF The denial of due process was predicated on the refusal of the Hearing Officer to reset
LABOR AND EMPLOYMENT, ROLANDO FABRIGAR, MERLYN VELARDE, VINCE the hearing set on April 1, 2004, which thus allegedly deprived petitioners the
LAMBOC, FELIPE GALINDO, LEONARDO MIGUEL, JULIUS RUBIN, EDEL opportunity to present their evidence. Likewise, petitioners asserted that the Order of
RODEROS, MERLYN COLIAO, AND EDGAR JOPSON, Respondents. the Regional Director does not state that an employer-employee relationship exists
between petitioners and private respondents, which is necessary to confer jurisdiction
to the DOLE over the alleged violations.
DECISION
In an Order5 dated November 8, 2004, the Secretary of Labor affirmed the findings of
VELASCO JR., J.: the DOLE Regional Director on the postulate that petitioners failed to question, despite
notice of hearing, the noted violations or to submit any proof of compliance therewith.
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking And in view of petitioners' failure to present their evidence before the Regional Director,
to reverse and set aside the Decision1 dated November 28, 2014 and Resolution dated the Secretary of Labor adopted the findings of the Labor Inspector and considered the
March 5, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 00179-MIN, affirming interviews conducted as substantial evidence. The Secretary of Labor likewise
the Orders dated November 8, 2004 and February 24, 2005 issued by the Secretary of sustained what is considered as the straight computation method adopted by the
Labor and Employment. Regional Office as regards the monetary claims of private
respondents,6 thus:chanRoblesvirtualLawlibrary
WHEREFORE, presmises considered, the appeal by DXCP Radio Station and Engr.
Factual Antecedents Gauvain Benzonan is hereby DISMISSED for lack of merit. The Order dated May [20],
2004 of the Regional Director, directing appellants to pay the nine (9) appellees the
On January 19, 2004, the Department of Labor and Employment Region-XII (DOLE) aggregate amount of Seven Hundred Fifty Nine Thousand Seven Hundred Fifty Two
conducted a Complaint Inspection2 at the premises of DXCP Radio Station, which is Pesos (Php759,752.00), representing their claims for wage differentials, 13 th month pay
owned by petitioner South Cotabato Communications Corporation. The inspection differentials, service incentive leave pay, holiday pay premium and rest day premium,
yielded a finding of violation of labor standards provisions of the Labor Code involving is AFFIRMED.
the nine (9) private respondents, such as:chanRoblesvirtualLawlibrary
SO ORDERED.cralawred
1. Underpayment of Wages
Petitioners moved for, but was denied, reconsideration of the Secretary of Labor's
2. Underpayment of 13th Month Pay
Order.
3. Non-payment of the five (5) days Service Incentive Leave Pay
4. Non-payment of Rest Day Premium Pay
Petitioners elevated the case to the Court of Appeals (CA) via a Petition for Certiorari
5. Non-payment of the Holiday Premium Pay
under Rule 65 of the Rules of Court. By a Resolution 7 dated July 20, 2005, the CA
6. Non-remittance of SSS Contributions
dismissed the petition owing to procedural infirmities because petitioners failed to
7. Some employees are paid on commission basis aside from their
attach a Secretary's Certificate evidencing the authority of petitioner Benzonan, as
allowance[s]3
President, to sign the petition. On appeal, 8 this Court remanded the case back to the
CA for determination on the merits.9ChanRoblesVirtualawlibrary
Consequently, the DOLE issued a Notice of Inspection Result directing petitioner
corporation and/or its president, petitioner Gauvain J. Benzonan (Benzonan), to effect Ruling of the Court of Appeals
restitution and/or correction of the alleged violations within five (5) days from notice.
Due to petitioners' failure to comply with its directive, the DOLE scheduled on March 3, In its Decision dated November 28, 2014 in CA-G.R. SP No. 00179-MIN, the CA upheld
2004 a Summary Investigation at its Regional Office No. XII, Provincial Extension the Secretary of Labor, holding that petitioners cannot claim denial of due process, their
Office, in General Santos City. However, petitioners failed to appear despite due notice. failure to present evidence being attributed to their negligence.
Another hearing was scheduled on April 1, 2004 wherein petitioners' counsel, Atty.
Thomas Jacobo (Atty. Jacobo), failed to attend due to an alleged conflict in schedule. Petitioners moved for the reconsideration of the Decision, grounded on similar
Instead, his secretary, Nona Gido, appeared on his behalf to request a resetting, which arguments raised before the Secretary of Labor, citing in addition, the pronouncement
the DOLE Hearing Officer denied.4 Thus, in an Order dated May 20, 2004, the DOLE of the National Labor Relations Commission (NLRC) in the related case of NLRC No.
Region-XII OIC Regional Director (DOLE Regional Director) directed petitioners to pay MAC-01-010053-2008 entitled Rolando Fabrigar, et. al. v. DXCP Radio Station, et.
private respondents the total amount of P759,752, representing private respondents' al. There, the NLRC held that no employer-employee relationship exists between
claim for wage differentials, 13th month pay differentials, service incentive leave pay, petitioners and private respondents Rolando Fabrigar (Fabrigar), Edgar Jopson
holiday premium pay, and rest day premium Pay-Therefrom, petitioners appealed to (Jopson), and Merlyn Velarde (Velarde). For clarity, two separate actions were
instituted by private respondents Fabrigar, Jopson, and Velarde against petitioners: the petitioner's appeal, as well as the Decision of the CA, is silent on the employer-
first, for violation of labor standards provisions with the DOLE; and the second, for employee relationship issue, which further suggests that no real and proper
illegal dismissal filed with the NLRC. The latter case arose from the three respondents' determination of the existence of such relationship was ever made by these tribunals.
claim of constructive dismissal effected by petitioners following the inspection by the
DOLE. In ruling for petitioners, the NLRC, in its Resolution10 dated April 30, 2008, In its Comment, the DOLE counters that the results of the interviews conducted in the
declared that there is no employer-employee relationship between the parties, thus premises of DXCP in the course of its inspection constitute substantial evidence that
negating the notion of constructive dismissal. served as basis for the monetary awards to private
respondents.14ChanRoblesVirtualawlibrary
The CA denied petitioners' motion for reconsideration in its Resolution dated March 5,
2014. Hence, this petition. From the foregoing, the issue for the resolution can be reduced into the question of
whether the CA erred in upholding the November 8, 2004 Order of the Secretary of
Petitioners presently seek the reversal of the CA's Decision and Resolution and ascribe Labor, which in turn affirmed the May 20, 2004 Order of the Regional Director.
the following errors to the court a quo:chanRoblesvirtualLawlibrary Inextricably linked to the resolution of the said issue is a determination of whether an
employer-employee relationship had sufficiently been established between the parties
I. The [CA] did not completely and properly dispose of the case as to warrant the assumption of jurisdiction by the DOLE and issuance of the said May
pending before it as it never resolved all justiciable issues raised x x 20, 2004 and November 8, 2004 Orders.
x, particularly, that the determination of presence or absence of
employer-employee relationship is indispensable in the resolution of The Court's Ruling
this case as jurisdiction is dependent upon it.
Petitioners were not denied due process
II. There is [no] single basis, either factual or legal, for the issuance of
the May 20, 2004 Order of the Regional Director x x x against the Petitioners' claim of denial of due process deserves scant consideration. The essence
petitioners as it was issued relying merely on pure allegations and of due process, jurisprudence teaches, is simply an opportunity to be heard, or, as
without any substantial proof on the part of the claimants, contrary to applied to administrative proceedings, an opportunity to explain one's side or an
law and jurisprudence. opportunity to seek a reconsideration of the action or ruling complained of.15 As long as
the parties are, in fine, given the opportunity to be heard before judgment is rendered,
the demands of due process are sufficiently met.16ChanRoblesVirtualawlibrary
III. The [CA] gravely erred in ruling that the Secretary of Labor x x x did
not act in a whimsical and capricious manner or with grave abuse of
That petitioners were given ample opportunity to present their evidence before the
discretion tantamount to lack or excess of jurisdiction in affirming the
Regional Director is indisputable. They were notified of the summary investigations
Order of the [Regional Director] despite the glaring fact that no
conducted on March 3, 2004 and April 1, 2004, both of which they failed to attend. To
evidence were submitted by private respondents as to the basis of
justify their non-appearance, petitioners claim they requested a resetting of the April 1,
[their] claim and nature of their employment.
2004 hearing due to the unavailability of their counsel.17 However, no such explanation
was proffered as to why they failed to attend the first hearing. At any rate, it behooved
IV. The [CA] erred in ruling that the Secretary of Labor x x x did not deny the petitioners to ensure that they, as well as their counsel, would be available on the
[petitioners their] right to due process in affirming the x x x Order of dates set for the summary investigation as this would enable them to prove their claim
[the] Regional Director x x x notwithstanding [the evidence] submitted of non-existence of an employer-employee relationship. Clearly, their own negligence
before her [that there] exist no employer- employee relation [ship] did them in. Their lament that they have been deprived of due process is specious.
among the parties and that the [DOLE] has no jurisdiction over the
case.11 This thus brings to the fore the issues of whether the Orders of the Regional Director
and Secretary of Labor are supported by factual and legal basis, and, concomitantly,
In the matter of denial of due process, petitioners maintain that they were prevented whether an employer-employee relationship was sufficiently established between
from presenting evidence to prove that private respondents are not their employees petitioners and private respondents as to warrant the exercise by the DOLE of
when the Regional Director submitted the case for resolution without affording them an jurisdiction.
opportunity to ventilate their case or rebut the findings of the inspection. In addition,
petitioners assail the Order of the Regional Director for want of factual and legal basis, At the outset, the determination as to whether such employer-employee relationship
particularly the lack of categorical finding on the existence of an employer-employee was, indeed, established requires an examination of facts. It is a well-settled rule that
relationship between the parties—an element which petitioners insist is a prerequisite findings of fact of quasi-judicial agencies are accorded great respect, even finality, by
for the exercise of the DOLE'S jurisdiction,12 following People's Broadcasting (Bombo this Court. This proceeds from the general rule that this Court is not a trier of facts, as
Radyo, Phils., Inc.) v. The Secretary of Labor and Employment, et al.13 Petitioners questions of fact are contextually for the labor tribunals to resolve, and only errors of
likewise note that the November 8, 2004 Order of the DOLE Secretary denying law are generally reviewed in petitions for review on certiorari criticizing the decisions
of the CA.18ChanRoblesVirtualawlibrary
 mandate under Article 128 has been established beyond cavil in Bombo
The findings of fact should, however, be supported by substantial evidence from which Radyo,23 thus:chanRoblesvirtualLawlibrary
the said tribunals can make their own independent evaluation of the facts. In labor It can be assumed that the DOLE in the exercise of its visitorial and enforcement
cases, as in other administrative and quasi-judicial proceedings, the quantum of proof power somehow has to make a determination of the existence of an employer-
necessary is substantial evidence, or such amount of relevant evidence which a employee relationship. Such prerogatival determination, however, cannot be
reasonable mind might accept as adequate to justify a conclusion. 19 Although no coextensive with the visitorial and enforcement power itself. Indeed, such determination
particular form of evidence is required to prove the existence of an employer-employee is merely preliminary, incidental and collateral to the DOLE'S primary function of
relationship, and any competent and relevant evidence to prove the relationship may enforcing labor standards provisions. The determination of the existence of employer-
be admitted,20 a finding that the relationship exists must nonetheless rest on substantial employee relationship is still primarily lodged with the NLRC. This is the meaning of the
evidence.21ChanRoblesVirtualawlibrary clause "in cases where the relationship of employer-employee still exists" in Art. 128
(b).
In addition, the findings of fact tainted with grave abuse of discretion will not be upheld.
This Court will not hesitate to set aside the labor tribunal's findings of fact when it is Thus, before the DOLE may exercise its powers under Article 128, two important
clearly shown that they were arrived at arbitrarily or in disregard of the evidence on questions must be resolved: (1) Does the employer-employee relationship still exist, or
record or when there is showing of fraud or error of law. 22ChanRoblesVirtualawlibrary alternatively, was there ever an employer-employee relationship to speak of; and (2)
Are there violations of the Labor Code or of any labor law?
This case clearly falls under the exception. After a careful review of this case, the Court
finds that the DOLE failed to establish its jurisdiction over the case. The existence of an employer-employee relationship is a statutory prerequisite
to and a limitation on the power of the Secretary of Labor, one which the
The assailed May 20, 2004 Order of the Regional Director and November 8, 2004 Order legislative branch is entitled to impose. The rationale underlying this limitation is to
of the Secretary of Labor were issued pursuant to Article 128 of the Labor Code, to eliminate the prospect of competing conclusions of the Secretary of Labor and the
wit:chanRoblesvirtualLawlibrary NLR.C, on a matter fraught with questions of fact and law, which is best resolved by
ART. 128. Visitorial and enforcement power. - (a) The Secretary of Labor and the quasi-judicial body, which is the NRLC, rather than an administrative official of the
Employment or his duly authorized representatives, including labor regulation officers, executive branch of the government. If the Secretary of Labor proceeds to exercise his
shall have access to employer's records and premises at any time of the day or night visitorial and enforcement powers absent the first requisite, as the dissent proposes,
whenever work is being undertaken therein, and the right to copy therefrom, to question his office confers jurisdiction on itself which it cannot otherwise acquire. (emphasis
any employee and investigate any fact, condition or matter which may be necessary to ours)cralawred
determine violations or which may aid in the enforcement of this Code and of any labor
The foregoing ruling was further reiterated and clarified in the resolution of the
law, wage order or rules and regulations issued pursuant thereto.
reconsideration of the same case, wherein the jurisdiction of the DOLE was delineated
vis-a-vis the NLRC where the employer-employee relationship between the parties is
(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary,
at issue:chanRoblesvirtualLawlibrary
and in cases where the relationship of employer-employee still exists, the Secretary of
No limitation in the law was placed upon the power of the DOLE to determine the
Labor and Employment or his duly authorized representatives shall have the power to
existence of an employer-employee relationship. No procedure was laid down where
issue compliance orders to give effect to the labor standards provisions of this Code
the DOLE would only make a preliminary finding, that the power was primarily held by
and other labor legislation based on the findings of labor employment and enforcement
the NLRC. The law did not say that the DOLE would first seek the NLRC's determination
officers or industrial safety engineers made in the course of inspection. The Secretary
of the existence of an employer-employee relationship, or that should the existence of
or his duly authorized representatives shall issue writs of execution to the appropriate
the employer-employee relationship be disputed, the DOLE would refer the matter to
authority for the enforcement of their orders, except in cases where the employer
the NLRC. The DOLE must have the power to determine whether or not an
contests the findings of the labor employment and enforcement officer and raises
employer-employee relationship exists, and from there to decide whether or not
issues supported by documentary proofs which were not considered in the course of
to issue compliance orders in accordance with Art. 128(b) of the Labor Code, as
inspection. (As amended by Republic Act No. 7730, June 2, 1994). x x xcralawred
amended by RA 7730.
Under the aforequoted provision, the Secretary of Labor, or any of his or her authorized
representatives, is granted visitorial and enforcement powers for the purpose of The DOLE, in determining the existence of an employer-employee relationship,
determining violations of, and enforcing, the Labor Code and any labor law, wage order, has a ready set of guidelines to follow, the same guide the courts themselves
or rules and regulations issued pursuant thereto. Indispensable to the DOLE'S exercise use. The elements to determine the existence of an employment relationship are:
of such power is the existence of an actual employer-employee relationship between (1) the selection and engagement of the employee; (2) the payment of wages; (3)
the parties. the power of dismissal; (4) the employer's power to control the employee's
conduct. The use of this test is not solely limited to the NLRC. The DOLE
The power of the DOLE to determine the existence of an employer-employee Secretary, or his or her representatives, can utilize the same test, even in the course of
relationship between petitioners and private respondents in order to carry out its inspection, making use of the same evidence that would have been presented before
the NLRC. (emphasis ours)cralawred
Like the NLRC, the DOLE has the authority to rule on the existence of an employer- denied x x x. Further, Mr. Fred Huervana, declared that this case be submitted for
employee relationship between the parties, considering that the existence of an decision based on the merit of the case.
employer-employee relationship is a condition sine qua non for the exercise of its
visitorial power. Nevertheless, it must be emphasized that without an employer- Failure of the parties to reach a final settlement prompted this Office to compute the
employee relationship, or if one has already been terminated, the Secretary of Labor is entitlements of the seven (7) affected workers for their salary differential, underpayment
without jurisdiction to determine if violations of labor standards provision had in fact of 13th month pay, non-payment of the five (5) days service incentive leave pay, non-
been committed,24 and to direct employers to comply with their alleged violations of payment of holiday premium pay and non-payment of rest day premium pay in the total
labor standards. amount of SEVEN HUNDRED FIFTY NINE THOUSAND SEVEN HUNDRED FIFTY
TWO PESOS (P759,752.00) x x x.25cralawred
The Orders of the Regional Director and the Secretary of Labor do not contain
In determining the existence of an employer-employee relationship, Bombo
clear and distinct factual basis necessary to establish the jurisdiction of the
Radyo specifies the guidelines or indicators used by courts, i.e. (1) the selection and
DOLE and to justify the monetary awards to private respondents
engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the employer's power to control the employee's conduct. The DOLE Secretary,
For expediency, the May 20, 2004 Order of the Regional Director is pertinently
or his or her representatives, can utilize the same test, even in the course of inspection,
reproduced hereunder:chanRoblesvirtualLawlibrary
making use of the same evidence that would have been presented before the
ORDER
NLRC.26ChanRoblesVirtualawlibrary
This refers to the Complaint Inspection conducted at DXCP Radio Station and/or Engr.
As can be gleaned from the above-quoted Order, the Regional Director merely noted
Gauvain Benzonan, President, located at NH Lagao Road, General Santos City on
the discovery of violations of labor standards provisions in the course of inspection of
January 19, 2004 pursuant to Inspection Authority No. R1201-0401-CI-052 which
the DXCP premises. No such categorical determination was made on the existence of
resulted to the discovery of the Labor Standards violations,
an employer-employee relationship utilizing any of the guidelines set forth. In a word,
namely:chanRoblesvirtualLawlibrary
the Regional Director had presumed, not demonstrated, the existence of the
1. Underpayment of Wages
relationship. Of particular note is the DOLE'S failure to show that petitioners, thus,
2. Underpayment of 13th Month Pay
exercised control over private respondents' conduct in the workplace. The power of the
3. Non-payment of the five (5) days Service Incentive Leave Pay
employee to control the work of the employee, or the control test, is considered the
4. Non-payment of Rest Day Premium Pay
most significant determinant of the existence of an employer-employee
5. Non-payment of the Holiday Premium Pay
relationship.27ChanRoblesVirtualawlibrary
6. Non-remittance of SSS Contributions
7. Some employees are paid on commission basis aside from their
Neither did the Orders of the Regional Director and Secretary of Labor state nor make
allowance[s]cralawred
reference to any concrete evidence to support a finding of an employer-employee
Proceeding from the conduct of such inspection was the issuance of the Notice of relationship and justify the monetary awards to private respondents. Substantial
Inspection Result requiring the respondent DXCP Radio Station and/or Engr. Gauvain evidence, such as proofs of employment, clear exercise of control, and the power to
Benzonan, President, to effect restitution and/or correction of the noted violations at the dismiss that prove such relationship and that petitioners committed the labor laws
plant/company level within five (5) calendar days from notice thereof. But, Engr. violations they were adjudged to have committed, are grossly absent in this case.
Gauvain Benzonan failed to do so. Furthermore, the Orders dated May 20, 2004 and November 8, 2004 do not even allude
to the substance of the interviews during the inspection that became the basis of the
On March 3, 2004, a summary investigation was conducted at the [DOLE], Regional finding of an employer-employee relationship.
Office No. XII, Provincial Extension Office, General Santos City. In that scheduled
Summary Investigation, only complainants appeared, assisted by Mr. Fred Huervana, The Secretary of Labor adverts to private respondents' allegation in their Reply28 to
National President of the Philippine Organization of Labor Unions, x x x while justify their status as employees of petitioners. The proffered justification falls below the
respondent failed to appear despite due notice. quantum of proof necessary to establish such fact as allegations can easily be
concocted and manufactured. Private respondents' allegations are inadequate to
On April 1, 2004, another Summary Investigation was conducted x x x [There] support a conclusion absent other concrete proof that would support or corroborate the
complainants appeared, x x x while respondent was represented by Ms. Nona Gido, same. Mere allegation, without more, is not evidence and is not equivalent to
Secretary of Atty. Thomas Jacobo, counsel for the respondent. During the deliberation, proof.29 Hence, private respondents' allegations, essentially self-serving statements as
Ms. Nona Gido manifested that her presence in that scheduled summary investigation they are and devoid under the premises of any evidentiary weight, can hardly be taken
was to request for the re-scheduling of such hearing, however, such request was as the substantial evidence contemplated for the DOLE'S conclusion that they are
denied. Mr. Fred Huervana declared that as he gleaned from the Notice of Inspection employees of petitioners.
Result issued by the labor inspector, the Non-payment of the Provisional Emergency
Relief Allowance (PERA) was not included from among the discovered violations, In a similar vein, the use of the straight computation method in awarding the sum of
hence he requested that it should be included in the computation. Such request was P759,752 to private respondents, without reference to any other evidence other than
the interviews conducted during the inspection, is highly telling that the DOLE failed to their conclusions and their final dispositions. A decision should faithfully comply with
consider evidence in arriving at its award and leads this Court to conclude that such Section 14, Article VIII of the Constitution which provides that no decision shall be
amount was arrived at arbitrarily. rendered by any court without expressing therein clearly and distinctly the facts of the
case and the law on which it is based. If such decision had to be completely overturned
It is quite implausible for the nine (9) private respondents to be entitled to uniform or set aside, upon the modified decision, such resolution or decision should likewise
amounts of Service Incentive Leave (SIL) pay, holiday pay premium, and rest day state the factual and legal foundation relied upon. The reason for this is obvious: aside
premium pay for three (3) years, without any disparity in the amounts due them since from being required by the Constitution, the court should be able to justify such a
entitlement to said benefits would largely depend on the actual rest days and holidays sudden change of course; it must be able to convincingly explain the taking back of its
worked and amount of remaining leave credits in a year. Whoever claims entitlement solemn conclusions and pronouncements in the earl indecision. The same thing goes
to the benefits provided by law should establish his or her right thereto. 30 The burden for the findings of fact made by the NLRC, as it is a settled rule that such findings are
of proving entitlement to overtime pay and premium pay for holidays and rest days lies entitled to great respect and even finality when supported by substantial evidence;
with the employee because these are not incurred in the normal course of business.31 In otherwise, they shall be struck down for being whimsical and capricious and arrived at
the case at bar, evidence pointing not only to the existence of an employer-employee with grave abuse of discretion. It is a requirement of due process and fair play that the
relationship between the petitioners and private respondents but also to the latter's parties to a litigation be informed of how it was decided, with an explanation of the
entitlement to these benefits are miserably lacking. factual and legal reasons that led to the conclusions of the court. A decision that does
not clearly and distinctly state the facts and the law on which it is based leaves the
It may be that petitioners have failed to refute the allegation that private respondents parties in the dark as to how it was reached and is especially prejudicial to the losing
were employees of DXCP. Nevertheless, it was incumbent upon private respondents party, who is unable to pinpoint the possible errors of the court for review by a higher
to prove their allegation that they were, indeed, under petitioners' employ and that the tribunal. x x xcralawred
latter violated their labor rights. A person who alleges a fact has the onus of proving it
To this end, University of the Philippines v. Hon. Dizon35 instructs that the Constitution
and the proof should be clear, positive and convincing. 32 Regrettably, private
and the Rules of Court require not only that a decision should state the ultimate facts
respondents failed to discharge this burden. The pronouncement in Bombyo
but also that it should specify the supporting evidentiary facts, for they are what are
Radyo that the determination by the DOLE of the existence of an employer-employee
called the findings of fact. A decision that does not clearly and distinctly state the facts
relationship must be respected should not be construed so as to dispense with the
and the law on which it is based leaves the parties in the dark as to how it was reached
evidentiary requirement when called for.
and is especially prejudicial to the losing party, who is unable to pinpoint the possible
errors of the court (or quasi-judicial body) for review by a higher
It cannot be stressed enough that the existence of an employer-employee relationship
tribunal.36ChanRoblesVirtualawlibrary
between the parties is essential to confer jurisdiction of the case to the DOLE. Without
such express finding, the DOLE cannot assume to have jurisdiction to resolve the
Accordingly, this Court will not hesitate to strike down decisions rendered not hewing
complaints of private respondents as jurisdiction in that instance lies with the
to the Constitutional directive, as it did to a Decision rendered by the NLRC in Anino,
NLRC.33ChanRoblesVirtualawlibrary
et al. v. Hinatuan Mining Corporation37 for non-observance of the said
requirement:chanRoblesvirtualLawlibrary
The Orders of the Regional Director and Secretary of Labor do not comply with
In the present case, the NLRC was definitely wanting in the observance of the aforesaid
Article VIII, Section 16 of the Constitution
constitutional requirement. Its assailed five-page Decision consisted of about three
pages of quotation from the labor arbiter's decision, including the dispositive portion,
As a necessary corollary to the foregoing considerations, another well-grounded reason
and barely a page (two short paragraphs of two sentences each) of its own discussion
exists to set aside the May 20, 2004 Order of the Regional Director and November 8,
of its reasons for reversing the arbiter's findings. It merely raised a doubt on the motive
2004 Order of the Secretary of Labor. The said Orders contravene Article VIII, Section
of the complaining employees and took "judicial notice that in one area of Mindanao,
14 of the Constitution, which requires courts to express clearly and distinctly the facts
the mining industry suffered economic difficulties." In affirming peremptorily the validity
and law on which decisions are based, to wit:chanRoblesvirtualLawlibrary
of private respondents' retrenchment program, it surmised that "[i]f small mining
Section 14. No decision shall be rendered by any court without expressing therein
cooperatives experienced the same fate, what more with those highly mechanized
clearly and distinctly the facts and the law on which it is based.
establishments."cralawred
No petition for review or motion for reconsideration of a decision of the court shall be The Court is not unmindful of the State's policy to zealously safeguard the rights of our
refused due course or denied without stating the legal basis therefor.cralawred workers, as no less than the Constitution itself mandates the State to afford full
protection to labor. Nevertheless, it is equally true that the law, in protecting the rights
As stressed by this Court in San Jose v. NLRC,34 faithful compliance by the courts and
of the laborer, authorizes neither oppression nor self-destruction of the employer.38 The
quasi-judicial bodies, such as the DOLE, with Art. VIII, Sec. 14 is a vital element of due
constitutional policy to provide full protection to labor is not meant to be a sword to
process as it enables the parties to know how decisions are arrived at as well as the
oppress employers.39 Certainly, an employer cannot be made to answer for claims that
legal reasoning behind them. Thus:chanRoblesvirtualLawlibrary
have neither been sufficiently proved nor substantiated.
This Court has previously held that judges and arbiters should draw up their decisions
and resolutions with due care, and make certain that they truly and accurately reflect
WHEREFORE, the petition is GRANTED. The Decision dated November 28, 2014 and
Resolution dated March 5, 2015 of the Court of Appeals in CA-G.R. SP No. 00179-MIN
are accordingly REVERSED and SET ASIDE. The Order of the then Secretary of Labor
and Employment dated November 8, 2004 denying petitioners' appeal and the Order
of the Regional Director, DOLE Regional Office No. XII, dated May 20, 2004,
are ANNULLED, without prejudice to whatever right or cause of action private
respondents may have against petitioners.

SO ORDERED.
G.R. No. 227550, August 14, 2019 Pinera, on the other hand, received a letter7 from De Leon on June 15, 2011 requiring
her to report for work in the University of Manila within 48 hours from receipt of the
UNIVERSITY OF MANILA, REPRESENTED BY EMILY DE LEON AS PRESIDENT, letter. Due to Pinera's refusal to be transferred to Manila, petitioner stopped the
DOING BUSINESS UNDER THE NAME AND STYLE BENGUET PINES TOURIST payment of her salary from June 1-15, 2011. On June 22, 2011, security guards of the
INN, PETITIONER, v. JOSEPHINE P. PINERA,* YOLANDA A. CALANZA AND BPTI, upon instruction of De Leon went to see Pinera and asked for the keys of their
LEONORA P. SONGALIA,** RESPONDENTS room in BPTI.8 When she refused, the guards destroyed the door knob of the locked
room, stormed in, illegally removed Pinera's personal belongings and dumped them
outside the room.9
DECISION
Songalia, for her part received a letter10 dated May 31, 2011, requiring her to explain
J. REYES, JR., J.: why she was reporting to Dely's Inn, a small inn conveniently located at the back of
BPTI and owned by Atty. Delos Santos. Another letter dated June 15, 2011 11 was sent
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court to Songalia reiterating the order for her to report to the University of Manila. Just like
from the August 24, 2015 Decision1 and the October 10, 2016 Resolution2 of the Court Pinera, her salaries were also withheld starting June 15, 2011.
of Appeals (CA) in CA-G.R. SP No. 127660, which respectively, reversed and set aside
the Decision of the National Labor Relations Commission (NLRC) and denied However, sometime in the end of July 2011, petitioner offered to give respondents
petitioner's Motion for Reconsideration. Calanza, Pinera and Songalia their 13th month pay which were refused by all of them.

Petitioner University of Manila (petitioner) is an educational institution established by Aggrieved, respondents filed an illegal dismissal case against petitioner. On March 22,
the Delos Santos Family. It is also engaged in the business of operating hotels and 2012, the Labor Arbiter rendered a Decision 12 in favor of respondents, ordering
restaurants, which include among others, Benguet Pines Tourist Inn (BPTI). petitioner to pay respondents separation pay, full backwages and the deficiency in 13th
month pay, in the total amount of P863,422.00.
Respondents Yolanda Calanza (Calanza), Josephine Pinera (Pinera) and Leonora P.
Songalia (Songalia) were all hired by Atty. Ernesto Delos Santos (Atty. Delos Santos) Petitioner appealed the case to the NLRC. The NLRC found that there was no illegal
and his mother Cordelia Delos Santos (Cordelia), to work in BPTI as receptionists and dismissal to speak about. Respondents were dismissed on the ground of unlawful
all-around employees, in 1984, 1993 and 1999, respectively. The late spouses Virgilio insubordination to the lawful order of petitioner for their refusal to transfer to Manila
and Cordelia Delos Santos (spouses Delos Santos) were then the owners of the although the procedural due process was not observed. The dispositive portion of the
petitioner University. During the lifetime of the spouses Delos Santos, BPTI was under NLRC's Resolution reads:
the management of Atty. Delos Santos. Upon the death of Cordelia, Dr. Emily De Leon
(De Leon) became the current University President.
WHEREFORE, premises considered, the appeal is partly GRANTED and the Decision
dated [22] March 2012 is ordered VACATED and SET ASIDE.
Sometime in December 2010, Calanza, who was then assigned as front desk clerk in
BPTI, was verbally informed by the personnel of the petitioner that 25 booklets of
unused official receipts (with No. 86251-87500) were allegedly missing. Petitioner A new one is issued finding that complainant-appellee Calanza was validly dismissed
insists that Calanza has custody over the booklets and was accountable for the loss. but for failure to observe the notice requirement of the law, respondents-appellants are
Calanza claims that she did not receive any written notice at all requiring her to explain ordered to pay complainant-appellee Calanza nominal damages in the amount of
the said missing booklets of official receipts.3 P10,000.00. The complaint for illegal dismissal filed by complainants-appellees Pinera
and Songalia are dismissed for lack of merit.
On January 19, 2011, petitioner released a letter-memorandum4 signed by the
petitioner's Chairman of the Board and Vice-President for Finance, Dr. Ma. Corazon SO ORDERED.13
Ramona Delos Santos (Delos Santos) concerning the reshuffling of BPTI employees
allegedly "to avoid anomalies." The letter mentioned about the 25 missing unused Respondents moved to reconsider but the NLRC denied its motion in a Resolution
booklets of official receipts and for this reason, reshuffling of the employees is dated September 12, 2012.14
necessary and only assigned personnel are allowed to work at BPTI. Respondents
were informed about the said letter-memorandum. The adverse Decision of the NLRC prompted respondents to file a Petition
for Certiorari with the CA, ascribing grave abuse of discretion on the part of NLRC in
On January 31, 2011, Calanza received a letter5 from Delos Santos of her impending declaring that Calanza was validly dismissed on the ground of willful disobedience or
transfer to Manila. Due to her refusal to be transferred to Manila, Calanza was informed loss of trust and in finding that Pinera and Songalia failed to establish the fact of their
through a letter6 dated March 3, 2011 that by virtue of a Board Resolution, her service illegal dismissal.
was already terminated on the ground of insubordination.
In the appealed Decision dated August 24, 2015, the CA reversed the findings of the First. Breach of trust and confidence must be premised on the fact that the employee
NLRC and reinstated that of the Labor Arbiter. It ruled that there was no just cause for concerned holds a position of trust and confidence, where greater trust is placed by
the dismissal of respondents and that procedural due process was not observed. The management and from whom greater fidelity to duty is correspondingly expected. 19 The
dispositive portion of the CA Decision reads: essence of the offense for which an employee is penalized is the betrayal of such
trust.20
WHEREFORE, premises considered, the instant Petition for [Certiorari] is
hereby GRANTED. Hence, the NLRC's dispositions on September 12, 2012 and July In the case of Wesleyan University Phils. v. Reyes,21 employees vested with trust and
9, 2012 are hereby SET ASIDE and we AFFIRM the Labor Arbiter's Decision on March confidence were divided into two classes: (a) the managerial employees; and (b) the
22, 2012.15 fiduciary rank-and-file employees. As explained by the Court:

It appears that the CA debunked the NLRC's findings of breach of trust and confidence To the first class belong the managerial employees or those vested with the powers or
and insubordination or willful disobedience. The order given by petitioner is for the prerogatives to lay down management policies and to hire, transfer, suspend, lay-off,
respondents to transfer their workplace from Baguio to Manila. The CA found that said recall, discharge, assign or discipline employees or effectively recommend such
transfer order was a retaliatory move or a punishment for the unproven transgressions managerial actions. The second class includes those who in the normal and routine
committed by Calanza — for losing the 25 booklets of official receipts (causing the exercise of their functions regularly handle significant amounts of money or property.
breach of trust and confidence) and by Pinera and Songalia for allegedly working at Cashiers, auditors, and property custodians are some of the employees in the second
Dely's Inn while employed with BPTI and for allowing Atty. Delos Santos to commit theft class.22
of supplies against BPTI. The Motion for Reconsideration was denied in a Resolution
dated October 10, 2016. Second. There must be some basis for the loss of trust and confidence. The employer
must present clear and convincing proof of an actual breach of duty committed by the
Hence, petitioner filed the instant Petition arguing that the CA Decision is not in accord employee by establishing the facts and incidents upon which the loss of confidence in
with law and/or jurisprudence and is based on misapprehension of facts, grounded on the employee may fairly be made to rest. 23 This means that "the employer must
speculations or conjectures.16 establish the existence of an act justifying the loss of trust and
confidence."24 Otherwise, employees will be left at the mercy of their employers.25
Under the Labor Code, there are twin requirements to justify a valid dismissal from
employment: (a) the dismissal must be for any of the causes provided in Article 282 of A more stringent degree of proof is required in terminating fiduciary rank-and-file
the Labor Code (substantive aspect); and (b) the employee must be given an employees. The Court explained in Caoile v. National Labor Relations Commission:26
opportunity to be heard and to defend himself (procedural aspect). 17 The onus of
proving the validity of dismissal lies with the employer. Thus: [W]ith respect to rank-and-file personnel, loss of trust and confidence as ground for
valid dismissal requires proof of involvement in the alleged events in question, and that
The burden of proof rests upon the employer to show that the disciplinary action was mere uncorroborated assertions and accusations by the employer will not be sufficient.
made for lawful cause or that the termination of employment was valid. In administrative But, as regards a managerial employee, mere existence of a basis for believing that
and quasi-judicial proceedings, the quantum of evidence required is substantial such employee has breached the trust of his employer would suffice for his dismissal.
evidence or "such relevant evidence as a reasonable mind might accept as adequate Hence, in the case of managerial employees, proof beyond reasonable doubt is not
to support a conclusion." Thus, unsubstantiated suspicions, accusations, and required, it being sufficient that there is some basis for such loss of confidence, such
conclusions of the employer do not provide legal justification for dismissing the as when the employer has reasonable ground to believe that the employee concerned
employee. When in doubt, the case should be resolved in favor of labor pursuant to the is responsible for the purported misconduct, and the nature of his participation therein
social justice policy of our labor laws and the 1987 Constitution. 18 renders him unworthy of the trust and confidence demanded by his position.

As records would show, respondents were dismissed on the grounds of (a) willful To determine whether Calanza falls within the first or second class of employees, the
breach of trust and confidence, specifically for losing the 25 booklets of unused official actual work that she performed, not her job title, must be considered.27
receipts during her duty as a front desk officer (for Calanza) and for working at Dely's
Inn while employed with BPTI and for not reporting and tolerating the act of Atty. Delos Petitioner averred that Calanza was an all-around in the small hotel that they operate.
Santos of getting supplies from BPTI; and (b) insubordination or willful disobedience of At the time the 25 booklets of unused official receipts were missing, respondent
company rules specifically for not complying with petitioner's order for respondents to Calanza was the front desk clerk who is in-charge of the money being paid by hotel
transfer workplace from Baguio to Manila. guests and for the properties of BPTI, including the said missing booklets of unused
official receipts. Verily, Calanza is considered to belong to the fiduciary rank-and-file
A dismissal based on willful breach of trust or loss of trust and confidence entails the entrusted with the money and properties of BPTI.
presence of two conditions.
While normally, the mere existence of the basis for believing that the managerial As to Pinera and Songalia, while they were made to explain why they were reporting to
employee breached the trust reposed by the employer would suffice to justify a Dely's Inn, the due process requirement was not completely complied with. No hearing
dismissal, we should desist from applying this norm against an employee who was not or conference was conducted in order for respondents to vent their side and that the
a managerial employee.28 The employer must present a more stringent proof of the second notice was not sent containing the decision to dismiss and the reasons that
employee's actual breach of trust and her involvement in the incident pertaining to the justify the dismissal.
missing unused booklets of official receipts.
Instead of complying with the notice requirement, Calanza was sent a letter ordering
Set against this guideline, we cannot hold as sufficient the evidence submitted by her to report to Manila to explain about the missing booklets of unused official receipts.
petitioner to establish Calanza's involvement on the missing booklets of unused official When she failed, she was charged with insubordination and willful disobedience. Pinera
receipts. Said evidence consists of the affidavit of a certain Nieves G. Gomez (Gomez) and Songalia, on the other hand, were sent office orders/letters directing them to
who attested that the missing booklets of unused official receipts happened during the transfer workplace from Baguio to Manila. When they refused to be transferred, they
watch of Calanza. Apart from the fact that said affidavit is self-serving as Gomez works were likewise charged with insubordination and willful disobedience.
for BPTI, it was not adequately explained how the booklets of unused official receipts
were kept, who handled them and whether there were other personnel who were In order for willful disobedience or insubordination to be a valid cause for dismissal, it
involved in safekeeping the said receipts. There was uncertainty then if indeed Calanza necessitates the concurrence of at least two requisites, namely: (a) the employee's
has anything to do with the missing booklets of unused official receipts. In short, the assailed conduct must have been willful, that is, characterized by a wrongful and
affidavit failed to show how Calanza had willfully betrayed her employer's trust. perverse attitude; and (b) 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
The same principle is true in the case of Pinera and Songalia. The willful breach of trust discharge.31
on their part was predicated on the petitioner's belief that they were working at Dely's
Inn during working hours and that they consented to the stealing of electricity and water Here, the order alleged to be violated is the order to transfer workplace from Baguio to
by Atty. Delos Santos from BPTI (for which the latter was now indicted for qualified Manila. Petitioner justified the transfer as a legitimate business strategy in order to avert
theft) and allowed Atty. Delos Santos to pirate hotel guests and take supplies like soap, the continuous anomaly going on in the company. The anomaly referred to herein was
tissues, rice, etc. from BPTI to Dely's Inn. Again, the involvement of Pinera and the case of the missing booklets of unused official receipts being blamed against
Songalia in these alleged acts of theft by Atty. Delos Santos were not sufficiently Calanza, and the allegations that all respondents were reporting to nearby Dely's Inn
established. It was likewise not adequately proven that Pinera and Songalia were during office hours and their failure to report the alleged theft of supplies committed by
working at Dely's Inn during office hours. They admitted that they were going to Dely's Atty. Delos Santos.
Inn only to help because it was just adjacent to BPTI, but never to work full-time. What
was clear from the records is the apparent conflict between the owners and the
members of the Board of Trustees and that said conflict has affected even the While it is the prerogative of the management to transfer an employee from one office
employees. Petitioner, through De Leon, has assumed that Pinera and Songalia had to another within the business establishment based on its assessment and perception
sided with Atty. Delos Santos, as he was the one who previously hired them. of the employee's qualifications, aptitudes and competence, and in order to ascertain
where he can function with maximum benefit to the company, this prerogative is not
without limit.32 As explained by the Court:
Records likewise show that respondents were not accorded due process. There is
procedural due process in termination of employment for just cause if the employer
gives the employee two written notices and a hearing or opportunity to be heard if The managerial prerogative to transfer personnel must be exercised without grave
requested by the employee before terminating the employment. 29 Specifically, there abuse of discretion, bearing in mind the basic elements of justice and fair play. Having
should be a notice specifying the grounds for which dismissal is sought, a hearing or the right should not be confused with the manner in which that right is exercised. Thus,
an opportunity to be heard, and after hearing or opportunity to be heard, a notice of the it cannot be used as a subterfuge by the employer to rid himself of an undesirable
decision to dismiss.30 worker. In particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries, privileges and other benefits.33 x x x
Petitioner firmly grasped on its belief that it was Calanza who was responsible for the
missing booklets of unused official receipts and verbally informed Calanza about it. She
was not formally charged nor investigated before she was terminated. Verbal notice is The transfer order, while in the guise of legitimate business prerogative, was issued
not enough. She was not even furnished any written notice particularly stating the with grave abuse of discretion.
offense which she might have been charged with. As correctly concluded by the CA,
Calanza was not given the opportunity to defend herself as she was not fully and First, it smacks of unreasonableness. As can be gleaned from the Letters 34 to
correctly informed of the charges against her which petitioner intended to prove. She respondents Pinera and Songalia both dated June 15, 2011, the directive indicates that
was simply and summarily served a notice of termination unmindful of her right to due the transfer must be done within 48 hours upon receipt of the letter, a herculean and
process and security of tenure.
inconvenient task for employees who have been working and who have established
family life in Baguio for a considerable length of time.

Second, it was issued without regard to due process. It was not sufficiently explained
to them why they were being transferred. If the reason is because of the missing
booklets of unused official receipts and their alleged moonlighting, then respondents
were clearly not given an opportunity to explain their sides and to defend themselves.

Third, it was not shown that the transfer was work-related or would give maximum
benefit to the company. The transfer order was silent as to what particular task will be
given to respondents in the University considering that they have no definite tasks in
the hotel.

After the transfer order, petitioner immediately withheld the respondents' salary,
coerced and forcefully evicted them from their living quarters in BPTI, as shown by the
photographs,35 police blotters and certifications.36

The CA then has strong basis for its conclusion that the transfer was not prompted by
legitimate business purpose, but merely a retaliatory move against the respondents —
specifically for the alleged anomalous acts committed by them despite not having been
proven by competent evidence and for allegedly siding with Atty. Delos Santos. Under
such questionable circumstances, respondents had a valid reason to refuse the Manila
transfer.

It is safe then to conclude that the allegation of insubordination on the part of

respondents was merely a fabrication made by petitioner to justify respondents'
dismissal from employment. It bears stressing that not every case of insubordination or
willful disobedience by an employee of a lawful work-related order of the employer or
its representative is reasonably penalized with dismissal.37 There must be reasonable
proportionality between, on the one hand, the willful disobedience by the employee and,
on the other hand, the penalty imposed therefor. 38 Here, the act of respondents in
defying the transfer order is justified because the transfer order itself was issued with
grave abuse of discretion. Clearly, there was a notable disparity between the alleged
insubordination and the penalty of dismissal meted out by petitioner.

The fundamental guarantees of security of tenure and due process dictate that no
worker shall be dismissed except for just and authorized cause provided by law and
after due process.39 In the instant case, petitioner was not able to establish the
existence of causes justifying the dismissal of respondents and the observance of due
process in effecting the dismissal.

WHEREFORE, the instant Petition is DENIED. The questioned Decision dated August
24, 2015 and the Resolution dated October 10, 2016 of the Court of Appeals in CA-
G.R. No. SP No. 127660 are AFFIRMED.

SO ORDERED.
574 Phil. 556 ABANDONMENT OF
SAN MIGUEL WORK
The same Policy on Employee Conduct also punishes falsification of company records
TINGA, J,: or documents with discharge or termination for the first offense if the offender himself
or somebody else benefits from falsification or would have benefited if falsification is
In this Petition for Review on Certiorari[1] under Rule 45, petitioners San Miguel not found on time.[6]
Corporation (SMC) and Geribern Abella, Assistant Vice President and Plant Manager
of SMC's Metal Closure and Lithography Plant, assail the Decision [2] dated 28 June It appears that per company records, respondent was AWOP on the following dates in
2000 and the Resolution[3] dated 17 November 2000, both of the Court of Appeals in 1997: 2, 4 and 11 January; 26, 28 and 29 April; and 5, 7, 8, 13, 21, 22, 28 and 29 May.
the consolidated cases of Ernesto M. Ibias v. National Labor Relations Commission, et For his absences on 2, 4 and 11 January and 28 and 29 April, he was given a written
al. and San Miguel Corporation Metal Closure and Lithography Plant, et al. v. National warning[7] dated 9 May 1997 that he had already incurred five (5) AWOPs and that
Labor Relations Commission, et al., docketed as CA G.R. SP No. 54684 and CA G.R. further absences would be subject to disciplinary action. For his absences on 28 and
SP No. 54709, respectively. 29 April and 7 and 8 May, respondent was alleged to have falsified his medical
consultation card by stating therein that he was granted sick leave by the plant clinic
The factual and legal antecedents follow. on said dates when in truth he was not.

Ernesto M. Ibias (respondent) was employed by petitioner SMC on 24 December 1978 In a Notice to Explain dated 20 May 1997,[8] respondent was required to state in writing
initially as a CRO operator in its Metal Closure and Lithography Plant. Respondent why he should not be subject to disciplinary action for falsifying his medical consultation
continuously worked therein until he advanced as Zamatic operator. He was also an card. On 29 May 1997, he was sent a telegram[9] asking him to explain why he should
active and militant member of a labor organization called Ilaw Buklod Manggagawa not be disciplined for not reporting for work since 26 May 1997. Respondent did not
(IBM)-SMC Chapter. comply with these notices. He was again issued two Notices to Explain [10] both dated 3
June 1997, one for his AWOPs from 26 May to 2 June 1997 and another for falsification
According to SMC's Policy on Employee Conduct,[4] absences without permission or of medical consultation card entries for 28 April and 8 May 1997.
AWOPs, which are absences not covered either by a certification of the plant doctor
that the employee was absent due to sickness or by a duly approved application for On 5 June 1997, respondent submitted a handwritten explanation to the charges, to
leave of absence filed at least six (6) days prior to the intended leave, are subject to wit: "Tungkol po sa ibinibintang po ninyong [sic] sa akin na falsification of medical
disciplinary action characterized by progressively increasing weight, as follows: consultation card ito po hindi ko magagawa at sa mga araw na hindi ko po ipinasok ito
po ay may kaukulang supporting paper[s]."[11]
VIOLATIONS 1ST Offense 2nd Offense 3rd Offense4th Offense5th Offense
2. ABSENCE WITHOUT Not satisfied with the explanation, SMC conducted an administrative investigation on
PERMISSION (within one 17 and 23 June 1997.[12]
calendar year)
A. Each day absent notWritten During the investigation, respondent admitted that he was absent on 28 and 29 April
exceeding two (2) days warning and 7 and 8 May 1997 and had not sought sick leave permission for those dates, and
3 Days' also denied falsifying or having had anything to do with the falsification of his medical
B. 3rd AWOP
suspension consultation card.
5 Days'
C. 4th AWOP
suspension Ferdinand Siwa (Siwa), staff assistant, and Dr. Angelito Marable (Marable), retainer-
7 Days' physician, testified for SMC.
D. 5th AWOP
suspension
10 Days' Siwa testified that sometime in May 1997, he called respondent's attention to AWOPs
E. 6th AWOP
suspension he incurred on 28 and 29 April. He admitted having given respondent a written warning
15 Days' for his absences on 2, 4 and 11 January and on 28 and 29 April. Respondent admitted
F. 7th AWOP
suspension his absences on 28 and 29 April but reasoned that he was on sick leave on those dates,
30 Days' producing his medical consultation card from his locker to prove the same. Siwa was
G. 8th AWOP
suspension surprised that the medical consultation card was in respondent's possession since this
H. 9th AWOP Discharge should have been in the rack beside the plant clinic. His medical consultation showed
3. ABSENCE WITHOUT that he was purportedly granted sick leave for 28 and 29 April. However, upon
PERMISSION FOR SIX (6) verification with the plant clinic, Siwa found that respondent was not granted sick leaves
OR MORE CONSECUTIVEDischarge[5] on those dates. When Siwa confronted respondent about the falsification, respondent
WORKING DAYS IS allegedly replied that he resorted to falsification to cover up his AWOPs which he was
CONSIDERED forced to incur because of personal problems.
 the modification that the payment of the full backwages and other benefits would be
Marable testified that sometime in May 1997, he together with the plant nurse and Siwa from 2 July 1997 up to 14 October 1998.
counter-checked respondent's sick leaves with the daily personnel leave authority
report. The examination revealed that the clinic had not granted any sick leave on 28 SO ORDERED.[18]
and 29 April and 7 and 8 May 1997. On 16 June 1997, when respondent came to him
for consultation, Marable confronted respondent about the falsified entries in his The Court of Appeals believed that contrary to SMC's claims, it was more consistent
medical consultation card, but respondent only explained that he had been having a lot with human experience that respondent did not make an admission, especially in view
of problems. of his consistent denials during the administrative investigation and of his written
explanation dated 5 June 1997. The Court of Appeals also stayed firm in its
After the completion of the investigation, SMC concluded that respondent committed determination that the testimonies of Marable and Siwa could not be given weight as
the offenses of excessive AWOPs and falsification of company records or documents, they were uncorroborated, and that it was Siwa who was liable for the falsification of
and accordingly dismissed him.[13] respondent's consultation card.

On 30 March 1998, respondent filed a complaint for illegal dismissal against SMC and The appellate court also held that respondent's AWOPs did not warrant his dismissal
Geribern Abella, assistant vice president and plant manager of the Metal Closure and in view of SMC's inconsistent implementation of its company policies. It could not
Lithography Plant. On 2 September 1998, Acting Executive Labor Arbiter Pedro C. understand why respondent was given a mere warning for his absences on 28 and 29
Ramos rendered his Decision,[14] finding respondent to have been illegally dismissed April which constituted his 5th and 6th AWOPs, respectively, when these should have
and ordering his reinstatement and payment of full backwages, benefits and attorney's merited suspension under SMC's policy. According to the appellate court, since
fees.[15] respondent was merely warned, logically said absences were deemed committed for
the first time; thus, it follows that the subject AWOPs did not justify his dismissal
The labor arbiter believed that respondent had committed the absences pointed out by because under SMC's policy, the 4th to 9th AWOPs are meted the corresponding
SMC but found the imposition of termination of employment based on his AWOPs to penalty only when committed for the second time.
be disproportionate since SMC failed to show by clear and convincing evidence that it
had strictly implemented its company policy on absences. It found nothing in the The Court of Appeals, however, disagreed with the NLRC's application of the doctrine
records that would show that respondent was suspended for his previous AWOPs of "strained relations," citing jurisprudence[19] that the same should be strictly applied
before he was meted the maximum penalty of discharge from service and thus, it ruled so as not to deprive an illegally dismissed employee of his right to reinstatement, and
that management was to be blamed for the non-implementation of and lax compliance that since every labor dispute almost always results in "strained relations," the phrase
with the policy. It also noted that termination based on the alleged falsification of cannot be given an over-arching interpretation.[20] Thus, it ordered that respondent's
company records was unwarranted in view of SMC's failure to establish respondent's backwages be computed from the date of his dismissal up to the time when he was
guilt. It observed that the medical card was under the care of Siwa and thus it was he actually reinstated. Since respondent was placed on payroll reinstatement on 15
who should be responsible for its loss and the insertion of falsified entries therein. October 1998, he should be awarded backwages from 2 July 1997 up to 14 October
1998.
SMC appealed the decision to the National Labor Relations Commission (NLRC) on 13
November 1998. On 31 March 1999, the NLRC First Division affirmed with modification Both parties separately moved for reconsideration of the decision but the Court of
the decision of the labor arbiter.[16] The NLRC found that there was already a strained Appeals denied the motions for lack of merit in the Resolution dated 17 November
relationship between the parties such that reinstatement was no longer feasible, so 2000.
instead it granted separation pay equivalent to one (1) month for every year of service.
It also deleted the award of attorney's fees. [17] In this present petition for review, SMC raises the following grounds:

The NLRC, on 30 June 1999, denied the parties' respective motions for reconsideration A.
of its decision.
THE COURT OF APPEALS DECIDED THE CASES IN A WAY NOT IN ACCORD
On 2 September 1999, respondent filed a special civil action for certiorari assailing the WITH LAW AND THE APPLICABLE DECISIONS OF THE SUPREME COURT, AND
NLRC decision and resolution. SMC filed its petition for certiorari on 3 September 1999. IN VIOLATION OF THE ACCEPTED RULES ON EVIDENCE AND USUAL COURSE
The cases were consolidated. OF JUDICIAL PROCEEDINGS.

On 28 June 2000, the Court of Appeals rendered its Decision affirming the findings of
the labor arbiter and the NLRC relative to the illegality of respondent's dismissal but B.
modifying the monetary award. The dispositive portion of the decision reads:
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE ABSENCES
WHEREFORE, the decision of the public respondent modifying the decision of the labor OF IBIAS ON 28TH AND 29TH OF APRIL 1997 "WERE COMMITTED FOR THE FIRST
arbiter is SET ASIDE and the decision of the labor arbiter is hereby REINSTATED with
TIME." SUCH FINDING IS GROUNDED ENTIRELY ON SPECULATION AND jurisprudence on the issue of respondent's dismissal due to his unauthorized absences.
CONJECTURE AND A RESULT OF A MANIFESTLY ABSURD INFERENCE.[21] But first the falsification issue.

On the first ground, SMC contends that the Court of Appeals allegedly disregarded the The settled rule in administrative and quasi-judicial proceedings is that proof beyond
basic rule on evidence that affirmative testimony is stronger than negative testimony. It reasonable doubt is not required in determining the legality of an employer's dismissal
claims that the testimonies of Marable and Siwa that respondent admitted having of an employee, and not even a preponderance of evidence is necessary as substantial
committed the falsification should be given more weight than his mere denial. SMC evidence is considered sufficient. Substantial evidence is more than a mere scintilla of
adds that the falsified medical consultation card by itself proves respondent's evidence or relevant evidence as a reasonable mind might accept as adequate to
falsification of the card. The fact that he used the falsified consultation card to falsely support a conclusion, even if other minds, equally reasonable, might conceivably opine
represent that he had been granted sick leave on 28 and 29 April and 7 and 8 May otherwise. Thus, substantial evidence is the least demanding in the hierarchy of
1997 is sufficient to hold him liable for falsification, SMC adds. Further, SMC argues evidence.[24]
that respondent's possession of the falsified consultation card also raises the
presumption that he is the author of the falsification. The Court agrees with the tribunals below that SMC was unable to prove the
falsification charge against respondent. Respondent cannot be legally dismissed on the
On the second ground, SMC points out respondent's absences on 28 and 29 April 1997 basis of the uncorroborated and self-serving testimonies of SMC's employees. SMC
were his 5th and 6th AWOPs, respectively, and following the Court of Appeals' ruling, merely relied on the testimonies of Marabe and Siwa, who both stated that respondent
the same should have been meted the penalty of five (5) days' suspension for the admitted to them that he falsified his medical consultation card to cover up his
5th AWOP and 10 days' suspension for the 6th AWOP under SMC's Policy on Employee excessive AWOPs. For his part, respondent denied having had any knowledge of said
Conduct. Respondent incurred fourteen (14) AWOPs but when SMC imposed the falsification, both in his testimony during the company-level investigation and in his
penalty of discharge, the Court of Appeals disagreed since SMC had supposedly failed handwritten explanation. He did not even claim that he had requested for, nor had been
to strictly implement its company policy on attendance. Such reasoning would have granted any sick leave for the days that the falsified entries were made. Siwa, being
respondent's AWOPs justified by SMC's lax implementation of disciplinary action on its responsible for the medical cards, should take the blame for the loss and alleged
employees, and would place on SMC the burden of proving strict conformity with tampering thereof, and not respondent who had no control over the same.
company rules. SMC argues that this is contrary to the ruling in Cando v. NLRC[22] that
it should be the employee who must show proof of condonation by the employer of the Proof beyond reasonable doubt is not required as a basis for judgment on the legality
offense or laxity in the enforcement of the company rules since it is he who has raised of an employer's dismissal of an employee, nor even preponderance of evidence for
this defense. that matter, substantial evidence being sufficient. In the instant case, while there may
be no denying that respondent's medical card had falsified entries in it, SMC was unable
SMC directs our attention to the Court of Appeals' observation that Ibias' 5 th and to prove, by substantial evidence, that it was respondent who made the unauthorized
6th AWOPs should be considered as though "said absences were committed for the entries. Besides, SMC's (Your) Guide on Employee Conduct [25] punishes the act of
first time" since respondent "was merely given a warning" for said AWOPs. To SMC, it falsification of company records or documents; it does not punish mere possession of
seems that that the appellate court would count the employee's AWOPs not on the a falsified document.
basis of the number of times that he had been absent, but on the basis of the penalty
imposed by the employee. This is clearly contrary to the dictates of the Policy. Such a The issue of the unauthorized absences, however, is another matter.
ruling also deprives SMC of its management prerogative to impose sanctions lighter
than those specifically prescribed by its rules. Respondent's time cards showed that he was on AWOP on the dates enumerated by
SMC: 2, 4 and 11 January; 26, 28 and 29 April; and 5, 7, 8, 13, 21, 22, 28 and 29 May
The issues to be resolved are whether the Court of Appeals erred in sustaining the 1997. The Labor Arbiter even found that respondent was on AWOP on all said
findings of the labor arbiter and the NLRC and in dismissing SMC's claims that dates.[26] Respondent also admitted being absent on 28 and 29 April and 7 and 8 May
respondent was terminated from service with just cause. 1997. For each of the periods of 1 to 15 January 1997 and 16 to 30 April 1997,
respondent reported for work only for two days. [27] For the month of May 1997, he
The petition is meritorious as regards one of the issues. reported only for one day.[28]

At the outset, it should be stressed that whether respondent had falsified his medical The Court observes that respondent admitted during the company-level investigation
consultation card and whether he incurred unauthorized absences are questions of fact that that his absences incurred on 28 and 29 April, and 7 and 8 May 1997 were without
which the Court of Appeals, the NLRC, and the labor arbiter had already resolved. We permission.[29] He explained that during those times, he had a family problem which
see no reason to disturb the same. After all, findings of fact of the Court of Appeals, needed his attention; he was confused and was unable to inform or seek permission
particularly where it is in absolute agreement with that of the NLRC and the Labor from his superior.[30]
Arbiter, as in this case, are accorded not only respect but even finality and are deemed
binding upon this Court so long as they are supported by substantial However, while respondent has admitted these absences, before the Court, he also
evidence.[23] Nevertheless, while the Court subscribes to the factual findings of the seeks to belittle the plain by countering that SMC has not been too rigid in its application
lower tribunals, it finds that these tribunals misapplied the appropriate law and of company rules pertaining to leave availments. In the proceedings below he claimed
that during the days that he was absent, he had attended to some family matters. Thus, requirements of justice and fair play. Indeed, we have previously stated:
he presented copies of two (2) medical certificates and a barangay certification that he
attended hearings on some of the days when he was absent. These certifications, Management also has its own rights, which, as such, are entitled to respect and
however, cannot work to erase his AWOPs; respondent had never submitted these enforcement in the interest of simple fair play. Out of its concern for those with [fewer]
documents to SMC and it is only when the case was pending before the Labor Arbiter privileges in life, the Supreme Court has inclined more often than not toward the worker
that he produced the same.[31] and upheld his cause in his conflicts with the employer. Such favoritism, however, has
not blinded the Court to rule that justice is in every case for the deserving, to be
Respondent cannot feign surprise nor ignorance of the earlier AWOPs he had incurred. dispensed in the light of the established facts and applicable law and doctrine.[38]
He was given a warning for his 2, 4, and 11 January and 26, 28, and 29 April 1997
AWOPs.[32] In the same warning, he was informed that he already had six AWOPs for All told, we find that SMC acted well within its rights when it dismissed respondent for
1997. He admitted that he was absent on 7 and 8 May 1997. [33] He was also given his numerous absences. Respondent was afforded due process and was validly
notices to explain his AWOPs for the period 26 May to 2 June 1997, which he received dismissed for cause.
but refused to acknowledge.[34] It does not take a genius to figure out that as early as
June 1997, he had more than nine AWOPs. WHEREFORE, the instant petition is GRANTED. The challenged Decision dated 28
June 2000 and Resolution dated 17 November 2000 of the Court of Appeals in CA-
Thus, even if he was not punished for his subsequent AWOPs, the same remained on G.R. SP Nos. 54684 and 54709 are REVERSED and SET ASIDE. Respondent's
record. He was aware of the number of AWOPs he incurred and should have known complaint against petitioners is DISMISSED.
that these were punishable under company rules. The fact that he was spared from
suspension cannot be used as a reason to incur further AWOPs and be absolved from SO ORDERED.
the penalty therefor.

The Court of Appeals, NLRC, and the labor arbiter found that respondent incurred
unauthorized absences, but concluded that the penalty of discharge or determination
was disproportionate to respondent's absences in view of SMC's inconsistent and lax
implementation of its policy on employees attendance. The Court disagrees.
Respondent's dismissal was well within the purview of SMC's management
prerogative.

What the lower tribunals perceived as laxity, we consider as leniency. SMC's tendency
to excuse justified absences actually redounded to the benefit of respondent since the
imposition of the corresponding penalty would have been deleterious to him. In a world
where "no work-no pay" is the rule of thumb, several days of suspension would be
difficult for an ordinary working man like respondent. He should be thankful that SMC
did not exact from him almost 70 days suspension before he was finally dismissed from
work.

In any case, when SMC imposed the penalty of dismissal for the 12 th and 13th AWOPs,
it was acting well within its rights as an employer. An employer has the prerogative to
prescribe reasonable rules and regulations necessary for the proper conduct of its
business, to provide certain disciplinary measures in order to implement said rules and
to assure that the same would be complied with.[35] An employer enjoys a wide latitude
of discretion in the promulgation of policies, rules and regulations on work-related
activities of the employees.[36]

It is axiomatic that appropriate disciplinary sanction is within the purview of

management imposition.[37] Thus, in the implementation of its rules and policies, the
employer has the choice to do so strictly or not, since this is inherent in its right to
control and manage its business effectively. Consequently, management has the
prerogative to impose sanctions lighter than those specifically prescribed by its rules,
or to condone completely the violations of its erring employees. Of course, this
prerogative must be exercised free of grave abuse of discretion, bearing in mind the
G.R. No. 181490 April 23, 2014 Respondent filed a complaint10 for illegal dismissal and money claims for 13th and 14th
month pay, bonuses and other benefits, as well as the payment of moral and exemplary
MIRANT (PHILIPPINES) CORPORATION AND EDGARDO A. damages and attorney’s fees. Respondent posits the following allegations in his
BAUTISTA, Petitioners, Position Paper:11
vs.
JOSELITO A. CARO, Respondent. On January 3, 1994, respondent was hired by petitioner corporation as its Logistics
Officer and was assigned at petitioner corporation’s corporate office in Pasay City. At
DECISION the time of the filing of the complaint, respondent was already a Supervisor at the
Logistics and Purchasing Department with a monthly salary of ₱39,815.00.
VILLARAMA, JR., J.:
On November 3, 2004, petitioner corporation conducted a random drug test where
respondent was randomly chosen among its employees who would be tested for illegal
At bar is a petition1 under Rule 45 of the 1997 Rules of Civil Procedure, as amended, drug use. Through an Intracompany Correspondence, 12 these employees were
assailing the Decision2 and Resolution3 of the Court of Appeals (CA) dated June 26, informed that they were selected for random drug testing to be conducted on the same
2007 and January 11, 2008, respectively, which reversed and set aside the Decision 4 of day that they received the correspondence. Respondent was duly notified that he was
the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 046551-05 scheduled to be tested after lunch on that day. His receipt of the notice was evidenced
(NCR-00-03-02511-05). The NLRC decision vacated and set aside the Decision5 of the by his signature on the correspondence.
Labor Arbiter which found that respondent Joselito A. Caro (Caro) was illegally
dismissed by petitioner Mirant (Philippines) Corporation (Mirant).
Respondent avers that at around 11:30 a.m. of the same day, he received a phone call
from his wife’s colleague who informed him that a bombing incident occurred near his
Petitioner corporation is organized and operating under and by virtue of the laws of the wife’s work station in Tel Aviv, Israel where his wife was then working as a caregiver.
Republic of the Philippines. It is a holding company that owns shares in project Respondent attached to his Position Paper a Press Release 13 of the Department of
companies such as Mirant Sual Corporation and Mirant Pagbilao Corporation (Mirant Foreign Affairs (DFA) in Manila to prove the occurrence of the bombing incident and a
Pagbilao) which operate and maintain power stations located in Sual, Pangasinan and letter14 from the colleague of his wife who allegedly gave him a phone call from Tel
Pagbilao, Quezon, respectively. Petitioner corporation and its related companies Aviv.
maintain around 2,000 employees detailed in its main office and other sites. Petitioner
corporation had changed its name to CEPA Operations in 1996 and to Southern
Company in 2001. In 2002, Southern Company was sold to petitioner Mirant whose Respondent claims that after the said phone call, he proceeded to the Israeli Embassy
corporate parent is an Atlanta-based power producer in the United States of to confirm the news on the alleged bombing incident. Respondent further claims that
America.6 Petitioner corporation is now known as Team Energy Corporation. 7 before he left the office on the day of the random drug test, he first informed the
secretary of his Department, Irene Torres (Torres), at around 12:30 p.m. that he will
give preferential attention to the emergency phone call that he just received. He also
Petitioner Edgardo A. Bautista (Bautista) was the President of petitioner corporation told Torres that he would be back at the office as soon as he has resolved his
when respondent was terminated from employment.8 predicament. Respondent recounts that he tried to contact his wife by phone but he
could not reach her. He then had to go to the Israeli Embassy to confirm the bombing
Respondent was hired by Mirant Pagbilao on January 3, 1994 as its Logistics Officer. incident. However, he was told by Eveth Salvador (Salvador), a lobby attendant at the
In 2002, when Southern Company was sold to Mirant, respondent was already a Israeli Embassy, that he could not be allowed entry due to security reasons.
Supervisor of the Logistics and Purchasing Department of petitioner. At the time of the
severance of his employment, respondent was the Procurement Supervisor of Mirant On that same day, at around 6:15 p.m., respondent returned to petitioner corporation’s
Pagbilao assigned at petitioner corporation’s corporate office. As Procurement office. When he was finally able to charge his cellphone at the office, he received a text
Supervisor, his main task was to serve as the link between the Materials Management message from Tina Cecilia (Cecilia), a member of the Drug Watch Committee that
Department of petitioner corporation and its staff, and the suppliers and service conducted the drug test, informing him to participate in the said drug test. He
contractors in order to ensure that procurement is carried out in conformity with set immediately called up Cecilia to explain the reasons for his failure to submit himself to
policies, procedures and practices. In addition, respondent was put incharge of the random drug test that day. He also proposed that he would submit to a drug test
ensuring the timely, economical, safe and expeditious delivery of materials at the right the following day at his own expense. Respondent never heard from Cecilia again.
quality and quantity to petitioner corporation’s plant. Respondent was also responsible
for guiding and overseeing the welfare and training needs of the staff of the Materials
Management Department. Due to the nature of respondent’s functions, petitioner On November 8, 2004, respondent received a Show Cause Notice 15 from petitioner
corporation considers his position as confidential.9 corporation through Jaime Dulot (Dulot), his immediate supervisor, requiring him to
explain in writing why he should not be charged with "unjustified refusal to submit to
random drug testing." Respondent submitted his written explanation 16 on November
The antecedent facts follow: 11, 2004. Petitioner corporation further required respondent on December 14, 2004 to
submit additional pieces of supporting documents to prove that respondent was at the On November 3, 2004, a random drug test was conducted on petitioner corporation’s
Israeli Embassy in the afternoon of November 3, 2004 and that the said bombing employees at its Corporate Office at the CTC Bldg. in Roxas Blvd., Pasay City. The
incident actually occurred. Respondent requested for a hearing to explain that he could random drug test was conducted pursuant to Republic Act No. 9165, otherwise known
not submit proof that he was indeed present at the Israeli Embassy during the said day as the "Comprehensive Dangerous Drugs Act of 2002." Respondent was randomly
because he was not allegedly allowed entry by the embassy due to security reasons. selected among petitioner’s employees to undergo the said drug test which was to be
On January 3, 2005, respondent submitted the required additional supporting carried out by Drug Check Philippines, Inc.22
documents.17
When respondent failed to appear at the scheduled drug test, Cecilia prepared an
On January 13, 2005, petitioner corporation’s Investigating Panel issued an incident report addressed to Dulot, the Logistics Manager of the Materials Management
Investigating Report18 finding respondent guilty of "unjustified refusal to submit to Department.23 Since it was stated under petitioner corporation’s Mirant Drugs Policy
random drug testing" and recommended a penalty of four working weeks suspension Employee Handbook to terminate an employee for "unjustified refusal to submit to a
without pay, instead of termination, due to the presence of mitigating circumstances. In random drug test" for the first offense, Dulot sent respondent a Show Cause
the same Report, the Investigating Panel also recommended that petitioner corporation Notice24 dated November 8, 2004, requiring him to explain why no disciplinary action
should review its policy on random drug testing, especially of the ambiguities cast by should be imposed for his failure to take the random drug test. Respondent, in a letter
the term "unjustified refusal." dated November 11, 2004, explained that he attended to an emergency call from his
wife’s colleague and apologized for the inconvenience he had caused. He offered to
On January 19, 2005, petitioner corporation’s Asst. Vice President for Material submit to a drug test the next day even at his expense. 25 Finding respondent’s
Management Department, George K. Lamela, Jr. (Lamela), recommended19 that explanation unsatisfactory, petitioner corporation formed a panel to investigate and
respondent be terminated from employment instead of merely being suspended. recommend the penalty to be imposed on respondent.26 The Investigating Panel found
Lamela argued that even if respondent did not outrightly refuse to take the random drug respondent’s explanations as to his whereabouts on that day to be inconsistent, and
test, he avoided the same. Lamela averred that "avoidance" was synonymous with recommended that he be suspended for four weeks without pay. The Investigating
"refusal." Panel took into account that respondent did not directly refuse to be subjected to the
drug test and that he had been serving the company for ten years without any record
of violation of its policies. The Investigating Panel further recommended that the Mirant
On February 14, 2005, respondent received a letter20 from petitioner corporation’s Vice Drug Policy be reviewed to clearly define the phrase "unjustified refusal to submit to
President for Operations, Tommy J. Sliman (Sliman), terminating him on the same date. random drug testing."27 Petitioner corporation’s Vice-President for Operations, Sliman,
Respondent filed a Motion to Appeal21 his termination on February 23, 2005. The however disagreed with the Investigating Panel’s recommendations and terminated the
motion was denied by petitioner corporation on March 1, 2005. services of respondent in accordance with the subject drug policy. Sliman likewise
stated that respondent’s violation of the policy amounted to willful breach of trust and
It is the contention of respondent that he was illegally dismissed by petitioner loss of confidence.28
corporation due to the latter’s non-compliance with the twin requirements of notice and
hearing. He asserts that while there was a notice charging him of "unjustified refusal to A cursory examination of the pleadings of petitioner corporation would show that it
submit to random drug testing," there was no notice of hearing and petitioner concurs with the narration of facts of respondent on material events from the time that
corporation’s investigation was not the equivalent of the "hearing" required under the Cecilia sent an electronic mail at about 9:23 a.m. on November 3, 2004 to all employees
law which should have accorded respondent the opportunity to be heard. of petitioner corporation assigned at its Corporate Office advising them of the details of
the drug test – up to the time of respondent’s missing his schedule to take the drug test.
Respondent further asserts that he was illegally dismissed due to the following Petitioner corporation and respondent’s point of disagreement, however, is whether
circumstances: respondent’s proffered reasons for not being able to take the drug test on the scheduled
day constituted valid defenses that would have taken his failure to undergo the drug
1. He signed the notice that he was randomly selected as a participant to the test out of the category of "unjustified refusal." Petitioner corporation argues that
company drug testing; respondent’s omission amounted to "unjustified refusal" to submit to the random drug
test as he could not proffer a satisfactory explanation why he failed to submit to the
drug test:
2. Even the Investigating Panel was at a loss in interpreting the charge
because it believed that the term "refusal" was ambiguous, and therefore such
doubt must be construed in his favor; and 1. Petitioner corporation is not convinced that there was indeed such a phone
call at noon of November 3, 2004 as respondent could not even tell who called
him up.
3. He agreed to take the drug test the following day at his own expense, which
he says was clearly not an indication of evasion from the drug test.
2. Respondent could not even tell if he received the call via the landline
telephone service at petitioner corporation’s office or at his mobile phone.
Petitioner corporation counters with the following allegations:
 3. Petitioner corporation was also of the opinion that granting there was such The Labor Arbiter stated that while petitioner corporation observed the proper
a phone call, there was no compelling reason for respondent to act on it at the procedure in the termination of an employee for a purported authorized cause, such
expense of his scheduled drug testing. Petitioner corporation principally just cause did not exist in the case at bar. The decision did not agree with the
pointed out that the call merely stated that a bomb exploded near his wife’s conclusions reached by petitioner corporation’s own Investigating Panel that while
work station without stating that his wife was affected. Hence, it found no point respondent did not refuse to submit to the questioned drug test and merely "avoided" it
in confirming it with extraordinary haste and forego the drug test which would on the designated day, "avoidance" and "refusal" are one and the same. It also held
have taken only a few minutes to accomplish. If at all, respondent should have that the terms "avoidance" and "refusal" are separate and distinct and that "the two
undergone the drug testing first before proceeding to confirm the news so as words are not even synonymous with each other." 31 The Labor Arbiter considered as
to leave his mind free from this obligation. more tenable the stance of respondent that his omission merely resulted to a "failure"
to submit to the said drug test – and not an "unjustified refusal." Even if respondent’s
4. Petitioner corporation maintained that respondent could have easily asked omission is to be considered as refusal, the Labor Arbiter opined that it was not
permission from the Drug Watch Committee that he was leaving the office tantamount to "unjustified refusal" which constitutes as just cause for his termination.
since the place where the activity was conducted was very close to his work Finally, the Labor Arbiter found that respondent was entitled to moral and exemplary
station.29 damages and attorney’s fees.

To the mind of petitioners, they are not liable for illegal dismissal because all of these On appeal to the NLRC, petitioners alleged that the decision of the Labor Arbiter was
circumstances prove that respondent really eluded the random drug test and was rendered with grave abuse of discretion for being contrary to law, rules and established
therefore validly terminated for cause after being properly accorded with due process. jurisprudence, and contained serious errors in the findings of facts which, if not
Petitioners further argue that they have already fully settled the claim of respondent as corrected, would cause grave and irreparable damage or injury to petitioners. The
evidenced by a Quitclaim which he duly executed. Lastly, petitioners maintain that they NLRC, giving weight and emphasis to the inconsistencies in respondent’s explanations,
are not guilty of unfair labor practice as respondent’s dismissal was not intended to considered his omission as "unjustified refusal" in violation of petitioner corporation’s
curtail his right to self-organization; that respondent is not entitled to the payment of his drug policy. Thus, in a decision dated May 31, 2006, the NLRC ruled, viz.:
13th and 14th month bonuses and other incentives as he failed to show that he is
entitled to these amounts according to company policy; that respondent is not entitled x x x [Respondent] was duly notified as shown by copy of the notice x x x which he
to reinstatement, payment of full back wages, moral and exemplary damages and signed to acknowledge receipt thereof on the said date. [Respondent] did not refute
attorney’s fees due to his termination for cause. [petitioner corporation’s] allegation that he was also personally reminded of said drug
test on the same day by Ms. Cecilia of [petitioner corporation’s] drug watch committee.
In a decision dated August 31, 2005, Labor Arbiter Aliman D. Mangandog found However, [respondent] was nowhere to be found at [petitioner corporation’s] premises
respondent to have been illegally dismissed. The Labor Arbiter also found that the at the time when he was supposed to be tested. Due to his failure to take part in the
quitclaim purportedly executed by respondent was not a bona fide quitclaim which random drug test, an incident report x x x was prepared by the Drug Cause Notice x x
effectively discharged petitioners of all the claims of respondent in the case at bar. If at x to explain in writing why no disciplinary action should be taken against him for his
all, the Labor Arbiter considered the execution of the quitclaim as a clear attempt on unjustified refusal to submit to random drug test, a type D offense punishable with
the part of petitioners to mislead its office into thinking that respondent no longer had termination. Pursuant to said directive, [respondent] submitted an explanation x x x on
any cause of action against petitioner corporation. The decision stated, viz.: 11 November 2004, pertinent portions of which read:

WHEREFORE, premises considered, this Office finds respondents GUILTY of illegal "I was scheduled for drug test after lunch that day of November 3, 2004 as confirmed
dismissal, and hereby ordered to jointly and severally reinstate complainant back to his with Tina Cecilia. I was having my lunch when a colleague of my wife abroad called up
former position without loss on seniority rights and benefits and to pay him his informing me that there was something wrong [that] happened in their neighborhood,
backwages and other benefits from the date he was illegally dismissed up to the time where a bomb exploded near her workstation. Immediately, I [left] the office to confirm
he is actually reinstated, partially computed as of this date in the amount of said information but at around 12:30 P.M. that day, I informed MS. IRENE TORRES,
₱258,797.50 (₱39,815.00 x 6.5 mos.) plus his 13th and 14th month pay in the amount our Department Secretary[,] that I would be attending to this emergency call. Did even
of ₱43,132.91 or in the total amount of ₱301,930.41. [inform] her that I’ll try to be back as soon as possible but unfortunately, I was able to
return at 6:15 P.M. I didn’t know that Tina was the one calling me on my cell that day.
Did only receive her message after I charged my cell at the office that night. I was able
Respondents are also ordered to pay complainant the amount of ₱3,000,000.00 as and to call back Tina Cecilia later [that] night if it’s possible to have it (drug test) the next
by way of moral and exemplary damages, and to pay complainant the amount day.
equivalent to ten percent (10%) of the total awards as and by way of attorney’s fees.
My apology [for] any inconvenience to the Drug Watch Committee, that I forgot
SO ORDERED.30 everything that day including my scheduled drug test due to confusion of what had
happened. It [was] not my intention not to undergo nor refuse to have a drug test x x x showing that he was able to make a cellphone call at 5:29 p.m. to [petitioner
knowing well that it’s a company policy and it’s mandated by law." corporation’s] supplier, Mutico for a duration of two (2) minutes. 32

In the course of the investigation, [respondent] was requested to present proof Given the foregoing facts, the NLRC stated that the offer of respondent to submit to
pertaining to the alleged call he received on 3 November 2004 from a colleague of his another drug test the following day, even at his expense, cannot operate to free him
wife regarding the bomb explosion in Tel Aviv, his presence at the Israel Embassy also from liability. The NLRC opined that taking the drug test on the day following the
on 3 November 2004. [Respondent], thereafter, submitted a facsimile which he scheduled random drug test would affect both the integrity and the accuracy of the
allegedly received from his wife's colleague confirming that she called and informed specimen which was supposed to be taken from a randomly selected employee who
him of the bombing incident. However, a perusal of said facsimile x x x reveals that the was notified of his/her selection on the same day that the drug test was to be
same cannot be given any probative value because, as correctly observed by administered. The NLRC further asserted that a drug test, conducted many hours or a
[petitioners], it can barely be read and upon inquiry with PLDT, the international area day after the employee was notified, would compromise its results because the
code of Israel which is 00972 should appear on the face of the facsimile if indeed said employee may have possibly taken remedial measures to metabolize or eradicate
facsimile originated from Israel. [Respondent] also could not present proof of his whatever drugs s/he may have ingested prior to the drug test.
presence at the Israel Embassy on said time and date. He instead provided the name
of a certain Ms. Eveth Salvador of said embassy who could certify that he was present The NLRC further stated that these circumstances have clearly established the falsity
thereat. Accordingly, Mr. Bailon, a member of the investigation panel, verified with Ms. of respondent’s claims and found no justifiable reason for respondent to refuse to
Salvador who told him that she is only the telephone operator of the Israel Embassy submit to the petitioner corporation’s random drug test. While the NLRC acknowledged
and that she was not in a position to validate [respondent’s] presence at the Embassy. that it was petitioner corporation’s own Investigating Panel that considered
Mr. Bailon was then referred to a certain Ms. Aimee Zandueta, also of said embassy, respondent’s failure to take the required drug test as mere "avoidance" and not
who confirmed that based on their records, [respondent] did not visit the embassy nor "unjustified refusal," it concluded that such finding was merely recommendatory to
was he attended to by any member of said embassy on 3 November 2004. Ms. guide top management on what action to take.
Zandueta further informed Mr. Bailon that no bombing occurred in Tel Aviv on 3
November 2004 and that the only reported incident of such nature occurred on 1
November 2004. A letter x x x to this effect was written by Consul Ziva Samech of the The NLRC also found that petitioner corporation’s denial of respondent’s motion to
Embassy of Israel. A press release x x x of the Department of Foreign Affairs reconsider his termination was in order. Petitioner corporation’s reasons for such denial
confirm[ed] that the bombing occurred on 1 November 2004. are quoted in the NLRC decision, viz.:

In his explanation, the [respondent] stated that the reason why he had to leave the "Your appeal is anchored on your claim that you responded to an emergency call from
office on 3 November 2004 was to verify an information at the Israel Embassy of the someone abroad informing you that a bomb exploded near the work station of your wife
alleged bombing incident on the same day. However, [petitioners] in their position paper making you unable to undergo the scheduled drug testing. This claim is groundless
alleged that Ms. Torres of [petitioner] company received a text message from him at taking into account the following:
around 12:47 p.m. informing her that he will try to be back since he had a lot of things
to do and asking her if there was a signatory on that day. [Respondent] did not deny We are not convinced that there was indeed that call which you claim to have received
sending said text messages to Ms. Torres in his reply and rejoinder x x x. He actually noon of November 3, 2004. On the contrary, our belief is based on the fact that you
confirmed that he was involved in the CIIS registration with all companies that was could not tell who called you up or how the call got to you. If you forgot to ask the name
involved with [petitioner] company and worked on the registration of [petitioner] of the person who called you up, surely you would have known how the call came to
company’s vehicles with TRO. you. You said you were having lunch at the third floor of the CTC building when you
received the call. There were only two means of communication available to you then:
It is also herein noted that [respondent] had initially reported to Ms. Torres that it was the land line telephone service in your office and your mobile phone. If your claim were
his mother in law who informed him about the problem concerning his wife. However, (sic) not fabricated, you would be able to tell which of these two was used.
in his written explanation x x x, the [respondent] stated that it was a friend of his wife,
whom he could not even identify, who informed him of the alleged bombing incident in Granting that you indeed received that alleged call, from your own account, there was
Tel Aviv, Israel. [Respondent] also did not deny receiving a cellphone call from Ms. no compelling reason for you to act on it at the expense of your scheduled drug testing.
Cecilia that day. He merely stated that he did not know that it was Ms. Cecilia calling The call, as it were, merely stated that ‘something wrong happened (sic) in their
him up in a cellphone and it was only after he charged his cellphone at the office that neighborhood, where a bomb exploded near her workstation.’ Nothing was said if your
night that he received her message. In effect, [respondent] asserted that his cellphone wife was affected. There is no point in confirming it with extraordinary haste and forego
battery was running low or drained. [Petitioners] were able to refute [these] averments the drug test which would have taken only a few minutes to accomplish. If at all, you
of [respondent] when they presented [respondent’s] Smart Billing Statement should have undergone the drug testing first before proceeding to confirm the news so
as to leave your mind free from this obligation.
Additionally, if it was indeed necessary that you skip the scheduled drug testing to verify Respondent filed a motion for reconsideration, 37 while petitioners filed a motion for
that call, why did you not ask permission from the Drug Watch [C]ommittee that you partial reconsideration38 of the NLRC decision. In a Resolution39 dated June 30, 2006,
were leaving? The place where the activity was being conducted was very close to your the NLRC denied both motions.
workstation. It was absolutely within your reach to inform any of its members that you
were attending to an emergency call. Why did you not do so? In a petition for certiorari before the CA, respondent raised the following issues: whether
the NLRC acted without or in excess of its jurisdiction, or with grave abuse of discretion
All this undisputedly proves that you merely eluded the drug testing. Your claim that amounting to lack or excess of its jurisdiction when it construed that the terms "failure,"
you did not refuse to be screened carries no value. Your act was a negation of your "avoidance," "refusal" and "unjustified refusal" have similar meanings; reversed the
words."33 factual findings of the Labor Arbiter; and held that respondent deliberately breached
petitioner’s Anti-Drugs Policy.40 Respondent further argued before the appellate court
The NLRC found that respondent was not only validly dismissed for cause – he was that his failure to submit himself to the random drug test was justified because he merely
also properly accorded his constitutional right to due process as shown by the following responded to an emergency call regarding his wife’s safety in Tel Aviv, and that such
succession of events: failure cannot be considered synonymous with "avoidance" or "refusal" so as to mean
"unjustified refusal" in order to be meted the penalty of termination. 41
1. On November 8, 2004, respondent was given a show-cause notice
requiring him to explain in writing within three days why no disciplinary action The CA disagreed with the NLRC and ruled that it was immaterial whether respondent
should be taken against him for violation of company policy on unjustified failed, refused, or avoided being tested. To the appellate court, the singular fact material
refusal to submit to random drug testing – a type D offense which results in to this case was that respondent did not get himself tested in clear disobedience of
termination. company instructions and policy. Despite such disobedience, however, the appellate
court considered the penalty of dismissal to be too harsh to be imposed on respondent,
viz.:
2. Respondent submitted his explanation on November 11, 2004.
x x x While it is a management prerogative to terminate its erring employee for willful
3. On December 9, 2004, respondent was given a notice of disobedience, the Supreme Court has recognized that such penalty is too harsh
investigation34 informing him of a meeting on December 13, 2004 at 9:00 a.m. depending on the circumstances of each case. "There must be reasonable
In this meeting, respondent was allowed to explain his side, present his proportionality between, on the one hand, the willful disobedience by the employee and,
evidences and witnesses, and confront the witnesses presented against him. on the other hand, the penalty imposed therefor" x x x.

4. On February 14, 2005, respondent was served a letter of termination which In this case, [petitioner corporation’s] own investigating panel has revealed that the
clearly stated the reasons therefor.35 penalty of dismissal is too harsh to impose on [respondent], considering that this was
the first time in his 10-year employment that the latter violated its company policies.
The NLRC, notwithstanding its finding that respondent was dismissed for cause and The investigating panel even suggested that a review be had of the company policy on
with due process, granted financial assistance to respondent on equitable grounds. It the term "unjustified refusal" to clearly define what constitutes a violation thereof. The
invoked the past decisions of this Court which allowed the award of financial assistance recommendation of the investigating panel is partially reproduced as follows:
due to factors such as long years of service or the Court’s concern and compassion
towards labor where the infraction was not so serious. Thus, considering respondent’s "VII. Recommendation
10 years of service with petitioner corporation without any record of violation of
company policies, the NLRC ordered petitioner corporation to pay respondent financial
assistance equivalent to one-half (1/2) month pay for every year of service in the However, despite having violated the company policy, the panel recommends 4
amount of One Hundred Ninety-Nine Thousand Seventy-Five Pesos (₱199,075.00). working weeks suspension without pay (twice the company policy’s maximum of 2
The NLRC decision states thus: working weeks suspension) instead of termination due to the following mitigating
circumstances.
WHEREFORE, the decision dated 31 August 2005 is VACATED and SET ASIDE. The
instant complaint is dismissed for lack of merit. However, respondent Mirant 1. Mr. Joselito A. Caro did not directly refuse to be subjected to the random
[Philippines] Corp. is ordered to pay complainant financial assistance in the amount of drug test scheduled on November 3, 2004.
one hundred ninety-nine thousand seventy five pesos (₱199,075.00).
2. In the case of Mr. Joselito A. Caro, the two conditions for termination
SO ORDERED.36 (Unjustified and Refusal) were not fully met as he expressly agreed to undergo
drug test.
 3. Mr. Joselito A. Caro voluntarily offered himself to undergo drug test the B. AT THE VERY LEAST, THE SAID PETITION FOR CERTIORARI
following day at his own expense. FILED BY RESPONDENT CARO SHOULD HAVE BEEN
CONSIDERED MOOT SINCE RESPONDENT CARO HAD
Doubling the maximum of 2 weeks suspension to 4 weeks is indicative of the gravity of ALREADY PREVIOUSLY EXECUTED A QUITCLAIM
the offense committed. The panel believes that although mitigating factors partially DISCHARGING THE PETITIONERS FROM ALL HIS MONETARY
offset reasons for termination, the 2 weeks maximum suspension is too lenient penalty CLAIMS.
for such an offense.
II. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND DECIDED
The Panel also took into consideration that Mr. Joselito A. Caro has served the QUESTIONS OF SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND
company for ten (10) years without any record of violation of the company policies. APPLICABLE DECISIONS OF THE HONORABLE COURT, CONSIDERING THAT:

xxxx A. THE COURT OF APPEALS REVERSED THE DECISION DATED

31 MAY 2006 OF THE NLRC ON THE GROUND THAT THERE
WAS GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
The Panel also recommends that Management review the Mirant Drug Policy EXCESS OF JURISDICTION NOTWITHSTANDING THE FACT
specifically ‘Unjustified [R]efusal to submit to random drug testing.’ The Panel believes THAT IT AFFIRMED THE NLRC’S FINDINGS THAT RESPONDENT
that the term refusal casts certain ambiguities and should be clearly defined." 42 CARO DELIBERATELY DISOBEYED PETITIONER MIRANT’S
ANTI-DRUGS POLICY.
The CA however found that award of moral and exemplary damages is without basis
due to lack of bad faith on the part of the petitioner corporation which merely acted B. THE PENALTY OF TERMINATION SHOULD HAVE BEEN
within its management prerogative. In its assailed Decision dated June 26, 2007, the SUSTAINED BY THE COURT OF APPEALS GIVEN ITS POSITIVE
CA ruled, viz.: FINDING THAT RESPONDENT CARO DELIBERATELY AND
WILLFULLY DISOBEYED PETITIONER MIRANT’S ANTI-DRUGS
IN VIEW OF ALL THE FOREGOING, the instant petition is GRANTED. The assailed POLICY.
Decision dated May 31, 2006 and Resolution dated June 30, 2006 rendered by the
National Labor Relations Commission (NLRC) in NLRC NCR CA No. 046551-05 (NCR- C. IN INVALIDATING RESPONDENT CARO’S DISMISSAL, THE
00-03-02511-05) are REVERSED and SET ASIDE. The Labor Arbiter’s Decision dated COURT OF APPEALS SUBSTITUTED WITH ITS OWN
August 31, 2005 is hereby REINSTATED with MODIFICATION by omitting the award DISCRETION A CLEAR MANAGEMENT PREROGATIVE
of moral and exemplary damages as well as attorney’s fees, and that the petitioner’s BELONGING ONLY TO PETITIONER MIRANT IN THE INSTANT
salary equivalent to four (4) working weeks at the time he was terminated be deducted CASE.
from his backwages. No cost.
D. THE WILLFUL AND DELIBERATE VIOLATION OF PETITIONER
SO ORDERED.43 MIRANT’S ANTI-DRUGS POLICY AGGRAVATED RESPONDENT
CARO’S WRONGFUL CONDUCT WHICH JUSTIFIED HIS
Petitioner moved for reconsideration. In its assailed Resolution dated January 11, 2008, TERMINATION.
the CA denied petitioners’ motion for reconsideration for lack of merit. It ruled that the
arguments in the motion for reconsideration were already raised in their past pleadings. E. IN INVALIDATING RESPONDENT CARO’S DISMISSAL, THE
COURT OF APPEALS, IN EFFECT, BELITTLED THE
In this instant Petition, petitioners raise the following grounds: IMPORTANCE AND SERIOUSNESS OF PETITIONER MIRANT’S
ANTI-DRUGS POLICY AND CONSEQUENTLY HAMPERED THE
I. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FAILED EFFECTIVE IMPLEMENTATION OF THE SAME.
TO CONSIDER THAT:
F. THE EXISTENCE OF OTHER GROUNDS FOR CARO’S
A. THE PETITION FOR CERTIORARI FILED BY RESPONDENT DISMISSAL, SUCH AS WILLFUL DISOBEDIENCE AND [LOSS] OF
CARO SHOULD HAVE BEEN SUMMARILY DISMISSED TRUST AND CONFIDENCE, JUSTIFIED HIS TERMINATION
CONSIDERING THAT IT LACKED THE REQUISITE FROM EMPLOYMENT.
VERIFICATION AND CERTIFICATION AGAINST FORUM
SHOPPING REQUIRED BY THE RULES OF COURT; OR III. NONETHELESS, THE AWARD OF FINANCIAL ASSISTANCE IN FAVOR OF
RESPONDENT CARO IS NOT WARRANTED CONSIDERING THAT RESPONDENT
CARO’S WILLFUL AND DELIBERATE REFUSAL TO SUBJECT HIMSELF TO Accordingly, such omission is fatal to the entire petition for not being properly verified
PETITIONER MIRANT’S DRUG TEST AND HIS SUBSEQUENT EFFORTS TO and certified. The CA therefore erred when it did not dismiss the petition.
CONCEAL THE SAME SHOWS HIS DEPRAVED MORAL CHARACTER.
This jurisdiction has adopted in the field of labor protection a liberal stance towards the
IV. THE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT HELD PETITIONER construction of the rules of procedure in order to serve the ends of substantial justice.
BAUTISTA PERSONALLY LIABLE FOR [RESPONDENT] CARO’S UNFOUNDED This liberal construction in labor law emanates from the mandate that the workingman’s
CLAIMS CONSIDERING THAT, ASIDE FROM RESPONDENT CARO’S DISMISSAL welfare should be the primordial and paramount consideration.45 Thus, if the rules of
BEING LAWFUL, PETITIONER BAUTISTA MERELY ACTED WITHIN THE SCOPE procedure will stunt courts from fulfilling this mandate, the rules of procedure shall be
OF HIS FUNCTIONS IN GOOD FAITH.44 relaxed if the circumstances of a case warrant the exercise of such liberality. If we
sustain the argument of petitioners in the case at bar that the petition for certiorari
We shall first rule on the issue raised by petitioners that the petition for certiorari filed should have been dismissed outright by the CA, the NLRC decision would have
by respondent with the CA should have been summarily dismissed as it lacked the reached finality and respondent would have lost his remedy and denied his right to be
requisite verification and certification against forum shopping under Sections 4 and 5, protected against illegal dismissal under the Labor Code, as amended.
Rule 7 of the Rules, viz.:
It is beyond debate that petitioner corporation’s enforcement of its Anti-Drugs Policy is
SEC. 4. Verification. – Except when otherwise specifically required by law or rule, an exercise of its management prerogative. It is also a conceded fact that respondent
pleadings need not be under oath, verified or accompanied by affidavit. "failed" to take the random drug test as scheduled, and under the said company policy,
such failure metes the penalty of termination for the first offense. A plain, simple and
literal application of the said policy to the omission of respondent would have warranted
A pleading is verified by an affidavit that the affiant has read the pleading and that the his outright dismissal from employment – if the facts were that simple in the case at
allegations therein are true and correct of his knowledge and belief. bar. Beyond debate – the facts of this case are not – and this disables the Court from
permitting a straight application of an otherwise prima facie straightforward rule if the
A pleading required to be verified which contains a verification based on "information ends of substantial justice have to be served.
and belief," or upon "knowledge, information and belief," or lacks a proper verification,
shall be treated as an unsigned pleading. It is the crux of petitioners’ argument that respondent’s omission amounted to "unjust
refusal" because he could not sufficiently support with convincing proof and evidence
SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall his defenses for failing to take the random drug test. For petitioners, the inconsistencies
certify under oath in the complaint or other initiatory pleading asserting a claim for relief, in respondent’s explanations likewise operated to cast doubt on his real reasons and
or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that motives for not submitting to the random drug test on schedule. In recognition of these
he has not theretofore commenced any action or filed any claim involving the same inconsistencies and the lack of convincing proof from the point of view of petitioners,
issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, the NLRC reversed the decision of the Labor Arbiter. The CA found the ruling of the
no such other action or claim is pending therein; (b) if there is such other pending action Labor Arbiter to be more in accord with the facts, law and existing jurisprudence.
or claim, a complete statement of the present status thereof; and (c) if he should
thereafter learn that the same or similar action or claim has been filed or is pending, he We agree with the disposition of the appellate court that there was illegal dismissal in
shall report that fact within five (5) days therefrom to the court wherein his aforesaid the case at bar.
complaint or initiatory pleading has been filed.
While the adoption and enforcement by petitioner corporation of its Anti-Drugs Policy
Failure to comply with the foregoing requirements shall not be curable by mere is recognized as a valid exercise of its management prerogative as an employer, such
amendment of the complaint or other initiatory pleading but shall be cause for the exercise is not absolute and unbridled. Managerial prerogatives are subject to
dismissal of the case without prejudice, unless otherwise provided, upon motion and limitations provided by law, collective bargaining agreements, and the general
after hearing. The submission of a false certification or noncompliance with any of the principles of fair play and justice.46 In the exercise of its management prerogative, an
undertakings therein shall constitute indirect contempt of court, without prejudice to the employer must therefore ensure that the policies, rules and regulations on work-related
corresponding administrative and criminal actions. If the acts of the party or his counsel activities of the employees must always be fair and reasonable and the corresponding
clearly constitute willful and deliberate forum shopping, the same shall be ground for penalties, when prescribed, commensurate to the offense involved and to the degree
summary dismissal with prejudice and shall constitute direct contempt, as well as a of the infraction.47 The Anti-Drugs Policy of Mirant fell short of these requirements.
cause for administrative sanctions.
Petitioner corporation’s subject Anti-Drugs Policy fell short of being fair and reasonable.
It is the contention of petitioners that due to respondent’s failure to subscribe the
Verification and Certification of Non-Forum Shopping before a Notary Public, the said
verification and certification cannot be considered to have been made under oath.
First. The policy was not clear on what constitutes "unjustified refusal" when the subject x x x We find, as correctly pointed out by the investigating panel, that the [petitioner
drug policy prescribed that an employee’s "unjustified refusal" to submit to a random corporation’s] Anti-Drug Policy is excessive in terminating an employee for his
drug test shall be punishable by the penalty of termination for the first offense. To be "unjustified refusal" to subject himself to the random drug test on first offense, without
sure, the term "unjustified refusal" could not possibly cover all forms of "refusal" as the clearly defining what amounts to an "unjustified refusal."
employee’s resistance, to be punishable by termination, must be "unjustified." To the
mind of the Court, it is on this area where petitioner corporation had fallen short of Thus, We find that the recommended four (4) working weeks’ suspension without pay
making it clear to its employees – as well as to management – as to what types of acts as the reasonable penalty to be imposed on [respondent] for his disobedience. x x
would fall under the purview of "unjustified refusal." Even petitioner corporation’s own x51 (Additional emphasis supplied.)
Investigating Panel recognized this ambiguity, viz.:
To be sure, the unreasonableness of the penalty of termination as imposed in this case
The Panel also recommends that Management review the Mirant Drug Policy is further highlighted by a fact admitted by petitioner corporation itself: that for the ten-
specifically "Unjustified [R]efusal to submit to random drug testing." The Panel believes year period that respondent had been employed by petitioner corporation, he did not
that the term "refusal" casts certain ambiguities and should be clearly defined. 48 have any record of a violation of its company policies.

The fact that petitioner corporation’s own Investigating Panel and its Vice President for As to the other issue relentlessly being raised by petitioner corporation that
Operations, Sliman, differed in their recommendations regarding respondent’s case are respondent’s petition for certiorari before the CA should have been considered moot as
first-hand proof that there, indeed, is ambiguity in the interpretation and application of respondent had already previously executed a quitclaim discharging petitioner
the subject drug policy. The fact that petitioner corporation’s own personnel had to corporation from all his monetary claims, we cannot agree. Quitclaims executed by
dissect the intended meaning of "unjustified refusal" is further proof that it is not clear laborers are ineffective to bar claims for the full measure of their legal
on what context the term "unjustified refusal" applies to. It is therefore not a surprise rights,52 especially in this case where the evidence on record shows that the amount
that the Labor Arbiter, the NLRC and the CA have perceived the term "unjustified stated in the quitclaim exactly corresponds to the amount claimed as unpaid wages by
refusal" on different prisms due to the lack of parameters as to what comes under its respondent under Annex A53 of his Reply54 filed with the Labor Arbiter. Prima facie, this
purview. To be sure, the fact that the courts and entities involved in this case had to creates a false impression that respondent’s claims have already been settled by
engage in semantics – and come up with different constructions – is yet another glaring petitioner corporation – discharging the latter from all of respondent’s monetary claims.
proof that the subject policy is not clear creating doubt that respondent’s dismissal was In truth and in fact, however, the amount paid under the subject quitclaim represented
a result of petitioner corporation’s valid exercise of its management prerogative. the salaries of respondent that remained unpaid at the time of his termination – not the
amounts being claimed in the case at bar.
It is not a mere jurisprudential principle, but an enshrined provision of law, that all
doubts shall be resolved in favor of labor. Thus, in Article 4 of the Labor Code, as We believe that this issue was extensively discussed by both the Labor Arbiter and the
amended, "[a]ll doubts in the implementation and interpretation of the provisions of [the CA and we find no reversible error on the disposition of this issue, viz.:
Labor] Code, including its implementing rules and regulations, shall be resolved in favor
of labor." In Article 1702 of the New Civil Code, a similar provision states that "[i]n case
of doubt, all labor legislation and all labor contracts shall be construed in favor of the A review of the records show that the alluded quitclaim, which was undated and not
safety and decent living for the laborer." Applying these provisions of law to the even notarized although signed by the petitioner, was for the amount of ₱59,630.05.
circumstances in the case at bar, it is not fair for this Court to allow an ambiguous policy The said quitclaim was attached as Annex 26 in the [petitioners’] Position Paper filed
to prejudice the rights of an employee against illegal dismissal. To hold otherwise and before the Labor Arbiter. As fully explained by [respondent] in his Reply filed with the
sustain the stance of petitioner corporation would be to adopt an interpretation that Labor Arbiter, the amount stated therein was his last pay due to him when he was
goes against the very grain of labor protection in this jurisdiction. As correctly stated by terminated, not the amount representing his legitimate claims in this labor suit x x x. To
the Labor Arbiter, "when a conflicting interest of labor and capital are weighed on the bolster his defense, [respondent] submitted the pay form issued to him by the [petitioner
scales of social justice, the heavier influence of the latter must be counter-balanced by corporation], showing his net pay at ₱59,630.05 exactly the amount stated in the
the sympathy and compassion the law must accord the underprivileged worker." 49 quitclaim x x x. Then, too, as stated on the quitclaim itself, the intention of the waiver
executed by the [respondent] was to release [petitioner corporation] from any liability
only on the said amount representing [respondent’s] "full and final payment of [his] last
Second. The penalty of termination imposed by petitioner corporation upon respondent salary/separation pay" x x x. It did not in any way waive [respondent’s] right to pursue
fell short of being reasonable. Company policies and regulations are generally valid his legitimate claims regarding his dismissal in a labor suit. Thus, We gave no credence
and binding between the employer and the employee unless shown to be grossly to [petitioners’] private defense that alleged quitclaim rendered the instant petition
oppressive or contrary to law50 – as in the case at bar. Recognizing the ambiguity in moot.55
the subject policy, the CA was more inclined to adopt the recommendation of petitioner
corporation’s own Investigating Panel over that of Sliman and the NLRC. The appellate
court succinctly but incisively pointed out, viz.: Finally, the petition avers that petitioner Bautista should not be held personally liable
for respondent’s dismissal as he acted in good faith and within the scope of his official
functions as then president of petitioner corporation. We agree with
petitioners.1âwphi1 Both decisions of the Labor Arbiter and the CA did not discuss the
basis of the personal liability of petitioner Bautista, and yet the dispositive portion of the
decision of the Labor Arbiter - which was affirmed by the appellate court - held him
jointly and severally liable with petitioner corporation, viz.:

WHEREFORE, premises considered, this Office finds respondents GUILTY of illegal

dismissal, and hereby ordered to jointly and severally reinstate complainant back to his
former position without loss on seniority rights and benefits and to pay him his
backwages and other benefits from the date he was illegally dismissed up to the time
he is actually reinstated, partially computed as of this date in the amount of
₱258,797.50 (₱39,815.00 x 6.5 mos.) plus his 13th and 14th month pay in the amount
of ₱43,132.91 or in the total amount of ₱301,930.41. Respondents are also ordered to
pay complainant the amount of ₱3,000,000.00 as and by way of moral and exemplary
damages, and to pay complainant the amount equivalent to ten percent (10%) of the
total awards as and by way of attorney's fees.

SO ORDERED.56 (Emphasis supplied.)

A corporation has a personality separate and distinct from its officers and board of
directors who may only be held personally liable for damages if it is proven that they
acted with malice or bad faith in the dismissal of an employee. 57 Absent any evidence
on record that petitioner Bautista acted maliciously or in bad faith in effecting the
termination of respondent, plus the apparent lack of allegation in the pleadings of
respondent that petitioner Bautista acted in such manner, the doctrine of corporate
fiction dictates that only petitioner corporation should be held liable for the illegal
dismissal of respondent.

WHEREFORE, the petition for review on certiorari is DENIED. The assailed Decision
dated June 26, 2007 and the Resolution dated January 11, 2008 in CA-G.R. SP No.
96153 are AFFIRMED with the MODIFICATION that only petitioner corporation is found
GUILTY of the illegal dismissal of respondent Joselito A. Caro. Petitioner Edgardo A.
Bautista is not held personally liable as then President of petitioner corporation at the
time of the illegal dismissal.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 163269 April 19, 2006 retirement under the SRP.10 Rivera was likewise required to sign an undated
Undertaking as a supplement to the Release, Waiver and Quitclaim in favor of
ROLANDO C. RIVERA, Petitioner, Solidbank in which he declared that he received in full his entitlement under the law
vs. (salaries, benefits, bonuses and other emoluments), including his separation pay in
SOLIDBANK CORPORATION, Respondent. accordance with the SRP. In this Undertaking, he promised that "[he] will not seek
employment with a competitor bank or financial institution within one (1) year from
February 28, 1995, and that any breach of the Undertaking or the provisions of the
DECISION Release, Waiver and Quitclaim would entitle Solidbank to a cause of action against him
before the appropriate courts of law.11 Unlike the Release, Waiver and Quitclaim, the
CALLEJO, SR., J.: Undertaking was not notarized.

Assailed in this Petition for Review on Certiorari is the Decision 1 of the Court of Appeals On May 1, 1995, the Equitable Banking Corporation (Equitable) employed Rivera as
(CA) in CA-G.R. CV No. 52235 as well as its Resolution2 denying the Motion for Partial Manager of its Credit Investigation and Appraisal Division of its Consumers’ Banking
Reconsideration of petitioner Rolando C. Rivera. Group.12 Upon discovering this, Solidbank First Vice-President for Human Resources
Division (HRD) Celia J.L. Villarosa wrote a letter dated May 18, 1995, informing Rivera
Petitioner had been working for Solidbank Corporation since July 1, 1977. 3 He was that he had violated the Undertaking. She likewise demanded the return of all the
initially employed as an Audit Clerk, then as Credit Investigator, Senior Clerk, Assistant monetary benefits he received in consideration of the SRP within five (5) days from
Accountant, and Assistant Manager. Prior to his retirement, he became the Manager of receipt; otherwise, appropriate legal action would be taken against him.13
the Credit Investigation and Appraisal Division of the Consumer’s Banking Group. In
the meantime, Rivera and his brother-in-law put up a poultry business in Cavite. When Rivera refused to return the amount demanded within the given period, Solidbank
filed a complaint for Sum of Money with Prayer for Writ of Preliminary
In December 1994, Solidbank offered two retirement programs to its employees: (a) Attachment14 before the Regional Trial Court (RTC) of Manila on June 26, 1995.
the Ordinary Retirement Program (ORP), under which an employee would receive 85% Solidbank, as plaintiff, alleged therein that in accepting employment with a competitor
of his monthly basic salary multiplied by the number of years in service; and (b) the bank for the same position he held in Solidbank before his retirement, Rivera violated
Special Retirement Program (SRP), under which a retiring employee would receive his Undertaking under the SRP. Considering that Rivera accepted employment with
250% of the gross monthly salary multiplied by the number of years in service. 4 Since Equitable barely three months after executing the Undertaking, it was clear that he had
Rivera was only 45 years old, he was not qualified for retirement under the ORP. Under no intention of honoring his commitment under said deed.
the SRP, he was entitled to receive P1,045,258.95 by way of benefits.5
Solidbank prayed that Rivera be ordered to return the net amount of P963,619.28 plus
Deciding to devote his time and attention to his poultry business in Cavite, Rivera interests therein, and attorney’s fees, thus:
applied for retirement under the SRP. Solidbank approved the application and Rivera
was entitled to receive the net amount of P963,619.28. This amount included his WHEREFORE, it is respectfully prayed that:
performance incentive award (PIA), and his unearned medical, dental and optical
allowances in the amount of P1,666.67, minus his total accountabilities to Solidbank 1. At the commencement of this action and upon the filing of a bond in such
amounting to P106,973.00.6 Rivera received the amount and confirmed his separation amount as this Honorable Court may fix, a writ of preliminary attachment be
from Solidbank on February 25, 1995.7 forthwith issued against the properties of the defendant as satisfaction of any
judgment that plaintiff may secure;
Subsequently, Solidbank required Rivera to sign an undated Release, Waiver and
Quitclaim, which was notarized on March 1, 1995.8 Rivera acknowledged receipt of the 2. After trial, judgment be rendered ordering defendant to pay plaintiff the
net proceeds of his separation and retirement benefits and promised that "[he] would following sums: NINE HUNDRED SIXTY-THREE THOUSAND SIX
not, at any time, in any manner whatsoever, directly or indirectly engage in any unlawful HUNDRED NINETEEN AND 28/100 ONLY (P963,619.28) PESOS, Philippine
activity prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary Currency, as of 23 May 1995, plus legal interest of 12% per annum until fully
companies, their stockholders, officers, directors, agents or employees, and their paid;
successors-in-interest and will not disclose any information concerning the business of
Solidbank, its manner or operation, its plans, processes, or data of any kind." 9
3. Such sum equivalent to 10% of plaintiff’s claims plus P2,000.00 for every
appearance by way of attorney’s fees; and
Aside from acknowledging that he had no cause of action against Solidbank or its
affiliate companies, Rivera agreed that the bank may bring any action to seek an award
for damages resulting from his breach of the Release, Waiver and Quitclaim, and that 4. Costs of suit.
such award would include the return of whatever sums paid to him by virtue of his
PLAINTIFF prays for other reliefs just and equitable under the premises.15 to Solidbank’s interest since he never acquired any sensitive or delicate information
which could prejudice the bank’s interest if disclosed.
Solidbank appended the Affidavit of HRD First Vice-President Celia Villarosa and a
copy of the Release, Waiver and Quitclaim and Undertaking which Rivera executed. 16 Rivera averred that he had the right to adduce evidence to prove that he had been
faithful to the provisions of the Release, Waiver and Quitclaim, and the Undertaking,
In an Order dated July 6, 1995, the trial court issued a Writ of Preliminary and had not committed any act or done or said anything to cause injury to Solidbank.18
Attachment17 ordering Deputy Sheriff Eduardo Centeno to attach all of Rivera’s
properties not exempt from execution. Thus, the Sheriff levied on a parcel of land Rivera appended to his Opposition his Counter-Affidavit in which he reiterated that he
owned by Rivera. had to sign the Undertaking containing the employment ban provision, otherwise his
availment of the SRP would not push through. There was no truth to the bank’s
In his Answer with Affirmative Defenses and Counterclaim, Rivera admitted that he allegation that, "in exchange for receiving the larger amount of P1,045,258.95 under
received the net amount of P963,619.28 as separation pay. However, the employment the SRP, instead of the very much smaller amount of P224,875.81 under the ORP, he
ban provision in the Undertaking was never conveyed to him until he was made to sign agreed that he will not seek employment in a competitor bank or financial institution
it on February 28, 1995. He emphasized that, prior to said date, Solidbank never within one year from February 28, 1995." It was the bank which conceived the SRP to
disclosed any condition to the retirement scheme, nor did it impose such employment streamline its organization and all he did was accept it. He stressed that the decision
ban on the bank officers and employees who had previously availed of the SRP. He whether to allow him to avail of the SRP belonged solely to Solidbank. He also pointed
alleged that the undertaking not to "seek employment with any competitor bank or out that the employment ban provision in the Undertaking was not a consideration for
financial institution within one (1) year from February 28, 1995" was void for being his availment of the SRP, and that if he did not avail of the retirement program, he would
contrary to the Constitution, the law and public policy, that it was unreasonable, have continued working for Solidbank for at least 15 more years, earning more than
arbitrary, oppressive, discriminatory, cruel, unjust, inhuman, and violative of his human what he received under the SRP. He alleged that he intended to go full time into the
rights. He further claimed that the Undertaking was a contract of adhesion because it poultry business, but after about two months, found out that, contrary to his
was prepared solely by Solidbank without his participation; considering his moral and expectations, the business did not provide income sufficient to support his family. Being
economic disadvantage, it must be liberally construed in his favor and strictly against the breadwinner, he was then forced to look for a job, and considering his training and
the bank. experience as a former bank employee, the job with Equitable was all he could find. He
insisted that he had remained faithful to Solidbank and would continue to do so despite
the case against him, the attachment of his family home, and the resulting mental
On August 15, 1995, Solidbank filed a Verified Motion for Summary Judgment, alleging anguish, torture and expense it has caused them. 19
therein that Rivera raised no genuine issue as to any material fact in his Answer except
as to the amount of damages. It prayed that the RTC render summary judgment against
Rivera. Solidbank alleged that whether or not the employment ban provision contained In his Supplemental Opposition, Rivera stressed that, being a former bank employee,
in the Undertaking is unreasonable, arbitrary, or oppressive is a question of law. It it was the only kind of work he knew. The ban was, in fact, practically absolute since it
insisted that Rivera signed the Undertaking voluntarily and for valuable consideration; applied to all financial institutions for one year from February 28, 1995. He pointed out
and under the Release, Waiver and Quitclaim, he was obliged to return that he could not work in any other company because he did not have the qualifications,
the P963,619.28 upon accepting employment from a competitor bank within the one- especially considering his age. Moreover, after one year from February 28, 1995, he
year proscribed period. Solidbank appended to its motion the Affidavit of Villarosa, would no longer have any marketable skill, because by then, it would have been
where she declared that Rivera was employed by Equitable on May 1, 1995 for the rendered obsolete by non-use and rapid technological advances. He insisted that the
same position he held before his retirement from Solidbank. ban was not necessary to protect the interest of Solidbank, as, in the first place, he had
no access to any "secret" information which, if revealed would be prejudicial to
Solidbank’s interest. In any case, he was not one to reveal whatever knowledge or
Rivera opposed the motion contending that, as gleaned from the pleadings of the information he may have acquired during his employment with said bank. 20
parties as well as Villarosa’s Affidavit, there are genuine issues as to material facts
which call for the presentation of evidence. He averred that there was a need for the
parties to adduce evidence to prove that he did not sign the Undertaking voluntarily. He In its Reply, Solidbank averred that the wisdom of requiring the Undertaking from the
claimed that he would not have been allowed to avail of the SRP if he had not signed 1995 SRP is purely a management prerogative. It was not for Rivera to question and
it, and consequently, his retirement benefits would not have been paid. This was what decry the bank’s policy to protect itself from unfair competition and disclosure of its
Ed Nallas, Solidbank Assistant Vice-President for HRD and Personnel, told him when trade secrets. The substantial monetary windfall given the retiring officers was meant
he received his check on February 28, 1995. Senior Vice-President Henry Valdez, his to tide them over the one-year period of hiatus, and did not prevent them from engaging
superior in the Consumers’ Banking Group, also did not mention that he would have to in any kind of business or bar them from being employed except with competitor
sign such Undertaking which contained the assailed provision. Thus, he had no choice banks/financial institutions.21
but to sign it. He insisted that the question of whether he violated the Undertaking is a
genuine issue of fact which called for the presentation of evidence during the hearing On December 18, 1995, the trial court issued an Order of Summary Judgment.22 The
on the merits of the case. He also asserted that he could not cause injury or prejudice fallo of the decision reads:
WHEREFORE, SUMMARY JUDGMENT is hereby rendered in favor of plaintiff and However, the CA ruled that the attachment made upon Rivera’s family home was void,
against defendant ordering the latter to pay to plaintiff bank the amount of NINE and, pursuant to the mandate of Article 155, in relation to Article 153 of the Family
HUNDRED SIXTY-THREE THOUSAND SIX HUNDRED NINETEEN AND 28/100 Code, must be discharged.
(P963,619.28) PESOS, Philippine Currency, as of May 23, 1995, plus legal interest at
12% per annum until fully paid, and the costs of the suit. Hence, this recourse to the Court.

FURTHER, NEVERTHELESS, both parties are hereby encouraged as they are Petitioner avers that –
directed to meet again and sit down to find out how they can finally end this rift and
litigation, all in the name of equity, for after all, defendant had worked for the bank for
some 18 years.23 I.

The trial court declared that there was no genuine issue as to a matter of fact in the THE COURT OF APPEALS ERRED IN UPHOLDING THE PROPRIETY OF THE
case since Rivera voluntarily executed the Release, Waiver and Quitclaim, and the SUMMARY JUDGMENT RENDERED BY THE TRIAL COURT CONSIDERING THE
Undertaking. He had a choice not to retire, but opted to do so under the SRP, and, in EXISTENCE OF GENUINE ISSUES AS TO MATERIAL FACTS WHICH CALL FOR
fact, received the benefits under it. THE PRESENTATION OF EVIDENCE IN A TRIAL ON THE MERITS.

According to the RTC, the prohibition incorporated in the Undertaking was not II.
unreasonable. To allow Rivera to be excused from his undertakings in said deed and,
at the same time, benefit therefrom would be to allow him to enrich himself at the THE COURT OF APPEALS ERRED IN NOT DECLARING THE ONE-YEAR
expense of Solidbank. The RTC ruled that Rivera had to return the P963,619.28 he EMPLOYMENT BAN IMPOSED BY RESPONDENT SOLIDBANK UPON HEREIN
received from Solidbank, plus interest of 12% per annum from May 23, 1998 until fully PETITIONER NULL AND VOID FOR BEING UNREASONABLE AND OPPRESSIVE
paid. AND FOR CONSTITUTING RESTRAINT OF TRADE WHICH VIOLATES PUBLIC
POLICY AS ENUNCIATED IN OUR CONSTITUTION AND LAWS.
Aggrieved, Rivera appealed the ruling to the CA which rendered judgment on June 14,
2002 partially granting the appeal. The fallo of the decision reads: III.

WHEREFORE, the appeal is PARTIALLY GRANTED. The decision appealed from is THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S DECISION
AFFIRMED with the modification that the attachment and levy upon the family home ORDERING HEREIN RESPONDENT TO PAY SOLIDBANK THE AMOUNT
covered by TCT No. 51621 of the Register of Deeds, Las Piñas, Metro Manila, is hereby OF P963,619.28 AS OF MAY 23, 1995, PLUS LEGAL INTEREST OF 12% PER
SET ASIDE and DISCHARGED. ANNUM UNTIL FULLY PAID.

SO ORDERED.24 IV.

The CA declared that there was no genuine issue regarding any material fact except MORE SPECIFICALLY, THE COURT OF APPEALS ERRED IN AFFIRMING THE
as to the amount of damages. It ratiocinated that the agreement between Rivera and PORTION OF THE SUMMARY JUDGMENT ORDERING PETITIONER TO PAY
Solidbank was the law between them, and that the interpretation of the stipulations SOLIDBANK LEGAL INTEREST OF 12% PER ANNUM UNTIL FULLY PAID ON THE
therein could not be left upon the whims of Rivera. According to the CA, Rivera never AFOREMENTIONED SUM [OF] P963,619.28.25
denied signing the Release, Waiver, and Quitclaim, including the Undertaking
regarding the employment prohibition. He even admitted joining Equitable as an The issues for resolution are: (1) whether the parties raised a genuine issue in their
employee within the proscribed one-year period. The alleged defenses of Rivera, the pleadings, affidavits, and documents, that is, whether the employment ban incorporated
CA declared, could not prevail over the admissions in his in the Undertaking which petitioner executed upon his retirement is unreasonable,
pleadings.1avvphil.net Moreover, Rivera’s justification for taking the job with Equitable, oppressive, hence, contrary to public policy; and (2) whether petitioner is liable to
"dire necessity," was not an acceptable ground for annulling the Undertaking since respondent for the restitution of P963,619.28 representing his retirement benefits, and
there were no earmarks of coercion, undue influence, or fraud in its execution. Having interest thereon at 12% per annum as of May 23, 1995 until payment of the full amount.
executed the said deed and thereafter receiving the benefits under the SRP, he is
deemed to have waived the right
On the first issue, petitioner claims that, based on the pleadings of the parties, and the
documents and affidavits appended thereto, genuine issues as to matters of fact were
to assail the same, hence, is estopped from insisting or retaining the said amount raised therein. He insists that the resolution of the issue of whether the employment
of P963,619.28.
ban is unreasonable requires the presentation of evidence on the circumstances which the amount he received under the SRP; much less does it provide that he would have
led to respondent bank’s offer of the SRP and ORP, and petitioner’s eventual to pay 12% interest per annum on said amount. On the other hand, the Release, Waiver
acceptance and signing of the Undertaking on March 1, 1995. There is likewise a need and Quitclaim does not contain the provision prohibiting him from being employed with
to adduce evidence on whether the employment ban is necessary to protect any competitor bank or financial institution within one year from February 28, 1995.
respondent’s interest, and whether it is an undue restraint on petitioner’s constitutional Petitioner insists that he acted in good faith when he received his retirement benefits;
right to earn a living to support his family. He further insists that respondent is burdened hence, he cannot be punished by being ordered to return the sum of P963,619.28 which
to prove that it sustained damage or injury by reason of his alleged breach of the was given to him for and in consideration of his early retirement.
employment ban since neither the Release, Waiver and Quitclaim, and Undertaking he
executed contain any provision that respondent is automatically entitled to the Neither can petitioner be subjected to the penalty of paying 12% interest per annum on
restitution of the P963,619.28. Petitioner points out that all the deeds provide is that, in his retirement pay of P963,619.28 from May 23, 1995, as it is improper and oppressive
case of breach thereof, respondent is entitled to protection before the appropriate to him and his family. As of July 3, 2002, the interest alone would amount
courts of law. to P822,609.67, thus doubling the amount to be returned to respondent bank under the
decision of the RTC and the CA. The imposition of interest has no basis because the
On the second issue, petitioner avers that the prohibition incorporated in the Release, Release, Waiver and Quitclaim, and the Undertaking do not provide for payment of
Waiver and Quitclaim barring him as retiree from engaging directly or indirectly in any interest. The deeds only state that breach thereof would entitle respondent to bring an
unlawful activity and disclosing any information concerning the business of respondent action to seek damages, to include the return of the amount that may have been paid
bank, as well as the employment ban contained in the Undertaking he executed, are to petitioner by virtue thereof. On the other hand, any breach of the Undertaking or the
oppressive, unreasonable, cruel and inhuman because of its overbreath. He reiterates Release, Waiver and Quitclaim would only entitle respondent to a cause of action
that it is against public policy, an unreasonable restraint of trade, because it prohibits before the appropriate courts of law. Besides, the amount received by petitioner was
him to work for one year in the Philippines, ultimately preventing him from supporting not a loan and, therefore, should not earn interest pursuant to Article 1956 of the Civil
his family. He points out that a breadwinner in a family of four minor daughters who are Code.
all studying, with a wife who does not work, one would have a very difficult time meeting
the financial obligations even with a steady, regular-paying job. He insists that the Finally, petitioner insists that he acted in good faith in seeking employment with another
Undertaking deprives him of the means to support his family, and ultimately, his bank within one year from February 28, 1995 because he needed to earn a living to
children’s chance for a good education and future. He reiterates that the returns in his support his family and finance his children’s education. Hence, the imposition of
poultry business fell short of his expectations, and unfortunately, the business was interest, which is a penalty, is unwarranted.
totally destroyed by typhoon "Rosing" in November 1995.
By way of Comment on the petition, respondent avers that the Undertaking is the law
Petitioner further maintains that respondent’s management prerogative does not give it between it and petitioner. As such, the latter could not assail the deed after receiving
a license to entice its employees to retire at a very young age and prohibit them from the retirement benefit under the SRP. As gleaned from the averments in his petition,
seeking employment in a so-called competitor bank or financial institution, thus prevent petitioner admitted that he executed the Undertaking after having been informed of the
them from working and supporting their families (considering that banking is the only nature and consequences of his refusal to sign the same, i.e., he would not be able to
kind of work they know). Petitioner avers that "management’s prerogative must be receive the retirement benefit under the SRP.
without abuse of discretion. A line must be drawn between management prerogative
regarding business operations per se and those which affect the rights of the
employees. In treating its employees, management should see to it that its employees Respondent maintains that courts have no power to relieve parties of obligations
are at least properly informed of its decision or modes of action." voluntarily entered into simply because their contracts turned out to be disastrous
deeds. Citing the ruling of this Court in Eastern Shipping Lines, Inc. v. Court of
Appeals,26 respondent avers that petitioner is obliged to pay 12% per annum interest
On the last issue, petitioner alleges that the P1,045,258.95 he received was his of the P963,619.28 from judicial or extrajudicial demand.
retirement benefit which he earned after serving the bank for 18 years. It was not a
mere gift or gratuity given by respondent bank, without the latter giving up something
of value in return. On the contrary, respondent bank received "valuable consideration," In reply, petitioner asserts that respondent failed to prove that it sustained damages,
that is, petitioner quit his job at the relatively young age of 45, thus enabling respondent including the amount thereof, and that neither the Release, Waiver and Quitclaim nor
to effect its reorganization plan and forego the salary, benefits, bonuses, and the Undertaking obliged him to pay interest to respondent.
promotions he would have received had he not retired early.
The petition is meritorious.
Petitioner avers that, under the Undertaking, respondent would be entitled to a cause
of action against him before the appropriate courts of law if he had violated the Sections 1 and 3, Rule 34 of the Revised Rules of Civil Procedure provide:
employment ban. He avers that respondent must prove its entitlement to
the P963,619.28. The Undertaking contains no provision that he would have to return
Section 1. Summary judgment for claimant. – A party seeking to recover upon a claim, differ as to the contentions shown from the evidence, summary judgment might be
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the denied.
pleading in answer thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor upon all or any part In United Rentals (North America), Inc. v. Keizer,38 the U.S. Circuit Court of Appeals
thereof. resolved the issue of whether a summary judgment is proper in a breach of contract
action involving the interpretation of such contract, and ruled that:
xxxx
[A] contract can be interpreted by the court on summary judgment if (a) the contract’s
Sec. 3. Motion and proceedings thereon. – The motion shall be served at least ten (10) terms are clear, or (b) the evidence supports only one construction of the controverted
days before the time specified for the hearing. The adverse party may serve opposing provision, notwithstanding some ambiguity. x x x If the court finds no ambiguity, it
affidavits, depositions, or admissions at least three (3) days before the hearing. After should proceed to interpret the contract – and it may do so at the summary judgment
the hearing, the judgment sought shall be rendered forthwith if the pleadings, stage. If, however, the court discerns an ambiguity, the next step – involving an
supporting affidavits, depositions, and admissions on file, show that, except as to the examination of extrinsic evidence – becomes essential. x x x Summary judgment may
amount of damages, there is no genuine issue as to any material fact and that the be appropriate even if ambiguity lurks as long as the extrinsic evidence presented to
moving party is entitled to a judgment as a matter of law. the court supports only one of the conflicting interpretations.39

For a summary judgment to be proper, the movant must establish two requisites: (a) In this case, there is no dispute between the parties that, in consideration for his
there must be no genuine issue as to any material fact, except for the amount of availment of the SRP, petitioner executed the Release, Waiver and Quitclaim, and the
damages; and (b) the party presenting the motion for summary judgment must be Undertaking as supplement thereto, and that he received retirement pay amounting
entitled to a judgment as a matter of law.27 Where, on the basis of the pleadings of a to P963,619.28 from respondent. On May 1, 1995, within the one-year ban and without
moving party, including documents appended thereto, no genuine issue as to a material prior knowledge of respondent, petitioner was employed by Equitable as Manager of
fact exists, the burden to produce a genuine issue shifts to the opposing party. If the its Credit Investigation and Appraisal Division, Consumers’ Banking Group. Despite
opposing party fails, the moving party is entitled to a summary judgment. 28 demands, petitioner failed to return the P963,619.28 to respondent on the latter’s
allegation that he had breached the one-year ban by accepting employment from
A genuine issue is an issue of fact which requires the presentation of evidence as Equitable, which according to respondent was a competitor bank.
distinguished from an issue which is a sham, fictitious, contrived or a false claim. The
trial court can determine a genuine issue on the basis of the pleadings, admissions, We agree with petitioner’s contention that the issue as to whether the post-retirement
documents, affidavits or counteraffidavits submitted by the parties. When the facts as competitive employment ban incorporated in the Undertaking is against public policy is
pleaded appear uncontested or undisputed, then there is no real or genuine issue or a genuine issue of fact, requiring the parties to present evidence to support their
question as to any fact and summary judgment called for. On the other hand, where respective claims.
the facts pleaded by the parties are disputed or contested, proceedings for a summary
judgment cannot take the place of a trial.29 The evidence on record must be viewed in As gleaned from the records, petitioner made two undertakings. The first is incorporated
light most favorable to the party opposing the motion who must be given the benefit of in the Release, Waiver and Quitclaim that he signed, to wit:
all favorable inferences as can reasonably be drawn from the evidence. 30
4. I will not, at any time, in any manner whatsoever, directly or indirectly engage in any
Courts must be critical of the papers presented by the moving party and not of the unlawful activity prejudicial to the interest of the BANK, its parent, affiliate or subsidiary
papers/documents in opposition thereto.31 Conclusory assertions are insufficient to companies, their stockholders, officers, directors, agents or employees, and their
raise an issue of material fact.32 A party cannot create a genuine dispute of material successors-in-interest and will not disclose any information concerning the business of
fact through mere speculations or compilation of differences. 33 He may not create an the BANK, its manner or operation, its plans, processes or data of any kind.40
issue of fact through bald assertions, unsupported contentions and conclusory
statements.34 He must do more than rely upon allegations but must come forward with
specific facts in support of a claim. Where the factual context makes his claim The second undertaking is incorporated in the Undertaking following petitioner’s
implausible, he must come forward with more persuasive evidence demonstrating a execution of the Release, Waiver and Quitclaim which reads:
genuine issue for trial.35
4. That as a supplement to the Release and Quitclaim, I executed in favor of Solidbank
Where there are no disputed material facts, the determination of whether a party on FEBRUARY 28, 1995, I hereby expressly undertake that I will not seek employment
breached a contract is a question of law and is appropriate for summary with any competitor bank or financial institution within one (1) year from February 28,
judgment.36 When interpreting an ambiguous contract with extrinsic evidence, 1995.41
summary judgment is proper so long as the extrinsic evidence presented to the court
supports only one of the conflicting interpretations.37 Where reasonable men could
In the Release, Waiver and Quitclaim, petitioner declared that respondent may bring x x x In the broader sense, it is any occupation or business carried on for subsistence
"an action for damages which may include, but not limited to the return of whatever or profit. Anderson’s Dictionary of Law gives the following definition: "Generally
sums he may have received from respondent under said deed if he breaks his equivalent to occupation, employment, or business, whether manual or mercantile; any
undertaking therein."42 On the other hand, petitioner declared in the Undertaking that occupation, employment or business carried on for profit, gain, or livelihood, not in the
"any breach on his part of said Undertaking or the terms and conditions of the Release, liberal arts or in the learned professions." In Abbott’s Law Dictionary, the word is defined
Waiver and Quitclaim will entitle respondent to a cause of action against [petitioner] for as "an occupation, employment or business carried on for gain or profit." Among the
protection before the appropriate courts of law."43 definitions given in the Encyclopaedic Dictionary is the following: "The business which
a person has learnt, and which he carries on for subsistence or profit; occupation;
Article 1306 of the New Civil Code provides that the contracting parties may establish particularly employment, whether manual or mercantile, as distinguished from the
such stipulations, clauses, terms and conditions as they may deem convenient, liberal arts or the learned professions and agriculture." Bouvier limits the meaning to
provided they are not contrary to law, morals, good customs, public order or public commerce and traffic, and the handicraft of mechanics. (In re Pinkney, 47 Kan., 89.)
policy. The freedom of contract is both a constitutional and statutory right. 44 A contract We are inclined to adopt and apply the broader meaning given by the lexicographers. 50
is the law between the parties and courts have no choice but to enforce such contract
as long as it is not contrary to law, morals, good customs and against public policy. In the present case, the trial court ruled that the prohibition against petitioner accepting
employment with a competitor bank or financial institution within one year from
The well-entrenched doctrine is that the law does not relieve a party from the effects of February 28, 1995 is not unreasonable. The appellate court held that petitioner was
an unwise, foolish or disastrous contract, entered into with full awareness of what he estopped from assailing the post-retirement competitive employment ban because of
was doing and entered into and carried out in good faith. Such a contract will not be his admission that he signed the Undertaking and had already received benefits under
discarded even if there was a mistake of law or fact. Courts have no jurisdiction to look the SRP.
into the wisdom of the contract entered into by and between the parties or to render a
decision different therefrom. They have no power to relieve parties from obligation The rulings of the trial court and the appellate court are incorrect.
voluntarily assailed, simply because their contracts turned out to be disastrous deals.45
There is no factual basis for the trial court’s ruling, for the simple reason that it rendered
On the other hand, retirement plans, in light of the constitutional mandate of affording summary judgment and thereby foreclosed the presentation of evidence by the parties
full protection to labor, must be liberally construed in favor of the employee, it being the to prove whether the restrictive covenant is reasonable or not. Moreover, on the face
general rule that pension or retirement plans formulated by the employer are to be of the Undertaking, the post-retirement competitive employment ban is unreasonable
construed against it.46 Retirement benefits, after all, are intended to help the employee because it has no geographical limits; respondent is barred from accepting any kind of
enjoy the remaining years of his life, releasing him from the burden of worrying for his employment in any competitive bank within the proscribed period. Although the period
financial support, and are a form of reward for being loyal to the employer. 47 of one year may appear reasonable, the matter of whether the restriction is reasonable
or unreasonable cannot be ascertained with finality solely from the terms and conditions
In Ferrazzini v. Gsell,48 the Court defined public policy in civil law countries and in the of the Undertaking, or even in tandem with the Release, Waiver and Quitclaim.
United States and the Philippines:
Undeniably, petitioner retired under the SRP and received P963,619.28 from
By "public policy," as defined by the courts in the United States and England, is intended respondent. However, petitioner is not proscribed, by waiver or estoppel, from assailing
that principle of the law which holds that no subject or citizen can lawfully do that which the post-retirement competitive employment ban since under Article 1409 of the New
has a tendency to be injurious to the public or against the public good, which may be Civil Code, those contracts whose cause, object or purpose is contrary to law, morals,
termed the "policy of the law," or "public policy in relation to the administration of the good customs, public order or public policy are inexistent or void from the beginning.
law." (Words & Phrases Judicially Defined, vol. 6, p. 5813, and cases cited.) Public Estoppel cannot give validity to an act that is prohibited by law or one that is against
policy is the principle under which freedom of contract or private dealing is restricted by public policy.51
law for the good of the public. (Id., Id.) In determining whether a contract is contrary to
public policy the nature of the subject matter determines the source from which such Respondent, as employer, is burdened to establish that a restrictive covenant barring
question is to be solved. (Hartford Fire Ins. Co. v. Chicago, M. & St. P. Ry. Co., 62 Fed. an employee from accepting a competitive employment after retirement or resignation
904, 906.) is not an unreasonable or oppressive, or in undue or unreasonable restraint of trade,
thus, unenforceable for being repugnant to public policy. As the Court stated in
The foregoing is sufficient to show that there is no difference in principle between the Ferrazzini v. Gsell,52 cases involving contracts in restraint of trade are to be judged
public policy (orden publico) in the two jurisdictions (the United States and the according to their circumstances, to wit:
Philippine Islands) as determined by the Constitution, laws, and judicial decisions. 49
x x x There are two principal grounds on which the doctrine is founded that a contract
The Court proceeded to define "trade" as follows: in restraint of trade is void as against public policy. One is, the injury to the public by
being deprived of the restricted party’s industry; and the other is, the injury to the party
himself by being precluded from pursuing his occupation, and thus being prevented Thus, in determining whether the contract is reasonable or not, the trial court should
from supporting himself and his family. consider the following factors: (a) whether the covenant protects a legitimate business
interest of the employer; (b) whether the covenant creates an undue burden on the
And in Gibbs vs. Consolidated Gas Co. of Baltimore, supra, the court stated the rule employee; (c) whether the covenant is injurious to the public welfare; (d) whether the
thus: time and territorial limitations contained in the covenant are reasonable; and (e)
whether the restraint is reasonable from the standpoint of public policy. 62
Public welfare is first considered, and if it be not involved, and the restraint upon one
party is not greater than protection to the other party requires, the contract may be Not to be ignored is the fact that the banking business is so impressed with public
sustained. The question is, whether, under the particular circumstances of the case and interest where the trust and interest of the public in general is of paramount importance
the nature of the particular contract involved in it, the contract is, or is not, such that the appropriate standard of diligence must be very high, if not the highest
unreasonable.53 degree of diligence.63

In cases where an employee assails a contract containing a provision prohibiting him We are not impervious of the distinction between restrictive covenants barring an
or her from accepting competitive employment as against public policy, the employer employee to accept a post-employment competitive employment or restraint on trade
has to adduce evidence to prove that the restriction is reasonable and not greater than in employment contracts and restraints on post-retirement competitive employment in
necessary to protect the employer’s legitimate business interests. 54 The restraint may pension and retirement plans either incorporated in employment contracts or in
not be unduly harsh or oppressive in curtailing the employee’s legitimate efforts to earn collective bargaining agreements between the employer and the union of employees,
a livelihood and must be reasonable in light of sound public policy. 55 or separate from said contracts or collective bargaining agreements which provide that
an employee who accepts post retirement competitive employment will forfeit
retirement and other benefits or will be obliged to restitute the same to the employer.
Courts should carefully scrutinize all contracts limiting a man’s natural right to follow The strong weight of authority is that forfeitures for engaging in subsequent competitive
any trade or profession anywhere he pleases and in any lawful manner. But it is just as employment included in pension and retirement plans are valid even though
important to protect the enjoyment of an establishment in trade or profession, which its unrestricted in time or geography. The raison d’etre is explained by the United States
employer has built up by his own honest application to every day duty and the faithful Circuit Court of Appeals in Rochester Corporation v. W.L. Rochester, Jr.:64
performance of the tasks which every day imposes upon the ordinary man. What one
creates by his own labor is his. Public policy does not intend that another than the
producer shall reap the fruits of labor; rather, it gives to him who labors the right by x x x The authorities, though, generally draw a clear and obvious distinction between
every legitimate means to protect the fruits of his labor and secure the enjoyment of restraints on competitive employment in employment contracts and in pension plans.
them to himself.56 Freedom to contract must not be unreasonably abridged. Neither The strong weight of authority holds that forfeitures for engaging in subsequent
must the right to protect by reasonable restrictions that which a man by industry, skill competitive employment, included in pension retirement plans, are valid, even though
and good judgment has built up, be denied.57 unrestricted in time or geography. The reasoning behind this conclusion is that the
forfeiture, unlike the restraint included in the employment contract, is not a prohibition
on the employee’s engaging in competitive work but is merely a denial of the right to
The Court reiterates that the determination of reasonableness is made on the particular participate in the retirement plan if he does so engage. A leading case on this point is
facts and circumstances of each case.58 In Esmerson Electric Co. v. Rogers,59 it was Van Pelt v. Berefco, Inc., supra, 208 N.E.2d at p. 865, where, in passing on a forfeiture
held that the question of reasonableness of a restraint requires a thorough provision similar to that here, the Court said:
consideration of surrounding circumstances, including the subject matter of the
contract, the purpose to be served, the determination of the parties, the extent of the
restraint and the specialization of the business of the employer. The court has to "A restriction in the contract which does not preclude the employee from engaging in
consider whether its enforcement will be injurious to the public or cause undue competitive activity, but simply provides for the loss of rights or privileges if he does so
hardships to the employee, and whether the restraint imposed is greater than is not in restraint of trade." (emphasis added)65
necessary to protect the employer. Thus, the court must have before it evidence relating
to the legitimate interests of the employer which might be protected in terms of time, A post-retirement competitive employment restriction is designed to protect the
space and the types of activity proscribed.60 employer against competition by former employees who may retire and obtain
retirement or pension benefits and, at the same time, engage in competitive
Consideration must be given to the employee’s right to earn a living and to his ability to employment.66
determine with certainty the area within which his employment ban is restituted. A
provision on territorial limitation is necessary to guide an employee of what constitutes We have reviewed the Undertaking which respondent impelled petitioner to sign, and
as violation of a restrictive covenant and whether the geographic scope is co-extensive find that in case of failure to comply with the promise not to accept competitive
with that in which the employer is doing business. In considering a territorial restriction, employment within one year from February 28, 1995, respondent will have a cause of
the facts and circumstances surrounding the case must be considered.61 action against petitioner for "protection in the courts of law." The words "cause of action
for protection in the courts of law" are so broad and comprehensive, that they may also
include a cause of action for prohibitory and mandatory injunction against petitioner,
specific performance plus damages, or a damage suit (for actual, moral and/or
exemplary damages), all inclusive of the restitution of the P963,619.28 which petitioner
received from respondent. The Undertaking and the Release, Waiver and Quitclaim do
not provide for the automatic forfeiture of the benefits petitioner received under the SRP
upon his breach of said deeds. Thus, the post-retirement competitive employment ban
incorporated in the Undertaking of respondent does not, on its face, appear to be of the
same class or genre as that contemplated in Rochester.

It is settled that actual damages or compensatory damages may be awarded for breach
of contracts. Actual damages are primarily intended to simply make good or replace
the loss covered by said breach.67 They cannot be presumed. Even if petitioner had
admitted to having breached the Undertaking, respondent must still prove that it
suffered damages and the amount thereof.68 In determining the amount of actual
damages, the Court cannot rely on mere assertions, speculations, conjectures or
guesswork but must depend on competent proof and on the best evidence obtainable
regarding the actual amount of losses.69 The benefit to be derived from a contract which
one of the parties has absolutely failed to perform is of necessity to some extent a
matter of speculation of the injured party.

On the assumption that the competitive employment ban in the Undertaking is valid,
petitioner is not automatically entitled to return the P963,619.28 he received from
respondent. To reiterate, the terms of the Undertaking clearly state that any breach by
petitioner of his promise would entitle respondent to a cause of action for protection in
the courts of law; as such, restitution of the P963,619.28 will not follow as a matter of
course. Respondent is still burdened to prove its entitlement to the aforesaid amount
by producing the best evidence of which its case is susceptible. 70

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the
Court of Appeals in CA-G.R. CV No. 52235 is SET ASIDE. Let this case be
REMANDED to the Regional Trial Court of Manila for further proceedings conformably
with this decision of the Court.

SO ORDERED.
G.R. No. 162957 March 6, 2006 a member of his (Guerrero’s) immediate family. The matter was brought to Voluntary
Arbitrator Danilo Lorredo who ruled that Guerrero’s nephew should be employed as his
UNITED KIMBERLY-CLARK EMPLOYEES UNION – PHILIPPINE TRANSPORT replacement in accordance with the CBA. KCPI brought the matter to the Court. On
GENERAL WORKERS’ ORGANIZATION (UKCEU-PTGWO), Petitioner, September 21, 1993, the Court affirmed the ruling of the VA in Kimberly Clark
vs. Philippines v. Lorredo,5 where it was held that:
KIMBERLY – CLARK PHILIPPINES, INC., Respondent.
As we see it, the phrase "in default thereof" has not been intended or contemplated by
DECISION the parties as having a preclusive effect within the group. It simply sets a priority on
who can possibly be recommendees for employment. The employee, in fine, need not
be childless at all for him to be allowed to nominate a third degree collateral relative;
CALLEJO, SR., J.: otherwise, his ability to designate such relative is all but suddenly lost by the birth of an
only child and regained by the latter's demise. This situation could not have been
Before the Court is a Petition for Review on Certiorari of the Decision 1 of the Court of intended.6
Appeals (CA) which partially reversed and set aside the March 19, 2001 Resolution 2 of
the Voluntary Arbitrator (VA). However, the Court also ruled that KCPI was not obliged to unconditionally accept the
recommendee since the latter must still meet the required employment standard
Following are the factual antecedents: theretofore set by it. Even a qualified recommendee would be hired only on a
"probationary status." As such, KCPI was not left without its own safeguards under the
United Kimberly-Clark Employees Union (UKCEU), a local chapter affiliate of the agreement.7
Philippine Transport General Workers’ Organization (PTGWO), is the certified
collective bargaining agent of all rank-and-file employees of the San Pedro milling plant On November 7, 1995, KCPI issued Guidelines on the Hiring of Replacements of
of Kimberly-Clark Philippines, Inc. (KCPI), a multinational corporation engaged in the Retired/Resigned Employees8 for the effective implementation of Article XX, Section 1
manufacture of bathroom and facial tissues, paper napkins, feminine care products, of the existing CBA, to take effect on January 1, 1996. The Guidelines require, among
disposable diapers and absorbent cotton. others, that: (a) such recommendees must be at least 18 years of age but not more
than 30 years old at the time of the hiring, and (b) have completed, after graduating
Way back in 1980, KCPI and the UKCEU executed a Collective Bargaining Agreement from high school, at least a two-year technical/vocational course or a third year level of
(CBA). Article XX, Section 1 of the CBA reads: college education. Moreover, where both husband and wife are employees of the
company, they shall be treated as one family; hence, only one of the spouses would be
allowed to avail of the benefit.9
Section 1. The Company agrees to employ, regardless of sex, the immediate member
of the family of an employee provided qualified, upon the employee's resignation,
retirement, disability or death. In case of resignation, however, employment of an UKCEU, through its President, Reynaldo B. Hermoso, requested for a grievance
immediate member of the family of an employee may be allowed provided the meeting, which was held on November 22, 1995. 10 During the meeting, UKCEU
employee has rendered a service of ten (10) years and above and the resignation is specifically requested the deferment of the implementation of the Guidelines until
not a forced resignation. For the purpose of this section, the phrase "immediate member January 1, 1997, after the next CBA negotiations in 1997 during which the matter will
of the family of an employee" shall refer to the employee's legitimate children and in be taken up. KCPI agreed to postpone the implementation of the Guidelines until
default thereof to the employee's collateral relative within the third civil degree. The January 1, 1997 but only with respect to the educational qualification. 11
recommendee of the retired/resigned employee shall, if qualified, be hired on
probationary status. (Emphasis added)3 During the negotiation for the 1997 CBA, UKCEU proposed the amendment of Article
XX, Section 1 of the existing CBA. After the negotiation, KCPI and UKCEU executed a
However, KCPI did not set any other employment qualifying standards for the CBA to cover the period from July 1, 1997 to June 30, 1999. The educational
recommendees of retired, resigned, deceased or disabled employees and agreed to qualifications contained in the Guidelines prepared and issued by KCPI were not
hire such recommendees who were high school graduates as an act of liberality and incorporated in the CBA. Neither were the proposed amendment of UKCEU. Article XX,
generosity. The provision remained unchanged.4 Through the years, several UKCEU Section 1 of the preceding CBA was retained without any modification. 12 KCPI
members who resigned or were disabled availed of the said benefits and recommended continued to hire employees pursuant to the CBA up to 1998. It had employed 44
their successors. Although such recommendees were merely high school graduates, employees from 1995 to 1998.13
KCPI nonetheless employed them.
However, in the second half of 1998, KCPI started to suspend the implementation of
Sometime in 1991, Danilo L. Guerrero retired and recommended his nephew as his the CBA. This was partly due to the depressed economic conditions then prevailing in
replacement. KCPI rejected Guerrero’s recommendation because his nephew was not the Philippines, and in compliance with the freeze hiring policy of its Asia-Pacific
headquarters.14 It refused to hire, as regular employees, 80 recommendees of retiring
employees.15 KCPI and UKCEU failed to settle the matter through the existing upgraded educational qualifications under the November 7, 1995 Guidelines were
grievance machinery. never brought up by UKCEU, and were never discussed during the 1997 CBA
negotiations. It asserted, however, that it was justified to temporarily suspend the
On April 23, 1999, the parties filed before the National Conciliation and Mediation Board implementation because the freeze hiring policy of its Asia-Pacific headquarters had
(NCMB), a Submission Agreement referring to arbitration the issue of whether KCPI affected both existing and new regular positions in the company. It pointed out that, in
violated Article XX, Section 1 of the CBA. The parties agreed not to appeal any order to enforce the CBA provision, it normally fills up two regular positions because
resolution/decision of the VA.16 the recommendee of a union member who resigns, retires, dies or is disabled does not
usually possess the same qualifications and skills of his/her predecessor. KCPI averred
that it never anticipated this undue burden and was not in a position to sustain the
Meantime, in August 1999, KCPI and UKCEU executed a new CBA. Article XX, Section practice, considering the lower volume in sales and a reduction in the number of
1 of the preceding CBA was incorporated in the new CBA, governing the relation of the working days in some areas of its operations.
parties up to June 30, 2002.17
With respect to spouses who are both employed in KCPI, it was maintained that the
UKCEU averred in its pleadings that the "qualification in terms of education," that is, policy regarding the availment of their benefits had always been consistent since 1980:
admitting recommendees who were at least high school graduates, had been an only one of the spouses is entitled thereto, like the CBA provisions on the employees’
established practice of KCPI since 1980. They appended to their position paper as medical and funeral benefits. It pointed out that at the time Article XX, Section 1 was
Annexes "A," "A-1" to "A-5" thereof, a list of such recommendees who were hired by adopted, there was already an existing policy in KCPI prohibiting the hiring of a relative
KCPI.18 This being the case, KCPI could not just unilaterally revoke such practice of an employee within the fourth civil degree of consanguinity or affinity. Thus, if the
without its (UKCEU) consent and approval. UKCEU explained that while KCPI, in interpretation of UKCEU would be considered, an unwarranted and anomalous
general, had the discretion to raise the educational qualification of its applicants for situation would result, since children of spouses who are both employed in the company
employment, this did not apply to recommendees due to the manner by which Article fall within the second degree of consanguinity. Moreover, spouses should be treated
XX, Section 1 was implemented in the past. UKCEU emphasized that its benefits had as one family, much like the tax treatment on the claim for additional dependents. KCPI
already been institutionalized in the CBAs executed by the parties through the years. stressed that, as stated in the guidelines, the rationale for the policy is to maintain
Thus, in refusing to hire the 80 recommendees as regular employees, KCPI violated its fairness and equality since the intended or actual beneficiary is the child of an
CBA with the union,19 equivalent to breach of contract and unfair labor practice. It was employee.
further pointed out that contrary to its claim that KCPI was implementing a freeze hiring
policy, KCPI even hired more or less 400 casuals, most of whom were only high school
graduates who performed activities necessary and desirable to KCPI’s regular and On May 8, 1999, the VA visited the premises of KCPI with prior notice to the parties,
usual business. They averred that the hiring of such employees was continuous, and and discovered that KCPI employed casuals who performed the work of certain regular
on a five-month contract without extension or rehiring. UKCEU insisted that it was not employees covered by the CBA.20
estopped to question the move to "upgrade the academic standards" of
recommendees, and that KCPI should have indicated its counter-proposal during the On March 19, 2001, the VA issued a Resolution in favor of UKCEU. The dispositive
1997 and 1999 CBA negotiations. Since KCPI preferred to retain Article XX, Section 1 portion of the resolution reads:
where the dispute and ambiguity developed, the union opined that such provision
should be strictly construed against the company. WHEREFORE, premises considered, this Voluntary Arbitrator, finds that (a) the
Company cannot suspend implementation of Section 1, Article XX of the existing CBA
UKCEU averred that either the husband or wife had the "right of replacement," and to unilaterally by upgrading the educational qualifications of "applicants-replacements"
the benefits offered by Article XX, Section 1; to deny them the right would be a clear than are required previously, and (b) the husband and the wife, under the said
discrimination and violation of the CBA, since both are paying members of union dues provision, are each entitled separately to recommend an applicant-replacement.
and individually vote for any policy determination.
SO ORDERED.21
In its pleadings, KCPI maintained that pursuant to its management prerogative, it had
the right to determine hiring standards under Article XX, Section 1 of the CBA without The VA ruled that since the CBA is the law between the parties, KCPI could not just
the consent or approval of UKCEU. It argued that like applicants for regular positions, unilaterally change or suspend the implementation of the existing employment
recommendees of retiring employees must also be college graduates, in accordance requirements, even in the light of the business situation then prevailing in the
with its November 7, 1995 Guidelines. It explained that such recommendees are Philippines. Moreover, an unambiguous CBA provision must be interpreted according
applying for regular positions and not as casual, who are hired on a temporary basis. to its literal meaning and not beyond the parties' actual intendment, and, in case of
KCPI averred that the employment educational standards in the Guidelines it issued on doubts, the same should be resolved in favor of labor. The VA declared that
November 7, 1995 took effect on January 1, 1997 and that after its implementation was management prerogative does not give license to a company to set aside or ignore
deferred, the union did not take any action. Hence, UKCEU was estopped from what had been agreed upon through negotiation. According to the VA, since KCPI failed
questioning the implementation of Article XX, Section 1 in the 1999 CBA. In fact, such to explain why it continued to hire casual workers doing the jobs of regular employees,
it failed to substantiate its contention that the economic crisis did not warrant the hiring upon an employee's death, disability, retirement or voluntary resignation. However, as
of regular employees.22 to whether spouses employed by petitioner may separately recommend a replacement,
the CA affirmed the observation of the VA that the provision was literally made to apply
As to the applicability of Article XX, Section 1 to spouses employed by KCPI, the VA to "all" employees, and does not mean that only one of the spouses may avail of said
referred to Article I of the CBA, which provides that the Agreement covers all regular benefit.29
rank-and-file employees. Had the intention of the parties been to grant husband and
wife employees the privilege of recommending only one applicant-replacement, it The CA rejected the claim of KCPI that it (the court) should take judicial notice of the
should have been stated in unequivocal terms.23 adverse effects of the Asian economic crisis to the operation of its business in the
Philippines. As in the case of retrenchment, it was ruled that the company must still
KCPI assailed the decision of the VA via petition for review24 before the CA. It alleged prove financial distress by sufficient and convincing evidence. Moreover, the CA held
that: that for the theory of rebus sic stantibus to apply, it must be shown that the economic
crisis made it extremely difficult for the company to comply with Article XX, Section 1 of
the CBA, and that the change in the circumstances of the parties must be one which
A. Contrary to the ruling of the Honorable Voluntary Arbitrator, petitioner may validly could not be foreseen at the time the contract was executed.30
suspend the implementation of Section 1, Article XX, by reason of economic difficulty.
Only UKCEU moved for a partial reconsideration of the CA Decision with respect to its
B. Contrary to the ruling of the Honorable Voluntary Arbitrator, law and jurisprudence ruling on the upgraded educational qualification of the recommendees. 31 The CA
[recognize] management's prerogative to set the qualifications for [the] hiring of denied the motion in a Resolution32 dated March 23, 2004.
employees, including those hired as replacements under Section 1, Article XX.
UKCEU, now petitioner, seeks relief from this Court in the instant petition.
C. Contrary to the ruling of the Honorable Voluntary Arbitrator, reasonable application
of statutory and contractual interpretation supports only one conclusion - that, in case
of both spouses being KCPI employees, only one of them may avail himself or herself The issue in this case is whether or not the CA erred in ruling that, under Article XX,
of the benefits of Section 1, Article XX.25 Section 1 of the 1997 CBA, respondent is required to hire only those recommendees
of retired/resigned, deceased or disabled members of petitioner who had completed at
least a two-year technical/vocational course or a third-year level of college education.
On July 23, 2003, the CA partially set aside the Resolution of the VA.26 The fallo of the This is anchored on the resolution of the issue of whether the November 7, 1995
decision reads: Guidelines issued by respondent took effect on January 1, 1997.

WHEREFORE, the petition is PARTIALLY GRANTED, and the Resolution of Voluntary Petitioner avers that the CA erred in holding that, under Article XX, Section 1 of the
Arbitrator Jose A. Cabatuando, Jr. dated March 19, 2001 is PARTIALLY REVERSED 1997 CBA and the ruling of this Court in Kimberly Clark Philippines v. Lorredo,
AND SET ASIDE. Petitioner may not suspend the implementation of Section 1, Article respondent is required to hire recommendees of retired/resigned, deceased or disabled
XX of the Collective Bargaining Agreement on account of alleged economic distress. employees who possess the educational qualification standards for employees
Petitioner, however, may require that recommendees under the said provision must contained in the November 7, 1995 Guidelines issued by respondent.
have completed at least a two-year technical/vocational course or reached the third
year of any college-level course, as a valid exercise of management prerogative. And
when spouses are both employed by petitioner, each may recommend a replacement Petitioner asserts that the employment qualification standards in Article XX, Section 1
in case of his death, disability, retirement or voluntary resignation pursuant to Section of the CBA requiring the recommendees to be at least high school graduates is contrary
1, Article XX of the Collective Bargaining Agreement. to the practice that had been followed by respondent since 1980 up to 1998. Petitioner
further avers that such practice, which had been established by respondent in
implementing the CBA, cannot be unilaterally revoked by it. Petitioner argues that to
SO ORDERED.27 allow respondent to set higher educational standards for employment of such
recommendees is to render nugatory the right granted to them under the CBA and
The CA ruled that KCPI may validly exercise its management prerogative and impose would defeat the ruling of the Court in Kimberly Clark Philippines v. Lorredo. Petitioner
the requirement that recommendees should have at least completed a two-year avers that 70% of the employees of respondent are mere high school graduates who
technical/vocational course or reached the third year of any college-level course. While did not finish any technical or vocational course. This, notwithstanding, respondent had
the right of KCPI to set hiring standards for recommendees under the disputed provision a profit of P527,000,000.00 in 1999. Petitioner stresses that the exercise of
of the CBA is apparent in the ruling of the Court in Kimberly Clark Philippines v. management prerogative must be circumscribed by the CBA of the parties.
Lorredo,28 the CA concluded that the right of retired, resigned, disabled or deceased
employees to recommend their replacements is not absolute. It emphasized that the For its part, respondent maintains that under Article XX, Section 1 of its CBA with
recommendees must still meet the standard set by petitioner. The CA further opined petitioner, a recommendee of retired/resigned, deceased or disabled members of
that Article XX, Section 1 is not an inheritance the right to which attaches immediately
petitioner must also be qualified for the position. Respondent also invokes Kimberly 7. It is contrary to public policy.40
Clark Philippines v. Lorredo, insisting that the Court ruled therein that such
recommendees must meet the employment standards set by respondent; conformably A CBA is more than a contract; it is a generalized code to govern a myriad of cases
with such ruling, it issued said Guidelines on November 7, 1995. Thus, it is not which the draftsmen cannot wholly anticipate. It covers the whole employment
proscribed from setting out higher qualification standards for said recommendees, such relationship and prescribes the rights and duties of the parties. It is a system of
as those set forth in said Guidelines. Contrary to petitioner’s claim of employing industrial self-government with the grievance machinery at the very heart of the
recommendees who were only high school graduates, was not an established practice, system.41 The parties solve their problems by molding a system of private law for all
as its policy had always been to hire college graduates for regular employment. Finally, the problems which may arise and to provide for their solution in a way which will
respondent avers that the implementation of qualifications for the recommendees is a generally accord with the variant needs and desires of the parties.
valid exercise of its management prerogative.
If the terms of a CBA are clear and have no doubt upon the intention of the contracting
Respondent also points out during their 1997 CBA negotiations, petitioner proposed parties, the literal meaning of its stipulation shall prevail.42 However, if, in a CBA, the
the following revisions of Article XX, Section 1: parties stipulate that the hirees must be presumed of employment qualification
standards but fail to state such qualification standards in said CBA, the VA may resort
Section 1. A replacement of a deceased employee or recommendee of a retiring or to evidence extrinsic of the CBA to determine the full agreement intended by the parties.
resigning employee with at least 10 years of service, when at least High School When a CBA may be expected to speak on a matter, but does not, its sentence imports
Graduate and able bodied, shall be hired by the Company as Trainee for the first six ambiguity on that subject.43 The VA is not merely to rely on the cold and cryptic words
(6) months, and then probationary employee to a permanent position and if passed to on the face of the CBA but is mandated to discover the intention of the parties.
qualifications made known to him shall be hired as a regular employee of the Company. Recognizing the inability of the parties to anticipate or address all future problems, gaps
Recommendee entitled to this right shall be limited to up to the third civil degree only.33 may be left to be filled in by reference to the practices of the industry, and the step
which is equally a part of the CBA although not expressed in it. 44 In order to ascertain
However, said proposal was not incorporated in the CBA of the parties since by then, the intention of the contracting parties, their contemporaneous and subsequent acts
the November 7, 1995 Guidelines had already taken effect. shall be principally considered.45 The VA may also consider and rely upon negotiating
and contractual history of the parties, evidence of past practices interpreting ambiguous
provisions. The VA has to examine such practices to determine the scope of their
We rule against petitioner. agreement,46 as where the provision of the CBA has been loosely
formulated.47 Moreover, the CBA must be construed liberally rather than narrowly and
As a general proposition, an arbitrator is confined to the interpretation and application technically and the Court must place a practical and realistic construction upon it.
of the collective bargaining agreement. He does not sit to dispense his own brand of
industrial justice: his award is legitimate only in so far as it draws its essence from the In the present case, the parties are in agreement that, on its face, Article XX, Section 1
CBA,34 i.e., when there is a rational nexus between the award and the CBA under of their 1997 CBA does not contain any provision relative to the employment
consideration.35 It is said that an arbitral award does not draw its essence from the qualification standards of recommendees of retired/resigned, deceased or disabled
CBA; hence, there is an unauthorized amendment or alteration thereof, if: employees of respondent who are members of petitioner. However, in determining the
employment qualification standards for said recommendees, the VA should have relied
1. It is so unfounded in reason and fact; on the November 7, 1995 Guidelines issued by respondent, which reads:

2. It is so unconnected with the working and purpose of the agreement; D. Definition of the phrase "immediate member of the family of an employee"

3. It is without factual support in view of its language, its context, and any other 1. The phrase "immediate member of the family of an employee" shall refer to
indicia of the parties' intention;36 the employee’s legitimate children and in default thereof to the employee’s
collateral relatives within the third civil degree.
4. It ignores or abandons the plain language of the contract; 37
2. A resigned/retired employee may be allowed to recommend a collateral
5. It is mistakenly based on a crucial assumption which concededly is a relative within the third civil degree (e.g., brother, sister, nephew or niece) as
nonfact;38 his/her replacement only in the following cases:

6. It is unlawful, arbitrary or capricious;39 and a. Where the retired/resigned employee is single or if married has no
legitimate children.
 b. Where the retired/resigned employee’s children are still minors employer’s interest and not for the purpose of defeating or circumventing the rights of
(below 18 years old) at the time of his/her separation from the the employees under special laws, valid agreements such as the individual contract of
company. (Emphasis added) employment and the collective bargaining agreement, and general principles of justice
and fair play.49 In this case, the Court finds that respondent acted in accord with the
E. General Provisions CBA and the November 7, 1995 Guidelines, which, by agreement of the parties, may
be implemented by respondent after January 1, 1997.
1. The privilege to recommend a replacement can be exercised by the
employee concerned only once. Thus, in the following cases, a recommendee IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs
who has been hired on probationary status can no longer be substituted with against petitioner.
another recommendee.
SO ORDERED.
a. where the recommendee fails to pass in his performance
evaluation.

b. where the recommendee resigns without completing his

probationary period.

c. where the recommendee is dismissed for cause.

d. where the recommendee dies during his probationary period. 48

Respondent issued said Guidelines in light of the ruling of this Court in Kimberly Clark
Philippines v. Lorredo. Respondent saw it imperative to do away with its practice of
accommodating recommendees who were mere high school graduates, and to require
higher employment standards for them.

By agreement of the parties, the implementation of the Guidelines was deferred until
January 1, 1997, unless revoked or amended by the 1997 CBA. Petitioner proposed
that the practice of hiring recommendees of retired/resigned, deceased or disabled
employees who were union members, who were at least high school graduates, be
included in their CBA, but respondent did not agree. Hence, Article XX, Section 1 of the
1997 CBA of the parties remained intact. There was thus no more legal bar for
respondent to implement the November 7, 1995 Guidelines. By executing the 1997
CBA, in its present form, petitioner is bound by the terms and conditions therein set
forth.

The VA, however, ignored the plain language of the 1997 CBA of the parties, as well
as the Guidelines issued by respondent. He capriciously based his resolution on the
respondent’s practice of hiring which, however, by agreement of petitioner and
respondent, was discontinued.

The Court has recognized in numerous instances the undoubted right of the employer
to regulate, according to his own discretion and best judgment, all aspects of
employment, including but not limited to, work assignments and supervision, working
methods and regulations, time, place and manner of work, processes to be followed,
and hiring, supervision, transfer, discipline, lay off, dismissal and recall of workers.
Encompassing though it could be, the exercise of this right is not absolute.
Management prerogative must be exercised in good faith for the advancement of the
G.R. No. 162994 September 17, 2004 Even before they got married, Tecson received several reminders from his District
Manager regarding the conflict of interest which his relationship with Bettsy might
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. engender. Still, love prevailed, and Tecson married Bettsy in September 1998.
TECSON, petitioners,
vs. In January 1999, Tecson’s superiors informed him that his marriage to Bettsy gave rise
GLAXO WELLCOME PHILIPPINES, INC., Respondent. to a conflict of interest. Tecson’s superiors reminded him that he and Bettsy should
decide which one of them would resign from their jobs, although they told him that they
RESOLUTION wanted to retain him as much as possible because he was performing his job well.

TINGA, J.: Tecson requested for time to comply with the company policy against entering into a
relationship with an employee of a competitor company. He explained that Astra,
Bettsy’s employer, was planning to merge with Zeneca, another drug company; and
Confronting the Court in this petition is a novel question, with constitutional overtones, Bettsy was planning to avail of the redundancy package to be offered by Astra. With
involving the validity of the policy of a pharmaceutical company prohibiting its Bettsy’s separation from her company, the potential conflict of interest would be
employees from marrying employees of any competitor company. eliminated. At the same time, they would be able to avail of the attractive redundancy
package from Astra.
This is a Petition for Review on Certiorari assailing the Decision1 dated May 19, 2003
and the Resolution dated March 26, 2004 of the Court of Appeals in CA-G.R. SP No. In August 1999, Tecson again requested for more time resolve the problem. In
62434.2 September 1999, Tecson applied for a transfer in Glaxo’s milk division, thinking that
since Astra did not have a milk division, the potential conflict of interest would be
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome eliminated. His application was denied in view of Glaxo’s "least-movement-possible"
Philippines, Inc. (Glaxo) as medical representative on October 24, 1995, after Tecson policy.
had undergone training and orientation.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan
Thereafter, Tecson signed a contract of employment which stipulates, among others, del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his request was
that he agrees to study and abide by existing company rules; to disclose to denied.
management any existing or future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies and should management find Tecson sought Glaxo’s reconsideration regarding his transfer and brought the matter
that such relationship poses a possible conflict of interest, to resign from the company. to Glaxo’s Grievance Committee. Glaxo, however, remained firm in its decision and
gave Tescon until February 7, 2000 to comply with the transfer order. Tecson defied
The Employee Code of Conduct of Glaxo similarly provides that an employee is the transfer order and continued acting as medical representative in the Camarines
expected to inform management of any existing or future relationship by consanguinity Sur-Camarines Norte sales area.
or affinity with co-employees or employees of competing drug companies. If
management perceives a conflict of interest or a potential conflict between such During the pendency of the grievance proceedings, Tecson was paid his salary, but
relationship and the employee’s employment with the company, the management and was not issued samples of products which were competing with similar products
the employee will explore the possibility of a "transfer to another department in a non- manufactured by Astra. He was also not included in product conferences regarding
counterchecking position" or preparation for employment outside the company after six such products.
months.
Because the parties failed to resolve the issue at the grievance machinery level, they
Tecson was initially assigned to market Glaxo’s products in the Camarines Sur- submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay
Camarines Norte sales area. of one-half (½) month pay for every year of service, or a total of ₱50,000.00 but he
declined the offer. On November 15, 2000, the National Conciliation and Mediation
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Board (NCMB) rendered its Decision declaring as valid Glaxo’s policy on relationships
Astra Pharmaceuticals3 (Astra), a competitor of Glaxo. Bettsy was Astra’s Branch between its employees and persons employed with competitor companies, and
Coordinator in Albay. She supervised the district managers and medical affirming Glaxo’s right to transfer Tecson to another sales territory.
representatives of her company and prepared marketing strategies for Astra in that
area. Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the
NCMB Decision.
On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition According to Glaxo, Tecson’s marriage to Bettsy, an employee of Astra, posed a real
for Review on the ground that the NCMB did not err in rendering its Decision. The and potential conflict of interest. Astra’s products were in direct competition with 67%
appellate court held that Glaxo’s policy prohibiting its employees from having personal of the products sold by Glaxo. Hence, Glaxo’s enforcement of the foregoing policy in
relationships with employees of competitor companies is a valid exercise of its Tecson’s case was a valid exercise of its management prerogatives. 12 In any case,
management prerogatives.4 Tecson was given several months to remedy the situation, and was even encouraged
not to resign but to ask his wife to resign form Astra instead.13
Tecson filed a Motion for Reconsideration of the appellate court’s Decision, but the
motion was denied by the appellate court in its Resolution dated March 26, 2004.5 Glaxo also points out that Tecson can no longer question the assailed company policy
because when he signed his contract of employment, he was aware that such policy
Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred was stipulated therein. In said contract, he also agreed to resign from respondent if the
in affirming the NCMB’s finding that the Glaxo’s policy prohibiting its employees from management finds that his relationship with an employee of a competitor company
marrying an employee of a competitor company is valid; and (ii) the Court of Appeals would be detrimental to the interests of Glaxo.14
also erred in not finding that Tecson was constructively dismissed when he was
transferred to a new sales territory, and deprived of the opportunity to attend products Glaxo likewise insists that Tecson’s reassignment to another sales area and his
seminars and training sessions.6 exclusion from seminars regarding respondent’s new products did not amount to
constructive dismissal.
Petitioners contend that Glaxo’s policy against employees marrying employees of
competitor companies violates the equal protection clause of the Constitution because It claims that in view of Tecson’s refusal to resign, he was relocated from the Camarines
it creates invalid distinctions among employees on account only of marriage. They claim Sur-Camarines Norte sales area to the Butuan City-Surigao City and Agusan del Sur
that the policy restricts the employees’ right to marry.7 sales area. Glaxo asserts that in effecting the reassignment, it also considered the
welfare of Tecson’s family. Since Tecson’s hometown was in Agusan del Sur and his
They also argue that Tecson was constructively dismissed as shown by the following wife traces her roots to Butuan City, Glaxo assumed that his transfer from the Bicol
circumstances: (1) he was transferred from the Camarines Sur-Camarines Norte sales region to the Butuan City sales area would be favorable to him and his family as he
area to the Butuan-Surigao-Agusan sales area, (2) he suffered a diminution in pay, (3) would be relocating to a familiar territory and minimizing his travel expenses. 15
he was excluded from attending seminars and training sessions for medical
representatives, and (4) he was prohibited from promoting respondent’s products which In addition, Glaxo avers that Tecson’s exclusion from the seminar concerning the new
were competing with Astra’s products.8 anti-asthma drug was due to the fact that said product was in direct competition with a
drug which was soon to be sold by Astra, and hence, would pose a potential conflict of
In its Comment on the petition, Glaxo argues that the company policy prohibiting its interest for him. Lastly, the delay in Tecson’s receipt of his sales paraphernalia was due
employees from having a relationship with and/or marrying an employee of a competitor to the mix-up created by his refusal to transfer to the Butuan City sales area (his
company is a valid exercise of its management prerogatives and does not violate the paraphernalia was delivered to his new sales area instead of Naga City because the
equal protection clause; and that Tecson’s reassignment from the Camarines Norte- supplier thought he already transferred to Butuan).16
Camarines Sur sales area to the Butuan City-Surigao City and Agusan del Sur sales
area does not amount to constructive dismissal.9 The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals
erred in ruling that Glaxo’s policy against its employees marrying employees from
Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical competitor companies is valid, and in not holding that said policy violates the equal
products, it has a genuine interest in ensuring that its employees avoid any activity, protection clause of the Constitution; (2) Whether Tecson was constructively dismissed.
relationship or interest that may conflict with their responsibilities to the company. Thus,
it expects its employees to avoid having personal or family interests in any competitor The Court finds no merit in the petition.
company which may influence their actions and decisions and consequently deprive
Glaxo of legitimate profits. The policy is also aimed at preventing a competitor company The stipulation in Tecson’s contract of employment with Glaxo being questioned by
from gaining access to its secrets, procedures and policies. 10 petitioners provides:

It likewise asserts that the policy does not prohibit marriage per se but only proscribes …
existing or future relationships with employees of competitor companies, and is
therefore not violative of the equal protection clause. It maintains that considering the
nature of its business, the prohibition is based on valid grounds.11 10. You agree to disclose to management any existing or future relationship
you may have, either by consanguinity or affinity with co-employees or
employees of competing drug companies. Should it pose a possible conflict of
 interest in management discretion, you agree to resign voluntarily from the Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing
Company as a matter of Company policy. strategies and other confidential programs and information from competitors, especially
so that it and Astra are rival companies in the highly competitive pharmaceutical
…17 industry.

The same contract also stipulates that Tescon agrees to abide by the existing company The prohibition against personal or marital relationships with employees of competitor
rules of Glaxo, and to study and become acquainted with such policies. 18 In this regard, companies upon Glaxo’s employees is reasonable under the circumstances because
the Employee Handbook of Glaxo expressly informs its employees of its rules regarding relationships of that nature might compromise the interests of the company. In laying
conflict of interest: down the assailed company policy, Glaxo only aims to protect its interests against the
possibility that a competitor company will gain access to its secrets and procedures.
1. Conflict of Interest
That Glaxo possesses the right to protect its economic interests cannot be denied. No
less than the Constitution recognizes the right of enterprises to adopt and enforce such
Employees should avoid any activity, investment relationship, or interest that a policy to protect its right to reasonable returns on investments and to expansion and
may run counter to the responsibilities which they owe Glaxo Wellcome. growth.20 Indeed, while our laws endeavor to give life to the constitutional policy on
social justice and the protection of labor, it does not mean that every labor dispute will
Specifically, this means that employees are expected: be decided in favor of the workers. The law also recognizes that management has rights
which are also entitled to respect and enforcement in the interest of fair play.21
a. To avoid having personal or family interest, financial or otherwise,
in any competitor supplier or other businesses which may As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard
consciously or unconsciously influence their actions or decisions and business confidentiality and protect a competitive position by even-handedly
thus deprive Glaxo Wellcome of legitimate profit. disqualifying from jobs male and female applicants or employees who are married to a
competitor. Consequently, the court ruled than an employer that discharged an
b. To refrain from using their position in Glaxo Wellcome or employee who was married to an employee of an active competitor did not violate Title
knowledge of Company plans to advance their outside personal VII of the Civil Rights Act of 1964.23 The Court pointed out that the policy was applied
interests, that of their relatives, friends and other businesses. to men and women equally, and noted that the employer’s business was highly
competitive and that gaining inside information would constitute a competitive
advantage.
c. To avoid outside employment or other interests for income which
would impair their effective job performance.
The challenged company policy does not violate the equal protection clause of the
Constitution as petitioners erroneously suggest. It is a settled principle that the
d. To consult with Management on such activities or relationships commands of the equal protection clause are addressed only to the state or those
that may lead to conflict of interest. acting under color of its authority.24 Corollarily, it has been held in a long array of U.S.
Supreme Court decisions that the equal protection clause erects no shield against
1.1. Employee Relationships merely private conduct, however, discriminatory or wrongful. 25 The only exception
occurs when the state29 in any of its manifestations or actions has been found to have
become entwined or involved in the wrongful private conduct. 27 Obviously, however,
Employees with existing or future relationships either by consanguinity or
the exception is not present in this case. Significantly, the company actually enforced
affinity with co-employees of competing drug companies are expected to
the policy after repeated requests to the employee to comply with the policy. Indeed,
disclose such relationship to the Management. If management perceives a
the application of the policy was made in an impartial and even-handed manner, with
conflict or potential conflict of interest, every effort shall be made, together by
due regard for the lot of the employee.
management and the employee, to arrive at a solution within six (6) months,
either by transfer to another department in a non-counter checking position,
or by career preparation toward outside employment after Glaxo Wellcome. In any event, from the wordings of the contractual provision and the policy in its
Employees must be prepared for possible resignation within six (6) months, if employee handbook, it is clear that Glaxo does not impose an absolute prohibition
no other solution is feasible.19 against relationships between its employees and those of competitor companies. Its
employees are free to cultivate relationships with and marry persons of their own
choosing. What the company merely seeks to avoid is a conflict of interest between the
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s
employee and the company that may arise out of such relationships. As succinctly
policy prohibiting an employee from having a relationship with an employee of a
explained by the appellate court, thus:
competitor company is a valid exercise of management prerogative.
 The policy being questioned is not a policy against marriage. An employee of company for illegal dismissal for allegedly terminating his employment when he refused
the company remains free to marry anyone of his or her choosing. The policy to accept his reassignment to a new area, the Court upheld the right of the drug
is not aimed at restricting a personal prerogative that belongs only to the company to transfer or reassign its employee in accordance with its operational
individual. However, an employee’s personal decision does not detract the demands and requirements. The ruling of the Court therein, quoted hereunder, also
employer from exercising management prerogatives to ensure maximum finds application in the instant case:
profit and business success. . .28
By the very nature of his employment, a drug salesman or medical
The Court of Appeals also correctly noted that the assailed company policy which forms representative is expected to travel. He should anticipate reassignment
part of respondent’s Employee Code of Conduct and of its contracts with its employees, according to the demands of their business. It would be a poor drug
such as that signed by Tescon, was made known to him prior to his employment. corporation which cannot even assign its representatives or detail men to new
Tecson, therefore, was aware of that restriction when he signed his employment markets calling for opening or expansion or to areas where the need for
contract and when he entered into a relationship with Bettsy. Since Tecson knowingly pushing its products is great. More so if such reassignments are part of the
and voluntarily entered into a contract of employment with Glaxo, the stipulations employment contract.33
therein have the force of law between them and, thus, should be complied with in good
faith."29 He is therefore estopped from questioning said policy. As noted earlier, the challenged policy has been implemented by Glaxo impartially and
disinterestedly for a long period of time. In the case at bar, the record shows that Glaxo
The Court finds no merit in petitioners’ contention that Tescon was constructively gave Tecson several chances to eliminate the conflict of interest brought about by his
dismissed when he was transferred from the Camarines Norte-Camarines Sur sales relationship with Bettsy. When their relationship was still in its initial stage, Tecson’s
area to the Butuan City-Surigao City-Agusan del Sur sales area, and when he was supervisors at Glaxo constantly reminded him about its effects on his employment with
excluded from attending the company’s seminar on new products which were directly the company and on the company’s interests. After Tecson married Bettsy, Glaxo gave
competing with similar products manufactured by Astra. Constructive dismissal is him time to resolve the conflict by either resigning from the company or asking his wife
defined as a quitting, an involuntary resignation resorted to when continued to resign from Astra. Glaxo even expressed its desire to retain Tecson in its employ
employment becomes impossible, unreasonable, or unlikely; when there is a demotion because of his satisfactory performance and suggested that he ask Bettsy to resign
in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by from her company instead. Glaxo likewise acceded to his repeated requests for more
an employer becomes unbearable to the employee. 30 None of these conditions are time to resolve the conflict of interest. When the problem could not be resolved after
present in the instant case. The record does not show that Tescon was demoted or several years of waiting, Glaxo was constrained to reassign Tecson to a sales area
unduly discriminated upon by reason of such transfer. As found by the appellate court, different from that handled by his wife for Astra. Notably, the Court did not terminate
Glaxo properly exercised its management prerogative in reassigning Tecson to the Tecson from employment but only reassigned him to another area where his home
Butuan City sales area: province, Agusan del Sur, was included. In effecting Tecson’s transfer, Glaxo even
considered the welfare of Tecson’s family. Clearly, the foregoing dispels any suspicion
. . . In this case, petitioner’s transfer to another place of assignment was of unfairness and bad faith on the part of Glaxo. 34
merely in keeping with the policy of the company in avoidance of conflict of
interest, and thus valid…Note that [Tecson’s] wife holds a sensitive WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.
supervisory position as Branch Coordinator in her employer-company which
requires her to work in close coordination with District Managers and Medical SO ORDERED.
Representatives. Her duties include monitoring sales of Astra products,
conducting sales drives, establishing and furthering relationship with
customers, collection, monitoring and managing Astra’s inventory…she
therefore takes an active participation in the market war characterized as it is
by stiff competition among pharmaceutical companies. Moreover, and this is
significant, petitioner’s sales territory covers Camarines Sur and Camarines
Norte while his wife is supervising a branch of her employer in Albay. The
proximity of their areas of responsibility, all in the same Bicol Region, renders
the conflict of interest not only possible, but actual, as learning by one spouse
of the other’s market strategies in the region would be inevitable.
[Management’s] appreciation of a conflict of interest is therefore not merely
illusory and wanting in factual basis…31

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,32 which

involved a complaint filed by a medical representative against his employer drug
G.R. No. 187417 All other charges and claims are hereby dismissed for lack of merit.

CHRISTINE JOY CAPIN-CADIZ, Petitioner, SO ORDERED.8

vs.
BRENT HOSPITAL AND COLLEGES, INC., Respondent. Cadiz appealed to the National Labor Relations Commission (NLRC), which affirmed
the LA decision in its Resolution9 dated December 10, 2007. Her motion for
DECISION reconsideration having been denied by the NLRC in its Resolution 10 dated February
29, 2008, Cadiz elevated her case to the CA on petition for certiorari under Rule 65.
REYES, J.:
Ruling of the CA
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing
the Resolutions dated July 22, 20082 and February 24, 20093 of the Court of Appeals The CA, however, dismissed her petition outright due to technical defects in the petition:
(CA) in CA-GR. SP No. 02373-MIN, which dismissed the petition filed by petitioner (1) incomplete statement of material dates; (2) failure to attach registry receipts; and
Christine Joy Capin-Cadiz (Cadiz) on the following grounds: (1) incomplete statement (3) failure to indicate the place of issue of counsel's PTR and IBP official
of material dates; (2) failure to attach registry receipts; and (3) failure to indicate the receipts. 11 Cadiz sought reconsideration of the assailed CA Resolution dated July 22,
place of issue of counsel's Professional Tax Receipt (PTR) and Integrated Bar of the 2008 but it was denied in the assailed Resolution dated February 24, 2009. 12 The CA
Philippines (IBP) official receipts. further ruled that "a perusal of the petition will reveal that public respondent NLRC
committed no grave abuse of discretion amounting to lack or excess of jurisdiction x x
Antecedent Facts x holding [Cadiz's] dismissal from employment valid." 13

Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges, Hence, the present petition.
Inc. (Brent) at the time of her indefinite suspension from employment in 2006. The
cause of suspension was Cadiz's Unprofessionalism and Unethical Behavior Resulting Cadiz argues that -
to Unwed Pregnancy. It appears that Cadiz became pregnant out of wedlock, and Brent
imposed the suspension until such time that she marries her boyfriend in accordance I
with law.
THE HONORABLE [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT HELD
Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice, THAT [CADIZ'S] IMPREGNATION OUTSIDE OF WEDLOCK IS A GROUND FOR THE
Constructive Dismissal, Non-Payment of Wages and Damages with prayer for TERMINATION OF [CADIZ'S] EMPLOYMENT14
Reinstatement.4
II
Ruling of the Labor Tribunals
THE [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT UPHELD THE
In its Decision5 dated April 12, 2007, the LA found that Cadiz's indefinite suspension DISMISSAL OF [CADIZ] ON THE GROUND THAT THE INDEFINITE SUSPENSION
amounted to a constructive dismissal; nevertheless, the LA ruled that Cadiz was not WAS VALID AND REQUIRED [CADIZ] TO FIRST ENTER INTO MARRIAGE BEFORE
illegally dismissed as there was just cause for her dismissal, that is, she engaged in SHE CAN BE ADMITTED BACK TO HER EMPLOYMENT15
premarital sexual relations with her boyfriend resulting in a pregnancy out of
wedlock. 6 The LA further stated that her "immoral conduct x x x [was] magnified as
serious misconduct not only by her getting pregnant as a result thereof before and III
without marriage, but more than that, also by the fact that Brent is an institution of the
Episcopal Church in the Philippines operating both a hospital and college where [Cadiz] RESPONDENT [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT DENIED
was employed."7 The LA also ruled that she was not entitled to reinstatement "at least [CADIZ'S] CLAIM FOR BACKWAGES, ALLOWANCES, SICK LEAVE PAY,
until she marries her boyfriend," to backwages and vacation/sick leave pay. Brent, MATERNITY PAY AND MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S
however, manifested that it was willing to pay her 13th month pay. The dispositive FEES 16
portion of the decision reads:
IV
WHEREFORE, judgment is hereby rendered, ordering [Brent] to pay [Cadiz] 13th month
pay in the sum of Seven Thousand Nine Hundred Seventy & 11/100 Pesos (P7,970.11).
THE [CA] MISPLACED APPLICATION OF THE MATERIAL DATA RULE RESULTING The CA also dismissed the petition for failure to attach the registry receipt in the affidavit
TO GRAVE ABUSE OF DISCRETION WHEN IT DISMISSED THE APPEAL17 of service.23 Cadiz points out, on the other hand, that the registry receipt number was
indicated in the petition and this constitutes substantial compliance with the
Cadiz contends, among others, that getting pregnant outside of wedlock is not grossly requirement. What the rule requires, however, is that the registry receipt must be
immoral, especially when both partners do not have any legal impediment to marry. appended to the paper being served.24 Clearly, mere indication of the registry receipt
Cadiz surmises that the reason for her suspension was not because of her relationship numbers will not suffice. In fact, the absence of the registry receipts amounts to lack of
with her then boyfriend but because of the resulting pregnancy. Cadiz also lambasts proof of service.25 Nevertheless, despite this defect, the Court finds that the ends of
Brent's condition for her reinstatement - that she gets married to her boyfriend - saying substantial justice would be better served by relaxing the application of technical rules
that this violates the stipulation against marriage under Article 136 of the Labor Code. of procedure. 26 With regard to counsel's failure to indicate the place where the IBP and
Finally, Cadiz contends that there was substantial compliance with the rules of PTR receipts were issued, there was substantial compliance with the requirement since
procedure, and the CA should not have dismissed the petition. 18 it was indicated in the verification and certification of non-forum shopping, as correctly
argued by Cadiz's lawyer. 27
Brent, meanwhile, adopts and reiterates its position before the LA and the NLRC that
Cadiz's arguments are irrational and out of context. Brent argues, among others, that Time and again, the Court has emphasized that rules of procedure are designed to
for Cadiz to limit acts of immorality only to extra-marital affairs is to "change the norms, secure substantial justice. These are mere tools to expedite the decision or resolution
beliefs, teachings and practices of BRENT as a Church institution of the x x x Episcopal of cases and if their strict and rigid application would frustrate rather than promote
Church in the Philippines." 19 substantial justice, then it must be avoided.28

Ruling of the Court Immorality as a just cause for

termination of employment
Ordinarily, the Court will simply gloss over the arguments raised by Cadiz, given that
the main matter dealt with by the CA were the infirmities found in the petition and which Both the LA and the NLRC upheld Cadiz's dismissal as one attended with just cause.
caused the dismissal of her case before it. In view, however, of the significance of the The LA, while ruling that Cadiz's indefinite suspension was tantamount to a constructive
issues involved in Cadiz's dismissal from employment, the Court will resolve the petition dismissal, nevertheless found that there was just cause for her dismissal. According to
including the substantial grounds raised herein. the LA, "there was just cause therefor, consisting in her engaging in premarital sexual
relations with Carl Cadiz, allegedly her boyfriend, resulting in her becoming pregnant
out of wedlock."29 The LA deemed said act to be immoral, which was punishable by
The issue to be resolved is whether the CA committed a reversible error in ruling that: dismissal under Brent's rules and which likewise constituted serious misconduct under
(1) Cadiz's petition is dismissible on ground of technical deficiencies; and (2) the NLRC Article 282(a) of the Labor Code. The LA also opined that since Cadiz was Brent's
did not commit grave abuse of discretion in upholding her dismissal from employment. Human Resource Officer in charge of implementing its rules against immoral conduct,
she should have been the "epitome of proper conduct." 30 The LA ruled:
Rules of procedure are mere tools
designed to facilitate the attainment [Cadiz's] immoral conduct by having premarital sexual relations with her alleged boy
of justice friend, a former Brent worker and her co-employee, is magnified as serious misconduct
not only by her getting pregnant as a result thereof before and without marriage, but
In dismissing outright Cadiz's petition, the CA found the following defects: (1) more than that, also by the fact that Brent is an institution of the Episcopal Church in
incomplete statement of material dates; (2) failure to attach registry receipts; and (3) the Philippines x x x committed to "developing competent and dedicated professionals
failure to indicate the place of issue of counsel's PTR and IBP official receipts. x x x and in providing excellent medical and other health services to the community for
the Glory of God and Service to Humanity." x x x As if these were not enough, [Cadiz]
Rule 46, Section 3 of the Rules of Court states the contents of a petition filed with the was Brent's Human Resource Officer charged with, among others, implementing the
CA under Rule 65, viz, "the petition shall x x x indicate the material dates showing when rules of Brent against immoral conduct, including premarital sexual relations, or
notice of the judgment or final order or resolution subject thereof was received, when a fornication x x x. She should have been the epitome of proper conduct, but miserably
motion for new trial or reconsideration, if any, was filed and when notice of the denial failed. She herself engaged in premarital sexual relations, which surely scandalized the
thereof was received." The rationale for this is to enable the CA to determine whether Brent community.xx x.31
the petition was filed within the period fixed in the rules. 20 Cadiz's failure to state the
date of receipt of the copy of the NLRC decision, however, is not fatal to her case since The NLRC, for its part, sustained the LA's conclusion.
the more important material date which must be duly alleged in a petition is the date of
receipt of the resolution of denial of the motion for reconsideration, 21 which she has The Court, however, cannot subscribe to the labor tribunals' conclusions.
duly complied with. 22
Admittedly, one of the grounds for disciplinary action under Brent's policies is single; they engaged in premarital sexual relations, which resulted into pregnancy. The
immorality, which is punishable by dismissal at first offense. 32 Brent's Policy Manual labor tribunals characterized these as constituting disgraceful or immoral conduct. They
provides: also sweepingly concluded that as Human Resource Officer, Cadiz should have been
the epitome of proper conduct and her indiscretion "surely scandalized the Brent
CATEGORY IV community."38

In accordance with Republic Act No. 1052,33 the following are just cause for terminating The foregoing circumstances, however, do not readily equate to disgraceful and
an employment of an employee without a definite period: immoral conduct. Brent's Policy Manual and Employee's Manual of Policies do not
define what constitutes immorality; it simply stated immorality as a ground for
disciplinary action. Instead, Brent erroneously relied on the standard dictionary
xxxx definition of fornication as a form of illicit relation and proceeded to conclude that
Cadiz's acts fell under such classification, thus constituting immorality. 39
2. Serious misconduct or willful disobedience by the employee of the orders of his
employer or representative in connection with his work, such as, but not limited to the Jurisprudence has already set the standard of morality with which an act should be
following: gauged - it is public and secular, not religious. 40 Whether a conduct is considered
disgraceful or immoral should be made in accordance with the prevailing norms of
xxxx conduct, which, as stated in Leus, refer to those conducts which are proscribed
because they are detrimental to conditions upon which depend the existence and
b. Commission of immoral conduct or indecency within the company premises, such as progress of human society. The fact that a particular act does not conform to the
an act of lasciviousness or any act which is sinful and vulgar in nature. traditional moral views of a certain sectarian institution is not sufficient reason to qualify
such act as immoral unless it, likewise, does not conform to public and secular
standards. More importantly, there must be substantial evidence to establish that
34
c. Immora1ity, concubinage, bigamy. premarital sexual relations and pregnancy out of wedlock is considered disgraceful or
immoral.41
Its Employee's Manual of Policies, meanwhile, enumerates "[a]cts of immorality such
as scandalous behaviour, acts of lasciviousness against any person (patient, visitors, The totality of the circumstances of this case does not justify the conclusion that Cadiz
co-workers) within hospital premises"35 as a ground for discipline and discharge. Brent committed acts of immorality. Similar to Leus, Cadiz and her boyfriend were both single
also relied on Section 94 of the Manual of Regulations for Private Schools (MRPS), and had no legal impediment to marry at the time she committed the alleged immoral
which lists "disgraceful or immoral conduct" as a cause for terminating employment. 36 conduct. In fact, they eventually married on April 15, 2008.42 Aside from these, the labor
tribunals' respective conclusion that Cadiz's "indiscretion" "scandalized the Brent
Thus, the question that must be resolved is whether Cadiz's premarital relations with community" is speculative, at most, and there is no proof adduced by Brent to support
her boyfriend and the resulting pregnancy out of wedlock constitute immorality. To such sweeping conclusion. Even Brent admitted that it came to know of Cadiz's
resolve this, the Court makes reference to the recently promulgated case of Cheryll "situation" only when her pregnancy became manifest. 43 Brent also conceded that "[a]t
Santos Leus v. St. Scholastica’s College Westgrove and/or Sr. Edna Quiambao, the time [Cadiz] and Carl R. Cadiz were just carrying on their boyfriend-girlfriend
OSB.37 relationship, there was no knowledge or evidence by [Brent] that they were engaged
also in premarital sex."44 This only goes to show that Cadiz did not flaunt her premarital
relations with her boyfriend and it was not carried on under scandalous or disgraceful
Leus involved the same personal circumstances as the case at bench, albeit the
circumstances. As declared in Leus, "there is no law which penalizes an unmarried
employer was a Catholic and sectarian educational institution and the petitioner, Cheryll
mother by reason of her sexual conduct or proscribes the consensual sexual activity
Santos Leus (Leus ), worked as an assistant to the school's Director of the Lay
between two unmarried persons; that neither does such situation contravene[s] any
Apostolate and Community Outreach Directorate. Leus was dismissed from
fundamental state policy enshrined in the Constitution. " 45 The fact that Brent is a
employment by the school for having borne a child out of wedlock. The Court ruled
sectarian institution does not automatically subject Cadiz to its religious standard of
in Leus that the determination of whether a conduct is disgraceful or immoral involves
morality absent an express statement in its manual of personnel policy and regulations,
a two-step process: first, a consideration of the totality of the circumstances
prescribing such religious standard as gauge as these regulations create the obligation
surrounding the conduct; and second, an assessment of the said circumstances vis-a-
on both the employee and the employer to abide by the same. 46
vis the prevailing norms of conduct, i.e., what the society generally considers moral and
respectable.
Brent, likewise, cannot resort to the MRPS because the Court already stressed
in Leus that "premarital sexual relations between two consenting adults who have no
In this case, the surrounding facts leading to Cadiz's dismissal are straightforward - she
impediment to marry each other, and, consequently, conceiving a child out of wedlock,
was employed as a human resources officer in an educational and medical institution
of the Episcopal Church of the Philippines; she and her boyfriend at that time were both
gauged from a purely public and secular view of morality, does not amount to a financial assistance. 55 In the computation of separation pay, the Court stresses that
disgraceful or immoral conduct under Section 94(e) of the 1992 MRPS." 47 it should not go beyond the date an employee was deemed to have been actually
separated from employment, or beyond the date when reinstatement was
Marriage as a condition for rendered impossible.56 In this case, the records do not show whether Cadiz already
reinstatement severed her employment with Brent or whether she is gainfully employed elsewhere;
thus, the computation of separation pay shall be pegged based on the findings that she
was employed on August 16, 2002, on her own admission in her complaint that she
The doctrine of management prerogative gives an employer the right to "regulate, was dismissed on November 17, 2006, and that she was earning a salary of P9,108.70
according to his own discretion and judgment, all aspects of employment, including per month,57 which shall then be computed at a rate of one (1) month salary for every
hiring, work assignments, working methods, the time, place and manner of work, work year of service,58 as follows:
supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and
recall of employees."48 In this case, Brent imposed on Cadiz the condition that she
subsequently contract marriage with her then boyfriend for her to be reinstated. Monthly salary P9,108.70
According to Brent, this is "in consonance with the policy against encouraging illicit or
common-law relations that would subvert the sacrament of marriage."49 multiplied by number of years x
in service (Aug 02 to Nov 06) 4
Statutory law is replete with legislation protecting labor and promoting equal opportunity
in employment. No less than the 1987 Constitution mandates that the "State shall afford
full protection to labor, local and overseas, organized and unorganized, and promote P36,434.80
full employment and equality of employment opportunities for all." 50 The Labor Code of
the Philippines, meanwhile, provides:
The Court also finds that Cadiz is only entitled to limited backwages. Generally, the
computation of backwages is reckoned from the date of illegal dismissal until actual
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as reinstatement. 59 In case separation pay is ordered in lieu of reinstatement or
a condition of employment or continuation of employment that a woman employee shall reinstatement is waived by the employee, backwages is computed from the time of
not get married, or to stipulate expressly or tacitly that upon getting married, a woman dismissal until the finality of the decision ordering separation pay. 60 Jurisprudence
employee shall be deemed resigned or separated, or to actually dismiss, discharge, further clarified that the period for computing the backwages during the period of appeal
discriminate or otherwise prejudice a woman employee merely by reason of her should end on the date that a higher court reversed the labor arbitration ruling of illegal
marriage. dismissal. 61 If applied in Cadiz's case, then the computation of backwages should be
from November 17, 2006, which was the time of her illegal dismissal, until the date of
With particular regard to women, Republic Act No. 9710 or the Magna Carta of promulgation of this decision. Nevertheless, the Court has also recognized that the
Women51 protects women against discrimination in all matters relating to marriage and constitutional policy of providing full protection to labor is not intended to oppress or
family relations, including the right to choose freely a spouse and to enter into destroy management. 62 The Court notes that at the time of Cadiz's indefinite
marriage only with their free and full consent.52 suspension from employment, Leus was yet to be decided by the Court. Moreover,
Brent was acting in good faith and on its honest belief that Cadiz's pregnancy out of
wedlock constituted immorality. Thus, fairness and equity dictate that the award of
Weighed against these safeguards, it becomes apparent that Brent's condition is
backwages shall only be equivalent to one (1) year or P109,304.40, computed as
coercive, oppressive and discriminatory. There is no rhyme or reason for it.1âwphi1 It
follows:
forces Cadiz to marry for economic reasons and deprives her of the freedom to choose
her status, which is a privilege that inheres in her as an intangible and inalienable
right. 53 While a marriage or no-marriage qualification may be justified as a "bona fide Monthly salary P9,108.70
occupational qualification," Brent must prove two factors necessitating its
imposition, viz: (1) that the employment qualification is reasonably related to the multiplied by one year x
essential operation of the job involved; and (2) that there is a factual basis for
believing that all or substantially all persons meeting the qualification would be unable or 12 months 12
to properly perform the duties of the job.54 Brent has not shown the presence of neither
of these factors. Perforce, the Court cannot uphold the validity of said condition. P109,304.40

Given the foregoing, Cadiz, therefore, is entitled to reinstatement without loss of

seniority rights, and payment of backwages computed from the time compensation was Finally, with regard to Cadiz's prayer for moral and exemplary damages, the Court finds
withheld up to the date of actual reinstatement. Where reinstatement is no longer viable the same without merit. A finding of illegal dismissal, by itself, does not establish bad
as an option, separation pay should be awarded as an alternative and as a form of faith to entitle an employee to moral damages. 63 Absent clear and convincing evidence
showing that Cadiz's dismissal from Brent's employ had been carried out in an arbitrary,
capricious and malicious manner, moral and exemplary damages cannot be awarded.
The Court nevertheless grants the award of attorney's fees in the amount of ten percent
(10%) of the total monetary award, Cadiz having been forced to litigate in order to seek
redress of her grievances.64

WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008 and
February 24, 2009 of the Court of Appeals in CA-G.R. SP No. 02373-MIN
are REVERSED and SET ASIDE, and a NEW ONE ENTERED finding petitioner
Christine Joy Capin-Cadiz to have been dismissed without just cause.

Respondent Brent Hospital and Colleges, Inc. is hereby ORDERED TO PAY petitioner
Christine Joy Capin-Cadiz:

(1) One Hundred Nine Thousand Three Hundred Four Pesos and 40/100 (Pl
09,304.40) as backwages;

(2) Thirty-Six Thousand Four Hundred Thirty-Four Pesos and 80/100

(P36,434.80) as separation pay; and

(3) Attorney's fees equivalent to ten percent (10%) of the total award.

The monetary awards granted shall earn legal interest at the rate of six percent
(6%) per annum from the date of the finality of this Decision until fully paid.

SO ORDERED.
G.R. No. 164774 April 12, 2006 pursuant to company policy, one must resign should they decide to get married. Comia
resigned on June 30, 2000.5
STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN
CHUA, Petitioners, Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a co-worker.
vs. Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The company
RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. allegedly could have terminated her services due to immorality but she opted to resign
ESTRELLA, Respondents. on December 21, 1999.6

DECISION The respondents each signed a Release and Confirmation Agreement. They stated
therein that they have no money and property accountabilities in the company and that
PUNO, J.: they release the latter of any claim or demand of whatever nature.7

We are called to decide an issue of first impression: whether the policy of the employer Respondents offer a different version of their dismissal. Simbol and Comia allege that
banning spouses from working in the same company violates the rights of the employee they did not resign voluntarily; they were compelled to resign in view of an illegal
under the Constitution and the Labor Code or is a valid exercise of management company policy. As to respondent Estrella, she alleges that she had a relationship with
prerogative. co-worker Zuñiga who misrepresented himself as a married but separated man. After
he got her pregnant, she discovered that he was not separated. Thus, she severed her
relationship with him to avoid dismissal due to the company policy. On November 30,
At bar is a Petition for Review on Certiorari of the Decision of the Court of Appeals 1999, she met an accident and was advised by the doctor at the Orthopedic Hospital
dated August 3, 2004 in CA-G.R. SP No. 73477 reversing the decision of the National to recuperate for twenty-one (21) days. She returned to work on December 21, 1999
Labor Relations Commission (NLRC) which affirmed the ruling of the Labor Arbiter. but she found out that her name was on-hold at the gate. She was denied entry. She
was directed to proceed to the personnel office where one of the staff handed her a
Petitioner Star Paper Corporation (the company) is a corporation engaged in trading – memorandum. The memorandum stated that she was being dismissed for immoral
principally of paper products. Josephine Ongsitco is its Manager of the Personnel and conduct. She refused to sign the memorandum because she was on leave for twenty-
Administration Department while Sebastian Chua is its Managing Director. one (21) days and has not been given a chance to explain. The management asked
her to write an explanation. However, after submission of the explanation, she was
The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol), nonetheless dismissed by the company. Due to her urgent need for money, she later
Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees submitted a letter of resignation in exchange for her thirteenth month pay. 8
of the company.1
Respondents later filed a complaint for unfair labor practice, constructive dismissal,
Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also separation pay and attorney’s fees. They averred that the aforementioned company
an employee of the company, whom he married on June 27, 1998. Prior to the policy is illegal and contravenes Article 136 of the Labor Code. They also contended
marriage, Ongsitco advised the couple that should they decide to get married, one of that they were dismissed due to their union membership.
them should resign pursuant to a company policy promulgated in 1995, 2 viz.:
On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the complaint
1. New applicants will not be allowed to be hired if in case he/she has [a] for lack of merit, viz.:
relative, up to [the] 3rd degree of relationship, already employed by the
company. [T]his company policy was decreed pursuant to what the respondent corporation
perceived as management prerogative. This management prerogative is quite broad
2. In case of two of our employees (both singles [sic], one male and another and encompassing for it covers hiring, work assignment, working method, time, place
female) developed a friendly relationship during the course of their and manner of work, tools to be used, processes to be followed, supervision of workers,
employment and then decided to get married, one of them should resign to working regulations, transfer of employees, work supervision, lay-off of workers and the
preserve the policy stated above.3 discipline, dismissal and recall of workers. Except as provided for or limited by special
law, an employer is free to regulate, according to his own discretion and judgment all
the aspects of employment.9 (Citations omitted.)
Simbol resigned on June 20, 1998 pursuant to the company policy. 4
On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter on
Comia was hired by the company on February 5, 1997. She met Howard Comia, a co- January 11, 2002. 10
employee, whom she married on June 1, 2000. Ongsitco likewise reminded them that
Respondents filed a Motion for Reconsideration but was denied by the NLRC in a The State shall promote the principle of shared responsibility between workers and
Resolution11 dated August 8, 2002. They appealed to respondent court via Petition for employers, recognizing the right of labor to its just share in the fruits of production and
Certiorari. the right of enterprises to reasonable returns on investments, and to expansion and
growth.
In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC
decision, viz.: The Civil Code likewise protects labor with the following provisions:

WHEREFORE, premises considered, the May 31, 2002 (sic)12 Decision of the National Art. 1700. The relation between capital and labor are not merely contractual. They are
Labor Relations Commission is hereby REVERSED and SET ASIDE and a new one is so impressed with public interest that labor contracts must yield to the common good.
entered as follows: Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of
(1) Declaring illegal, the petitioners’ dismissal from employment and ordering labor and similar subjects.
private respondents to reinstate petitioners to their former positions without
loss of seniority rights with full backwages from the time of their dismissal until Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed
actual reinstatement; and in favor of the safety and decent living for the laborer.

(2) Ordering private respondents to pay petitioners attorney’s fees amounting The Labor Code is the most comprehensive piece of legislation protecting labor. The
to 10% of the award and the cost of this suit.13 case at bar involves Article 136 of the Labor Code which provides:

On appeal to this Court, petitioners contend that the Court of Appeals erred in holding Art. 136. It shall be unlawful for an employer to require as a condition of employment
that: or continuation of employment that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married a woman employee shall be
1. x x x the subject 1995 policy/regulation is violative of the constitutional rights deemed resigned or separated, or to actually dismiss, discharge, discriminate or
towards marriage and the family of employees and of Article 136 of the Labor otherwise prejudice a woman employee merely by reason of her marriage.
Code; and
Respondents submit that their dismissal violates the above provision. Petitioners allege
2. x x x respondents’ resignations were far from voluntary. 14 that its policy "may appear to be contrary to Article 136 of the Labor Code" but it
assumes a new meaning if read together with the first paragraph of the rule. The rule
does not require the woman employee to resign. The employee spouses have the right
We affirm. to choose who between them should resign. Further, they are free to marry persons
other than co-employees. Hence, it is not the marital status of the employee, per se,
The 1987 Constitution15 states our policy towards the protection of labor under the that is being discriminated. It is only intended to carry out its no-employment-for-
following provisions, viz.: relatives-within-the-third-degree-policy which is within the ambit of the prerogatives of
management.16
Article II, Section 18. The State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare. It is true that the policy of petitioners prohibiting close relatives from working in the same
company takes the nature of an anti-nepotism employment policy. Companies adopt
xxx these policies to prevent the hiring of unqualified persons based on their status as a
relative, rather than upon their ability.17 These policies focus upon the potential
employment problems arising from the perception of favoritism exhibited towards
Article XIII, Sec. 3. The State shall afford full protection to labor, local and overseas, relatives.
organized and unorganized, and promote full employment and equality of employment
opportunities for all.
With more women entering the workforce, employers are also enacting employment
policies specifically prohibiting spouses from working for the same company. We note
It shall guarantee the rights of all workers to self-organization, collective bargaining and that two types of employment policies involve spouses: policies banning only spouses
negotiations, and peaceful concerted activities, including the right to strike in from working in the same company (no-spouse employment policies), and those
accordance with law. They shall be entitled to security of tenure, humane conditions of banning all immediate family members, including spouses, from working in the same
work, and a living wage. They shall also participate in policy and decision-making company (anti-nepotism employment policies).18
processes affecting their rights and benefits as may be provided by law.
Unlike in our jurisdiction where there is no express prohibition on marital based on marital status and there is no better available or acceptable policy which
discrimination,19 there are twenty state statutes20 in the United States prohibiting would better accomplish the business purpose, an employer may not discriminate
marital discrimination. Some state courts21 have been confronted with the issue of against an employee based on the identity of the employee’s spouse.31 This is known
whether no-spouse policies violate their laws prohibiting both marital status and sex as the bona fide occupational qualification exception.
discrimination.
We note that since the finding of a bona fide occupational qualification justifies an
In challenging the anti-nepotism employment policies in the United States, employer’s no-spouse rule, the exception is interpreted strictly and narrowly by these
complainants utilize two theories of employment discrimination: state courts. There must be a compelling business necessity for which no alternative
the disparate treatment and the disparate impact. Under the disparate treatment exists other than the discriminatory practice.32 To justify a bona fide occupational
analysis, the plaintiff must prove that an employment policy is discriminatory on its qualification, the employer must prove two factors: (1) that the employment qualification
face. No-spouse employment policies requiring an employee of a particular sex to is reasonably related to the essential operation of the job involved; and, (2) that there
either quit, transfer, or be fired are facially discriminatory. For example, an employment is a factual basis for believing that all or substantially all persons meeting the
policy prohibiting the employer from hiring wives of male employees, but not husbands qualification would be unable to properly perform the duties of the job. 33
of female employees, is discriminatory on its face.22
The concept of a bona fide occupational qualification is not foreign in our jurisdiction.
On the other hand, to establish disparate impact, the complainants must prove that a We employ the standard of reasonableness of the company policy which is parallel to
facially neutral policy has a disproportionate effect on a particular class. For example, the bona fide occupational qualification requirement. In the recent case of Duncan
although most employment policies do not expressly indicate which spouse will be Association of Detailman-PTGWO and Pedro Tecson v. Glaxo Wellcome
required to transfer or leave the company, the policy often disproportionately affects Philippines, Inc.,34 we passed on the validity of the policy of a pharmaceutical
one sex.23 company prohibiting its employees from marrying employees of any competitor
company. We held that Glaxo has a right to guard its trade secrets, manufacturing
The state courts’ rulings on the issue depend on their interpretation of the scope of formulas, marketing strategies and other confidential programs and information from
marital status discrimination within the meaning of their respective civil rights acts. competitors. We considered the prohibition against personal or marital relationships
Though they agree that the term "marital status" encompasses discrimination based on with employees of competitor companies upon Glaxo’s employees reasonable under
a person's status as either married, single, divorced, or widowed, they are divided on the circumstances because relationships of that nature might compromise the interests
whether the term has a broader meaning. Thus, their decisions vary.24 of Glaxo. In laying down the assailed company policy, we recognized that Glaxo only
aims to protect its interests against the possibility that a competitor company will gain
access to its secrets and procedures.35
The courts narrowly25 interpreting marital status to refer only to a person's status as
married, single, divorced, or widowed reason that if the legislature intended a broader
definition it would have either chosen different language or specified its intent. They The requirement that a company policy must be reasonable under the circumstances
hold that the relevant inquiry is if one is married rather than to whom one is married. to qualify as a valid exercise of management prerogative was also at issue in the 1997
They construe marital status discrimination to include only whether a person is single, case of Philippine Telegraph and Telephone Company v. NLRC.36 In said case, the
married, divorced, or widowed and not the "identity, occupation, and place of employee was dismissed in violation of petitioner’s policy of disqualifying from work any
employment of one's spouse." These courts have upheld the questioned policies and woman worker who contracts marriage. We held that the company policy violates the
ruled that they did not violate the marital status discrimination provision of their right against discrimination afforded all women workers under Article 136 of the Labor
respective state statutes. Code, but established a permissible exception, viz.:

The courts that have broadly26 construed the term "marital status" rule that it [A] requirement that a woman employee must remain unmarried could be justified as a
encompassed the identity, occupation and employment of one's spouse. They strike "bona fide occupational qualification," or BFOQ, where the particular requirements
down the no-spouse employment policies based on the broad legislative intent of the of the job would justify the same, but not on the ground of a general principle, such as
state statute. They reason that the no-spouse employment policy violate the marital the desirability of spreading work in the workplace. A requirement of that nature would
status provision because it arbitrarily discriminates against all spouses of present be valid provided it reflects an inherent quality reasonably necessary for satisfactory
employees without regard to the actual effect on the individual's qualifications or work job performance.37 (Emphases supplied.)
performance.27 These courts also find the no-spouse employment policy invalid for
failure of the employer to present any evidence of business necessity other than the The cases of Duncan and PT&T instruct us that the requirement of reasonableness
general perception that spouses in the same workplace might adversely affect the must be clearly established to uphold the questioned employment policy. The
business.28 They hold that the absence of such a bona fide occupational employer has the burden to prove the existence of a reasonable business necessity.
qualification29 invalidates a rule denying employment to one spouse due to the current The burden was successfully discharged in Duncan but not in PT&T.
employment of the other spouse in the same office. 30 Thus, they rule that unless the
employer can prove that the reasonable demands of the business require a distinction We do not find a reasonable business necessity in the case at bar.
Petitioners’ sole contention that "the company did not just want to have two (2) or more Estrella avers that she went back to work on December 21, 1999 but was dismissed
of its employees related between the third degree by affinity and/or consanguinity"38 is due to her alleged immoral conduct. At first, she did not want to sign the termination
lame. That the second paragraph was meant to give teeth to the first paragraph of the papers but she was forced to tender her resignation letter in exchange for her thirteenth
questioned rule39 is evidently not the valid reasonable business necessity required by month pay.
the law.
The contention of petitioners that Estrella was pressured to resign because she got
It is significant to note that in the case at bar, respondents were hired after they were impregnated by a married man and she could not stand being looked upon or talked
found fit for the job, but were asked to resign when they married a co-employee. about as immoral43 is incredulous. If she really wanted to avoid embarrassment and
Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine humiliation, she would not have gone back to work at all. Nor would she have filed a
Operator, to Alma Dayrit, then an employee of the Repacking Section, could be suit for illegal dismissal and pleaded for reinstatement. We have held that in voluntary
detrimental to its business operations. Neither did petitioners explain how this detriment resignation, the employee is compelled by personal reason(s) to dissociate himself from
will happen in the case of Wilfreda Comia, then a Production Helper in the Selecting employment. It is done with the intention of relinquishing an office, accompanied by the
Department, who married Howard Comia, then a helper in the cutter-machine. The act of abandonment. 44 Thus, it is illogical for Estrella to resign and then file a complaint
policy is premised on the mere fear that employees married to each other will be less for illegal dismissal. Given the lack of sufficient evidence on the part of petitioners that
efficient. If we uphold the questioned rule without valid justification, the employer can the resignation was voluntary, Estrella’s dismissal is declared illegal.
create policies based on an unproven presumption of a perceived danger at the
expense of an employee’s right to security of tenure. IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP No. 73477
dated August 3, 2004 is AFFIRMED.1avvphil.net
Petitioners contend that their policy will apply only when one employee marries a co-
employee, but they are free to marry persons other than co-employees. The questioned SO ORDERED.
policy may not facially violate Article 136 of the Labor Code but it creates a
disproportionate effect and under the disparate impact theory, the only way it could
pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit
disproportionate, effect. The failure of petitioners to prove a legitimate business
concern in imposing the questioned policy cannot prejudice the employee’s right to be
free from arbitrary discrimination based upon stereotypes of married persons working
together in one company.40

Lastly, the absence of a statute expressly prohibiting marital discrimination in our

jurisdiction cannot benefit the petitioners. The protection given to labor in our jurisdiction
is vast and extensive that we cannot prudently draw inferences from the legislature’s
silence41 that married persons are not protected under our Constitution and declare
valid a policy based on a prejudice or stereotype. Thus, for failure of petitioners to
present undisputed proof of a reasonable business necessity, we rule that the
questioned policy is an invalid exercise of management prerogative. Corollarily, the
issue as to whether respondents Simbol and Comia resigned voluntarily has become
moot and academic.

As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling on the
singular fact that her resignation letter was written in her own handwriting. Both ruled
that her resignation was voluntary and thus valid. The respondent court failed to
categorically rule whether Estrella voluntarily resigned but ordered that she be
reinstated along with Simbol and Comia.

Estrella claims that she was pressured to submit a resignation letter because she was
in dire need of money. We examined the records of the case and find Estrella’s
contention to be more in accord with the evidence. While findings of fact by
administrative tribunals like the NLRC are generally given not only respect but, at times,
finality, this rule admits of exceptions,42 as in the case at bar.
G.R. No. 145587 October 26, 2007 After Gran had been working for about five months for OAB, his employment was
terminated through OAB's July 9, 1994 letter,11 on the following grounds:
EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner,
vs. 1. Non-compliance to contract requirements by the recruitment agency
NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. primarily on your salary and contract duration.
GRAN, respondents.
2. Non-compliance to pre-qualification requirements by the recruitment
DECISION agency[,] vide OAB letter ref. F-5751-93, dated October 3, 1993.12

VELASCO, JR., J.: 3. Insubordination or disobedience to Top Management Order and/or

instructions (non-submittal of daily activity reports despite several
The Case instructions).

This Petition for Review on Certiorari1 seeks to set aside the October 18, 2000 On July 11, 1994, Gran received from OAB the total amount of SR 2,948.00
Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the representing his final pay, and on the same day, he executed a Declaration 13 releasing
January 15, 1999 Decision3 and September 30, 1999 Resolution4 rendered by the OAB from any financial obligation or otherwise, towards him.
National Labor Relations Commission (NLRC) (Third Division) in POEA ADJ (L) 94-06-
2194, ordering Expertise Search International (ESI), EDI-Staffbuilders International, After his arrival in the Philippines, Gran instituted a complaint, on July 21, 1994, against
Inc. (EDI), and Omar Ahmed Ali Bin Bechr Est. (OAB) jointly and severally to pay ESI/EDI, OAB, Country Bankers Insurance Corporation, and Western Guaranty
Eleazar S. Gran (Gran) the amount of USD 16,150.00 as unpaid salaries. Corporation with the NLRC, National Capital Region, Quezon City, which was docketed
as POEA ADJ (L) 94-06-2194 for underpayment of wages/salaries and illegal dismissal.
The Facts
The Ruling of the Labor Arbiter
Petitioner EDI is a corporation engaged in recruitment and placement of Overseas
Filipino Workers (OFWs).5 ESI is another recruitment agency which collaborated with In his February 10, 1998 Decision,14 Labor Arbiter Manuel R. Caday, to whom Gran's
EDI to process the documentation and deployment of private respondent to Saudi case was assigned, ruled that there was neither underpayment nor illegal dismissal.
Arabia.
The Labor Arbiter reasoned that there was no underpayment of salaries since
Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work according to the POEA-Overseas Contract Worker (OCW) Information Sheet, Gran's
for OAB, in Riyadh, Kingdom of Saudi Arabia.6 monthly salary was USD 600.00, and in his Confirmation of Appointment as Computer
Specialist, his monthly basic salary was fixed at SR 2,500.00, which was equivalent to
It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of USD 600.00.
qualified applicants for the position of "Computer Specialist." 7 In a facsimile
transmission dated November 29, 1993, OAB informed EDI that, from the Arbiter Caday also cited the Declaration executed by Gran, to justify that Gran had no
applicants' curricula vitae submitted to it for evaluation, it selected Gran for the position claim for unpaid salaries or wages against OAB.
of "Computer Specialist." The faxed letter also stated that if Gran agrees to the terms
and conditions of employment contained in it, one of which was a monthly salary of SR With regard to the issue of illegal dismissal, the Labor Arbiter found that Gran failed to
(Saudi Riyal) 2,250.00 (USD 600.00), EDI may arrange for Gran's immediate dispatch.8 refute EDI's allegations; namely, (1) that Gran did not submit a single activity report of
his daily activity as dictated by company policy; (2) that he was not qualified for the job
After accepting OAB's offer of employment, Gran signed an employment contract 9 that as computer specialist due to his insufficient knowledge in programming and lack of
granted him a monthly salary of USD 850.00 for a period of two years. Gran was then knowledge in ACAD system; (3) that Gran refused to follow management's instruction
deployed to Riyadh, Kingdom of Saudi Arabia on February 7, 1994. for him to gain more knowledge of the job to prove his worth as computer specialist; (4)
that Gran's employment contract had never been substituted; (5) and that Gran was
Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salary—his paid a monthly salary of USD 850.00, and USD 350.00 monthly as food allowance.
employment contract stated USD 850.00; while his Philippine Overseas Employment
Agency (POEA) Information Sheet indicated USD 600.00 only. However, through the Accordingly, the Labor Arbiter decided that Gran was validly dismissed from his work
assistance of the EDI office in Riyadh, OAB agreed to pay Gran USD 850.00 a month. 10 due to insubordination, disobedience, and his failure to submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint for lack of merit. amply discussed, considered, and ruled upon" in the Decision, and that there was "no
cogent reason or patent or palpable error that warrant any disturbance thereof."
Dissatisfied, Gran filed an Appeal15 on April 6, 1998 with the NLRC, Third Division.
However, it appears from the records that Gran failed to furnish EDI with a copy of his Unconvinced of the NLRC's reasoning, EDI filed a Petition for Certiorari before the CA.
Appeal Memorandum. Petitioner claimed in its petition that the NLRC committed grave abuse of discretion in
giving due course to the appeal despite Gran's failure to perfect the appeal.
The Ruling of the NLRC
The Ruling of the Court of Appeals
The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is
actually "reprocessing," which is a prohibited transaction under Article 34 (b) of the The CA subsequently ruled on the procedural and substantive issues of EDI's petition.
Labor Code. This scheme constituted misrepresentation through the conspiracy
between EDI and ESI in misleading Gran and even POEA of the actual terms and On the procedural issue, the appellate court held that "Gran's failure to furnish a copy
conditions of the OFW's employment. In addition, it was found that Gran did not commit of his appeal memorandum [to EDI was] a mere formal lapse, an excusable neglect
any act that constituted a legal ground for dismissal. The alleged non-compliance with and not a jurisdictional defect which would justify the dismissal of his appeal." 22 The
contractual stipulations relating to Gran's salary and contract duration, and the absence court also held that petitioner EDI failed to prove that private respondent was terminated
of pre-qualification requirements cannot be attributed to Gran but to EDI, which dealt for a valid cause and in accordance with due process; and that Gran's Declaration
directly with OAB. In addition, the charge of insubordination was not substantiated, and releasing OAB from any monetary obligation had no force and effect. The appellate
Gran was not even afforded the required notice and investigation on his alleged court ratiocinated that EDI had the burden of proving Gran's incompetence; however,
offenses. other than the termination letter, no evidence was presented to show how and why
Gran was considered to be incompetent. The court held that since the law requires the
Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a new one, the recruitment agencies to subject OFWs to trade tests before deployment, Gran must
dispositive portion of which reads: have been competent and qualified; otherwise, he would not have been hired and
deployed abroad.
WHEREFORE, the assailed decision is SET ASIDE. Respondents Expertise
Search International, Inc., EDI Staffbuilders Int'l., Inc. and Omar Ahmed Ali As for the charge of insubordination and disobedience due to Gran's failure to submit
Bin Bechr Est. (OAB) are hereby ordered jointly and severally liable to pay the a "Daily Activity Report," the appellate court found that EDI failed to show that the
complainant Eleazar Gran the Philippine peso equivalent at the time of actual submission of the "Daily Activity Report" was a part of Gran's duty or the company's
payment of SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS policy. The court also held that even if Gran was guilty of insubordination, he should
(US$16,150.00) representing his salaries for the unexpired portion of his have just been suspended or reprimanded, but not dismissed.
contract.
The CA also held that Gran was not afforded due process, given that OAB did not abide
SO ORDERED.16 by the twin notice requirement. The court found that Gran was terminated on the same
day he received the termination letter, without having been apprised of the bases of his
Gran then filed a Motion for Execution of Judgment17 on March 29, 1999 with the NLRC dismissal or afforded an opportunity to explain his side.
and petitioner receiving a copy of this motion on the same date.18
Finally, the CA held that the Declaration signed by Gran did not bar him from
To prevent the execution, petitioner filed an Opposition 19 to Gran's motion arguing that demanding benefits to which he was entitled. The appellate court found that the
the Writ of Execution cannot issue because it was not notified of the appellate Declaration was in the form of a quitclaim, and as such is frowned upon as contrary to
proceedings before the NLRC and was not given a copy of the memorandum of appeal public policy especially where the monetary consideration given in the Declaration was
nor any opportunity to participate in the appeal. very much less than what he was legally entitled to—his backwages amounting to USD
16,150.00.
Seeing that the NLRC did not act on Gran's motion after EDI had filed its Opposition,
petitioner filed, on August 26, 1999, a Motion for Reconsideration of the NLRC Decision As a result of these findings, on October 18, 2000, the appellate court denied the
after receiving a copy of the Decision on August 16, 1999.20 petition to set aside the NLRC Decision.

The NLRC then issued a Resolution21 denying petitioner's Motion for Reconsideration, Hence, this instant petition is before the Court.
ratiocinating that the issues and arguments raised in the motion "had already been
The Issues
Petitioner raises the following issues for our consideration: Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC, the order of dismissal of an
appeal to the NLRC based on the ground that "there is no showing whatsoever that a
I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS copy of the appeal was served by the appellant on the appellee"25 was annulled. The
APPEAL MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A Court ratiocinated as follows:
JURISDICTIONAL DEFECT AND A DEPRIVATION OF PETITIONER EDI'S
RIGHT TO DUE PROCESS AS WOULD JUSTIFY THE DISMISSAL OF The failure to give a copy of the appeal to the adverse party was a mere formal
GRAN'S APPEAL. lapse, an excusable neglect. Time and again We have acted on petitions to
review decisions of the Court of Appeals even in the absence of proof of
II. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF service of a copy thereof to the Court of Appeals as required by Section 1 of
SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS Rule 45, Rules of Court. We act on the petitions and simply require the
JUSTIFIABLE BY REASON OF INCOMPETENCE. COROLLARY HERETO, petitioners to comply with the rule.26 (Emphasis supplied.)
WHETHER THE PRIETO VS. NLRC RULING, AS APPLIED BY THE COURT
OF APPEALS, IS APPLICABLE IN THE INSTANT CASE. The J.D. Magpayo ruling was reiterated in Carnation Philippines Employees Labor
Union-FFW v. National Labor Relations Commission,27 Pagdonsalan v. NLRC,28 and
III. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF in Sunrise Manning Agency, Inc. v. NLRC.29
SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS
JUSTIFIABLE BY REASON OF INSUBORDINATION AND DISOBEDIENCE. Thus, the doctrine that evolved from these cases is that failure to furnish the adverse
party with a copy of the appeal is treated only as a formal lapse, an excusable neglect,
IV. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO and hence, not a jurisdictional defect. Accordingly, in such a situation, the appeal
TERMINATION. should not be dismissed; however, it should not be given due course either. As
enunciated in J.D. Magpayo, the duty that is imposed on the NLRC, in such a case,
is to require the appellant to comply with the rule that the opposing party should
V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE be provided with a copy of the appeal memorandum.
UNEXPIRED PORTION OF HIS CONTRACT.23
While Gran's failure to furnish EDI with a copy of the Appeal Memorandum is excusable,
The Court's Ruling the abject failure of the NLRC to order Gran to furnish EDI with the Appeal
Memorandum constitutes grave abuse of discretion.
The petition lacks merit except with respect to Gran's failure to furnish EDI with his
Appeal Memorandum filed with the NLRC. The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of
the Appeal Memorandum. The NLRC then ordered Gran to present proof of service. In
First Issue: NLRC's Duty is to Require Respondent to Provide Petitioner a Copy compliance with the order, Gran submitted a copy of Camp Crame Post Office's list of
of the Appeal mail/parcels sent on April 7, 1998.30 The post office's list shows that private respondent
Gran sent two pieces of mail on the same date: one addressed to a certain Dan O. de
Petitioner EDI claims that Gran's failure to furnish it a copy of the Appeal Memorandum Guzman of Legaspi Village, Makati; and the other appears to be addressed to Neil B.
constitutes a jurisdictional defect and a deprivation of due process that would warrant Garcia (or Gran),31 of Ermita, Manila—both of whom are not connected with petitioner.
a rejection of the appeal.
This mailing list, however, is not a conclusive proof that EDI indeed received a copy of
This position is devoid of merit. the Appeal Memorandum.

In a catena of cases, it was ruled that failure of appellant to furnish a copy of the Sec. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness
appeal to the adverse party is not fatal to the appeal. of service in proceedings before the NLRC:

In Estrada v. National Labor Relations Commission,24 this Court set aside the order of Section 5.32 Proof and completeness of service.—The return is prima
the NLRC which dismissed an appeal on the sole ground that the appellant did not facie proof of the facts indicated therein. Service by registered mail is
furnish the appellee a memorandum of appeal contrary to the requirements of Article complete upon receipt by the addressee or his agent; but if the addressee
223 of the New Labor Code and Section 9, Rule XIII of its Implementing Rules and fails to claim his mail from the post office within five (5) days from the date of
Regulations. first notice of the postmaster, service shall take effect after such time.
(Emphasis supplied.)
Hence, if the service is done through registered mail, it is only deemed complete when The second and third issues have a common matter—whether there was just cause for
the addressee or his agent received the mail or after five (5) days from the date of first Gran's dismissal—hence, they will be discussed jointly.
notice of the postmaster. However, the NLRC Rules do not state what would constitute
proper proof of service. Second and Third Issues: Whether Gran's dismissal is justifiable by reason of
incompetence, insubordination, and disobedience
Sec. 13, Rule 13 of the Rules of Court, provides for proofs of service:
In cases involving OFWs, the rights and obligations among and between the OFW, the
Section 13. Proof of service.—Proof of personal service shall consist of a local recruiter/agent, and the foreign employer/principal are governed by the
written admission of the party served or the official return of the server, or the employment contract. A contract freely entered into is considered law between the
affidavit of the party serving, containing a full statement of the date, place and parties; and hence, should be respected. In formulating the contract, the parties may
manner of service. If the service is by ordinary mail, proof thereof shall consist establish such stipulations, clauses, terms and conditions as they may deem
of an affidavit of the person mailing of facts showing compliance with section convenient, provided they are not contrary to law, morals, good customs, public order,
7 of this Rule. If service is made by registered mail, proof shall be made or public policy.34
by such affidavit and registry receipt issued by the mailing office. The
registry return card shall be filed immediately upon its receipt by the In the present case, the employment contract signed by Gran specifically states that
sender, or in lieu thereof the unclaimed letter together with the certified Saudi Labor Laws will govern matters not provided for in the contract (e.g. specific
or sworn copy of the notice given by the postmaster to the causes for termination, termination procedures, etc.). Being the law intended by the
addressee (emphasis supplied). parties (lex loci intentiones) to apply to the contract, Saudi Labor Laws should govern
all matters relating to the termination of the employment of Gran.
Based on the foregoing provision, it is obvious that the list submitted by Gran is not
conclusive proof that he had served a copy of his appeal memorandum to EDI, nor is it In international law, the party who wants to have a foreign law applied to a dispute or
conclusive proof that EDI received its copy of the Appeal Memorandum. He should case has the burden of proving the foreign law. The foreign law is treated as a question
have submitted an affidavit proving that he mailed the Appeal Memorandum together of fact to be properly pleaded and proved as the judge or labor arbiter cannot take
with the registry receipt issued by the post office; afterwards, Gran should have judicial notice of a foreign law. He is presumed to know only domestic or forum law. 35
immediately filed the registry return card.
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus,
Hence, after seeing that Gran failed to attach the proof of service, the NLRC should not the International Law doctrine of presumed-identity approach or processual
have simply accepted the post office's list of mail and parcels sent; but it should have presumption comes into play.36 Where a foreign law is not pleaded or, even if pleaded,
required Gran to properly furnish the opposing parties with copies of his Appeal is not proved, the presumption is that foreign law is the same as ours.37 Thus, we apply
Memorandum as prescribed in J.D. Magpayo and the other cases. The NLRC Philippine labor laws in determining the issues presented before us.
should not have proceeded with the adjudication of the case, as this constitutes grave
abuse of discretion.
Petitioner EDI claims that it had proven that Gran was legally dismissed due to
incompetence and insubordination or disobedience.
The glaring failure of NLRC to ensure that Gran should have furnished petitioner EDI a
copy of the Appeal Memorandum before rendering judgment reversing the dismissal of
Gran's complaint constitutes an evasion of the pertinent NLRC Rules and established This claim has no merit.
jurisprudence. Worse, this failure deprived EDI of procedural due process guaranteed
by the Constitution which can serve as basis for the nullification of proceedings in the In illegal dismissal cases, it has been established by Philippine law and jurisprudence
appeal before the NLRC. One can only surmise the shock and dismay that OAB, EDI, that the employer should prove that the dismissal of employees or personnel is legal
and ESI experienced when they thought that the dismissal of Gran's complaint became and just.
final, only to receive a copy of Gran's Motion for Execution of Judgment which also
informed them that Gran had obtained a favorable NLRC Decision. This is not level Section 33 of Article 277 of the Labor Code38 states that:
playing field and absolutely unfair and discriminatory against the employer and the job
recruiters. The rights of the employers to procedural due process cannot be cavalierly
disregarded for they too have rights assured under the Constitution. ART. 277. MISCELLANEOUS PROVISIONS39

However, instead of annulling the dispositions of the NLRC and remanding the case for (b) Subject to the constitutional right of workers to security of tenure and their
further proceedings we will resolve the petition based on the records before us to avoid right to be protected against dismissal except for a just and authorized cause
a protracted litigation.33 and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to
 be terminated a written notice containing a statement of the causes for For willful disobedience to be a valid cause for dismissal, the following twin
termination and shall afford the latter ample opportunity to be heard and to elements must concur: (1) the employee's assailed conduct must have been
defend himself with the assistance of his representative if he so desires in willful, that is, characterized by a wrongful and perverse attitude; and (2) the
accordance with company rules and regulations promulgated pursuant to order violated must have been reasonable, lawful, made known to the
guidelines set by the Department of Labor and Employment. Any decision employee and must pertain to the duties which he had been engaged to
taken by the employer shall be without prejudice to the right of the workers to discharge.47
contest the validity or legality of his dismissal by filing a complaint with the
regional branch of the National Labor Relations Commission. The burden of EDI failed to discharge the burden of proving Gran's insubordination or willful
proving that the termination was for a valid or authorized cause shall disobedience. As indicated by the second requirement provided for in Micro Sales
rest on the employer. x x x Operation Network, in order to justify willful disobedience, we must determine whether
the order violated by the employee is reasonable, lawful, made known to the employee,
In many cases, it has been held that in termination disputes or illegal dismissal cases, and pertains to the duties which he had been engaged to discharge. In the case at bar,
the employer has the burden of proving that the dismissal is for just and valid causes; petitioner failed to show that the order of the company which was violated—the
and failure to do so would necessarily mean that the dismissal was not justified and submission of "Daily Activity Reports"—was part of Gran's duties as a Computer
therefore illegal.40 Taking into account the character of the charges and the penalty Specialist. Before the Labor Arbiter, EDI should have provided a copy of the company
meted to an employee, the employer is bound to adduce clear, accurate, consistent, policy, Gran's job description, or any other document that would show that the "Daily
and convincing evidence to prove that the dismissal is valid and legal. 41 This is Activity Reports" were required for submission by the employees, more particularly by
consistent with the principle of security of tenure as guaranteed by the Constitution and a Computer Specialist.
reinforced by Article 277 (b) of the Labor Code of the Philippines. 42
Even though EDI and/or ESI were merely the local employment or recruitment agencies
In the instant case, petitioner claims that private respondent Gran was validly dismissed and not the foreign employer, they should have adduced additional evidence to
for just cause, due to incompetence and insubordination or disobedience. To prove its convincingly show that Gran's employment was validly and legally terminated. The
allegations, EDI submitted two letters as evidence. The first is the July 9, 1994 burden devolves not only upon the foreign-based employer but also on the employment
termination letter,43 addressed to Gran, from Andrea E. Nicolaou, Managing Director of or recruitment agency for the latter is not only an agent of the former, but is also
OAB. The second is an unsigned April 11, 1995 letter44 from OAB addressed to EDI solidarily liable with the foreign principal for any claims or liabilities arising from the
and ESI, which outlined the reasons why OAB had terminated Gran's employment. dismissal of the worker.48

Petitioner claims that Gran was incompetent for the Computer Specialist position Thus, petitioner failed to prove that Gran was justifiably dismissed due to
because he had "insufficient knowledge in programming and zero knowledge of [the] incompetence, insubordination, or willful disobedience.
ACAD system."45 Petitioner also claims that Gran was justifiably dismissed due to
insubordination or disobedience because he continually failed to submit the required Petitioner also raised the issue that Prieto v. NLRC,49 as used by the CA in its Decision,
"Daily Activity Reports."46 However, other than the abovementioned letters, no other is not applicable to the present case.
evidence was presented to show how and why Gran was considered incompetent,
insubordinate, or disobedient. Petitioner EDI had clearly failed to overcome the burden
of proving that Gran was validly dismissed. In Prieto, this Court ruled that "[i]t is presumed that before their deployment, the
petitioners were subjected to trade tests required by law to be conducted by the
recruiting agency to insure employment of only technically qualified workers for the
Petitioner's imputation of incompetence on private respondent due to his "insufficient foreign principal."50 The CA, using the ruling in the said case, ruled that Gran must have
knowledge in programming and zero knowledge of the ACAD system" based only on passed the test; otherwise, he would not have been hired. Therefore, EDI was at fault
the above mentioned letters, without any other evidence, cannot be given credence. when it deployed Gran who was allegedly "incompetent" for the job.

An allegation of incompetence should have a factual foundation. Incompetence may be According to petitioner, the Prieto ruling is not applicable because in the case at hand,
shown by weighing it against a standard, benchmark, or criterion. However, EDI failed Gran misrepresented himself in his curriculum vitae as a Computer Specialist; thus, he
to establish any such bases to show how petitioner found Gran incompetent. was not qualified for the job for which he was hired.

In addition, the elements that must concur for the charge of insubordination or willful We disagree.
disobedience to prosper were not present.
The CA is correct in applying Prieto. The purpose of the required trade test is to weed
In Micro Sales Operation Network v. NLRC, we held that: out incompetent applicants from the pool of available workers. It is supposed to reveal
applicants with false educational backgrounds, and expose bogus qualifications. Since
EDI deployed Gran to Riyadh, it can be presumed that Gran had passed the required give Gran the chance to be heard and to defend himself with the assistance of a
trade test and that Gran is qualified for the job. Even if there was no objective trade test representative in accordance with Article 277 of the Labor Code. Clearly, there was no
done by EDI, it was still EDI's responsibility to subject Gran to a trade test; and its failure intention to provide Gran with due process. Summing up, Gran was notified and his
to do so only weakened its position but should not in any way prejudice Gran. In any employment arbitrarily terminated on the same day, through the same letter, and for
case, the issue is rendered moot and academic because Gran's incompetency is unjustified grounds. Obviously, Gran was not afforded due process.
unproved.
Pursuant to the doctrine laid down in Agabon,57 an employer is liable to pay nominal
Fourth Issue: Gran was not Afforded Due Process damages as indemnity for violating the employee's right to statutory due process. Since
OAB was in breach of the due process requirements under the Labor Code and its
As discussed earlier, in the absence of proof of Saudi laws, Philippine Labor laws and regulations, OAB, ESI, and EDI, jointly and solidarily, are liable to Gran in the amount
regulations shall govern the relationship between Gran and EDI. Thus, our laws and of PhP 30,000.00 as indemnity.
rules on the requisites of due process relating to termination of employment shall apply.
Fifth and Last Issue: Gran is Entitled to Backwages
Petitioner EDI claims that private respondent Gran was afforded due process, since he
was allowed to work and improve his capabilities for five months prior to his We reiterate the rule that with regard to employees hired for a fixed period of
termination.51 EDI also claims that the requirements of due process, as enunciated employment, in cases arising before the effectivity of R.A. No. 8042 58 (Migrant Workers
in Santos, Jr. v. NLRC,52 and Malaya Shipping Services, Inc. v. NLRC,53 cited by the and Overseas Filipinos Act) on August 25, 1995, that when the contract is for a fixed
CA in its Decision, were properly observed in the present case. term and the employees are dismissed without just cause, they are entitled to the
payment of their salaries corresponding to the unexpired portion of their contract. 59 On
This position is untenable. the other hand, for cases arising after the effectivity of R.A. No. 8042, when the
termination of employment is without just, valid or authorized cause as defined by law
or contract, the worker shall be entitled to the full reimbursement of his placement fee
In Agabon v. NLRC,54 this Court held that: with interest of twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of the
Procedurally, (1) if the dismissal is based on a just cause under Article 282, unexpired term whichever is less.60
the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the In the present case, the employment contract provides that the employment contract
employment: a notice specifying the grounds for which dismissal is sought a shall be valid for a period of two (2) years from the date the employee starts to work
hearing or an opportunity to be heard and after hearing or opportunity to be with the employer.61 Gran arrived in Riyadh, Saudi Arabia and started to work on
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on February 7, 1994;62 hence, his employment contract is until February 7, 1996. Since he
authorized causes under Articles 283 and 284, the employer must give the was illegally dismissed on July 9, 1994, before the effectivity of R.A. No. 8042, he is
employee and the Department of Labor and Employment written notices 30 therefore entitled to backwages corresponding to the unexpired portion of his contract,
days prior to the effectivity of his separation. which was equivalent to USD 16,150.

Under the twin notice requirement, the employees must be given two (2) notices before Petitioner EDI questions the legality of the award of backwages and mainly relies on
their employment could be terminated: (1) a first notice to apprise the employees of the Declaration which is claimed to have been freely and voluntarily executed by Gran.
their fault, and (2) a second notice to communicate to the employees that their The relevant portions of the Declaration are as follows:
employment is being terminated. In between the first and second notice, the employees
should be given a hearing or opportunity to defend themselves personally or by counsel
of their choice.55 I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY
FINAL SETTLEMENT ON THIS DATE THE AMOUNT OF:
A careful examination of the records revealed that, indeed, OAB's manner of dismissing
Gran fell short of the two notice requirement. While it furnished Gran the written notice S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE
informing him of his dismissal, it failed to furnish Gran the written notice apprising him
of the charges against him, as prescribed by the Labor Code. 56 Consequently, he was HUNDRED FORTY EIGHT ONLY)
denied the opportunity to respond to said notice. In addition, OAB did not schedule a
hearing or conference with Gran to defend himself and adduce evidence in support of REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE
his defenses. Moreover, the July 9, 1994 termination letter was effective on the same SERVICES I RENDERED TO OAB ESTABLISHMENT.
day. This shows that OAB had already condemned Gran to dismissal, even before Gran
was furnished the termination letter. It should also be pointed out that OAB failed to
 I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL OBLIGATION addition, it is also very much less than the USD 16,150.00 which is the amount Gran is
IN MY FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT legally entitled to get from petitioner EDI as backwages.
IN CASH.
2. The Declaration reveals that the payment of SR 2,948.00 is actually the payment for
I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION TOWARDS ME Gran's salary for the services he rendered to OAB as Computer Specialist. If the
IN WHATEVER FORM. Declaration is a quitclaim, then the consideration should be much much more than the
monthly salary of SR 3,190.00 (USD 850.00)—although possibly less than the
I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING estimated Gran's salaries for the remaining duration of his contract and other benefits
MY SIGNATURE VOLUNTARILY. as employee of OAB. A quitclaim will understandably be lower than the sum total of the
amounts and benefits that can possibly be awarded to employees or to be earned for
the remainder of the contract period since it is a compromise where the employees will
SIGNED. have to forfeit a certain portion of the amounts they are claiming in exchange for the
ELEAZAR GRAN early payment of a compromise amount. The court may however step in when such
amount is unconscionably low or unreasonable although the employee voluntarily
Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more agreed to it. In the case of the Declaration, the amount is unreasonably small compared
particularly those executed by employees. This requirement was clearly articulated by to the future wages of Gran.
Chief Justice Artemio V. Panganiban in Land and Housing Development Corporation
v. Esquillo: 3. The factual circumstances surrounding the execution of the Declaration would show
that Gran did not voluntarily and freely execute the document. Consider the following
Quitclaims, releases and other waivers of benefits granted by laws or chronology of events:
contracts in favor of workers should be strictly scrutinized to protect the weak
and the disadvantaged. The waivers should be carefully examined, in a. On July 9, 1994, Gran received a copy of his letter of termination;
regard not only to the words and terms used, but also the factual
circumstances under which they have been executed.63 (Emphasis
supplied.) b. On July 10, 1994, Gran was instructed to depart Saudi Arabia and required
to pay his plane ticket;65
This Court had also outlined in Land and Housing Development Corporation,
citing Periquet v. NLRC,64 the parameters for valid compromise agreements, waivers, c. On July 11, 1994, he signed the Declaration;
and quitclaims:
d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia; and
Not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents a reasonable e. On July 21, 1994, Gran filed the Complaint before the NLRC.
settlement, it is binding on the parties and may not later be disowned simply
because of a change of mind. It is only where there is clear proof that the The foregoing events readily reveal that Gran was "forced" to sign the Declaration and
waiver was wangled from an unsuspecting or gullible person, or the terms of constrained to receive the amount of SR 2,948.00 even if it was against his will—since
settlement are unconscionable on its face, that the law will step in to annul the he was told on July 10, 1994 to leave Riyadh on July 12, 1994. He had no other choice
questionable transaction. But where it is shown that the person making the but to sign the Declaration as he needed the amount of SR 2,948.00 for the payment
waiver did so voluntarily, with full understanding of what he was doing, of his ticket. He could have entertained some apprehensions as to the status of his stay
and the consideration for the quitclaim is credible and reasonable, the or safety in Saudi Arabia if he would not sign the quitclaim.
transaction must be recognized as a valid and binding undertaking. (Emphasis
supplied.)
4. The court a quo is correct in its finding that the Declaration is a contract of adhesion
which should be construed against the employer, OAB. An adhesion contract is
Is the waiver and quitclaim labeled a Declaration valid? It is not. contrary to public policy as it leaves the weaker party—the employee—in a "take-it-or-
leave-it" situation. Certainly, the employer is being unjust to the employee as there is
The Court finds the waiver and quitclaim null and void for the following reasons: no meaningful choice on the part of the employee while the terms are unreasonably
favorable to the employer.66
1. The salary paid to Gran upon his termination, in the amount of SR 2,948.00, is
unreasonably low. As correctly pointed out by the court a quo, the payment of SR Thus, the Declaration purporting to be a quitclaim and waiver is unenforceable under
2,948.00 is even lower than his monthly salary of SR 3,190.00 (USD 850.00). In Philippine laws in the absence of proof of the applicable law of Saudi Arabia.
In order to prevent disputes on the validity and enforceability of quitclaims and waivers SO ORDERED.
of employees under Philippine laws, said agreements should contain the following:

1. A fixed amount as full and final compromise settlement;

2. The benefits of the employees if possible with the corresponding amounts, which the
employees are giving up in consideration of the fixed compromise amount;

3. A statement that the employer has clearly explained to the employee in English,
Filipino, or in the dialect known to the employees—that by signing the waiver or
quitclaim, they are forfeiting or relinquishing their right to receive the benefits which are
due them under the law; and

4. A statement that the employees signed and executed the document voluntarily, and
had fully understood the contents of the document and that their consent was freely
given without any threat, violence, duress, intimidation, or undue influence exerted on
their person.

It is advisable that the stipulations be made in English and Tagalog or in the dialect
known to the employee. There should be two (2) witnesses to the execution of the
quitclaim who must also sign the quitclaim. The document should be subscribed and
sworn to under oath preferably before any administering official of the Department of
Labor and Employment or its regional office, the Bureau of Labor Relations, the NLRC
or a labor attaché in a foreign country. Such official shall assist the parties regarding
the execution of the quitclaim and waiver.67 This compromise settlement becomes final
and binding under Article 227 of the Labor Code which provides that:

[A]ny compromise settlement voluntarily agreed upon with the assistance of

the Bureau of Labor Relations or the regional office of the DOLE, shall be final
and binding upon the parties and the NLRC or any court "shall not assume
jurisdiction over issues involved therein except in case of non-compliance
thereof or if there is prima facie evidence that the settlement was obtained
through fraud, misrepresentation, or coercion.

It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor
contracts of OFWs in the absence of proof of the laws of the foreign country agreed
upon to govern said contracts. Otherwise, the foreign laws shall apply.

WHEREFORE, the petition is DENIED. The October 18, 2000 Decision in CA-G.R. SP
No. 56120 of the Court of Appeals affirming the January 15, 1999 Decision and
September 30, 1999 Resolution of the NLRC

is AFFIRMED with the MODIFICATION that petitioner EDI-Staffbuilders International,

Inc. shall pay the amount of PhP 30,000.00 to respondent Gran as nominal damages
for non-compliance with statutory due process.

No costs.
[ G.R. No. 206529, April 23, 2018 ] Construction's premises.[15]
RENANTE B. REMOTICADO, PETITIONER, VS. TYPICAL CONSTRUCTION In a Decision[16] dated October 11, 2011, Labor Arbiter Dela Cruz dismissed
TRADING CORP. AND ROMMEL M. ALIGNAY, RESPONDENTS. Remoticado's Complaint for lack of merit. He explained that Remoticado's employment
could not have been illegally terminated as he voluntarily resigned. [17]
DECISION
LEONEN, J.: In its January 11, 2012 Decision,[18] the National Labor Relations Commission denied
There can be no case for illegal termination of employment when there was no Remoticado's appeal.
termination by the employer. While, in illegal termination cases, the burden is upon the
employer to show just cause for termination of employment, such a burden arises only In its assailed November 29, 2012 Decision,[19] the Court of Appeals found no grave
if the complaining employee has shown, by substantial evidence, the fact of termination abuse of discretion on the part of the National Labor Relations Commission. In its
by the employer. assailed March 26, 2013 Resolution,[20] the Court of Appeals denied Remoticado's
Motion for Reconsideration.
This resolves a Petition for Review on Certiorari[1] under Rule 45 of the 1997 Rules of
Civil Procedure praying that the assailed November 29, 2012 Decision [2] and March 26, Undeterred by the consistent rulings of the Court of Appeals, the National Labor
2013 Resolution[3] of the Court of Appeals in CA G.R. SP No. 124993 be reversed and Relations Commission, and Labor Arbiter Dela Cruz, Remoticado filed the present
set aside. Petition.[21]
The assailed Court of Appeals November 29, 2012 Decision found no grave abuse of For resolution is the issue of whether petitioner Renante B. Remoticado voluntarily
discretion on the part of National Labor Relations Commission in rendering its January resigned or his employment was illegally terminated in the manner, on the date, and for
11, 2012 Decision,[4] which affirmed Labor Arbiter Renell Joseph R. Dela Cruz's (Labor the reason he averred in his complaint.
Arbiter Dela Cruz) October 11, 2011 Decision.[5] Labor Arbiter Del a Cruz's Decision
dismissed petitioner Renante B. Remoticado's (Remoticado) Complaint for illegal The Petition lacks merit.
dismissal after a finding that he voluntarily resigned. The assailed Court of Appeals
March 26, 2013 Resolution denied his Motion for Reconsideration.
I
Remoticado's services were engaged by Typical Construction Trading Corporation Determining which between two (2) alternative versions of events actually transpired
(Typical Construction) as a helper/laborer in its construction projects, the most recent and ascertaining the specifics of how, when, and why one of them occurred involve
being identified as the Jedic Project at First Industrial Park in Batangas. [6]
factual issues resting on the evidence presented by the parties.
In separate sworn statements, Pedro Nielo (Nielo), Typical Construction's Field Human It is basic that factual issues are improper in Rule 45 petitions. Under Rule 45 of the
Resources Officer, and two (2) of Remoticado's co-workers, Salmero Pedros and Jovito 1997 Rules of Civil Procedure,[22] only questions of law may be raised in a petition for
Credo,[7] recalled that on December 6, 2010, Remoticado was absent without an official
review on certiorari. The rule, however, admits of exceptions. In Pascual v. Burgos:[23]
leave. He remained absent until December 20, 2010 when, upon showing up, he
The Rules of Court require that only questions of law should be raised in petitions tiled
informed Nielo that he was resigning. Prodded by Nielo for his reason, Remoticado under Rule 45. This court is not a trier of facts. It will not entertain questions of fact as
noted that they were "personal reasons considering that he got sick." [8] Nielo advised the factual findings of the appellate courts are "final, binding[,] or conclusive on the
Remoticado to return the following day as he still had to report Remoticado's resignation parties and upon this [c]ourt" when supported by substantial evidence. Factual findings
to Typical Construction's main office, and as his final pay had yet to be computed. [9]
of the appellate courts will not be reviewed nor disturbed on appeal to this court.
Remoticado returned the following day and was handed P5,082.53 as his final pay. He However, these rules do admit exceptions. Over time, the exceptions to these rules
protested, saying that he was entitled to "separation pay computed at two (2) months have expanded. At present, there are 10 recognized exceptions that were first listed
for his services for two (2) years."[10] In response, Nielo explained that Remoticado
in Medina v. Mayor Asistio, Jr.:
could not be entitled to separation pay considering that he voluntarily resigned. Nielo
(1) When the conclusion is a finding grounded entirely on speculation, surmises or
added that if Remoticado was not satisfied with P5,082.53, he was free to continue conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible;
working for Typical Construction. However, Remoticado was resolute and proceeded (3) Where there is a grave abuse of discretion; (4) When the judgment is based on a
to sign and affix his thumb marks on a Kasulatan ng Pagbawi ng Karapatan at Kawalan
misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the
ng Paghahabol, a waiver and quitclaim.[11]
Court of Appeals, in making its findings, went beyond the issues of the case and the
same is contrary to the admissions of both appellant and appellee; (7) The findings of
On January 10, 2011,[12] Remoticado filed a Complaint for illegal dismissal against the Court of Appeals are contrary to those of the trial court; (8) When the findings of
Typical Construction and its owner and operator, Rommel M. Alignay (Alignay). [13] He
fact are conclusions without citation of specific evidence on which they are based; (9)
claimed that on December 23, 2010, he was told to stop reporting for work due to a
When the facts set forth in the petition as well as in the petitioner's main and reply briefs
"debt at the canteen"[14] and thereafter was prevented from entering Typical are not disputed by the respondents; and (10) The finding of fact of the Court of Appeals
is premised on the supposed absence of evidence and is contradicted by the evidence Construction, was prejudiced or even just inconvenienced by petitioner's indebtedness.
on record. It appears that Bax Canteen was merely in the proximity of the site of Typical
These exceptions similarly apply in petitions for review filed before this court involving Construction's Jedic Project. Petitioner failed to show why Typical Construction would
civil, labor, tax, or criminal cases.[24] (Citations omitted) go out of its way to concern itself with the affairs of another company. What stands,
No exception avails in this case. therefore, is the sheer improbability that Typical Construction would take petitioner's
indebtedness as an infraction, let alone as a ground for terminating his employment.[29]
Quite glaring is the sheer consistency of the factual findings of the Court of Appeals,
the National Labor Relations Commission, and Labor Arbiter Dela Cruz. The waiver and quitclaim bearing petitioner's signature and thumbmarks was d9Jed
December 21, 2010,[30] predating petitioner's alleged illegal termination by two (2) days.
Not only are these findings uniform, but they are also sustained by evidence. The Court If indeed petitioner was told to stop reporting for work on December 23, 2010, it does
of Appeals correctly ruled that there is no showing of grave abuse of discretion on the not make sense for Typical Construction to have petitioner execute a waiver and
part of the National Labor Relations Commission. quitclaim two (2) full days ahead of the termination of his employment. It would have
been a ludicrous move for an employer that is purportedly out to outwit someone into
II unemployment.

It is petitioner's claim that the Court of Appeals, the National Labor Relations The waiver and quitclaim could very well have been antedated. But it is not for this
Commission, and Labor Arbiter Dela Cruz are all in error for failing to see that Typical Court to sustain a mere conjecture. It was for petitioner to allege and prove any
Construction failed to discharge its supposed burden of proving the validity of his possibility of antedating. He did not do so. In any case, even if this Court were to indulge
dismissal. He asserts that such failure leaves no other conclusion than that his a speculation, there does not appear to be any cogent reason for antedating. To the
employment was illegally terminated.[25] contrary, antedating the waiver and quitclaim was an unnecessary complication
considering that any simulation of resignation would have already been served by
It is petitioner who is in error. petitioner's mere affixing of his signature. Antedating would just have been an
inexplicably asinine move on the part of respondents.
It is true that in illegal termination cases, the burden is upon the employer to prove that
termination of employment was for a just cause. Logic dictates, however, that the What is most crucial is that petitioner has never disavowed the waiver and
complaining employee must first establish by substantial evidence the fact of quitclaim.[31] It does not appear also that petitioner has accounted for why this
termination by the employer.[26] If there is no proof of termination by the employer, there document exists, such as by alleging that he was coerced into executing it.
is no point in even considering the cause for it. There can be no illegal termination when
there was no termination: Jurisprudence frowns upon waivers and quitclaims forced upon employees. Waivers
Before the employer must bear the burden of proving that the dismissal was legal, the and quitclaims are, however, not invalid in themselves. When shown to be freely
employee must first establish by substantial evidence the fact of his dismissal from executed, they validly discharge an employer from liability to an employee. "[A]
service. If there is no dismissal, then there can be no question as to the legality or legitimate waiver representing a voluntary settlement of a laborer's claims should be
illegality thereof.[27] respected by the courts as the law between the parties."[32] In Goodrich Manufacturing
Petitioner here insists on his version of events, that is, that on December 23, 2010, he Corporation v. Ativo:[33]
was told to stop reporting for work on account of his supposed indebtedness at the It is true that the law looks with disfavor on quitclaims and releases by employees who
canteen. This bare insistence, however, is all that petitioner has. He failed to present have been inveigled or pressured into signing them by unscrupulous employers
convincing evidence. Even his basic narrative is bereft of supporting details that could seeking to evade their legal responsibilities and frustrate just claims of employees. In
be taken as badges of veracity. As the Court of Appeals underscored, "[P]etitioner only certain cases, however, the Court has given effect to quitclaims executed by employees
made a general statement that he was illegally dismissed . . . He did not state how he if the employer is able to prove the following requisites, to wit: (1) the employee
was terminated [or] mentioned who prevented him from reporting for work." [28] executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of
any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and
III (4) the contract is not contrary to law, public order, public policy, morals or good
customs, or prejudicial to a third person with a right recognized by law.
In contrast with petitioner's bare allegation are undisputed facts and pieces of evidence
adduced by respondents, which cast serious doubt on the veracity of petitioner's Our pronouncement in Periquet v. National Labor Relations Commission on this matter
recollection of events. cannot be more explicit:
Not all waivers and quitclaims are invalid as against public policy. If the agreement was
It is not disputed that the establishment identified as Bax Canteen, to which petitioner voluntarily entered into and represents a reasonable settlement, it is binding on the
owed P2,115.00, is not owned by, or otherwise connected with any of the respondents, parties and may not later be disowned simply because of a change of mind. It is only
or with any of Typical Construction's owners, directors, or officers. There was also no where there is clear proof that the waiver was wangled from an unsuspecting or gullible
showing that any of the two (2) respondents, or anyone connected with Typical person, or the terms of settlement are unconscionable on its face, that the law will step
in to annul the questionable transaction. But where it is shown that the person making
the waiver did so voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking.[34] (Citations omitted)
Petitioner's barren tale of his employer's order for him to stop reporting for work is hardly
the requisite "clear proof that the waiver was wangled from an unsuspecting or gullible
person."[35] Indeed, courts and tribunals should not be so gullible as to lend validity to
every waiver and quitclaim confronting them. However, neither should they be so
foolhardy as to believe a complaining employee's narrative at the mere sight or mention
of a waiver or quitclaim.

IV

Petitioner here would have this Court rule in his favor when he does absolutely nothing
more than entreat the doctrine on an employer's burden to prove just cases for
terminating employment. It is as though this invocation was a magic spell that would
win the day for him regardless of whether or not he is able to discharge his primordial
burden of proving the occurrence of termination. This Court cannot fall for this. The task
of adjudication demands more than convenient conclusions obtained through handy
invocations. Rather, it requires a meticulous appraisal of evidence and legal bases.

Petitioner is utterly wanting, both in evidence and legal bases. This Court cannot be so
witless as to rule in his favor. With an utter dearth of proof in petitioner's favor, the
consistent findings of the Court of Appeals, the National Labor Relations Commission,
and the Labor Arbiter must be sustained.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed

November 29, 2012 Decision and March 26, 2013 Resolution of the Court of Appeals
in CA-G.R. SP No. 124993 are AFFIRMED.

SO ORDERED.
G.R. No. 203328 an available officer's post.4 However, Alva was no longer given any post. Alva begged
for an assignment, but his pleas were all unheeded. 5
JOSELITO A. ALVA, Petitioner
vs. This prompted Alva to file a Complaint for Illegal Dismissal, Underpayment of Wages,
HIGH CAPACITY SECURITY FORCE, INC. and ARMANDO M. VILLANUEVA, Non-Payment of 13th Month Pay, Service Incentive Leave, Holiday Premium, ECOLA,
Respondents Payment for Rest Day, Night Shift Differential Pay, Separation Pay, moral and
exemplary damages and attorney's fees against High Capacity and its General
DECISION Manager, Armando Villanueva.6 Alva was assisted by the PAO in the proceedings
before the Labor Arbiter (LA).7
REYES, J.:
Ruling of the LA
The laborer's availment of the free legal services offered by the Public Attorney's Office
(PAO) does not prevent the award of attorney's fees upon the successful conclusion of On October 28, 2008, the LA rendered a Decision8 finding High Capacity guilty of illegal
the litigation. dismissal. The LA observed that Alva was placed on floating status from October 21,
2007 to April 22, 2008, and was not given any assignment or duty after the lapse of six
months. The failure of High Capacity to reinstate Alva after the lapse of his off-detail
This treats of the Petition for Review on Certiorari1 under Rule 45 of the Rules of Court status on April 22, 2008, rendered it liable for illegal dismissal. 9
seeking the reversal of the Decision2 dated February 24, 2012 and Resolution3 dated
August 30, 2012, rendered by the Court of Appeals (CA) in CA-G.R. SP No. 114442
and CA-G.R. SP No. 114520, which deleted the award of attorney's fees in favor of Accordingly, the LA ordered Alva's reinstatement with the payment of backwages,
petitioner Joselito A. Alva (Alva). computed six months after he was first placed on floating status up to the promulgation
of its decision. Likewise, the LA awarded separation pay in lieu of reinstatement,
equivalent to one month salary for every year of service. In addition, the LA awarded
The Antecedents attorney's fees equivalent to ten percent (10%) of the total monetary award, finding that
Alva was constrained to hire the services of counsel to protect his rights and interests.
On November 1, 2003, Alva was hired as a security guard by respondent High Capacity
Security Force, Inc., (High Capacity), a duly organized security agency. Alva was Aggrieved, High Capacity filed an appeal before the National Labor Relations
initially detailed as a security guard at the Basa Land Power Plant in Rosario, Cavite, Commission (NLRC).10
earning a daily wage of Three Hundred Thirty Pesos (Php 330.00).
Ruling of the NLRC
On April 16, 2004, Alva was promoted as Assistant Security Officer. After sometime,
he was again promoted as Security Officer, with a daily salary of Four Hundred Thirty
Pesos (Php 430.00). On December 8, 2009, the NLRC modified the earlier ruling of the Labor Arbiter.11 The
NLRC found that Alva was dismissed for just cause, as he was caught sleeping while
on duty. However, the NLRC noted that High Capacity failed to observe procedural due
Meanwhile, on June 5, 2007, Alva was assigned as an Assistant Officer-in-Charge of process in effecting Alva's dismissal from employment. Accordingly, the NLRC deleted
HRD-PTE, Ltd. Inc. (HRD PTE). While assigned thereat, one of the security guards the award of backwages and separation pay, and instead ordered the payment of
under his supervision allowed the entry of a garbage collection truck without securing nominal damages in addition to Alva's monetary claims. The NLRC maintained the
the prior permission and approval of the company's Administrative and Personnel award of attorney's fees. The dispositive portion of the NLRC decision reads:
Manager. Bearing the crudgels of such mishap, Alva was suspended for one month
beginning October 21, 2007.
WHEREFORE, premises considered, the Decision is MODIFIED. Respondents are
ordered: (1) to pay Complainant the amount of ₱30,000.00 by way of nominal damages;
During Alva's suspension, HRD-PTE requested for Alva's relief from post. HRD-PTE (2) to pay the Complainant the aggregate amount of P52,890.00 representing his
complained that Alva was found sleeping while on duty and exercised favoritism in the holiday pay, service incentive leave pay and 13th month pay; (3) to pay Complainant
assignment of shifts of security guards. an amount equivalent to ten (10%) percent of the judgment award, as and for attorney's
fees.
Thereafter, Alva was placed on floating status. On November 23, 2007, while Alva was
still on floating status, High Capacity informed him of the lack of available posts where SO ORDERED.12
he could be assigned as Security Officer or Assistant Security Officer. Instead, Alva
was given an option to temporarily render duty as an ordinary guard while waiting for
Dissatisfied with the ruling of the NLRC, both parties filed their respective Motions for 1. Declaring the dismissal of Joselito A. Alva to be illegal and consequently, HCSFI and
Reconsideration. Armando Villanueva are directed to pay Mr. Alva his separation pay, backwages and
monetary claims constituting holiday pay, service incentive leave pay and 13th month
In his Motion for Reconsideration,13 Alva claimed that the NLRC gravely abused its pay;
discretion in modifying the decision of the LA by deleting the awards of backwages and
separation pay. Alva maintained that he was entitled to backwages as a recompense 2. Dismissing the claim of Joselito A. Alva for attorney's fees; and
for the earnings he lost due to his illegal dismissal.
3. The [LA] of origin is DIRECTED to compute the following with dispatch:
On the other hand, High Capacity averred that the NLRC's award of nominal damages
amounting to Thirty Thousand Pesos (Php 30,000.00), effectively forbid the imposition 1. Joselito A. Alva's backwages from the time his salary was withheld on April 22, 2008,
of any other damages. In this regard, High Capacity argued that the award of Fifty Two up to the date of finality of this Decision;
Thousand Eight Hundred Ninety Pesos (Php 52,890.00), which represented Alva's
holiday pay, service incentive leave pay and 13th month pay, partook the nature of
actual damages that may no longer be imposed. In addition, High Capacity prayed for 2. Joselito A. Alva's separation pay from the date he was employed on November 1,
the deletion of attorney's fees, there being no justification for its award. High Capacity 2003 up to the date of finality of this Decision; and
stressed that the award of attorney's fees is an exception, rather than the general rule. 14
3. Joselito A. Alva's monetary claims comprising of holiday pay, service incentive leave
On March 30, 2010, the NLRC issued a Resolution15 partially granting High Capacity's pay and 13th month pay with due consideration to the corresponding changes in the
Motion for Reconsideration by deleting the award of attorney's fees in favor of Alva. daily salary rate received by him within the period of three years, that is, from 2005 until
The NLRC found no basis to award attorney's fees considering that Alva's dismissal the year he filed the case for illegal dismissal on April 22, 2008.
from employment was justified. As such, the NLRC opined that no bad faith may be
imputed against High Capacity.16 The total monetary award shall earn legal interest from the date of the finality of this
Decision until fully paid.24
Dissatisfied with the ruling, both parties filed separate Petitions for Certiorari before the
CA.17 The two petitions were consolidated. One of the issues raised before the 1CA Both parties filed their respective Motions for Reconsideration, 25 which were denied by
was the propriety of the deletion of the award of attorney's fees. 18 the CA in its Resolution26 dated August 30, 2012.

Ruling of the CA The Issue

On February 24, 2012, the CA rendered the assailed Decision. 19 The CA held that Alva Undeterred, Alva filed the instant Petition, praying for the modification of the assailed
was constructively dismissed, when he was placed on floating status for more than six decision, on the following lone ground, to wit:
months. The unreasonable length of time that Alva was not given a new assignment
inevitably resulted in his constructive dismissal.20 Additionally, the CA observed that THE CA GRAVELY ERRED IN DELETING THE AW ARD OF ATTORNEY'S FEES.27
High Capacity failed to comply with procedural due process requirements in effecting
Alva's dismissal.21
Alva asserts that High Capacity should be ordered to pay attorney's fees pursuant to
Article 2208 paragraphs (2) and (7) of the Civil Code.28 Alva asserts that he is entitled
Accordingly, the CA ordered the payment of backwages, computed from the time Alva's to attorney's fees as he was compelled to litigate to protect his interest by reason of the
compensation was withheld up to the finality of the Court's decision. Acceding to Alva's unjustified and unlawful termination of his employment. 29 The fact that he is
request not to be reinstated, the CA awarded separation pay in lieu of represented by the PAO does not militate against his right to receive attorney's fees.
reinstatement.22 Likewise, the CA granted Alva's claims for holiday pay, service Alva points out that Section 6 of Republic Act (R.A.) No. 9406 30 actually sanctions the
incentive leave pay and 13th month pay. However, the CA deleted the award of award of attorney's fees in favor of the PAO in successfully litigated cases. 31
attorney's fees noting that Alva was represented by the PAO.23

On the other hand, High Capacity counters that the CA was correct in deleting the
The dispositive portion of the assailed decision reads: award of attorney's fees. High Capacity avers that the award of attorney's fees is
warranted only in cases where the plaintiff was compelled to litigate or incur expenses
WHEREFORE, premises considered, the assailed Decision dated December 8, 2009 to protect his interest due to the act or omission of the defendant. Alva, who was
rendered by the [NLRC] in NLRC LAC No. 12- 004020-08 and its Resolution dated represented by the PAO, did not incur any expenses to protect his interest, as the
March 30, 2010 issued in the same case are hereby VACA TED and SET ASIDE and former merely availed of the latter's free legal services. High Capacity relies on the
another judgment entered as follows:
Court's pronouncement in Lambo v. NLRC,32 which disallowed the award of attorney's (3) In criminal cases of malicious prosecution against the plaintiff;
fees to litigants who were represented by the PAO. 33 Similarly, High Capacity points
out that the award of attorney's fees in favor of Alva was bereft of any factual, legal and (4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
equitable justification.34 Finally, High Capacity asserts that the award of attorney's fees
under Article 2208 of the Civil Code is discretionary on the courts. This being so, the
CA's refusal to award attorney's fees must thus be respected. (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiffs plainly valid, just and demandable claim;
Ruling of the Court
(6) In actions for legal support;
The petition is impressed with merit.
(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;
It must be noted at the outset that the only issue submitted for the Court's resolution is
the propriety of the deletion of the award of attorney's fees.1âwphi1 There remains no
issue regarding the finding of illegal dismissal, thereby rendering all pronouncements (8) In actions for indemnity under workmen's compensation and employer's liability
on the matter of illegal dismissal final. laws;

The Concept of Attorney's Fees in (9) In a separate civil action to recover civil liability arising from a crime;
Labor Cases
(10) When at least double judicial costs are awarded;
Essentially, there are two commonly accepted concepts of attorney's fees - the ordinary
and extraordinary. On the one hand, in its ordinary concept, an attorney's fee is the (11) In any other case where the court deems it just and equitable that attorney's fees
reasonable compensation paid by the client to his lawyer in exchange for the legal and expenses of litigation should be recovered.
services rendered by the latter. The compensation is paid for the cost and/or results of
the legal services, as agreed upon by the parties or as may be assessed by the courts. In all cases, the attorney's fees and expenses of litigation must be reasonable.
On the other hand, as an extraordinary concept, an attorney's fee is deemed an (Emphasis Ours)
indemnity for damages ordered by the court to be paid by the losing party to the winning
party. In labor cases, attorney's fees partake of the nature of an extraordinary award
granted to the victorious party as an indemnity for damages. As a general rule, it is To recapitulate, both the Labor Code and the Civil Code provide that attorney's fees
payable to the client, not to his counsel, unless the former agreed to give the amount may be recovered in the following instances, namely, (i) in cases involving the unlawful
to the latter as an addition to, or part of the counsel's compensation.35 withholding of wages;38 (ii) where the defendant's act or omission has compelled the
plaintiff to litigate with third persons or the plaintiff incurred expenses to protect his
interest;39 (iii) in actions for the recovery of wages of household helpers, laborers and
Notably, Article 111 of the Labor Code sanctions the award of attorney's foes in cases skilled workers;40 (iv) in actions for indemnity under workmen's compensation and
of the unlawful withholding of wages, wherein the culpable party may be assessed employer's liability laws;41 and (v) in cases where the court deems it just and equitable
attorney's fees equivalent to ten percent (10%) of the amount of wages that attorney's fees and expenses of litigation should be recovered. 42
recovered.36 The amount of attorney's fees shall not exceed ten percent (10%) of the
total monetary award, and the fees may be deducted from the amount due the winning
party.37 In a catena of cases, the Court awarded attorney's fees in favor of illegally dismissed
employees who were compelled to file an action for the recovery of their lawful wages,
which were withheld by the employer without any valid and legal basis. 43 A plain
In addition, Article 2208 of the Civil Code allows the award of attorney's fees in the showing that the lawful wages were not paid without justification was sufficient to
following instances, to wit: warrant an award of attorney's fees.44

ART. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, Moreover, "Article III is an exception to the declared policy of strict construction in the
other than judicial costs, cannot be recovered, except: award of attorney's fees."45 In fact, the general rule that attorney's fees may only be
awarded upon proof of bad faith takes a different turn when it comes to labor cases.
(1) When exemplary damages are awarded; The established rule in labor law is that the withholding of wages need not be coupled
with malice or bad faith to warrant the grant of attorney's fees under Article III of the
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third Labor Code.46 All that is required is that the lawful wages were not paid without
persons or to incur expenses to protect his interest; justification, thereby compelling the employee to litigate. 47
Thus, based on the foregoing laws and jurisprudence, it becomes all too apparent that Republic Act No. 9406, the costs of the suit, attorney's fees and contingent fees
Alva, whose wages and monetary benefits were unlawfully withheld, is indeed entitled imposed upon the adversary of the PAO clients after a successful litigation shall be
to an award of attorney's fees. deposited in the National Treasury as trust fund and shall be disbursed for special
allowances of authorized officials and lawyers of the PAO.
The Availment of Free Legal
Services Does Not Foreclose an Thus, the respondents are still entitled to attorney's fees. The attorney's fees awarded
Award of Attorney's Fees to them shall be paid to the PAO. It serves as a token recompense to the PAO for its
provision of free legal services to litigants who have no means of hiring a private
In the case at bar, the CA deleted the award of attorney's fees on the simple pretext lawyer.50 (Citations omitted and emphasis Ours)
that Alva was represented by the PAO.
Thus, Alva's availment of free legal services from the PAO does not disqualify him from
The CA was mistaken. an award of attorney's fees.1âwphi1 Simply put, Alva should be awarded attorney's
fees notwithstanding the fact that he was represented by the PAO.
Needless to say, in addition to the fact that attorney's fees partake of an indemnity for
damages awarded to the employee, there is nothing that prevents Alva and the PAO The Respondent's Reliance on the
from entering into an agreement assigning attorney's fees in favor of the latter. It must Case of Lambo v. NLRC is
be noted that in 2007, Congress passed R.A. No. 9406 inserting new sections in Misplaced
Chapter 5, Title III, Book IV of Executive Order No. 292 (E.O. 292), or the Adminstrative
Code of 1987. R.A. No. 9406 sanctions the receipt by the PAO of attorney's fees, and In Lambo,51 the Court disallowed the payment of attorney's fees on the ground that
provides that such fees shall constitute a trust fund to be used for the special therein petitioners were represented by the PAO.
allowances of their officials and lawyers, viz.:
It must be noted that the Lambo52 case was decided on October 26, 1999, when the
SEC. 6. New sections are hereby inserted in Chapter 5, Title III, Book IV of Executive law that governed the PAO was still E.O. 292. Nothing in the provisions of E.O. 292
Order No. 292, to read as follows: granted the PAO the right to an award of attorney's fees. In contrast, the later law R.A.
No. 9406 allows the award of attorney's fees and clearly instructs that such attorney's
xxxx fees shall constitute a special allowance for the PA O's officers and lawyers.

SEC. 16-D. Exemption from Fees and Costs of the Suit. - The clients of the PAO shall In fine, the award of attorney's fees is sanctioned in the case at bar, where there was
[sic] exempt from payment of docket and other fees incidental to instituting an action in an unlawful and unjustified withholding of wages, and as a result thereof, the employee
court and other quasi-judicial bodies, as an original proceeding or on appeal. was compelled to litigate to protect and defend his interests. This award is not
prevented by the fact that the employee was represented by the PAO. After all,
attorney's fees are awarded as a recompense against the employer who unjustifiably
The costs of the suit, attorney's fees and contingent fees imposed upon the adversary deprived the employee of a source of income he industriously worked for.
of the PAO clients after a successful litigation shall be deposited in the National
Treasury as trust fund and shall be disbursed for special allowances of authorized
officials and lawyers of the PAO.48 (Emphasis Ours) WHEREFORE, premises considered, the petition is GRANTED. The Decision dated
February 24, 2012 of the Court of Appeals in CA-G.R. SP No. 114442 and CA-G.R. SP
No. 114520 is MODIFIED in order to INTEGRATE the award of attorney's fees
In fact, the matter of entitlement to attorney's fees by a claimant who was represented equivalent to ten percent (10%) of the total monetary award.
by the PAO has already been settled in Our Haus Realty Development Corporation v.
Alexander Parian, et al.49 The Court, speaking through Associate Justice Arturo D.
Brion ruled that the employees are entitled to attorney's fees, notwithstanding their SO ORDERED.
availment of the free legal services offered by the PAO. The Court ruled that the amount
of attorney's fees shall be awarded to the PAO as a token recompense to them for their
provision of free legal services to litigants who have no means of hiring a private lawyer,
to wit:

It is settled that in actions for recovery of wages or where an employee was forced to
litigate and, thus, incur expenses to protect his rights and interest, the award of
attorney's fees is legally and morally justifiable. Moreover, under the PAO Law or
G.R. No. 86773 February 14, 1992 Upon petitioner SEAFDEC-AQD's failure to pay private respondent his separation pay,
the latter filed on March 18, 1987 a complaint against petitioners for non-payment of
SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE separation benefits plus moral damages and attorney's fees with the Arbitration Branch
DEPARTMENT (SEAFDEC-AQD), DR. FLOR LACANILAO (CHIEF), RUFIL of the NLRC (Annex "C" of Petition for Certiorari).
CUEVAS (HEAD, ADMINISTRATIVE DIV.), BEN DELOS REYES (FINANCE
OFFICER), petitioners, Petitioners in their answer with counterclaim alleged that the NLRC has no jurisdiction
vs. over the case inasmuch as the SEAFDEC-AQD is an international organization and
NATIONAL LABOR RELATIONS COMMISSION and JUVENAL that private respondent must first secure clearances from the proper departments for
LAZAGA, respondents. property or money accountability before any claim for separation pay will be paid, and
which clearances had not yet been obtained by the private respondent.
Ramon Encarnacion for petitioners.
A formal hearing was conducted whereby private respondent alleged that the non-
Caesar T. Corpus for private respondent. issuance of the clearances by the petitioners was politically motivated and in bad faith.
On the other hand, petitioners alleged that private respondent has property
accountability and an outstanding obligation to SEAFDEC-AQD in the amount of
P27,532.11. Furthermore, private respondent is not entitled to accrued sick leave
benefits amounting to P44,000.00 due to his failure to avail of the same during his
NOCON, J.: employment with the SEAFDEC-AQD (Annex "D", Id.).

This is a petition for certiorari to annul and set aside the July 26, 1988 decision of the On January 12, 1988, the labor arbiter rendered a decision, the dispositive portion of
National Labor Relations Commission sustaining the labor arbiter, in holding herein which reads:
petitioners Southeast Asian Fisheries Development Center-Aquaculture Department
(SEAFDEC-AQD), Dr. Flor Lacanilao, Rufil Cuevas and Ben de los Reyes liable to pay WHEREFORE, premises considered, judgment is hereby rendered
private respondent Juvenal Lazaga the amount of P126,458.89 plus interest thereon ordering respondents:
computed from May 16, 1986 until full payment thereof is made, as separation pay and
other post-employment benefits, and the resolution denying the petitioners' motion for
reconsideration of said decision dated January 9, 1989. 1. To pay complainant P126,458.89, plus legal interest thereon
computed from May 16, 1986 until full payment thereof is made, as
separation pay and other post-employment benefits;
The antecedent facts of the case are as follows:
2. To pay complainant actual damages in the amount of P50,000,
SEAFDEC-AQD is a department of an international organization, the Southeast Asian plus 10% attorney's fees.
Fisheries Development Center, organized through an agreement entered into in
Bangkok, Thailand on December 28, 1967 by the governments of Malaysia, Singapore,
Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring country All other claims are hereby dismissed.
(Article 1, Agreement Establishing the SEAFDEC).
SO ORDERED. (Rollo, p. 51, Annex "E")
On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research
Associate an a probationary basis by the SEAFDEC-AQD and was appointed Senior On July 26, 1988, said decision was affirmed by the Fifth Division of the NLRC except
External Affairs Officer on January 5, 1983 with a monthly basic salary of P8,000.00 as to the award of P50,000.00 as actual damages and attorney's fees for being
and a monthly allowance of P4,000.00. Thereafter, he was appointed to the position of baseless. (Annex "A", p. 28, id.)
Professional III and designated as Head of External Affairs Office with the same pay
and benefits. On September 3, 1988, petitioners filed a Motion for Reconsideration (Annex "G", id.)
which was denied on January 9, 1989. Thereafter, petitioners instituted this petition
On May 8, 1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent for certiorari alleging that the NLRC has no jurisdiction to hear and decide respondent
a notice of termination to private respondent informing him that due to the financial Lazaga's complaint since SEAFDEC-AQD is immune from suit owing to its international
constraints being experienced by the department, his services shall be terminated at character and the complaint is in effect a suit against the State which cannot be
the close of office hours on May 15, 1986 and that he is entitled to separation benefits maintained without its consent.
equivalent to one (1) month of his basic salary for every year of service plus other
benefits (Rollo, p. 153). The petition is impressed with merit.
Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department laws and regulations shall apply only insofar as its contribution to SEAFDEC of "an
(SEAFDEC-AQD) is an international agency beyond the jurisdiction of public agreed amount of money, movable and immovable property and services necessary
respondent NLRC. for the establishment and operation of the Center" are concerned (Art. 11, ibid.). It
expressly waived the application of the Philippine laws on the disbursement of funds of
It was established by the Governments of Burma, Kingdom of Cambodia, Republic of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292).
Indonesia, Japan, Kingdom of Laos, Malaysia. Republic of the Philippines, Republic of
Singapore, Kingdom of Thailand and Republic of Vietnam (Annex "H", Petition). The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction
over SEAFDEC-AQD in Opinion No. 139, Series of 1984 —
The Republic of the Philippines became a signatory to the Agreement establishing
SEAFDEC on January 16,1968. Its purpose is as follows: 4. One of the basic immunities of an international organization is
immunity from local jurisdiction, i.e., that it is immune from the legal
The purpose of the Center is to contribute to the promotion of the writs and processes issued by the tribunals of the country where it is
fisheries development in Southeast Asia by mutual co-operation found. (See Jenks, Id., pp. 37-44) The obvious reason for this is that
among the member governments of the Center, hereinafter called the subjection of such an organization to the authority of the local
the "Members", and through collaboration with international courts would afford a convenient medium thru which the host
organizations and governments external to the Center. (Agreement government may interfere in there operations or even influence or
Establishing the SEAFDEC, Art. 1; Annex "H" Petition) (p.310, Rollo) control its policies and decisions of the organization; besides, such
subjection to local jurisdiction would impair the capacity of such body
to discharge its responsibilities impartially on behalf of its member-
SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July states. In the case at bar, for instance, the entertainment by the
3-7, 1973 in Kuala Lumpur, Malaysia as one of the principal departments of SEAFDEC National Labor Relations Commission of Mr. Madamba's
(Annex "I", id.) to be established in Iloilo for the promotion of research in aquaculture. reinstatement cases would amount to interference by the Philippine
Paragraph 1, Article 6 of the Agreement establishing SEAFDEC mandates: Government in the management decisions of the SEARCA
governing board; even worse, it could compromise the desired
1. The Council shall be the supreme organ of the Center and all impartiality of the organization since it will have to suit its actuations
powers of the Center shall be vested in the Council. to the requirements of Philippine law, which may not necessarily
coincide with the interests of the other member-states. It is precisely
Being an intergovernmental organization, SEAFDEC including its Departments (AQD), to forestall these possibilities that in cases where the extent of the
enjoys functional independence and freedom from control of the state in whose territory immunity is specified in the enabling instruments of international
its office is located. organizations, jurisdictional immunity from the host country is
invariably among the first accorded. (See Jenks, Id.; See
also Bowett, The Law of International Institutions, pp. 284-1285).
As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their
book, Public International Law (p. 83, 1956 ed.):
Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is
unavailing because estoppel does not apply to confer jurisdiction to a tribunal that has
Permanent international commissions and administrative bodies none over a cause of action. Jurisdiction is conferred by law. Where there is none, no
have been created by the agreement of a considerable number of agreement of the parties can provide one. Settled is the rule that the decision of a
States for a variety of international purposes, economic or social and tribunal not vested with appropriate jurisdiction is null and void. Thus, in Calimlim
mainly non-political. Among the notable instances are the vs. Ramirez, this Court held:
International Labor Organization, the International Institute of
Agriculture, the International Danube Commission. In so far as they
are autonomous and beyond the control of any one State, they have A rule, that had been settled by unquestioned acceptance and
a distinct juridical personality independent of the municipal law of the upheld in decisions so numerous to cite is that the jurisdiction of a
State where they are situated. As such, according to one leading court over the subject matter of the action is a matter of law and may
authority "they must be deemed to possess a species of international not be conferred by consent or agreement of the parties. The lack of
personality of their own." (Salonga and Yap, Public International Law, jurisdiction of a court may be raised at any stage of the proceedings,
83 [1956 ed.]) even on appeal. This doctrine has been qualified by recent
pronouncements which it stemmed principally from the ruling in the
cited case of Sibonghanoy. It is to be regretted, however, that the
Pursuant to its being a signatory to the Agreement, the Republic of the Philippines holding in said case had been applied to situations which were
agreed to be represented by one Director in the governing SEAFDEC Council obviously not contemplated therein. The exceptional circumstances
(Agreement Establishing SEAFDEC, Art. 5, Par. 1, Annex "H", ibid.) and that its national
 involved in Sibonghanoy which justified the departure from the
accepted concept of non-waivability of objection to jurisdiction has
been ignored and, instead a blanket doctrine had been repeatedly
upheld that rendered the supposed ruling in Sibonghanoy not as the
exception, but rather the general rule, virtually overthrowing
altogether the time-honored principle that the issue of jurisdiction is
not lost by waiver or by estoppel. (Calimlim vs. Ramirez, G.R. No. L-
34362, 118 SCRA 399; [1982])

Respondent NLRC'S citation of the ruling of this Court in Lacanilao v. De Leon (147
SCRA 286 [1987]) to justify its assumption of jurisdiction over SEAFDEC is misplaced.
On the contrary, the Court in said case explained why it took cognizance of the case.
Said the Court:

We would note, finally, that the present petition relates to a

controversy between two claimants to the same position; this is not
a controversy between the SEAFDEC on the one hand, and an
officer or employee, or a person claiming to be an officer or
employee, of the SEAFDEC, on the other hand. There is before us
no question involving immunity from the jurisdiction of the Court,
there being no plea for such immunity whether by or on behalf of
SEAFDEC, or by an official of SEAFDEC with the consent of
SEAFDEC (Id., at 300; emphasis supplied).

WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the

jurisdiction of the courts or local agency of the Philippine government, the questioned
decision and resolution of the NLRC dated July 26, 1988 and January 9, 1989,
respectively, are hereby REVERSED and SET ASIDE for having been rendered without
jurisdiction. No costs.

SO ORDERED.
G.R. No. 179793 July 5, 2010 Headquarters (AFP GHQ) issued Staff Memorandum No. 5 formally organizing the
AFPCES.3
MAGDALENA HIDALGO, EDITHA GONZALES, EUNICE P. MALIMBAN,
CHRISTINE VIDAL, CHRISTIAN CALLEJO, CONSOLACION P. MORENO, In order to socialize the services of AFPCES, General Order No. 920 was issued by
SHERINA F. DOREZA, LUZ T. SUCGANG, PRISCILLA F. ESTOYE, REYNOSO V. the AFP GHQ on July 13, 1976 reorganizing the AFPCES as an AFP-Wide Service
GALLANO, ROSITA L. SENEDRIN, JULITA P. DE CASTRO, JULIETA F. PALAFOX, Support Unit. General Order No. 920 also provided that all installation Commissary
ERLINDO V. GALANO, JR., ROSALINDA R. SALUD, EVANGELINE D. Exchange Service including their equipment, records and assets shall be assigned and
EVANGELISTA, BABYLINDA N. NOHAY, BELINDA D. CARDONA, WILMA D. absorbed by the AFPCES.4 This, in effect, centralized the management of the
BARCENA, ANABELLE P. MOJADAS, LEONORA GRANADO, RICARDO R. commissary exchange services to the AFPCES. On February 26, 1987, General Order
BARANGCO, ROMEO O. MAICON, DANILO B. ENRICO, MARIANILA SITO, No. 138 was issued activating the AFPCES as a regular unit under the direct control of
MERLINA A. CATAAN, NEMIA E. PIANO, SOLEDAD P. RAMOS, DANTE L. the AFP Chief of Staff.5
PESIGAN, EDA A. JUNIO, MERCEDES R. NAFARRETE, MARILYN S. GONO, LUZ
SAMSON, ERNESTO C. DESEAR, TERESITA G. GONZAGA, TERESITA E. Petitioners, on the other hand, numbering 65 in all, 6 were hired as regular employees
EUSTAQUIO, VIRGINIA S. MONTEMAYOR, CRISTINA ABANTO, HENRY C. of AFPCES. Some worked as food handlers in AFPCES’ catering business and served
AMORTIZADO, FRANKIE VALERA, NELIA G. CAMORO, JOYSIE LABRADOR, during social functions held within its premises. Others occupied positions as computer
GERTRUDES FALALES, OPHELIA G. MUSAMAREN, PETRA M. IRINGAN, technicians, auditors, record clerks, cashiers, canvassers, bookkeepers, and
FRANCISCO C. CAPIZ, JR., RICKY ECHIEVERA, MA. ELGIN O. ABAIS, JOHN warehousemen.7 Several of them had worked with AFPCES for a number of years,
CARANAN, ROMEO LAGUNA, REBECCA C. BUGUA, NELSON FERRER, HELEN ranging from 4 to 31 years. Since the start of their employment, petitioners were
MANRESA, CONSORCIA FAJANEL, MA. JUANA A. GOLFO, RUBYLYN D. enrolled in the Social Security System (SSS), with respondent AFPCES paying its
DUMANDAL, FLORECERFINA S. BANDOLIN, FLORENCIO A. QUILATON, JR., corresponding employer’s share in their monthly SSS contribution. 8
GLORIA J. DOMINGO, MAY MACUGAY, MARY ANN CLAUDIO, ELVIRA KALALO,
DOROTEA MARTINEZ, LIGAYA PANEDA, and RENATO AGUILAR, Petitioners,
vs. Between 1999 and 2001, however, AFPCES advised petitioners to undergo an
REPUBLIC OF THE PHILIPPINES, for and in behalf of the ARMED FORCES OF indefinite leave of absence without pay, allegedly upon a conditional promise that they
THE PHILIPPINES COMMISSARY AND EXCHANGE SERVICES would be allowed to return to work as soon as AFPCES’ tax subsidy is released and
(AFPCES), Respondent. upon resumption of its store operations.9

DECISION When AFPCES failed to recall petitioners to their work as allegedly promised,
petitioners filed a complaint for illegal (constructive) dismissal with damages against
AFPCES before the NLRC.10 On July 4, 2002, after efforts to forge an amicable
VILLARAMA, JR., J.: settlement had failed, Labor Arbiter Salimathar V. Nambi rendered a decision11 in favor
of petitioners by ordering AFPCES to pay a total of ₱16,007,996.00 as back wages,
Which quasi-judicial agency has jurisdiction to hear and decide complaints for illegal 13th month pay and separation pay to petitioners.
dismissal against an adjunct government agency engaged in proprietary function?
Should the complaint be lodged before the National Labor Relations Commission AFPCES filed an appeal12 praying, among others, that it be exempted from posting the
(NLRC) or to the Civil Service Commission (CSC)? This is the focal issue that needs to required appeal bond. The NLRC, however, denied the plea and gave AFPCES ten
be resolved in this petition for review on certiorari assailing the Decision1 and (10) days to post an appeal bond. The NLRC likewise denied AFPCES’ motion for
Resolution2 of the Court of Appeals in CA-G.R. SP No. 84801 nullifying the Labor reconsideration. Meanwhile, petitioners sought the immediate execution of the Labor
Arbiter’s and the NLRC’s rulings. Arbiter’s decision.

Republic of the Philippines has represented respondent Armed Forces of the AFPCES filed a petition before the appellate court docketed as CA-G.R. SP. No. 84801,
Philippines Commissary and Exchange Services (AFPCES) in this recourse. AFPCES and prayed among others, for the issuance of a temporary restraining order to enjoin
is a unit/facility of the Armed Forces of the Philippines (AFP) organized pursuant to the NLRC from dismissing the appeal and granting execution of the Labor Arbiter’s
Letter of Instruction (LOI) No. 31, which was issued on November 20, 1972 by then decision.
President Ferdinand Marcos. Under LOI No. 31-A, which amended LOI No. 31, an
amount of ₱5 million was set aside from the Philippine Veterans’ Claims Settlement
Fund as seed capital for the AFPCES to be utilized and administered for the operations On October 22, 2004, the Court of Appeals issued a Resolution denying AFPCES’
and management of all commissary facilities in the military establishments all over the prayer for the issuance of a temporary restraining order for lack of merit. 13
country. AFPCES was intended to benefit the veterans, their widows and orphans, and
the members of the AFP and their dependents. In December 1972, the AFP General
Subsequently, on October 29, 2004, the NLRC dismissed AFPCES’ appeal following Subsequently, Executive Order (EO) No. 18024 defined government employees as all
its failure to post the required appeal bond.14 On December 7, 2004, petitioners moved employees of all branches, subdivisions, instrumentalities, and agencies of the
for the execution of the Labor Arbiter’s decision. Government, including government-owned or controlled corporations with original
charters.25 It provided that the Civil Service and labor laws shall be followed in the
On March 17, 2005, the enforcing sheriffs of the NLRC issued a Progress resolution of complaints, grievances and cases involving government employees.26
Report15 indicating that writs of execution and garnishment have been issued against
AFPCES’ funds deposited with the Land Bank of the Philippines to satisfy the Labor In Philippine Refining Company v. Court of Appeals, 27 we declared that AFPCES is a
Arbiter’s award. The said report noted that AFPCES has reinstated petitioners to their government agency that is not immune from suit since it is engaged in proprietary
former positions although Capt. Preciliano M. Ruiz, AFPCES’ commander and general activities. We find no compelling reason to deviate from such pronouncement. The
manager, gave no assurance regarding the payment of petitioners’ salaries. 16 historical background of its creation and establishment indicates that AFPCES is an
agency under the direct control and supervision of the AFP as it was established to
On April 7, 2005, the Court of Appeals granted AFPCES’ motion to lift the writ of take charge of the operations and management of all commissary facilities in military
garnishment and to stay the execution of the Labor Arbiter’s monetary award. establishments all over the country. By clear implication of law, all AFPCES personnel
Undaunted, petitioners were able to secure an alias writ of execution after due hearing should therefore be classified as government employees and any appointment,
before the Labor Arbiter. The issue was again brought before the Court of Appeals. promotion, discipline and termination of its civilian staff should be governed by
appropriate civil service laws and procedures.
On August 31, 2006, the appellate court promulgated the assailed Decision in CA-G.R.
SP No. 84801 granting AFPCES’ petition. The Court of Appeals, after applying the Interestingly, in the course of the proceedings, petitioners did not question or refute
Supreme Court’s pronouncement in Duty Free Philippines v. Mojica, 17 explained that such classification of the AFPCES. They, in fact, averred that AFPCES is not created
since AFPCES is a governmental agency that has no personality separate and distinct by a special law to classify it as a government-owned or controlled corporation with
from the AFP, petitioners are considered civil service employees, and that complaints original charter, but a mere entity of the AFP. They also admit that AFPCES is without
for illegal dismissal should therefore be lodged not with the Labor Arbiter but with the any corporate features as it is merely an agency performing proprietary functions not
CSC.18 only for the benefit of veterans, their widows and orphans, and the members of the
AFP, but for the public in general.28
Aggrieved, petitioners moved for a reconsideration of the said decision, but the
appellate court denied the same for lack of merit.19 Petitioners, however, assert that the pronouncement in Duty Free Philippines should
not be applied in the instant case since the factual milieu of the said case is different
from the case at bar.
Hence, this petition.
We partly agree with petitioners.
Pivotal to the resolution of this petition is a determination of the classification of
petitioners’ employment status with respondent AFPCES. AFPCES asserts that since
petitioners are government employees, jurisdiction over their complaints lies not with Like AFPCES, Duty Free Philippines is also a government agency engaged in
the NLRC, but with the CSC. Petitioners, on the other hand, contend that since they do proprietary activities without separate corporate existence. Unlike Duty Free
not belong to the approved plantilla of government personnel, their complaints for illegal Philippines, however, AFPCES committed acts which created an impression upon
dismissal was properly made before the NLRC. petitioners that they fall within the coverage of pertinent labor laws and not the civil
service law. First, since the start of their employment and until their unceremonious
indefinite suspension from work, AFPCES have enrolled petitioners to the SSS, the
Let us clarify the matter. primary governmental agency engaged in providing social security benefits to
employees of the private sector, instead of the Government Service Insurance System
Presidential Decree (PD) No. 807 or the Civil Service Decree of the (GSIS) as mandated by Commonwealth Act No. 186.29 AFPCES even remitted its
Philippines20 declares that the Civil Service Commission shall be the central personnel corresponding employer’s share to petitioners’ SSS contributions. Such practice has
agency to set standards and to enforce the laws governing the discipline of civil been continuously observed by the AFPCES in the span of more than three (3)
servants.21 PD No. 807 categorically described the scope of the civil service as decades.
embracing every branch, agency, subdivision, and instrumentality of the government,
including every government-owned or controlled corporations whether performing Second, the hiring, appointment and discipline of AFPCES employees never went
governmental or proprietary function;22 and construed an agency to mean any bureau, through the proper procedure as required by pertinent civil service laws and regulations.
office, commission, administration, board, committee, institute, corporation, whether In a formal request made by Feliciano M. Gacis, Jr., Officer-in-Charge of the Office of
performing governmental or proprietary function, or any other unit of the National the Assistant Secretary for Personnel of the Department of National Defense, inquiring
Government, as well as provincial, city or municipal government, except as otherwise from the CSC whether petitioners are indeed government employees covered by
provided.23
the Civil Service Law and CSC regulations, the said Commission issued a Resolution the direct control and supervision of the AFP. However, since this did not happen,
containing the following findings: petitioners were placed under an anomalous situation with AFPCES insisting that they
are government employees under the jurisdiction of the CSC, but with the CSC itself
It is explicit that the aforequoted LOI merely set aside a fund in the amount of five (5) disavowing any jurisdiction over them.1avvphi1
[m]illion [p]esos for the operation of a commissary in all military establishments in the
country for the benefit of veterans, their widows and orphans, and the members of the This notwithstanding, since it cannot be denied that petitioners are government
Armed Forces of the Philippines. And the fund and commissary shall be managed by employees, the proper body that has jurisdiction to hear the case is the CSC. Such fact
an entity called AFPCES. It can, thus, be said that the AFPCES is a mere entity in the cannot be negated by the failure of respondents to follow appropriate civil service rules
Armed Forces of the Philippines that is tasked to manage a commissary in different in the hiring, appointment, discipline and dismissal of petitioners. Neither can it be
military establishments for the benefit of those mentioned in the said LOI. Hence, it denied by the fact that respondents chose to enroll petitioners in the SSS instead of the
does not necessarily follow that all its civilian employees are considered government GSIS. Such considerations cannot be used against the CSC to deprive it of its
employees covered by and subject to the Civil Service Law and rules. jurisdiction. It is not the absence or presence of the required appointment from the CSC,
or the membership of an employee in the SSS or in the GSIS that determine the status
Section 2 (1), Article IX B of the 1987 Constitution defines the scope of the civil service, of the position of an employee. We agree with the opinion of the AFP Judge Advocate
as follows: General that it is the regulation or the law creating the Service that determines the
position of the employee.31
"Sec. 2. (1) The civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government-owned or controlled corporations Petitioners are government personnel since they are employed by an agency attached
with original charters." to the AFP. Consequently, as correctly observed by the Court of Appeals, the Labor
Arbiter’s decision on their complaint for illegal dismissal cannot be made to stand since
the same was issued without jurisdiction. Any decision issued without jurisdiction is a
From the aforequoted constitutional provision, it is clear that only government-owned total nullity, and may be struck down at any time.32
or controlled corporations with original charters are embraced by the civil service.
Hence, the question now that needs to be answered is: Can LOI 31-A be considered
as the charter of the AFPCES such that it can be considered a government-owned or However, given petitioners’ peculiar situation, the Court is constrained not to deny the
controlled corporation embraced by the Civil Service Law and rules? petition entirely, but instead to refer it to the CSC pro hac vice. The Court notes that
this case has been pending for nearly a decade, but deciding it on the merits at this
juncture, while ideal and more expeditious, is not possible. The records of the case fail
After a careful evaluation and scrutiny of LOI 31-A, the Commission is of the opinion to adequately spell out the validity of the complaint for illegal dismissal as well as the
and so holds that the said LOI could hardly be considered as the charter of AFPCES. actual amount of the claim. In fact, the records even fail to disclose the amount of salary
It should be noted that the said LOI does not specify the composition of AFPCES, its received by petitioners while they were engaged to work in AFPCES’ facilities. But
specific functions, its governing board, its powers and the limitation of the exercise rather than directing petitioners to re-file and relitigate their claim before the CSC – a
thereof. In short, the said LOI does not provide the AFPCES corporate features. This step which will only duplicate much of the proceedings already accomplished – the
being the case, the AFPCES cannot be considered a government-owned or controlled Court deems it best, pro hac vice, to order the NLRC to forward the entire records of
corporation with original charter. In fact, the AFPCES does not exercise corporate the case directly to the CSC which is directed to take cognizance of the case. The CSC
powers. Accordingly, its civilian employees cannot be considered as government is directed to promptly resolve whether petitioners were illegally dismissed from the
employees covered by the Civil Service Law and rules. service, and whether they are entitled to their monetary claims. Further, taking into
consideration AFPCES’ failure to observe the proper procedure required by pertinent
xxxx civil service rules and regulations regarding the hiring, appointment and placement of
petitioners, we likewise caution the CSC not to use the AFPCES’ inefficiency to
Further, there is neither a showing that the positions of civilian employees of the prejudice the status of petitioners’ employment or to deny whatever right they may have
AFPCES are included in the plantilla of personnel duly approved by the Department of under pertinent civil service laws. To hold otherwise would only be giving premium to
Budget and Management (DBM) nor said employees were issued appointments AFPCES’ delinquent attitude towards petitioners in particular, and to the civil service in
attested by the Commission. general. The AFPCES cannot be made to have its cake and eat it, too.

WHEREFORE, the Commission hereby rules that all civilian employees of the Armed WHEREFORE, the petition is PARTLY GRANTED. The Court of Appeals Decision
Forces of the Philippines Commissary and Exchange Service are not government dated August 31, 2006 in CA-G.R. SP No. 84801 and its Resolution dated September
employees covered and embraced by the Civil Service Law and rules. 30 18, 2007 are hereby SET ASIDE.

Indeed, petitioners’ employment to the AFPCES should have been made in conformity The National Labor Relations Commission (NLRC) is DIRECTED to forward the
with pertinent civil service regulations since AFPCES is a government agency under records of the case (NLRC-NCR Case No. 03-01533-2001-NLRC NCR Case No.
032920-02) to the Civil Service Commission (CSC), which is ordered to promptly
proceed with the resolution of the case on the merits with deliberate dispatch.

SO ORDERED.
G.R. No. 98107 August 18, 1997 The Board finds the comment and/or motion to dismiss meritorious.
It was not disputed that NHC is a government corporation without an
BENJAMIN C. JUCO, petitioner, original charter but organized/created under the Corporation Code.
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL HOUSING Article IX, Section 2 (1) of the 1987 Constitution provides:
CORPORATION, respondents.
The civil service embraces all branches,
HERMOSISIMA, JR., J.: subdivisions, instrumentalities and agencies of the
Government, including government owned and
This is a petition for certiorari to set aside the Decision of the National Labor Relations controlled corporations with original charters.
Commission (NLRC) dated March 14, 1991, which reversed the Decision dated May (emphasis supplied)
21, 1990 of Labor Arbiter Manuel R Caday, on the ground of lack of jurisdiction.
From the aforequoted constitutional provision, it is clear that
Petitioner Benjamin C. Juco was hired as a project engineer of respondent National respondent NHC is not within the scope of the civil service and is
Housing Corporation (NHC) from November 16, 1970 to May 14, 1975. On May 14, therefore beyond the jurisdiction of this Board. Moreover, it is
1975, he was separated from the service for having been implicated in a crime of theft pertinent to state that the 1987 Constitution was ratified and became
and/or malversation of public funds. effective on February 2, 1987.

On March 25, 1977, petitioner filed a complaint for illegal dismissal against the NHC WHEREFORE, for lack of jurisdiction, the instant complaint is hereby
with the Department of Labor. dismissed.6

On September 17, 1977, the Labor Arbiter rendered a decision dismissing the On April 28, 1989, petitioner filed with respondent NLRC a complaint for illegal
complaint on the ground that the NLRC had no jurisdiction over the case. 1 dismissal with preliminary mandatory injunction against respondent NHC. 7

Petitioner then elevated the case to the NLRC which rendered a decision on December On May 21, 1990, respondent NLRC thru Labor Arbiter Manuel R. Caday ruled that
28, 1982, reversing the decision of the Labor Arbiter. 2 petitioner was illegally dismissed from his employment by respondent as there was
evidence in the record that the criminal case against him was purely fabricated,
prompting the trial court to dismiss the charges against him. Hence, he concluded that
Dissatisfied with the decision of the NLRC, respondent NHC appealed before this Court the dismissal was illegal as it was devoid of basis, legal or factual.
and on January 17, 1985, we rendered a decision, the dispositive portion thereof reads
as follows:
He further ruled that the complaint is not barred by prescription considering that the
period from which to reckon the reglementary period of four years should be from the
WHEREFORE, the petition is hereby GRANTED. The questioned date of the receipt of the decision of the Civil Service Commission promulgated on April
decision of the respondent National Labor Relations Commission is 11, 1989. He also ratiocinated that:
SET ASIDE. The decision of the Labor Arbiter dismissing the case
before it for lack of jurisdiction is REINSTATED. 3
It appears . . . complainant filed the complaint for illegal dismissal
with the Civil Service Commission on January 6, 1989 and the same
On January 6, 1989, petitioner filed with the Civil Service Commission a complaint for was dismissed on April 11, 1989 after which on April 28, 1989, this
illegal dismissal, with preliminary mandatory injunction. 4 case was filed by the complainant. Prior to that, this case was ruled
upon by the Supreme Court on January 17, 1985 which enjoined the
On February 6, 1989, respondent NHC moved for the dismissal of the complaint on the complainant to go to the Civil Service Commission which in fact,
ground that the Civil Service Commission has no jurisdiction over the case. 5 complainant did. Under the circumstances, there is merit on the
contention that the running of the reglementary period of four (4)
On April 11, 1989, the Civil Service Commission issued an order dismissing the years was suspended with the filing of the complaint with the said
complaint for lack of jurisdiction. It ratiocinated that: Commission. Verily, it was not the fault of the respondent for failing
to file the complaint as alleged by the respondent but due to, in the
words of the complainant, a "legal knot" that has to be untangled. 8
Thereafter, the Labor Arbiter rendered a decision, the dispositive portion of which In National Service Corporation (NASECO) v. National Labor Relations
reads: Commission, 12 we had the occasion to apply the present Constitution in deciding
whether or not the employees of NASECO are covered by the Civil Service Law or the
Premises considered, judgment is hereby rendered declaring the Labor Code notwithstanding that the case arose at the time when the 1973 Constitution
dismissal of the complainant as illegal and ordering the respondent was still in effect. We ruled that the NLRC has jurisdiction over the employees of
to immediately reinstate him to his former position without loss of NASECO on the ground that it is the 1987 Constitution that governs because it is the
seniority rights with full back wages inclusive of allowance and to his Constitution in place at the time of the decision. Furthermore, we ruled that the new
other benefits or equivalent computed from the time it is withheld phrase "with original charter" means that government-owned and controlled
from him when he was dismissed on March 27, 1977, until actually corporations refer to corporations chartered by special law as distinguished from
reinstated. 9 corporations organized under the Corporation Code. Thus, NASECO which had been
organized under the general incorporation statute and a subsidiary of the National
Investment Development Corporation, which in turn was a subsidiary of the Philippine
On June 1, 1990, respondent NHC filed its appeal before the NLRC and on March 14, National Bank, is exluded from the purview of the Civil Service Commission.
1991, the NLRC promulgated a decision which reversed the decision of Labor Arbiter
Manuel R. Caday on the ground of lack of jurisdiction. 10
We see no cogent reason to depart from the ruling in the aforesaid case.
The primordial issue that confronts us is whether or not public respondent committed
grave abuse of discretion in holding that petitioner is not governed by the Labor Code. In the case at bench, the National Housing Corporation is a government owned
corporation organized in 1959 in accordance with Executive Order No. 399, otherwise
known as the Uniform Charter of Government Corporation, dated January 1, 1959. Its
Under the laws then in force, employees of government-owned and/or controlled shares of stock are and have been one hundred percent (100%) owned by the
corporations were governed by the Civil Service Law and not by the Labor Code. Government from its incorporation under Act 1459, the former corporation law. The
Hence, government entities that own its shares of stock are the Government Service Insurance
System, the Social Security System, the Development Bank of the Philippines, the
Article 277 of the Labor Code (PD 442) then provided: National Investment and Development Corporation and the People's Homesite and
Housing Corporation. 13 Considering the fact that the NHA had been incorporated
The terms and conditions of employment of all government under Act 1459, the former corporation law, it is but correct to say that it is a
employees, including employees of government-owned and government-owned or controlled corporation whose employees are subject to the
controlled corporations shall be governed by the Civil Service Law, provisions of the Labor Code. This observation is reiterated in the recent case of Trade
rules and regulations . . . . Union of the Philippines and Allied Services (TUPAS) v. National Housing
Corporation, 14 where we held that the NHA is now within the jurisdiction of the
Department of Labor and Employment, it being a government-owned and/or controlled
The 1973 Constitution, Article II-B, Section 1(1), on the other hand corporation without an original charter. Furthermore, we also held that the workers or
provided: employees of the NHC (now NHA) undoubtedly have the right to form unions or
employee's organization and that there is no impediment to the holding of a certification
The Civil Service embraces every branch, agency, subdivision and election among them as they are covered by the Labor Code.
instrumentality of the government, including government-owned or
controlled corporations. Thus, the NLRC erred in dismissing petitioner's complaint for lack of jurisdiction
because the rule now is that the Civil Service now covers only government-owned or
Although we had earlier ruled in National Housing Corporation v. controlled corporations with original charters. 15 Having been incorporated under the
Juco, 11 that employees of government-owned and/or controlled corporations, whether Corporation Law, its relations with its personnel are governed by the Labor Code and
created by special law or formed as subsidiaries under the general Corporation Law, come under the jurisdiction of the National Labor Relations Commission.
are governed by the Civil Service Law and not by the Labor Code, this ruling has been
supplanted by the 1987 Constitution. Thus, the said Constitution now provides: One final point. Petitioners have been tossed from one forum to another for a simple
illegal dismissal case. It is but apt that we put an end to his dilemna in the interest of
The civil service embraces all branches, subdivisions, justice.
instrumentalities, and agencies of the Government, including
government owned or controlled corporations with original charter. WHEREFORE, the decision of the NLRC in NLRC NCR-04-02036089 dated March 14,
(Article IX-B, Section 2[1]) 1991 is hereby REVERSED and the Decision of the Labor Arbiter dated May 21, 1990
is REINSTATED.
G.R. No. 141020 June 12, 2008 Acting on the Manifestation/Motion, the NLRC First Division issued an Order 11 dated
30 June 1989, which granted the motion and ordered that the records of the cases be
CASINO LABOR ASSOCIATION, petitioner, forwarded to the Arbitration Branch for further proceedings.
vs.
COURT OF APPEALS, PHIL. CASINO OPERATORS CORPORATION (PCOC) and Respondents PCOC and PSSC filed a motion for reconsideration. In an Order 12 dated
PHIL. SPECIAL SERVICES CORPORATION (PSSC), respondents. 22 July 1994, the NLRC First Division granted the motion, set aside the 30 June 1989
Order for having been issued without legal basis, and denied with finality the petitioner's
DECISION Manifestation/Motion. Petitioner's motion for reconsideration was likewise denied in a
Resolution13 dated 28 November 1997.
PUNO, C.J.:
Petitioner filed a petition for certiorari14 with this Court asserting that the NLRC First
Division committed grave abuse of discretion in ignoring the mandate of G.R. No.
This petition for certiorari1 assails the Decision2 and Resolution3 of the Court of Appeals 85922. Petitioner argued that, with the statement "(a)ny petitions brought against
(CA) in CA-G.R. SP No. 50826. The CA dismissed the petition for certiorari filed by the private companies will have to be brought before the appropriate agency or office of
petitioner against the First Division of the National Labor Relations Commission (NLRC) the Department of Labor and Employment," this Court laid down the law of the case
and denied petitioner's motion for reconsideration. and mandated that petitions against respondents PCOC and PSSC should be brought
before the NLRC. By way of resolution,15 this Court referred the case to the CA in
The series of events which ultimately led to the filing of the petition at bar started with accordance with the ruling in St. Martin Funeral Homes v. NLRC.16
the consolidated cases4 filed by the petitioner labor union with the Arbitration Branch of
the NLRC. In an Order5 dated 20 July 1987, the Labor Arbiter dismissed the On 22 June 1999, the CA rendered its Decision dismissing the petition for certiorari.
consolidated cases for lack of jurisdiction over the respondents therein, Philippine The CA found no grave abuse of discretion on the part of the NLRC First Division when
Amusement and Gaming Corporation (PAGCOR) and Philippine Casino Operators it issued: (a) the 22 July 1994 Order, which set aside its 30 June 1989 Order remanding
Corporation (PCOC). the case to the Arbitration Branch for further proceedings; and (b) the 28 November
1998 Resolution, which denied petitioner's motion for reconsideration. Petitioner filed a
On appeal to the NLRC, the Commission en banc issued a Resolution6 dated 15 motion for reconsideration, which the CA denied in its 6 December 1999 Resolution.
November 1988, which dismissed the separate appeals filed by the petitioner on the
ground that the NLRC has no jurisdiction over PAGCOR. Hence, the instant petition for certiorari in which the petitioner raises this sole issue:

Petitioner then elevated the case to this Court, via a petition for review on CAN THE COURT OF APPEALS IGNORE THE MANDATE OF THE
certiorari,7 entitled Casino Labor Association v. National Labor Relations HONORABLE SUPREME COURT'S RESOLUTION IN G.R. 85922, THAT
Commission, Philippine Amusement & Gaming Corporation, Philippine Casino PETITIONS AGAINST PRIVATE RESPONDENTS PCOC AND PSSC
Operators Corporation and Philippine Special Services Corporation and docketed SHOULD BE TRIED BY THE COMMISSION (NLRC) THRU ITS
as G.R. No. 85922. In a Resolution8 dated 23 January 1989, the Third Division of the ARBITRATION BRANCH?
Court dismissed the petition for failure of the petitioner to show grave abuse of
discretion on the part of the NLRC.
To determine whether the CA acted with grave abuse of discretion correctable by
certiorari, it is necessary to resolve one core issue: whether the Supreme Court, in G.R.
Petitioner filed a motion for reconsideration, but the same was denied with finality in a No. 85922, mandated that the NLRC assume jurisdiction over the cases filed against
15 March 1989 Resolution.9 The Resolution states, in part: PCOC and PSSC.

x x x Any petitions brought against private companies will have to be brought The resolution of the case at bar hinges on the intended meaning of the Third Division
before the appropriate agency or office of the Department of Labor and of the Court when it stated in its 15 March 1989 Resolution in G.R. No. 85922, viz:
Employment.
x x x Any petitions brought against private companies will have to be brought
Based solely on that statement, petitioner filed a Manifestation/Motion 10 with the NLRC before the appropriate agency or office of the Department of Labor and
praying that the records of the consolidated cases be "remanded to the Arbitration Employment.
Branch for proper prosecution and/or disposition thereof against private respondents
Philippine Casino Operators Corporation (PCOC) and Philippine Special Services
Corporation (PSSC)." Petitioner considers the foregoing statement as a legal mandate warranting the remand
of the consolidated labor cases to the Arbitration Branch of the NLRC for further
proceedings against respondents PCOC and PSSC.
We do not agree. CONSIDERING the failure of the petitioner to show grave abuse of discretion
on the part of the public respondent, the COURT RESOLVED to DISMISS the
A court decision must be read as a whole. With regard to interpretation of petition.
judgments, Republic v. De Los Angeles stated:
Thus, in resolving the issue of whether or not the NLRC has jurisdiction over employer-
As a general rule, judgments are to be construed like other written employee relations in PAGCOR, PCOC and PSSC, the Third Division made the
instruments. The determinative factor is the intention of the court, as gathered definitive ruling that "there appears to be no question from the petition and its annexes
from all parts of the judgment itself. In applying this rule, effect must be given that the respondent corporations were created by an original charter." The Court
to that which is unavoidably and necessarily implied in a judgment, as well as collectively referred to all respondent corporations, including PCOC and PSSC, and
to that which is expressed in the most appropriate language. Such held that in accordance with the Constitution and jurisprudence, corporations with
construction should be given to a judgment as will give force and effect to original charter "fall under the jurisdiction of the Civil Service Commission and not the
every word of it, if possible, and make it as a whole consistent, effective and Labor Department." The Court stated further that P.D. 1869 exempts casino employees
reasonable.17 from the coverage of Labor Code provisions and although the employees are
empowered by the Constitution to form unions, these are "subject to the laws passed
to regulate unions in offices and corporations governed by the Civil Service Law." Thus,
Hence, a close scrutiny of the full text of the 23 January and 15 March 1989 Resolutions in dismissing the petition, the ruling of the Third Division was clear - - - it is the Civil
in G.R. No. 85922 sheds much needed light. In the first Resolution, the Third Division Service Commission, and not the NLRC, that has jurisdiction over the employer-
of this Court dismissed the petitioner's case in this wise: employee problems in PAGCOR, PCOC and PSSC.

The issue in this case is whether or not the National Labor Relations In its motion for reconsideration, petitioner lamented that its complaint might be treated
Commission has jurisdiction over employee-employer problems in the as a "pingpong ball" by the Department of Labor and Employment and the Civil Service
Philippine Amusement and Gaming Corporation (PAGCOR), the Philippine Commission. It argued:
Casino Operators Corporation (PCOC), and the Philippine Special Services
Corporation (PSSC).
x x x the petitioner will now be in a dilemna (sic) for the reason, that the charter
creating PAGCOR expressly exempts it from the coverage of the Civil Service
The present Constitution specifically provides in Article IX B, Section 2(1) that Laws and therefore the petitioner, will now be in a quandary whether it will be
"the civil service embraces all branches, subdivisions, instrumentalities, and allowed to prosecute its case against PAGCOR before the Civil Service
agencies of the Government, including government-owned or controlled Commission while its own charter expressly exempts it from the coverage of
corporations with original charters." (Emphasis supplied) the Civil Service Law x x x18

There appears to be no question from the petition and its annexes that the The Third Division denied the motion for reconsideration in a Resolution dated 15
respondent corporations were created by an original charter, P.D. No. 1869 in March 1989, which contained the statement upon which the petitioner's whole case
relation to P.D. Nos. 1067-A, 1067-C, 1399 and 1632. relies. The Court stated:

In the recent case of National Service Corporation, et al. v. Honorable Third The petitioner states in its motion for reconsideration that the PAGCOR
Division, National Labor Relations Commission, et al. (G.R. No. 69870, charter expressly exempts it from the coverage of the Civil Service Laws and,
November 29, 1988), this Court ruled that subsidiary corporations owned by consequently, even if it has an original charter, its disputes with management
government corporations like the Philippine National Bank but which have should be brought to the Department of Labor and Employment. This
been organized under the General Corporation Code are not governed by Civil argument has no merit. Assuming that there may be some exemptions from
Service Law. They fall under the jurisdiction of the Department of Labor and the coverage of Civil Service Laws insofar as eligibility requirements and other
Employment and its various agencies. Conversely, it follows that government rules regarding entry into the service are concerned, a law or charter cannot
corporations created under an original charter fall under the jurisdiction of the supersede a provision of the Constitution. The fear that the petitioner's
Civil Service Commission and not the Labor Department. complaint will be rejected by the Civil Service Commission is unfounded as
the Commission must act in accordance with its coverage as provided by the
Moreover, P.D. 1869, Section 18, specifically prohibits formation of unions Constitution. Any petitions brought against private companies will have
among casino employees and exempts them from the coverage of Labor Code to be brought before the appropriate agency or office of the Department
provisions. Under the new Constitution, they may now form unions but subject of Labor and Employment.
to the laws passed to regulate unions in offices and corporations governed by
the Civil Service Law. CONSIDERING THE FOREGOING, the COURT RESOLVED to DENY the
motion for reconsideration. This DENIAL is FINAL. (emphasis added)
Petitioner contends that the "private companies" referred to therein pertain to specifically stated that "no new issues may be raised by a party in his/its Memorandum."
respondents PCOC and PSSC, and consequently, this Court has laid down the law of Moreover, petitioner, in support of this additional issue, presents its arguments on the
the case in G.R. No. 85922 and has directed that the cases against PCOC and PSSC merits of the consolidated labor cases. This Court is not a trier of facts. In Santiago v.
should be prosecuted before the Department of Labor and Employment or NLRC. Vasquez, we reiterated:

Petitioner's contention is untenable. It is well-settled that to determine the true intent We discern in the proceedings in this case a propensity on the part of
and meaning of a decision, no specific portion thereof should be resorted to, but the petitioner, and, for that matter, the same may be said of a number of litigants
same must be considered in its entirety.19 Hence, petitioner cannot merely view a who initiate recourses before us, to disregard the hierarchy of courts in our
portion of the 15 March 1989 Resolution in isolation for the purpose of asserting its judicial system by seeking relief directly from this Court despite the fact that
position. The 23 January 1989 Resolution already ruled on the NLRC's lack of the same is available in the lower courts in the exercise of their original or
jurisdiction over all the respondents in the case - PAGCOR, PCOC and PSSC. The concurrent jurisdiction, or is even mandated by law to be sought therein. This
Third Division neither veered away nor reversed such ruling in its 15 March 1989 practice must be stopped, not only because of the imposition upon the
Resolution to petitioner's motion for reconsideration. A reading of the two precious time of this Court but also because of the inevitable and resultant
aforementioned resolutions clearly shows that the phrase "private companies" could delay, intended or otherwise, in the adjudication of the case which often has
not have referred to PCOC and PSSC for that would substantially alter the Court's ruling to be remanded or referred to the lower court as the proper forum under the
that petitioner's labor cases against the respondents are cognizable by the Civil Service rules of procedure, or as better equipped to resolve the issues since this Court
Commission, and not by the NLRC. In its assailed decision, the Court of Appeals is not a trier of facts. We, therefore, reiterate the judicial policy that this Court
ratiocinated: will not entertain direct resort to it unless the redress desired cannot be
obtained in the appropriate courts or where exceptional and compelling
Evidently, the [March 15] Resolution containing the questioned circumstances justify availment of a remedy within and calling for the exercise
pronouncement did not give legal mandate to petitioner to file its Petition with of our primary jurisdiction.21
the Department of Labor and Employment or any of its agencies. On the
contrary, the Resolution decided with finality that petitions brought against the In this case, the Civil Service Commission is the proper venue for petitioner to ventilate
PAGCOR or similar agencies/instrumentalities of the government must be its claims.
filed with the Civil Service Commission which has jurisdiction on the matter.
The questioned pronouncement, to Our mind, was made only to illustrate the The Court is not oblivious to petitioner's plea for justice after waiting numerous years
instance when jurisdiction is instead conferred on the Department of Labor for relief since it first filed its claims with the labor arbiter in 1986. However, petitioner
vis-à-vis the Civil Service Commission; that is, when the petitions are filed is not completely without fault. The 23 January 1989 Resolution in G.R. No. 85922,
[against] private companies. declaring the lack of jurisdiction by the NLRC over PAGCOR, PCOC and PSSC,
became final and executory on March 27, 1989. The petitioner did not file a second
Finally, as pointed out by the Office of the Solicitor General, the subject matter motion for reconsideration nor did it file a motion for clarification of any statement by
of the pronouncement in question is "any petition" not the petition filed by the Court which petitioner might have thought was ambiguous. Neither did petitioner
petitioners. Likewise, the petition must be one which is brought against take the proper course of action, as laid down in G.R. No. 85922, to file its claims before
"private companies" not against private respondents. Apparently, the the Civil Service Commission. Instead, petitioner pursued a protracted course of action
abovequoted pronouncement is intended to be a general rule that will govern based solely on its erroneous understanding of a single sentence in the Court's
petitions filed against private companies. It is not intended to be a specific rule resolution to a motion for reconsideration.
that will apply only to the petition filed by herein petitioners. Where the law
makes no distinctions, one does not distinguish. A fortiori, where the IN VIEW WHEREOF, the instant petition for certiorari is DISMISSED. The assailed 22
questioned pronouncement makes no distinctions, one does not distinguish. June 1999 Decision and 6 December 1999 Resolution of the Court of Appeals in CA-
G.R. SP No. 50826 are AFFIRMED.
We agree with the CA. The statement that "(a)ny petitions brought against private
companies will have to be brought before the appropriate agency or office of the SO ORDERED.
Department of Labor and Employment," upon which petitioner's entire case relies, is of
no consequence. It is obiter dictum.

In its memorandum,20 petitioner presents a second issue not otherwise raised in its
petition for certiorari, contending that respondents waived their rights to controvert
petitioner's valid and just claims when they filed a motion to dismiss the consolidated
cases with the labor arbiter on the ground of lack of jurisdiction. However, in our 20
August 2003 Resolution requiring the parties to submit their respective memoranda, we
G.R. No. 205813 • Entitlement to any and all other basic and fringe benefits enjoyed by the officers; core
of the Bank relative to Insurance covers, Healthcare Insurance, vacation and sick
ALFREDO F. LAY A, JR., Petitioner leaves, among others."
vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, On the other hand, private respondent has its Retirement Plan Rules and Regulations
PHILIPPINE VETERANS BANK and RICARDO A. BALBIDO, JR., Respondents which provides among others, as follows:

DECISION ARTICLE IV

BERSAMIN, J.: RETIREMENT DATES

An employee in the private sector who did not expressly agree to the terms of an early Section 1. Normal Retirement. The normal retirement date of a Member shall be the
retirement plan cannot be separated from the service before he reaches the age of 65 first day of the month coincident with or next following his attainment of age 60.
years. The employer who retires the employee prematurely is guilty of illegal dismissal,
and is liable to pay his backwages and to reinstate him without loss of seniority and Section 2. Early Retirement. A Member may, with the approval of the Board of
other benefits, unless the employee has meanwhile reached the mandatory retirement Directors, retire early on the first day of any month coincident with or following his
age under the Labor Code, in which case he is entitled to separation pay pursuant to attainment of age 50 and completion of at least 10 years of Credited Service.
theterms of the plan, with legal interest on the backwages and separation pay reckoned
from the finality of the decision.
Section 3. Late Retirement. A Member may, with the approval of the Board of Directors,
extend his service beyond his normal retirement date but not beyond age 65. Such
The Case deferred retirement shall be on a case by case and yearly extension basis.

The petitioner seeks the review and reversal of the adverse decision promulgated on On 14 June, 2007, petitioner was informed thru letter by the private respondent of his
August 31, 2012,1 whereby the Court of Appeals (CA) upheld the ruling of the National retirement effective on 1 July 2007. On 21 June 2007 petitioner wrote Col. Emmanuel
Labor Relations Commission (NLRC) dated June 21, 2010 affirming the dismissal of V. De Ocampo, Chairman of respondent bank, requesting for an extension of his tenure
his complaint for illegal dismissal by the Labor Arbiter. for two (2) more years pursuant to the Bank's Retirement Plan (Late Retirement).

Antecedents On 26 June 2008, private respondent issued a memorandum directing the petitioner to
continue to discharge his official duties and functions as chief legal counsel pending his
The CA summarized the factual antecedents as follows: request. However on 18 July 2007, petitioner was informed thru its president Ricardo
A. Balbido Jr. that his request for an extension of tenure was denied. 2
On 1 June 2001, petitioner Alfredo F. Laya, Jr. was hired by respondent Philippine
Veterans Bank as its Chief Legal Counsel with a rank of Vice President. Among others, According to the petitioner, he was made aware of the retirement plan of respondent
the terms and conditions of his appointment are as follows; (sic) Philippine Veterans Bank (PVB) only after he had long been employed and was shown
a photocopy of the Retirement Plan Rules and Regulations,3 but PVB's President
"3. As a Senior Officer of the Bank, you are entitled to the following executive ben[e]fits: Ricardo A. Balbido, Jr. had told him then that his request for extension of his service
would be denied "to avoid precedence."4 He sought the reconsideration of the denial of
the request for the extension of his retirement, 5 but PVB certified his retirement from
• Car Plan limit of ₱700,000.00, without equity on your part; a gasoline subsidy of 300 the service as of July 1, 2007 on March 6, 2008.6
liters per month and subject further to The Car Plan Policy of the Bank.
On December 24, 2008, the petitioner filed his complaint for illegal dismissal against
• Membership in a professional organization in relation to your profession and/or PVB and Balbido, Jr. in the NLRC to protest his unexpected retirement. 7
assigned functions in the Bank.
Ruling of the Labor Arbiter
• Membership in the Provident Fund Program/Retirement Program.
On August 28, 2009, the Labor Arbiter rendered a decision dismissing the complaint
for illegal dismissal,8 to wit:
WHEREFORE, the charge of illegal dismissal and money claims raised by the PVB;22 and that to allow the adverse rulings to stand would be to condone the creation
complainant, together with the counterclaim raised by the respondents are DISMISSED of a private corporation by Congress other than by a general law on incorporation. 23
for lack of merit but by reason of a flaw in the denial of complainant's application for
term extension as discussed above, the respondent bank is hereby ordered to pay the In its resolution promulgated on August 28, 2013, the Court (First Division) denied the
complainant the amount of ₱200,000.00 by way of reasonble (sic) indemnity. petitioner's motion for reconsideration, as well as his prayer to refer the case to the
Court En Banc. 24The entry of judgment was issued on December 6, 2013. 25
Ricardo Balbido, Jr., is hereby dropped as party respondent.
The petitioner filed a second motion for reconsideration on December 18,
SO ORDERED.9 2013,26 whereby he expounded on the issues he was raising in his first motion for
reconsideration. He urged that the Court should find and declare PVB as a public
After his motion for reconsideration was denied,10 the petitioner appealed to the instrumentality; that the law applicable to his case was Presidential Decree No. 1146
NLRC.11 (GSIS Law), which stipulated the compulsory retirement age of 65 years; 27 and that the
compulsory retirement age for civil servants could not be "contracted out." 28
Ruling of the NLRC
On March 25, 2014, the Court En Banc accepted the referral of this case by the First
Division.29
On June 21, 2010, the NLRC affirmed the dismissal of the petitioner's complaint, and
deleted the indemnity imposed by the Labor Arbiter,12 viz.:
On April 22, 2014, the Court En Banc required PVB and the Office of the Solicitor
General (OSG) to file their comments on the petitioner's second motion for
WHEREFORE, premises considered the appeal of the complainant is hereby DENIED reconsideration.30
for lack of merit. The appeal of respondents is GRANTED. The Decision below is
hereby AFFIRMED with MODIFICATION, deleting the award of indemnity to
complainant. The comment of PVB poses several challenges to the petition.

SO ORDERED.13 In support of its first challenge, PVB contends that the Court should not have accepted
the referral of the case to the Banc because the First Division had already denied with
finality the petitioner's first motion for reconsideration, as well as his motion to refer the
The petitioner assailed the ruling to the CA through certiorari. case to the Banc;31 that the Court En Bane's acceptance of the case was in violation of
the principle of immutability of final judgments as well as of Section 3, Rule 15 of
Ruling of the CA the Internal Rules of the Supreme Court32to the effect that a second motion for
reconsideration could be allowed only "before the ruling sought to be reconsidered
On August 31, 2012, the CA promulgated the now assailed decision, 14 holding that the becomes final by operation of law or by the Court's declaration;"33 and that the First
petitioner's acceptance of his appointment as Chief Legal Officer of PVB signified his Division had correctly denied the petition for review because the issues raised therein
conformity to the retirement program;15 that he could not have been unaware of the were factual matters that this mode of appeal could not review and pass upon.34
retirement program which had been in effect since January 1, 1996;16 that the lowering
of the retirement age through the retirement plan was a recognized exception under As its second challenge, PVB demurrs to the propriety of the petitioner's attack on its
the provisions of Article 287 of the Labor Code; 17 that considering his failure to adduce corporate existence. It submits that he should not be allowed to pose such attack for
evidence showing that PVB had acted maliciously in applying the provisions of the the first time in this appeal;35 that his argument was also an impermissible collateral
retirement plan to him and in denying his request for the extension of his service, PVB attack on the constitutionality of Republic Act No. 3518 and Republic Act No.
's implementation of the retirement plan was a valid exercise of its management 7169;36 and that his seeking a declaration of PVB as a public institution "partakes the
prerogative.18 nature of a petition for declaratory relief which is an action beyond the original
jurisdiction of the Honorable Court."37
The CA denied the petitioner's motion for reconsideration on February 8, 2013. 19
Nevertheless, PVB maintains that it is not a public or government entity for several
On April 8, 2013, the Court (First Division) denied the petition for review reasons, namely: (1) the Government does not own a single share in it; 38 (2) the
on certiorari.20 In his motion for reconsideration, the petitioner not only prayed for the Government has no appointee or representative in the Board of Directors, and is not
reconsideration of the denial but also sought the referral of his petition to the Court En involved in its management;39 and (3) it does not administer government funds.40
Banc,21 arguing that the CA and the NLRC had erroneously applied laws and legal
principles intended for corporations in the private sector to a public instrumentality like PVB insists that its creation as a private bank with a special charter does not in any
way violate Section 16, Article XII of the Constitution, 41 explaining:
Firstly, the mischief which the constitutional provision seeks to prevent, i.e., giving is to be organized and the Officers to be elected or appointed are stated in the by-laws.
certain individuals, families or groups special privileges denied to other citizens, will not The latest Definitive Information Sheet of the Bank indicates that as of April 30, 2014,
be present insofar as the Bank is concerned. As this Honorable Court observed the total number of shareholders of record (common and preferred) is 383,852. There
in Philippine Veterans Bank Employees Union-NUBE vs. Philippine Veterans Bank – had been 25,303,869 common shares and 3,611,556 preferred shares issued, none of
which belong to the government. It is thus operating under and by virtue of the
These stockholdings (of the veterans, widows, orphans or compulsory heirs) do not Corporation Code and the General Banking Act. 42
enjoy any special immunity over and above shares of stock in any other corporation,
which are always subject to the vicissitudes of business. Their value may appreciate or Through its comment, the OSG presents an opinion favorable to the position of the
decline or the stocks may become worthless altogether. Like any other property, they petitioner, opining upon the authority of Boy Scouts of the Philippines v. Commission
do not have a fixed but a fluctuating price. Certainly, the mere acceptance of these on Audit43 and Article 44 of the Civil Code44that PVB is a public corporation created in
shares of stock by the petitioners did not create any legal assurance from the the public interest, and a government instrumentality with juridical personality; 45 hence,
Government that their original value would be preserved and that the owners could not the law governing the petitioner's compulsory retirement age was Republic Act No.
be deprived of such property under any circumstance no matter how justified 8291, and the compulsory retirement age for him should be 65 years. 46

Secondly, the obvious legislative intent is "to give meaning and realization to the Issues
constitutional mandate to provide immediate and adequate care, benefits and other
forms of assistance to war veterans and veterans of military campaigns, their surviving The following procedural and substantive issues are to be considered and resolved,
spouses and orphans" Article XVI, Section 7 of the Constitution states: namely: (1) whether or not the Court could accept the petitioner's second motion for
reconsideration; (2) whether PVB is a private entity or a public instrumentality; and (3)
Section 7. The State shall provide immediate and adequate care, benefits and other whether the petitioner was validly retired by PVB at age 60.
forms of assistance to war veterans and veterans of military campaigns, their surviving
spouses and orphans. Funds shall be provided therefor and due consideration shall be Ruling of the Court
given them in the disposition of agricultural lands of the public domain and, in
appropriate cases, in the utilization of natural resources.
In light of pertinent laws and relevant jurisprudence, the Court has ascertained, after
going over the parties' arguments and the records of the case, that the reconsideration
The creation of Veterans Bank through Republic Act Nos. 3518 and 7169 should of the Court's resolutions promulgated on April 8, 2013 and August 28, 2013, and the
therefore be taken in conjunction and harmonized with Section 16, Article XII of the lifting of the entry of judgment made herein are in order; and that the appeal by the
Constitution. The predilection of the said Republic Acts towards the welfare of the petitioner should be given due course.
veterans, their widows, orphans or compulsory heirs is supported by no less than a
constitutional provision. That Republic Act Nos. 3518 and 7169 do not fall within the
proscription against the creation of private corporations is readily apparent from the fact 1.
that in both laws, the intendment of the legislature is that Veterans Bank will eventually
be operated, managed and exist under the general laws, i.e., Corporation Code and The Court En Banc properly accepted the petitioner's second motion for
General Banking Act. The mere circumstance that the charter was granted directly by reconsideration.
Congress does not signify that only Congress can modify or abrogate it by another
enactment. As a general rule, second and subsequent motions for reconsideration are
forbidden.47 Nevertheless, there are situations in which exceptional circumstances
Thirdly, the following mandate of Section 3 of Republic Act No. 7169 had been warrant allowing such motions for reconsideration, and for that reason the Court has
accomplished: recognized several exceptions to the general rule. We have extensively expounded on
the exceptions in McBurnie v. Ganzon,48 where we observed:
"The operations and changes in the capital structure of the Veterans Bank, as well as
other amendments to its articles of incorporation and by-laws as prescribed under At the outset, the Court emphasizes that second and subsequent motions for
Republic Act No. 3518, shall be in accordance with the Corporation Code, the General reconsideration are, as a general rule, prohibited. Section 2, Rule 52 of the Rules of
Banking Act, and other related laws." Court provides that "[n]o second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained." The rule rests on the basic tenet of
Pursuant hereto, the Bank had registered with the Securities and Exchange immutability of judgments. "At some point, a decision becomes final and executory and,
Commission under its certificate of incorporation/registration number 24681. It has its consequently, all litigations must come to an end."
articles of incorporation and by-laws separate and distinct from the provisions of
Republic Act Nos. 3518 and 7169. The manner by which the Bank's Board of Directors
The general rule, however, against second and subsequent motions for reconsideration The Rules of Court was conceived and promulgated to set forth guidelines in the
admits of settled exceptions. For one, the present Internal Rules of the Supreme Court, dispensation of justice but not to bind and chain the hand that dispenses it, for
particularly Section 3, Rule 15 thereof, provides: otherwise, courts will be mere slaves to or robots of technical rules, shorn of judicial
discretion. That is precisely why courts in rendering real justice have always been, as
Sec. 3. Second motion for reconsideration. - The Court shall not entertain a second they in fact ought to be, conscientiously guided by the norm that when on the balance,
motion for reconsideration, and any exception to this rule can only be granted in the technicalities take a backseat against substantive rights, and not the other way around.
higher interest of justice by the Court en bane upon a vote of at least two-thirds of its Truly then, technicalities, in the appropriate language of Justice Makalintal, "should give
actual membership. There is reconsideration "in the higher interest of justice" when the way to the realities of the situation." x x x.
assailed decision is not only legally erroneous, but is likewise patently unjust and
potentially capable of causing unwarranted and irremediable injury or damage to the Consistent with the foregoing precepts, the Court has then reconsidered even decisions
parties. A second motion for reconsideration can only be entertained before the ruling that have attained finality, finding it more appropriate to lift entries of judgments already
sought to be reconsidered becomes final by operation of law or by the Court's made in these cases. In Navarro v. Executive Secretary, we reiterated the
declaration. pronouncement in DeGuzman that the power to suspend or even disregard rules of
procedure can be so pervasive and compelling as to alter even that which this Court
xxxx itself has already declared final. The Court then recalled in Navarro an entry of
judgment after it had determined the validity and constitutionality of Republic Act No.
9355, explaining that:
In a line of cases, the Court has then entertained and granted second motions
for reconsideration "in the higher interest of substantial justice," as allowed under
the Internal Rules when the assailed decision is "legally erroneous," "patently unjust" Verily, the Court had, on several occasions, sanctioned the recall of entries of judgment
and "potentially capable of causing unwarranted and irremediable injury or damage to in light of attendant extraordinary circumstances. The power to suspend or even
the parties." In Tirazona v. Philippine EDS Techno-Service, Inc. (PET, Inc.), we also disregard rules of procedure can be so pervasive and compelling as to alter even that
explained that a second motion for reconsideration may be allowed in instances of which this Court itself had already declared final. In this case, the compelling concern
"extraordinarily persuasive reasons and only after an express leave shall have been is not only to afford the movants-intervenors the right to be heard since they would be
obtained." In Apo Fruits Corporation v. Land Bank of the Philippines we allowed a adversely affected by the judgment in this case despite not being original parties
second motion for reconsideration as the issue involved therein was a matter of public thereto, but also to arrive at the correct interpretation of the provisions of the [Local
interest, as it pertained to the proper application of a basic constitutionallyguaranteed Government Code (LGC)] with respect to the creation of local government units. x x x.
right in the government's implementation of its agrarian reform program. In San Miguel
Corporation v. NLRC, the Court set aside the decisions of the LA and the NLRC that In Munoz v. CA, the Court resolved to recall an entry of judgment to prevent a
favored claimants-security guards upon the Court's review of San Miguel Corporation's miscarriage of justice. This justification was likewise applied in Tan Tiac Chiong v. Hon.
second motion for reconsideration. In Vir-Jen Shipping and Marine Services, Inc. v. Cosico, wherein the Court held that:
NLRC, et al., the Court en bane reversed on a third motion for reconsideration the ruling
of the Court's Division on therein private respondents' claim for wages and monetary The recall of entries of judgments, albeit rare, is not a novelty. In Munoz v. CA, where
benefits. the case was elevated to this Court and a first and second motion for reconsideration
had been denied with finality, the Court, in the interest of substantial justice, recalled
It is also recognized that in some instances, the prudent action towards a just the Entry of Judgment as well as the letter of transmittal of the records to the Court of
resolution of a case is for the Court to suspend rules of procedure, for "the power Appeals.
of this Court to suspend its own rules or to except a particular case from its
operations whenever the purposes of justice require it, cannot be In Barnes v. Judge Padilla, we ruled:
questioned." In De Guzman v. Sandiganbayan, the Court, thus, explained:
[A] final and executory judgment can no longer be attacked by any of the parties or be
[T]he rules of procedure should be viewed as mere tools designed to facilitate the modified, directly or indirectly, even by the highest court of the land.
attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always
be avoided. Even the Rules of Court envision this liberality. This power to suspend or However, this Court has relaxed this rule in order to serve substantial justice
even disregard the rules can be so pervasive and encompassing so as to alter even considering (a) matters of life, liberty, honor or property, (b) the existence of special or
that which this Court itself has already declared to be final, as we are now compelled compelling circumstances, (c) the merits of the case, (d) a cause not entirely
to do in this case x x x. attributable to the fault or negligence of the party favored by the suspension of the rules,
(e) a lack of any showing that the review sought is merely frivolous and dilatory, and (t)
the other party will not be unjustly prejudiced thereby. (Citations omitted; underscoring
xxxx supplied)49
In short, the Court may entertain second and subsequent motions for reconsideration Charter of the Philippine Veterans' Bank; and that, notwithstanding the provisions of
when the assailed decision is legally erroneous, patently unjust and potentially capable any existing law to the contrary, said Bank shall be deemed registered and duly
of causing unwarranted and irremediable injury or damage to the parties. Under these authorized to do business and operate as a commercial bank as of the date of approval
circumstances, even final and executory judgments may be set aside because of the of this Act.
existence of compelling reasons.
This point is important because the Constitution provides in its Article IX-B,
It is notable that the retirement program in question herein was established solely by Section 2(1) that "the Civil Service embraces all branches, subdivisions,
PVB as the employer. Although PVB could validly impose a retirement age lower than instrumentalities, and agencies of the Government, including government-
65 years for as long as it did so with the employees' consent,50 the consent must be owned or controlled corporations with original charters." As the Bank is not
explicit, voluntary, free, and uncompelled.51 In dismissing the petition for review owned or controlled by the Government although it does have an original charter
on certiorari, the Court's First Division inadvertently overlooked that the law required in the form of R.A. No. 3518, it clearly does not fall under the Civil Service and
the employees' consent to be express and voluntary in order for them to be bound by should be regarded as an ordinary commercial corporation. Section 28 of the
the retirement program providing for a retirement age earlier than the age of 65 years. said law so provides. The consequence is that the relations of the Bank with its
Hence, the Court deems it proper to render a fair adjudication on the merits of the employees should be governed by the labor laws, under which in fact they have
appeal upon the petitioner's second motion for reconsideration. Furthermore, allowing already been paid some of their claims.53 (Bold underscoring supplied for emphasis)
this case to be reviewed on its merits furnishes the Court with the opportunity to re-
examine the case in order to ascertain whether or not the dismissal produced results Anent whether PVB was a government or a private entity, therefore, we declare that it
patently unjust to the petitioner. These reasons do justify treating this case as an is the latter. The foregoing jurisprudential pronouncement remains to be good law, and
exception to the general rule on immutability of judgments. should be doctrinal and controlling.

2. We also note that Congress enacted Republic Act No. 7169, 54 whereby it
acknowledged the Filipino veterans of World War II as the owners of PVB, but their
The pronouncement of the Court in Philippine Veterans Bank Employees Union- ownership had not been fully realized despite the implementation of Republic Act No.
NUBE v. The Philippine Veterans Bank is still doctrinal on the status of the 3518.55 As one of the mechanisms to rehabilitate PVB, Congress saw fit to modify PVB'
Philippine Veterans Bank as a private, not a government, entity s operations, capital structure, articles of incorporation and by-laws through the
enactment of Republic Act No. 7169.56 By restoring PVB as envisioned by Republic Act
In Philippine Veterans Bank Employees Union-NUBE v. The Philippine Veterans No. 3518,57 and by providing that the creation of the PVB would be in accord with
Bank,52 we pertinently pronounced: the Corporation Code, the General Banking Act, and other related laws, Congress
undeniably bestowed upon the PVB the personality of a private commercial
bank through Republic Act No. 7169. In that regard, Section 8 of Republic Act No. 7169
Coming now to the ownership of the Bank, we find it is not a government bank, as directed the Filipino veterans to raise ₱750,000,000.00 in total unimpaired capital
claimed by the petitioners.1âwphi1 The fact is that under Section 3(b) of its charter, accounts, prior to PVB's reopening, but excused the Government from making any new
while 51 % of the capital stock of the Bank was initially fully subscribed by the Republic capital infusion, viz.:
of the Philippines for and in behalf of the veterans, their widows, orphans or compulsory
heirs, the corresponding shares of stock were to be turned over within 5 years from the
organization by the Bank to the said beneficiaries who would thereafter have the right Section 8. Transitory Provisions. - Without requiring new capital infusion either from the
to vote such common shares. The balance of about 49% was to be divided into Government or from outside investigators, the Filipino veterans of World War II who are
preferred shares which would be opened for subscription by any recognized veteran, real owners-stockholders of the Veterans Bank shall cause the said bank to have at
widow, orphans or compulsory heirs of said veteran at the rate of one preferred share least Seven hundred fifty million pesos (₱750,000,000.00) in total unimpaired capital
per veteran, on the condition that in case of failure of any particular veteran to subscribe accounts prior to reopening pursuant to this Act as a commercial bank.
for any preferred share of stock so offered to him within thirty (30) days from the date
of receipt of notice, said share of stock shall be available for subscription to other It is hereby provided that the Board of Trustees of the Veterans of World War II
veterans in accordance with such rules or regulations as may be promulgated by the (BTVWW II) created under Republic Act No. 3518 is hereby designated as trustee of
Board of Directors. Moreover, under Sec. 6(a), the affairs of the Bank are managed by all issued but undelivered shares of stock.
a board of directors composed of eleven members, three of whom are ex
officio members, with the other eight being elected annually by the stockholders in the With the Government having no more stake in PVB, there is no justification for the
manner prescribed by the Corporation Law. Significantly, Sec. 28 also provides as insistence of the petitioner that PVB "is a public corporation masquerading as a private
follows: corporation."58

Sec. 28. Articles of incorporation. - This Act, upon its approval, shall be deemed and 3.
accepted to all legal intents and purposes as the statutory articles of incorporation or
Petitioner Alfredo Laya was not validly retired at age 60 Factual findings of administrative agencies are not infallible and will be set aside when
they fail the test of arbitrariness.64
Notwithstanding the rejection of the petitioner's insistence that PVB was a public
corporation, we find and declare that the petitioner was not validly retired at age 60. The review of the findings of the CA becomes more compelling herein, inasmuch as it
appears that the CA did not appreciate the fact that the retirement plan was not the sole
Before going further, we clarify that the CA, in the exercise of its certiorari jurisdiction, prerogative of the employer, and that the petitioner was automatically made a member
is limited to determining whether or not the NLRC committed grave abuse of discretion of the plan. Upon reviewing the resolution by the NLRC, the CA simply concluded that
amounting to lack or excess of jurisdiction. The remedy is the special civil action the petitioner's acceptance of the employment offer had carried with it his
for certiorari under Rule 65 of the Rules of Court brought in the CA, and once the CA acquiescence, which implied his knowledge of the plan, thus:
decides the case the party thereby aggrieved may appeal the decision of the CA by
petition for review on certiorari under Rule 45 of the Rules of Court. This Court finds petitioner's argument to be misplaced. It must be stressed that when
petitioner was appointed as Chief Legal Officer on 01 June 2001 among the terms and
However, rigidly limiting the authority of the CA to the determination of grave abuse of conditions of his employment is the membership in the Provident Fund
discretion amounting to lack or excess of jurisdiction on the part of the NLRC does not Program/Retirement Program. Worthy to note that when petitioner accepted his
fully conform with prevailing case law, particularly St. Martin Funeral appointment as Chief Legal Officer, he likewise signified his conformity with the
Home v. NLRC,59 where we firmly observed that because of the "growing number of provisions of the Retirement Program considering that the same has already been in
labor cases being elevated to this Court which, not being a trier of fact, has at times existence and effective since 1 January 1996, i.e. prior to his appointment. As such,
been constrained to remand the case to the NLRC for resolution of unclear or this Court is not convinced that petitioner was not aware of the private respondent's
ambiguous factual findings"60 the CA could more properly address petitions retirement program.65
for certiorari brought against the NLRC. Conformably with such observation made in St.
Martin Funeral Homes, we have then later on clarified that the CA, in its exercise of The retirement of employees in the private sector is governed by Article 287 of
its certiorari jurisdiction, can review the factual findings or even the legal conclusions of the Labor Code:66
the NLRC,61 viz.:
Art. 287. Retirement. Any employee may be retired upon reaching the retirement
In St. Martin Funeral Home[s] v. NLRC, it was held that the special civil action age established in the collective bargaining agreement or other applicable
of certiorari is the mode of judicial review of the decisions of the NLRC either by this employment contract.
Court and the Court of Appeals, although the latter court is the appropriate forum for
seeking the relief desired "in strict observance of the doctrine on the hierarchy of courts" In case of retirement, the employee shall be entitled to receive such retirement benefits
and that, in the exercise of its power, the Court of Appeals can review the factual as he may have earned under existing laws and any collective bargaining agreement
findings or the legal conclusions of the NLRC. The contrary rule in Jamer was thus and other agreements: Provided, however, That an employee's retirement benefits
overruled.62 under any collective bargaining and other agreements shall not be less than those
provided therein.
There is now no dispute that the CA can make a determination whether the factual
findings by the NLRC or the Labor Arbiter were based on the evidence and in accord In the absence of a retirement plan or agreement providing for retirement benefits
with pertinent laws and jurisprudence. of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
The significance of this clarification is that whenever the decision of the CA in a labor the compulsory retirement age, who has served at least five (5) years in the said
case is appealed by petition for review on certiorari, the Court can competently delve establishment, may retire and shall be entitled to retirement pay x x x x.
into the propriety of the factual review not only by the CA but also by the NLRC. Such
ability is still in pursuance to the exercise of our review jurisdiction over administrative Under the provision, the employers and employees may agree to fix the retirement age
findings of fact that we have discoursed on in several rulings, including Aklan Electric for the latter, and to embody their agreement in either their collective bargaining
Coooperative, Inc. v. National Labor Relations Commission,63 where we have pointed agreements (CBAs) or their employment contracts. Retirement plans allowing
out: employers to retire employees who have not yet reached the compulsory retirement
age of 65 years are not per se repugnant to the constitutional guaranty of security of
While administrative findings of fact are accorded great respect, and even finality when tenure, provided that the retirement benefits are not lower than those prescribed by
supported by substantial evidence, nevertheless, when it can be shown that law.67
administrative bodies grossly misappreciated evidence of such nature as to compel a
contrary conclusion, this Court had not hesitated to reverse their factual findings. The CA concluded that the petitioner had agreed to be bound by the retirement plan of
PVB when he accepted the letter of appointment as its Chief Legal Counsel.
We disagree with the conclusion. We declare that based on the clear circumstances Furthermore, the petitioner's membership in the retirement plan could not be justifiably
herein the CA erred in so concluding. attributed to his signing of the letter of appointment that only listed the minimum benefits
provided to PVB's employees. Indeed, in Cercado, we have declared that the
The petitioner's letter of appointment pertinently stated: employee's consent to the retirement plan that came into being two years after the
hiring could not be inferred from her signature on the personnel action forms accepting
the terms of her job description, and compliance with the company policies, rules and
3. As a Senior Officer of the Bank, you are entitled to the following executive regulations, to wit:
benefits:
We also cannot subscribe to respondent's submission that petitioner's consent to the
•Car Plan limit of ₱700,000.00, without equity on your part; a gasoline subsidy retirement plan may be inferred from her signature in the personnel action forms
of 300 liters per month and subject further to The Car Plan Policy of the Bank. containing the phrase: "Employee hereby expressly acknowledges receipt of and
undertakes to abide by the provisions of his/her Job Description, Company Code of
• Membership in a professional organization in relation to your profession Conduct and such other policies, guidelines, rules and regulations the company may
and/or assigned functions in the Bank. prescribe."

• Membership in the Provident Fund Program/Retirement Program. It should be noted that the personnel action forms relate to the increase in petitioner's
salary at various periodic intervals. To conclude that her acceptance of the salary
• Entitlement to any and all other basic and fringe benefits enjoyed by the increases was also, simultaneously, a concurrence to the retirement plan would be
officers; core of the Bank relative to Insurance covers, Healthcare Insurance, tantamount to compelling her to agree to the latter. Moreover, voluntary and equivocal
vacation and sick leaves, among others.68 acceptance by an employee of an early retirement age option in a retirement plan
necessarily connotes that her consent specifically refers to the plan or that she has at
least read the same when she affixed her conformity thereto. 73
Obviously, the mere mention of the retirement plan in the letter of appointment did not
sufficiently inform the petitioner of the contents or details of the retirement program. To
construe from the petitioner's acceptance of his appointment that he had acquiesced A perusal of PVB's retirement plan shows that under its Article III all the regular
to be retired earlier than the compulsory age of 65 years would, therefore, not be employees of PVB were automatically admitted into membership, thus:
warranted. This is because retirement should be the result of the bilateral act of both
the employer and the employee based on their voluntary agreement that the employee ARTICLE III
agrees to sever his employment upon reaching a certain age. 69 MEMBERSHIP IN THE PLAN

That the petitioner might be well aware of the existence of the retirement program at Section 1. Eligibility at Effective Date. Any Employee of the Bank as of January 1, 1996
the time of his engagement did not suffice. His implied knowledge, regardless of shall automatically be a Member of the Plan as of such date.
duration, did not equate to the voluntary acceptance required by law in granting an early
retirement age option to the employee. The law demanded more than a passive Section 2. Eligibility after Effective Date. Any person who becomes an Employee after
acquiescence on the part of the employee, considering that his early retirement age January 1, 1996 shall automatically become a Member of the Plan on the date he
option involved conceding the constitutional right to security of tenure. 70 becomes a regular permanent Employee, provided he is less than 55 years old as of
such date.
In Cercado v. Uniprom, Inc.,71 we have underscored the character of the employee's
consent in agreeing to the early retirement policy of the employer, viz.: Section 3. Continuation/Termination of Membership. Membership in the Plan shall be
concurrent with employment with the Bank, and shall cease automatically upon
Acceptance by the employees of an early retirement age option must be explicit, termination of the Member's service with the Bank for any reason whatsoever.74 (Bold
voluntary, free, and uncompelled. While an employer may unilaterally retire an underscoring supplied for emphasis)
employee earlier than the legally permissible ages under the Labor Code, this
prerogative must be exercised pursuant to a mutually instituted early retirement plan. Having thus automatically become a member of the retirement plan through his
In other words, only the implementation and execution of the option may be unilateral, acceptance of employment as Chief Legal Officer of PVB,75 the petitioner could not
but not the adoption and institution of the retirement plan containing such option. For withdraw from the plan except upon his termination from employment.
the option to be valid, the retirement plan containing it must be voluntarily assented to
by the employees or at least by a majority of them through a bargaining
representative.72 (Bold emphasis supplied) It is also notable that the retirement plan had been in existence since January 1,
1996,76 or more than five years prior to the petitioner's employment by PVB. The plan
was established solely by the PVB,77 and approved by its president.78 As such, the plan
was in the nature of a contract of adhesion,79 in respect to which the petitioner was The basis for computing the separation pay should accord with Section 4, 85 Article III
reduced to mere submission by accepting his employment, and automatically became of PVB's retirement plan. Hence, his full backwages should be computed from July 18,
a member of the plan. With the plan being a contract of adhesion, to consider him to 2007 - the date when he was illegally dismissed - until his compulsory retirement age
have voluntarily and freely given his consent to the terms thereof as to warrant his being of 65 years on June 11, 2012. Such backwages shall all be subject to legal interest of
compulsorily retired at the age of 60 years is factually unwarranted. 12% per annum from July 18, 2007 until June 30, 2013, and then to legal interest of
6% interest per annum from July 1, 2013 until full satisfaction, conformably with Nacar
In view of the foregoing, the Court disagrees with the view tendered by Justice Leonen v. Gallery Frames.86
to the effect that the petitioner, because of his legal expertise and educational
attainment, could not now validly claim that he was not informed of the provisions of WHEREFORE, the Court GRANTS the petition for review
the retirement program. The pertinent rule on retirement plans does not presume on certiorari; REVERSES and SETS ASIDE the decision promulgated by the Court of
consent or acquiescence from the high educational attainment or legal knowledge of Appeals on August 31, 2012; FINDS and DECLARES respondent PHILIPPINE
the employee. In fact, the rule provides that the acquiescence by the employee cannot VETERANS BANK guilty of illegally dismissing the petitioner;
be lightly inferred from his acceptance of employment. and ORDERS respondent PHILIPPINE VETERANS BANK to pay to the petitioner, as
follows: (a) backwages computed from July 18, 2007, the time of his illegal dismissal,
Moreover, it was incumbent upon PVB to prove that the petitioner had been fully until his compulsory age of retirement, plus legal interest of 12% per annum from July
apprised of the terms of the retirement program at the time of his acceptance of the 18, 2007 until June 30, 2013, and legal interest of 6% per annum from July 1, 2013 until
offer of employment. PVB did not discharge its burden, for the petitioner's appointment full satisfaction; (b) separation pay computed at the rate of 100% of the final monthly
letter apparently enumerated only the minimum benefits that he would enjoy during his salary received by the petitioner pursuant to Section 4, Article V of the PVB Retirement
employment by PVB, and contained no indication of PVB having given him a copy of Plan; and (c) the costs of suit.
the program itself in order to fully apprise him of the contents and details thereof.
Nonetheless, even assuming that he subsequently obtained information about the The Court DIRECTS that any amount that the petitioner received from
program in the course of his employment, he still could not opt to simply withdraw from respondent PHILIPPINE VETERANS BANK by virtue of his illegal retirement shall be
the program due to his membership therein being automatic for the regular employees deducted from the amounts hereby awarded to him.
of PVB.
The Court DIRECTS the National Labor Relations Commission to facilitate the
To stress, company retirement plans must not only comply with the standards set by computation and payment of the total monetary benefits and awards due to the
the prevailing labor laws but must also be accepted by the employees as petitioner in accordance with this decision.
commensurate to their faithful services to the employer within the requisite
period.80 Although the employer could be free to impose a retirement age lower than SO ORDERED.
65 years for as long its employees consented,81 the retirement of the employee whose
intent to retire was not clearly established, or whose retirement was involuntary is to be
treated as a discharge.82

With the petitioner having been thus dismissed pursuant to the retirement provision that
he had not knowingly and voluntarily agreed to, PVB was guilty of illegal dismissal as
to him. Being an illegally dismissed employee, he was entitled to the reliefs provided
under Article 27983 of the Labor Code, to wit:

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

Considering that the petitioner's reinstatement is no longer feasible because of his

having meanwhile reached the compulsory retirement age of 65 years by June 11,
2012, he should be granted separation pay. In this regard, retirement benefits and
separation pay are not mutually exclusive.84