[G.R. No. 111173.

September 4, 1996]
PHILIPPINE SAVINGS BANK, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and VICTORIA T.
CENTENO, respondents.
D E C I S I O N
MENDOZA, J .:
This is a petition for certiorari to annul the decision of the National Labor Relations Commission in NLRC Case
No. RB-IV-2-1554-85, affirming the decision of the Labor Arbiter, which found petitioner guilty of illegal dismissal, and
the resolution of the NLRC denying reconsideration.
The facts are as follows:
Private respondent Victoria T. Centeno started, as a bank teller of petitioner Philippine Savings Bank,
on November 3, 1965. Through the years she was promoted, becoming on February 4, 1985, assistant cashier of
petitioners Taytay branch, at a salary of P2,672.00 a month.
From September 17, 1984 to November 15, 1984, private respondent was acting branch cashier, substituting for
Mrs. Victoria Ubaa, who had gone on maternity leave. As acting branch cashier, private respondent was in charge
of the cash in the vault and the preparation of the daily cash proof sheet, which was a daily record of the cash in the
vault and was used as basis in determining the starting balance on the next banking day.
On November 16, 1984, Mrs. Victoria Ubaa reported back to work. Before turning over the cash to Mrs.
Ubaa, private respondent Centeno deposited P356,400.00 in the Metropolitan Bank and Trust Co. (Metrobank).
However, what appeared as amount deposited in the November 16, 1984 cash proof and batch sheets of the cashier
and clearing clerk, was P371,400.00, and not P356,400.00 as shown in the Metrobank passbook. Petitioner later
charged that private respondent falsified the deposit slip and made it appear that she had deposited P371,400.00
when actually she had deposited only P356,400.00.
On December 18, 1984, the branch accounting clerk, Lolita Oliveros, discovered a discrepancy between the
cash deposit recorded (P371,400.00) in the cash proof and batch sheets and the deposit actually made
(P356,400.00) as reflected in the Metrobank passbook. She called the attention of the clearing clerk, Alberto C. Jose,
to the matter. They reviewed the records and found that what had been attached to the debit ticket of Jose was a
deposit slip for P356,400.00, and not for P371,400.00.
An audit team reviewed the account of the branch and found a P15,000.00 shortage incurred on November 16,
1984, the day private respondent turned over her accountability to Mrs. Ubaa after the latters maternity leave.
A committee was formed to investigate the shortage. Private respondent, the branch manager, Eladio C.
Laurena, the cashier, Victoria N. Ubaa, the clearing clerk, Alberto C. Jose, and two other employees were called to
the investigation. The committee found private respondent accountable for the shortage.
[1]
Hence, on January 7,
1985, private respondent was given a memorandum which stated:
In connection with the shortage of P15,000.00 at Taytay Branch which has been recently discovered by the Auditing
Department which shortage appears to have been deliberately perpetuated through falsifications of various
documents, all of which appear to have been done by you, you are hereby required to submit your explanation within
seventy two (72) hours from receipt of this memo why no administrative and/or disciplinary action shall be taken
against you.
In the meantime, you are hereby preventively suspended for a period of thirty (30) days effective January 8,
1985. (Emphasis added)
The manager, cashier, clearing clerk and a teller, were also given show-cause memoranda, but only private
respondent was placed under preventive suspension.
All those required to show cause filed their respective answers, except private respondent. Instead she
requested the banks vice-president, Antonio Viray, on January 15, 1985, to give her until January 18, 1985 within
which to file her answer on the ground that she needed to consult her lawyer. Her request was granted but private
respondent nonetheless failed to answer the charges against her.
On February 4, 1985, private respondent was dismissed by the bank. The memorandum to her read:
Memorandum
To : MS. VICTORIA T. CENTENO
Assistant Cashier
Taytay Branch
* * * * * * * * * * * * * * * * * * * * * * * ** * * * * * * * * * * *
This is in connection with the shortage of P15,000.00 at Taytay Branch which was incurred while you were in charge
of the vault. Immediately after the discovery of the shortage, through the memorandum of the undersigned
dated January 7, 1985 addressed to you, we required you to explain within seventy two (72) hours from receipt of
said memo why no administrative and/or disciplinary action should be taken against you. Despite the lapse of the
extension period you requested within which to submit your explanation, and up this date, you have not submitted
your explanation.
After carefully evaluating the evidence presented and considering your failure to explain the shortage which
tantamounts to admission of guilt, we have no alternative but to conclude, as we hereby conclude, that you were the
one who misappropriated the shortage of P15,000.00. You have therefore forfeited the confidence that the Bank has
reposed on you as an officer.
IN VIEW OF THE FOREGOING, Management hereby dismisses you FOR CAUSE effective immediately with
forfeiture of all benefits. The Bank reserves the right to take such actions it may deem necessary for the recovery of
the P15,000.00. (Emphasis added)
Private respondent sued petitioner for illegal dismissal before the Labor Arbiter. Aside from claiming that her
dismissal was without basis, she claimed that she was denied due process because she had not been informed of
the specific acts for which she was dismissed. She claimed that during her 19 years of service in petitioner bank, she
never [played] fast and loose with bank funds.
Petitioner alleged that private respondent was dismissed for loss of trust and confidence as a result of the
shortage, which, according to petitioner, she tried to conceal by falsifying the banks cash proof sheet and the tellers
vale. Petitioner claimed that private respondent was accorded due process prior to her dismissal.
On September 15, 1988, the Labor Arbiter found petitioner guilty of having illegally dismissed private
respondent and of denying her due process. Accordingly the Labor Arbiter ordered:
WHEREFORE, responsive to the foregoing, judgment is as it is hereby entered in favor of complainant and against
respondent:
1. Considering the termination of complainant illegal;
2. Ordering respondent to reinstate complainant to her former position or equivalent position with full backwages
from the time of her unlawful termination and until actually reinstated without loss of seniority rights and other
privileges appertaining to her position;
3. Ordering respondent to pay complainant moral and exemplary damages in the amounts of Fifty Thousand Pesos
(P50,000.00) and Ten Thousand Pesos (P10,000.00), respectively; and,
4. Ordering respondent to pay complainant attorneys fees equivalent to ten (10%) per cent of the total award.
SO ORDERED.
On appeal, the NLRC affirmed with modification thus:
PREMISES CONSIDERED, the Decision of September 15, 1988 is hereby MODIFIED with the deletion of awards
representing moral/exemplary damages and attorneys fees. However, the award of backwages and other benefits
shall not exceed three (3) years as laid down by the Supreme Court. Respondent is hereby directed to pay
complainant backwages in the amount of NINETY SIX THOUSAND ONE HUNDRED NINETY TWO PESOS
(P96,192.00) and/or other benefits due. The other findings stand AFFIRMED.
SO ORDERED.
Both parties moved for reconsideration, but their motions were denied by the NLRC in its resolution on July 8,
1993.
Hence this petition. Petitioner claims that the NLRC gravely abused its discretion in:
a) holding that private respondent Centeno was denied due process of law prior to her dismissal; and
b) failing to fully discuss all the six (6) assigned errors raised by the petitioner in its appeal by ignoring:
1) the valid ground wherein petitioner based its termination of the service of private respondent, and that is loss of
confidence;
2) the specific circumstances that led the petitioner to lose its trust and confidence on private respondent; and
3) the applicable settled law and jurisprudence that the private respondent, having been validly dismissed, is not
entitled to reinstatement and backwages.
First. Contrary to the finding of the Labor Arbiter and the NLRC, private respondent was notified of the charge
against her through a memorandum sent to her on January 7, 1985. Indeed she knew the reason for the show-
cause order because before that, she and other employees had been asked to attend an investigation. The law
requires that the employer must furnish the worker sought to be dismissed with two (2) written notices before
termination may be validly effected: first, a notice apprising the employee of the particular acts or omission for which
his dismissal is sought and, second, a subsequent notice informing the employee of the decision to dismiss him.
[2]
In
accordance with this requirement, private respondent was given the required notices, on January 7, 1985 and then on
February 4, 1985.
The NLRC ruled that an investigation should have been conducted prior to private respondents dismissal. As
already noted, however, private respondent was informed of the charges against her and given an opportunity to
answer the charges. Upon her request, she was given until January 18, 1985 within which to file her answer. But
she failed to file her answer. Of course she later tried to explain that she did not find it necessary to do so
because there was, after all, no ground for any action against [her] . . . and [she] did not feel obligated, therefore, to
dispute the action which was baseless and unfounded.
[3]
Furthermore, she claimed she thought the Committee had
prejudged the case against her.
[4]

Whatever her reason might have been, the fact is that petitioner waived the right to be heard in an
investigation. Due process is not violated where a person is not heard because he has chosen not to give his side of
the case. If he chooses to be silent when he has a right to speak, he cannot later be heard to complain that he was
silenced.
[5]
Private respondent having chosen not to answer, should not be allowed to turn the tables on her employer
and claim that she was denied due process. Indeed, the requirement of due process is satisfied when a fair and
reasonable opportunity to explain his side of the controversy is afforded the party. A formal or trial-type hearing is not
at all times and in all circumstances essential, especially when the employee chooses not to speak.
[6]
Under the
circumstance of this case, it is too much to require petitioner to hear private respondent before the latter can be
dismissed.
Happily, no liability was imposed on petitioner by either the Labor Arbiter or the NLRC despite the finding that
petitioner had denied private respondent due process. Accordingly, all that we need to do in this case is to record our
finding that petitioner fully complied with its duty under the law to accord due process to private respondent.
Second. Petitioner also claims that the NLRC gravely abused its discretion in not passing upon three (3) errors
assigned by it on appeal.
We find the contention without merit. In affirming the Labor Arbiter, the NLRC found the evidence supporting
the Labor Arbiters factual findings to be substantial and for this reason apparently found it unnecessary to make a
separate discussion. Factual findings of administrative agencies are generally accorded respect and even finality in
this Court if they are supported by substantial evidence.
[7]

Petitioner makes a reconstruction of the facts which, according to it, shows how the shortage incurred on
November 16, 1984 was concealed. The reconstruction is as follows:
A) During the turn-over of the cash in vault by Mrs. Victoria Centeno to Mrs. Victoria Ubaa, after counting the cash
in vault, no formal recording of how much cash was actually turned over was done. However, from the Cash Proof in
November 16, 1984, it could be reconstructed and determined whether there is a shortage or not by the following
figures:
Cash Balance, Nov. 15 84 P589,572.02
Deduct: Cash Vales of
Tellers at start of
banking day
Pico of Teller No. 1 P19,207.06
Pico of Teller No. 2 P21,666.21
Pico of Teller No. 3 P21,995.25 [P 62,868.52]
Balance: Paper Bills & Coins P536,703.50
Deduct: Deposit with Metrobank P356,400.00
Balance that should have been
turned over P170,303.50
Additional Vale-Coins-Teller 3 P 11.00
Balance P170,292.50
Add: Sorted Paper Bills turned
over by the tellers to the
cashiers:
Teller No. 1 P100,000.00
Teller No. 1 P 40,000.00
Teller No. 2 P147,200.00
[P 46,202.64] [P333,402.64]
CORRECT CASH BALANCE
November 16, 1984 P503,695.14
Cash Balance per Cash
Proof November 16, 1984 P488,695.14
SHORTAGE P 15,000.00
B) The above P15,000.00 shortage was covered up in two (2) ways or stages:
First: In the original or untampered cash proof, the deposit to Metrobank was written originally as P371,400.00 instead of the
actual deposit of P356,400.00. The writing of the P371,400.00 deposit to Metrobank was based on a deposit slip for
P371,400.00 given to Mrs. Victoria Ubaa by Mrs. Victoria Centeno. The same deposit slip for P371,400.00 was also
given to Mr. Alberto Jose, the Clearing clerk, who used the same to enter the P371,400.00 deposit with Metrobank in
the Batch Sheet, as well as in the preparation of the Debit and Credit Tickets. The P15,000.00 shortage, which is the
difference between P371,400.00 and P356,400.00 was therefore concealed in the P371,400.00 deposit to
Metrobank, which actually and truly was for P356,400.00 only.
Second: When the genuine deposit slip to Metrobank for P356,400.00 was placed in the Cash Proof file and the spurious deposit
slip for P371,400.00 was removed by whoever was responsible for the shortage, the cashproof will NOT BE
BALANCED, so that the second step was to ADD P15,000.00 to the P11.00 cash vale of Teller No. 3 to make it
appear as if the vale was for P15,011.00. In this way, the cash proof will again be balanced, since the decrease of
P15,000.00 in deposit with Metrobank from P371,400.00 to P356,400.00 was shifted to the P15,011.00 vale which
was actually P11.00 only.
Though the P371,400.00 deposit slip is now missing, the insertion of the P15,000.00 in the vale of Teller No. 3 is very
apparent, since the duplicate vale in the possession of the Teller has not been tampered and remains as
P11.00. Incidentally, it had not missed the petitioners attention also that, by force of habit, Teller No. 3 was
accustomed to placing a hyphen across the centavo figures in her Tellers vales when there was no centavo entry
thereon; the added figures amounting to P15,000.00 on the other hand did not contain such a hyphen in the centavo
of the vale, leading us to believe that the addition of P15,000.00 could not have been made by the Teller
concerned. (Affidavit of Norberto Robleza dated 09 October 1985, pp. 4-6)
Loss of trust and confidence is a cause for dismissing an employee who is entrusted with fiducial matters, or
with the custody, handling or care and protection of the employers property.
[8]
There is no dispute about this. But the
employer must clearly and convincingly establish the facts and incidents upon which its loss of confidence in the
employee may be fairly made to rest, otherwise, the dismissal will be rendered illegal.
[9]

Petitioners claim is that although private respondent deposited only P356,400.00 in the Metrobank, she filled up
a deposit slip showing the deposit to be P371,400.00 and this amount was recorded in the cash proof sheet and
batch sheet for November 16, 1984. But there is no evidence to show this. The falsified deposit slip allegedly made
by private respondent was not presented. Petitioner claimed it was missing. But as private respondent testified the
amount of P356,400.00 which she deposited was recorded in the Metrobank passbook. She gave this passbook to
Mrs. Ubaa on November 16, 1984. Yet the supposed discrepancy was not noticed by Mrs. Ubaa in preparing the
cash proof sheet and the debit sheet who recorded P371,400.00 as having been deposited in Metrobank. Petitioners
allegation that Ms. Centeno misled the cashier and the clearing clerk into recording P371,400.00 cannot therefore be
given credence.
Indeed, private respondent denied that she gave Mrs. Ubaa a falsified deposit slip showing a deposit of
P371,400.00 because after the Metrobank picked up the deposit she made, private respondent handed to Mrs.
Ubaa the deposit slip of P356,400.00 together with the cash proof sheet of November 15, 1984 and the key to the
vault.
[10]
Besides, Mrs. Ubaa as already stated, had the passbook. She could not have failed to notice that the
amount deposited was P356,400.00 and not P371,400.00 as the bank now claims it was made to understand on
November 16, 1984.
Petitioner claims that the party responsible for concealing the shortage altered the tellers vale and made it
appear that the vale of Teller 3 (Antonette Reyes) was P15,011.00 when the fact was that it was only for P11.00 as
shown in the duplicate vale in the possession of Reyes. This claim is subject to two objections. First, it was not
shown that private respondent had custody of the vale or, if she had access to the document, that private respondent
was the only one who had such access to it, so as to make her the only possible author of the alteration. Second, the
fact that the altered vale of Teller 3 in the possession of the bank was not in the tellers customary way of recording
does not necessarily mean that the vale she had was the authentic vale while that given to the clearing clerk was
falsified. She could have altered her usual practice of recording.
It is noteworthy that the shortage was incurred on the day (November 16, 1984) the branch regular cashier, Mrs.
Victoria Ubaa, reported for work. It was she in fact who prepared the cash proof sheet. The alteration in the cash
proof sheet on that day could not have been made by private respondent. As an NBI handwriting expert stated under
cross examination:
WITNESS
A The supplemental report is also an answer to the first. The requested analysis should center on the handwritings of
the two (2) persons, Mrs. Victoria Ubaa and Mrs. Victoria Centeno. In my first report dated December 3, 1985 my
findings are as follows: The no. 1 states that there are existing fundamental differences between the questioned
handwritings or figures appearing on the questioned document and the standard handwritings/figures appearing on
the standard documents marked as SV-1 thru SV-9 and those standards were the handwritings of one Victoria
Ubaa. The result of which is that the questioned handwritings and the standard handwritings were not written by
one and the same person. And then in statement that the submitted standards, signatures under the specimen
named Victoria Centeno any findings whether Victoria Centeno or not is the writer of the questioned handwritings, so
I made the supplemental report to make a definite answer that all the figures and handwritings appearing on the cash
proof sheet which is being questioned were not written by Victoria Centeno to answer this phrase. (Emphasis
supplied)
Furthermore, the cash proof sheet and the vale were kept in the banks vault, the key to which was held only by
Mrs. Ubaa, as cashier of the bank.
[11]
Any alteration in the documents by private respondent or by any party could,
therefore, have easily been discovered by the cashier.
Petitioner further claims that private respondents accounting method did not correctly reflect the bills from
previous banking days and that taking into account all the entries, the amount not reflected was equivalent to the
shortage. This contention is without merit. While the accounting method adopted by private respondent was different
from the method used by Mrs. Ubaa, private respondents method was nonetheless an acceptable bank procedure
according to Mr. Robleza, petitioners own witness.
[12]
The method adopted by private respondent was accurate,
otherwise it could not have been allowed by the bank.
Indeed private respondent was acting cashier for two months, from September 17, 1984 to November 15,
1984. During that period no shortage was ever reported. At the time the cash in the vault was turned over to Mrs.
Ubaa, it was counted and the failure to record its amount at that time can only mean one thing: that the cash turned
over to Mrs. Ubaa corresponded with the amount recorded in the cash proof sheet on November 15, 1984.
Private respondent had faithfully served petitioner bank for 19 years. Starting as a bank teller, she steadily rose
to the position of assistant branch cashier. Considering this fact, petitioner should have been more careful in
determining liability for the loss rather than merely relying on what it calls circumstantial evidence of guilt. The fact
that only private respondent did not answer the charge when required in the memorandum of petitioner is not an
indication of her guilt. While we recognize that petitioner has a wide latitude in dismissing a bank
officer, nonetheless, the evidence on which it acts must be substantial.
As the dismissal of private respondent is illegal, she is entitled to reinstatement to her former position without
loss of seniority rights and to the payment to her of backwages.
[13]
The NLRC correctly limited the award of
backwages to three years, consistent with the rule at the time of private respondents dismissal.
[14]
R.A. No. 6715,
which amended Art. 279 of the Labor Code, awarding full backwages to illegally dismissed employees, cannot be
retroactively applied to dismissals taking place before its effectivity on March 21, 1989.
[15]

WHEREFORE, the petition is DISMISSED.
SO ORDERED.

RAYCOR AIRCONTROL SYSTEMS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND
ROLANDO LAYA, et al., respondents.
D E C I S I O N
PANGANIBAN, J .:
Were private respondents, employed by petitioner in its business of installing airconditioning systems in
buildings, project employees or regular employees? And were their dismissals "due to (petitioner's) present business
status" and effective the day following receipt of notice legal? Where both the petitioner and the respondents fail to
present sufficient and convincing evidence to prove their respective claims, how should the case be decided?
This Court answers the foregoing questions in resolving this petition for certiorari assailing the
Decision
[1]
promulgated November 29, 1993 by the National Labor Relations Commission,
[2]
which set aside and
reversed the decision of the labor arbiter
[3]
dated 22 January 1993, as well as the subsequent order of respondent
Commission denying petitioner's motion for reconsideration.
The Facts
Petitioner's sole line of business is installing airconditioning systems in the buildings of its clients. In connection
with such installation work, petitioner hired private respondents Roberto Fulgencio, Rolando Laya, Florencio Espina,
Romulo Magpili, Ramil Hernandez, Wilfredo Brun, Eduardo Reyes, Crisostomo Donompili, Angelito Realingo, Hernan
Delima, Jaime Calipayan, Jorge Cipriano, Carlito de Guzman, Susano Atienza, and Gerardo de Guzman, who
worked in various capacities as tinsmith, leadman, aircon mechanic, installer, welder and painter. Private
respondents insist that they had been regular employees all along, but petitioner maintains that they were project
employees who were assigned to work on specific projects of petitioner, and that the nature of petitioner's business --
mere installation (not manufacturing) of aircon systems and equipment in buildings of its clients -- prevented
petitioner from hiring private respondents as regular employees. As found by the labor arbiter, their average length of
service with petitioner exceeded one year, with some ranging from two to six years (but private respondents claim
much longer tenures, some allegedly exceeding ten years).
In 1991, private respondent Laya and fourteen other employees of petitioner filed NLRC NCR Case No. 00-03-
02080-92 for their "regularization". This case, was dismissed on May 20, 1992for want of cause of action.
[4]

On different dates in 1992, they were served with uniformly-worded notices of "Termination of Employment" by
petitioner "due to our present business status", which terminations were to be effective the day following the date of
receipt of the notices. Private respondents felt they were given their walking papers after they refused to sign a
"Contract Employment" providing for, among others, a fixed period of employment which "automatically terminates
without necessity of further notice" or even earlier at petitioner's sole discretion.
Because of the termination, private respondents filed three cases of illegal dismissal against petitioner, alleging
that the reason given for the termination of their employment was not one of the valid grounds therefor under the
Labor Code. They also claimed that the termination was without benefit of due process.
The three separate cases filed by private respondents against petitioner, docketed as NLRC-NCR 00-03-05930-
92, NLRC NCR 00-05-02789-92, and NLRC NCR 00-07-03699-92, were subsequently consolidated. The parties
were given opportunity to file their respective memoranda and other supplemental pleadings before the labor arbiter.
On January 22, 1993, the Labor Arbiter issued his decision dismissing the complaints for lack of
merit. He reasoned that the evidence showed that the individual complainants (private respondents) were project
employees within the meaning of Policy Instructions No. 20 (series of 1977)
[5]
of the Department of Labor and
Employment, having been assigned to work on specific projects involving the installation of air-conditioning units as
covered by contracts between their employer and the latter's clients. Necessarily, the installation of airconditioning
systems "must come to a halt as projects come and go", and "(o)f consequence, the [petitioner] cannot hire workers
in perpetuity. And as project employees, private respondents would not be entitled to termination pay, separation
pay, holiday premium pay, etc.; and neither is the employer required to secure a clearance from the Secretary of
Labor in connection with such termination.
Private respondents appealed to the respondent NLRC, which in its November 29,
1993 Decision reversed the arbiter and found private respondents to have been regular employees illegally
dismissed. The respondent Commission made the following four-paragraph disquisition:
"From the above rules, it can easily be- gleaned that complainants belong to a work pool from which the respondent
company drew its manpower requirements. This is buttressed by the fact that many of the complainants have been
employed for long periods of time already.
We doubt respondent's assertion that complainants were really assigned to different projects. The 'Contract
Employment' which it submitted (see pp. 32-38, record) purporting to show particular projects are not reliable nay
even appears to have been contrived. The names of the projects clearly appear to have been recently
typewritten. In the 'Contract Employment' submitted by complainants (see p. 65, record), no such name of project
appears. Verily, complainants were non-project employees.
Anent the dismissal of complainants, suffice it to state that the same was capricious and whimsical as shown by the
vague reason proffered by respondent for said dismissal which is 'due to our present business states' (should read
'status') is undoubtedly not one of the valid causes for termination of an employment. We are thus inclined to give
credence to complainants' allegation that they were eased out of work for their refusal to sign the one-sided 'Contract
Employment.'
The fact that complainants were dismissed merely to spite them is made more manifest by respondent's failure to
make a report of dismissal or secure a clearance from the Department of Labor (see pp. 196 and 197, record) as
required under P.I. No. 20 and their publication of an advertisement for replacements for the same positions held
by complainants (see p. 298, record). Even assuming that complainants were project employees, their
unceremonious dismissal coupled with the attempt to replace them via the newspaper advertisement entitles them to
reinstatement with backwages under P.I., No. 20."
The dispositive portion followed immediately and read:
"WHEREFORE, the appealed Decision is hereby SET ASIDE and a new one entered ordering respondent to:
1. Immediately reinstate complainants (private respondents) to their former positions without loss of seniority
rights and privileges; and
2. Pay them full backwages from the time they were dismissed up to the time they are actually reinstated."
Petitioner's motion for reconsideration was denied by public respondent on February 23, 1994 for lack of
merit. Hence, this petition.
Issues
Petitioner charges public respondent NLRC with grave abuse of discretion in finding private respondents to
have been non-project employees and illegally dismissed, and in ordering their reinstatement with full backwages.
For clarity's sake, let us re-state the pivotal questions involved in the instant case as follows: whether private
respondents were project employees or regular (non-project) employees, and whether or not they were legally
dismissed.
In support of its petition, petitioner reiterates the same points it raised before the tribunals below: that it is
engaged solely in the business of installation of airconditioning units or systems in the buildings of its clients. It has
no permanent clients with continuous projects where its workers could be assigned; neither is it a manufacturing
firm. Most of its projects last from two to three months. (The foregoing matters were never controverted by private
respondents.) Thus, for petitioner, work is "not done in perpetuity but necessarily comes to a halt when the installation
of airconditioning units is completed."
On the basis of the foregoing, petitioner asserts that it could not have hired private respondents as anything
other than project employees. It further insists that "(a)t the incipience of hiring, private respondents were appraised
(sic) that their work consisted only in the installation of airconditioning units and that as soon as the installation is
completed, their work ceases and that they have to wait for another installation projects (sic)." In other words, their
work was co-terminous with the duration of the project, and was not continuous or uninterrupted as claimed by
them. Petitioner also claims that the private respondents signed project contracts of employment indicating the
names of the projects or buildings they are working on. And when between projects, there project employees were
free to work elsewhere with other establishments.
Private respondents controverted these assertions of petitioner, claiming that they had worked continuously for
petitioner for several years, some of them as long as ten years, and thus, by operation of law had become regular
employees.
The Court's Ruling
Ordinarily, the findings made by the NLRC are entitled to great respect and are even clothed with finality and
deemed binding on this Court, except that when such findings are contrary to those of the labor arbiter, this Court
may choose to re-examine the same, as we hereby do in this case nor.
The First Issue: Project Employees or Regular Employees?
An Unfounded Conclusion
We scoured the assailed Decision for any trace of arbitrariness, capriciousness or grave abuse of discretion,
and noted that the respondent Commission first cited the facts of the case, then quoted part of the arbi ter's
disquisition along with relevant portions of Policy Instructions No. 20, after which it immediately leapt to the
conclusion that "(F)rom the above rules, it can easily be gleaned that complainants belong to a work pool from which
the respondent company drew its manpower requirements. This is buttressed by the fact that many of the
complainants have been employed for long periods of time already." (underscoring supplied) By reason of such
"finding", respondent NLRC concluded that private respondents were regular (not project) employees, but failed to
indicate the basis for such finding and conclusion. For our part, we combed the Decision in search of such
basis. However, repeated scrutiny of the provisions of Policy Instructions No. 20 pertaining to work pools merely
raised further questions.
"Members of a work pool from which a construction company draws its project employees, if considered
employees of the construction company while in the work pool, are non-project employees or employees for an
idefinite period. If they are employed in a particular project, the completion of the project or of any phase thereof will
not mean severance of employer-employee relationship.
However, if the workers in the workpool are free to leave anytime and offer their services to other employers
then they are project employees employed by a construction company in a particular project or in a phase thereof."
A careful reading of the aforequoted and preceding provisions establishes the fact that project employees may or
may not be members of a workpool, (that is, the employer may or may not have formed a work pool at all),
and in turn, members of a work pool could be either project employees or regular employees. In the instant
case, respondent NLRC did not indicate how private respondents came to be considered members of a work pool as
distinguished from ordinary (non-work pool) employees. It did not establish that a work pool existed in the first
place. Neither did it make any finding as to whether the herein private respondents were indeed free to leave
anytime and offer their services to other employers, as vigorously contended by petitioner, despite the fact that such
a determination would have been critical in defining the precise nature of private respondents' employment. Clearly,
the NLRC's conclusion of regular employment has no factual support and is thus unacceptable.
Conclusion Based on Unwarranted Assumption of Bad Faith
Immediately thereafter, respondent Commission determined -- without sufficient basis -- that complainants were
non-project employees. We quote:
"We doubt respondent's (petitioner's) assertion that complainants (private respondents) were really assigned to
different projects. The "Contract Employment" which it submitted (see pp. 32-38, record) purporting to show
particular pojects are not reliable nay even appears to have been contrived. The names of the projects clearly
appear to have been recently typewritten. In the 'Contract Employment' submitted by complainants (see p. 65,
record), no such name of project appears. Verily, complainants were non-project employees." (underscoring
supplied)
The basis for respondent NLRC's statement that the contracts were contrived was the fact that the names of
projects clearly appeared to have been typed in only after the contracts had been prepared. However, our
examination of the contracts (presented by petitioner as Annexes "A", "B", "B-1", "C", "D", "E" and "F"
[6]
to its Position
Paper dated July 30, 1992 filed with the labor arbiter) did not lead inexorably to the conclusion that these were
"contrived". Said Annexes were photocopies of photocopies of the original "Contract Employments",
[7]
and the
names of projects had been typed onto these photocopies, meaning that the originals of said contracts probably did
not indicate the project names. But this alone did not automatically or necessarily mean that petitioner had
committed any falsehood or fraud, or had any intent to deceive or impose upon the tribunals below, because the
names of the projects could have been typed/filled in good faith,nunc pro tunc, in order to supply the data which
ought to have been indicated in the originals at the time those were issued, but which for some reason or other were
omitted. In short, the names of projects could have been filled in simply in order to make the contracts speak the
truth more clearly or completely. Notably, no reason was advanced for not according the petitioner the presumption
of good faith. Respondent NLRC, then, made an unwarranted assumption that bad faith and fraudulent intent
attended the filling in of the project names in said Annexes. In any event, it can be easily and clearly established with
the use of the naked eye that the dates and durations of the projects and/or work assignments had been typed into
the original contracts, and therefore, petitioner's failure to indicate in the originals of the contracts the name(s) of the
project(s) to which private respondents were assigned does not necessarily mean that they could not have been
project employees. (Incidentally, we should make mention here that what is or is not stated in a contract does not
control nor change the Juridical nature of an employment relationship since the same is determined and fixed by
law. As a matter of fact, we note that there is no requirement in Policy Instructions No. 20 that project employees
should be issued written contracts of employment, let alone that a written contract should indicate the name of the
project to which the employee concerned is being assigned.)
Statutory Basis for Determining Nature of Employment
The parties and their respective counsel, as well as respondent Commission and the Solicitor General, should
have re-read and carefully studied ALU-TUCP vs. National Labor Relations Commission,
[8]
which is highly
instructional on this question:
"The law on the matter is Article 280 of the Labor Code which reads in full:
'Article 280. Regular and Casual Employment -- The provisions of the written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall continue
while such activity exists.' xxx
x x x x x x x x x
x x x For, as is evident from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for
determining whether particular employees are properly characterized as 'project employees' as distinguished from
'regular employees,' is whether or not the 'project employees' were assigned to carry out a 'specific project or
undertaking,' the duration (and scope) of which were specified at the time the employees were engaged for that
project. (underscoring ours)
In the realm of business and industry, we note that 'project' could refer to x x x a particular job or undertaking that is
within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as
such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or
determinable times. The typical example of this x x x type of project is a particular construction job or project of a
construction company. A construction company ordinarily carried out two or more discrete identifiable construction
projects: e.g., a twenty-five.story hotel in Makati; a residential condominium building in Baguio City; and a domestic
air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects, the scope
and duration of which has been determined and made known to the employees at the time of employment, are
properly treated as 'project employees,' and their services may be lawfully terminated at completion of the project."
The same decision goes on to say:
[9]

"x x x The simple fact that the employment of petitioners as project employees had gone beyond one (1) year, does
not detract from, or legally dissolve, their status as project employees. The second paragraph of Article 280 of the
Labor Code, quoted above, providing that an employee who has served for at least one (1) year, shall be considered
a regular employee, relates to casual employees, not to project employees.
In the case of Mercado, Sr. vs. National Labor Relations Commission (201 SCRA 332 [1991]), this Court ruled that
the proviso in the second paragraph of Article 280 relates only to casual employees and is not applicable to those
who fall within the definition of said Article's first paragraph, i.e.. project employees. x x x"
Incidentally, we should mention that both respondent Commission and the Solicitor General were in error in
concluding based on private respondents' claimed length of employment (allegedly for over ten years) that they were
regular employees. Sad to state, the Solicitor General in his arguments tried to "force-fit" private respondents into the
"regular employee" category and completedly disregarded the critical distinctions set forth in ALU-TUCP and earlier
cases.
Inconclusive Evidence
Based on the foregoing considerations, it is patent that, in the instant case, there needs to be a finding as to
whether or not the duration and scope of the project or projects were determined or specified and made known to
herein private respondents at the time of their engagement. The labor arbiter tried to do this, relying heavily on the
"Contract(s) Employment" presented in petitioner's Annexes as well as on private respondents' own Annex
"A"
[10]
attached to their Position Paper, and citing the fact that the said contracts of employment indicated the duration
of the projects to which the private respondents had been assigned. He then held that "(t)here is no denial that
complainants were assigned to work in these projects,"
[11]
and concluded that they were indeed project employees.
But the arbiter completed ignored the fact that all the "Contract(s) Employment" presented in evidence by both
petitioner and private respondents had been signed only by petitioner's president and general manager, Luis F.
Ortega, but not by the employees concerned, who had precisely refused to sign them. The said contracts therefore
could in no wise be deemed conclusive evidence. Thus, private respondents faulted the labor arbiter for giving
credence and probative value to said contracts. Besides, they claimed, only seven contracts in all were presented in
evidence, pertaining to seven individual employees, while there are fifteen employees involved in the
complaints. Moreover, these contracts, purportedly issued either in July or December of 1991, except for one dated
May 1992), were all one-shot contracts of short duration, the longest being for about five months. Now, inasmuch as
petitioner had not denied nor rebutted private respondents' allegations that they had each worked several years for
the petitioner, the obvious question is, why didn't petitioner produce in evidence similar contracts for all the other
years that private respondents had worked as project employees? To these points, petitioner offered no explanation
whatsoever.
Failure to Discharge Burden of Proof
For that matter, it seems self-evident to this Court that, even if the contracts presented by petitioner had been
signed by the employees concerned, still, they would not constitute conclusive proof of petitioner's claim. After all, in
the usual scheme of things, contract terms are normally dictated by the employer and simply acceded to and
accepted by the employee, who may be desperate for work and therefore in no position to bargain freely or negotiate
terms to his liking.
In any event, petitioner in this case undoubtedly could have presented additional evidence to buttress its
claim. For instance, petitioner could have presented copies of its contracts with its clients, to show the time, duration
and scope of past installation projects. The data from these contracts could then have been correlated to the data
which could be found in petitioner's payroll records for, let us say, the past three years or so,
[12]
to show that private
respondents had been working intermittently as and when they were assigned to said projects, and that their
compensation had been computed on the basis of such work. But petitioner did not produce such additional
evidence, and we find that it failed to discharge its burden of proof.
It is not so much that this Court cannot appreciate petitioner's contentions about the nature of its business and
its inability to maintain a large workforce on its permanent payroll. Private respondents have admitted that petitioner
is engaged only in the installation (not manufacture) of aircon systems or units in buildings, and since such a line of
business would obviously be highly (if not wholly) dependent on the availability of buildings or projects requiring such
installation services, which factor no businessman, no matter how savvy, can accurately forecast from year to year, it
can be easily surmised that petitioner, aware that its revenues and income would be unpredictable, would always try
to keep its overhead costs to a minimum, and would naturally want to engage workers on a per-project or per-building
basis only, retaining very few employees (if any) on its permanent payroll. It would also have been more than glad if
its employees found other employment elsewhere, in between projects. To our mind, it appears rather unlikely that
petitioner would keep private respondents -- all fifteen of them -- continuously on its permanent payroll for, say, ten or
twelve years, knowing fully well that there would be periods (of uncertain duration) when no project can be had. To
illustrate, let us assume that private respondents (who were each making aboutP118.00 to P119.50 per day in 1991)
were paid only P100.00 per day. If the fifteen were, as they claimed, regular employees entitled to their wages
regardless of whether or not they were assigned to work on any project, the overhead for their salaries alone --
computed at P100.00/day for 30 days in a month -- would come to no less than P45,000.00 a month, or P540,000.00
a year, not counting 13th month pay, Christmas bonus, SSS/Medicare premium payments, sick leaves and service
incentives leaves, and so forth. Even if petitioner may have been able to afford such overhead costs, it certainly does
not make business sense for it or anyone else to do so, and is in every sense contrary to human nature, not to
mention common business practice. On this score alone, we believe that petitioner could have made out a strong
case. Which is why we have difficulty understanding its failure to present clear and convincing evidence on this point,
it being doctrinal that in illegal dismissal cases, the employer always has the burden of proof.
[13]

Petitioner's problem of weak evidence was further compounded by certain documentary evidence in the
records below which controverted petitioner's position, or, at the very least, tended to confuse rather than clarify
matters. For instance, we noted that in their Memorandum of Appeal dated February 17, 1993 filed with the
respondent Commission, herein private respondents had attached as annexes thereto the following documents:
1. As Annex "B" thereof, a Certification dated January 28, 1992, signed by one Flora P. Perez, Administrative/Accountant
of Raycor, certifying that "x x x Mr. Roberto B. Fulgencio (one of the private respondents) has been connected with
the undersigned corporation (Raycor) from August 22, 1986 to May 18, 1991 and September 01, 1990 to January 25,
1992 as Aircon Installer";
2. As Annex "C" thereof, a Certification dated May 7, 1985, signed by Luis F. Ortega, President and General Manager of
herein petitioner corporation, to the effect that "x x x Mr. Jaime Calipayan(another one of the private respondents) has
been connected with the undersigned corporation from June 18, 1982 up to present as a Mechanical Installer ; and
3. As Annex "D" thereof, a Certification dated June 06, 1991, likewise signed by Luis G. Ortega, president and general
manager of Raycor, certifying that "x x x Mr. Susano A. Atienza (still another of the private respondents) has been
connected with the undersigned corporation from October 10, 1983 up to present as Aircon Mechanic/Technician".
Understandably, private respondents made big capital out of these certifications. But, while petitioner failed
utterly to offer rebutting evidence, still and all, we are not prepared to conclude on the basis of these certifications
alone that private respondents were indeed regular employees. First of all, said certifications refer only to three out of
the fifteen private respondents, so what could be true of them may not necessarily apply with respect to the other
twelve. Moreover, the certifications do not categorically state that the three employees had been permanent
employeesof Raycor. In other words, they do not necessarily overturn petitioner's contention that private respondents
were project employees, since it is still possible to read the documents a saying that the named employees were
working as project employees during the periods therein specified. This is especially so since the said certifications
were prepared by non-lawyers who in all likelihood were not aware of the potential legal implications and
ramifications of what were ostensibly innocuous certifications. As held in one recent case, "x x x it is however not
difficult to understand that ordinary business activities are performed in the normal course without anticipation nor
foreknowledge of litigation, often with dispatch and usually with a minimum of documentation.
[14]
Nonetheless, all
things considered, the certifications, issued by petitioner itself, tend to put its claims in serious doubt.
The situation was still further aggravated by the manner in which petitioner dismissed private respondents. As
found by respondent Commission, the reason given for the dismissals, i.e., "due to our present business status," is
vague, to say the least, and unarguably is not one of the valid or just causes provided by law for termination of an
employment, whatever its classification. But more significantly -- if indeed private respondents were project
employees, there would have been no need to terminate them by sending them notices of termination, inasmuch as
their employment ceases "as a result of the completion of the project or any phase thereof in which they are
employed," per Policy Instruction No. 20 itself. Thus, if petitioner resorted to such dismissals, there is the
unavoidable inference that petitioner regarded the private respondents as regular employees after all. But again, this
is inconclusive, since the notices of termination were signed, and in all likelihood prepared, by the president and
general manager of petitioner, probably sans any legal advice or awareness of the implications of such a move.
All the aforesaid conflicting data have the net effect of casting doubt upon and clouding the real nature of the
private respondents' employment status. And we are mandated by law to resolve all doubts in favor of labor. For
which reason, we hereby hold that private respondents were regular employees of the petitioner.
Having arrived at basically the same results as respondent NLRC with respect to private respondents'
employment status, did this Court waste its time and effort in re-examining the instant case? The answer is in the
negative, this Court cannot affirm a decision or judgment based on erroneous findings and conclusions, for justice
can never be adequately dispensed to all parties if a judgment is not grounded on the truth.
Second Issue: Terminations Illegal
On the second issue of alleged illegality of the subject dismissals, we agree with respondent Commission when
it held, as mentioned above, that "the same was capricious and whimsical as shown by the vague reason proffered
by respondent for said dismissal which is 'due to our present business states' (should read 'status') is undoubtedly not
one of the valid causes for termination of an employment." True indeed, for neither trhe Labor Code nor Policy
Instructions No. 20 allows termination on such ground. Even Art. 283 of the Labor Code as amended, which treats of
retrenchments and closures due to business losses, requires that the employer first serve written notice on the
workers and the Department of Labor at least one month before the intended date thereof; and in certain cases,
separation pay must be paid. And it cannot be denied that in the instant case, petitioner did not afford them due
process thru the twin requirements of notice and hearing,
[15]
as the terminations took effect the day following receipt
of the notices of termination. Ineluctably, the said terminations are not in accordance with law and therefore illegal.
On top of that, there is evidence of the bad faith of petitioner in terminating the private respondents. Petitioner
placed an ad
[16]
in the classified ads section of the People's Journal, sometime in June 1992
[17]
which read:
"WANTED IMMEDIATELY
MECHANICAL INSTALLERS
TINSMITHS
WELDERS/PIPEFITTERS

APPLY IN PERSON:
RAYCOR AIR CONTROL
SYSTEMS, INC.
RM 306 20TH CENTURY BLDG.
632 SHAW BLVD., MAND.
METRO MANILA"
Unmistakably, petitioner, in placing the ad, must have had at least one project, maybe more, "in the pipeline" at
that time, and was clearly in need of replacements for private respondents whom it had just fired. Thus, the
dismissals could hardly have been due to a valid cause, not even due to petitioner's alleged "present business
status". On this count as well, the dismissals were illegal.
And lastly, we should mention that an order for reinstatement with payment of backwages must be based on the
correct premises. This point is best illustrated by considering the last ratiocination utilized by public respondent:
"Even assuming that complainants were project employees, their unceremonious dismissal coupled with the attempt
to replace them via the newspaper advertisement entitles them to reinstatement with backwages under P.I. No. 20."
There is a world of difference between reinstatement as project employees and reinstatement as regular employees,
but the difference was obviously lost on the respondent NLRC.
Conclusion
We reiterate that this Court waded through the records of this case searching for solid evidence upon which to
decide the case either way. But all told, neither party managed to make out a clear case. Therefore, considering that
in illegal dismissal cases, the employer always has the burden of proof, and considering further that the law
mandates that all doubts, uncertainties, ambiguities, and insufficiencies be resolved in favor of labor, we perforce rule
against petitioner and in favor of private respondents.
WHEREFORE, the foregoing considered, the assailed Decision is hereby SET ASIDE and a new one rendered
holding that petitioner had failed to discharge its burden of proof in the instant case and
therefore ORDERING the reinstatement of private respondents as regular employees of petitioner, without loss of
seniority rights and privileges and with payment of backwages from the day they were dismissed up to the time they
are actually reinstated. No costs.
SO ORDERED.
Narvasa, C.J. (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.

WALLEM MARITIME SERVICES, INC., and WALLEM SHIP MANAGEMENT, LTD., petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION and ELIZABETH INDUCTIVO, respondents.
D E C I S I O N
BELLOSILLO, J .:
WALLEM MARITIME SERVICES, INC. and WALLEM SHIP MANAGEMENT LTD. in this petition
for certiorari assail for having been rendered with grave abuse of discretion the 30 June 1997 Resolution of the
National Labor Relations Commission dismissing their appeal for lack of merit, as well as its 29 August 1997
Resolution denying reconsideration thereof.
[1]

Sometime in May 1993, Pan-Fil Co. Inc., as manning and crewing agent in the Philippines of Wallem Ship
Management Ltd. (WALLEM MANAGEMENT), hired Faustino Inductivo as utilityman for "MT Rowan," a vessel
owned and operated by WALLEM MANAGEMENT, a Hongkong based shipping company. The employment contract
of Faustino Inductivo was good for ten (10) months with a compensation of US$360.00 monthly basic salary,
US$201.00 fixed monthly overtime pay, and a monthly vacation leave with pay for six (6) days. As was the standard
procedure, Faustino Inductivo underwent pre-employment medical examination and was found by his employer's
doctors to be physically fit for work. So, on 13 May 1993, he was told to board as he did the "MT Rowan."
In November 1993 Wallem Maritime Services, Inc. (WALLEM SERVICES) took over as WALLEM
MANAGEMENT's manning and crewing agent in the Philippines. Faustino Inductivo, who was advised of the
takeover, opted to remain on the vessel and to continue his employment under the manning agency of WALLEM
SERVICES. Barely two (2) months before the expiration of his employment contract, or on 17 January 1994, he was
discharged from the vessel. His Seaman's Book
[2]
and Wages Account
[3]
indicated that the cause of the discharge
was "mutual consent, on completion of 8 months and 5 days." Accordingly, he disembarked in Hong Kong, travelled
to Manila alone and then returned to his hometown in Nueva Ecija.
On 19 January 1994, two (2) days after his arrival in the Philippines, he was hospitalized at the Yamsuan
Medical Clinic in Gapan, Nueva Ecija, after complaining of occasional coughing and chest pains. The clinical
diagnosis was pneumonities, bilateral. As his condition worsened, Faustino Inductivo was rushed to the Lung Center
of the Philippines where a mass was found on his right lung and another on his right neck. His doctor advised him to
undergo biopsy treatment, but since he was scared he requested to go on medication at home instead. Two (2) days
thereafter, Faustino Inductivo returned to the hospital, this time at the De Ocampo Memorial Medical Center. Dr.
Alfredo Sales, his attending physician, found on examination the presence of water in his lungs causing shortness of
breath. For insufficiency of medical facilities, however, he was transferred to the Makati Medical Center where his
doctor finally abandoned all hopes for his recovery as his disease was already in its advanced stage. He succumbed
to his illness on 23 April 1994 and the autopsy report showed as cause of death disseminated intravascular
coagulations, septecalmia, pulmonary congestion and multiple intestinal obstruction secondary to multiple
adhesions.
[4]

Before Faustino Inductivo's death, or sometime in February 1994, herein private respondent Elizabeth Inductivo
went to petitioners to claim the balance of her husbands leave wages. She also inquired about his sickness benefits
as he was then very sick. Petitioners however informed her that her husband was not entitled to sickness benefits
because he was not sick at the time he was "offsigned" from the vessel; he was "offsigned" from the vessel on
"mutual consent" and not on medical grounds; and since he failed to advise or notify petitioners in writing within
seventy-two (72) hours of his alleged sickness, his right to claim sickness benefits was deemed
forfeited. Consequently, at the instance of Faustino Inductivo, private respondent filed an affidavit-complaint against
petitioners for the payment of sickness and insurance benefits. After Faustino Inductivo died his complaint was
amended by private respondent to include death benefits.
On 24 September 1996 the Labor Arbiter
[5]
rendered a decision in favor of private respondent ordering
petitioners to pay complainant, for herself and in her capacity as guardian of her two (2) minor children, as
follows: US$50,000.00 as death benefits; US$14,000.00 as childrens allowances; and US$1,000.00 as burial
expenses.
On appeal the NLRC sustained the Labor Arbiter. In its Resolution of 30 June 1997 the NLRC held in part -
It may be true that the deceased failed to report to respondent Wallem Maritime within seventy two hours after arrival
in the Philippines but it could not be denied also that the deceased was sick when he arrived. Human mind dictates
that a medical consultation at the nearest clinic is necessary before anything else. The wife could not immediately
advise the respondent due to the situation of her deceased husband x x x x The allegation of the complainant that her
husband was repatriated upon petition of the crew due to the deteriorating physical condition of Faustino Inductivo,
was not denied by respondent. The defense of the latter that the repatriation of the deceased was by mutual
consent and not discharged medically deserves scant consideration. It is to be emphasized that the illness was
contracted during the deceased's employment on board "MT Rowan." Suffice it to say that the death of Faustino
Inductivo is compensable under the circumstances.
Their motion for reconsideration having been denied by the NLRC in its Resolution of 29 August 1997,
petitioners are now before us imputing grave abuse of discretion on the part of the NLRC in: (a) totally disregarding
the evidence on record; (b) ignoring and disregarding the existing law and jurisprudence on the matter; and, (c)
affirming in toto the Labor Arbiters award of death compensation in favor of private respondent.
The pivotal issue to be resolved is whether the death of Faustino Inductivo is compensable as to entitle his wife
and children to claim death benefits. Petitioners insist that it is not compensable for two (2) principal reasons: first,
Faustino Inductivo was offsigned from the vessel "MT Rowan" based on "mutual consent" and not on medical
grounds, and the cancer which caused his death was not contracted during his employment but was a pre-existing
condition; and second, Faustino Inductivo failed to comply with the mandatory seventy-two (72)-hour reporting
requirement prescribed by the POEA standard employment contract, and therefore his right to claim benefits was
deemed forfeited.
Petitioners would want to impress upon this Court that Faustino Inductivo was still in good health when he
disembarked from "MT Rowan," as shown in his Seaman's Book indicating that the cause of his discharge was
"mutual consent in writing" and not on medical grounds.
We disagree. From all indications, Faustino Inductivo was already in a deteriorating physical condition when he
left the vessel. This is the only plausible reason why with barely two (2) months away from the expiration of his
employment contract he was all of a sudden and with no rational explanation discharged from the vessel. This
conclusion is buttressed by the events that transpired immediately upon his arrival in the Philippines, i.e., he was
hospitalized two (2) days later and died three (3) months after.
Thus, as succinctly observed by the Labor Arbiter -
While it's true that the seaman was offsigned from the vessel by mutual consent, what could have been the
compelling reason why only less than two (2) months away before the expiration of his employment contract, he
decided to disembark. Then there is the question about the true state of his health at the time he disembarked. The
puzzle of course is why two (2) days upon his disembarkation complainants husband lapsed into his ordeal
immediately serious at the onset without any sign of relief until his last breath barely three months thereafter.
It is indeed unthinkable that the deceased seaman at the homestretch of his voyage would suddenly seek the end of
his employment for no reason at all. There is only one logical explanation for this given the circumstances that took
place immediately after disembarkation. Complainants husband was already seriously ill when he (was) discharged
from the vessel. This conclusion is supported by the fact that barely two (2) days upon his arrival in the Philippines,
he was rushed to a local medical clinic for some serious symptoms. There being no relief after six (6) days of
medical attendance, the late seaman was transferred to the Lung Center of the Philippines. Again, as there was
likewise no relief obtained the family was constrained to seek further work-outs in two (2) other hospitals, the last of
which was at the Makati Medical Center where all clinical procedures and work-outs were ruled out as of no
consequence since the deceaseds condition at the time was already irreversible.
There is likewise no merit in petitioners theory that Faustino Inductivo died of cancer which was pre-existing
and could not have been contracted during the eight (8)-month period of his employment at the vessel. Primarily, both
the Death Certificate
[6]
and Autopsy Report of Faustino Inductivo never mentioned that the cause of death was
cancer. What was mentioned was "septicemia," if we go by the Death Certificate, and "disseminated intravascular
coagulations, septecalmia, pulmonary congestion, multiple intestinal obstruction secondary to multiple adhesions," if
we refer to the autopsy report. Ostensibly, cancer was not in the list.
Indeed, there was never any categorical or conclusive finding that Faustino Inductivo was afflicted with
cancer. Petitioners extensive discussion in support of their "cancer theory" is nothing more than mere speculations
cloaked in medical gibberish.
Moreover, we agree with private respondent that opinions of petitioners doctors to this effect should not be
given evidentiary weight as they are palpably self-serving and biased in favor of petitioners, and certainly could not be
considered independent. These medical opinions cannot prevail over the entries in the Death Certificate and Autopsy
Report.
Furthermore, before Faustino Inductivo was made to sign the employment contract with petitioners he was
required to undergo, as a matter of procedure, medical examinations and was declared fit to work by no less than
petitioners' doctors. Petitioners cannot now be heard to claim that at the time Faustino Inductivo was employed by
them he was afflicted with a serious disease, and that the medical examination conducted on the deceased seaman
was not exploratory in nature such that his disease was not detected in the first instance. Being the employer,
petitioners had all the opportunity to pre-qualify, screen and choose their applicants and determine whether they were
medically, psychologically and mentally fit for the job upon employment. The moment they have chosen an applicant
they are deemed to have subjected him to the required pre-qualification standards.
But even assuming that the ailment of Faustino Inductivo was contracted prior to his employment on board "MT
Rowan," this is not a drawback to the compensability of the disease. It is not required that the employment be the
sole factor in the growth, development or acceleration of the illness to entitle the claimant to the benefits provided
therefor. It is enough that the employment had contributed, even in a small degree, to the development of the
disease and in bringing about his death.
It is indeed safe to presume that, at the very least, the nature of Faustino Inductivos employment had
contributed to the aggravation of his illness - if indeed it was pre-existing at the time of his employment - and
therefore it is but just that he be duly compensated for it. It cannot be denied that there was at least a reasonable
connection between his job and his lung infection, which eventually developed into septicemia and ultimately caused
his death. As a utilityman on board the vessel, he was exposed to harsh sea weather, chemical irritants, dusts, etc.,
all of which invariably contributed to his illness.
Neither is it necessary, in order to recover compensation, that the employee must have been in perfect condition
or health at the time he contracted the disease. Every workingman brings with him to his employment certain
infirmities, and while the employer is not the insurer of the health of the employees, he takes them as he finds them
and assumes the risk of liability. If the disease is the proximate cause of the employees death for which
compensation is sought, the previous physical condition of the employee is unimportant and recovery may be had
therefor independent of any pre-existing disease.
[7]

On the alleged failure of private respondent to comply with the seventy-two (72)-hour reporting requirement,
the POEA Standard Employment Contract Governing the Employment of All Filipino Seamen on Board Ocean Going
Vessel,
[8]
provides in part -
x x x x the seaman shall submit himself to a post-employment medical examination by the company-designated
physician within three working days upon his return, except when he is physically incapacitated to do so, in which
case a written notice to the agency within the same period is deemed as compliance. Failure of the seaman to
comply with the mandatory requirement shall result in his forfeiture of the right to claim the above benefits
(underscoring supplied).
Admittedly, Faustino Inductivo did not subject himself to post-employment medical examination within three (3)
days from his return to the Philippines, as required by the above provision of the POEA standard employment
contract. But such requirement is not absolute and admits of an exception, i.e., when the seaman is physically
incapacitated from complying with the requirement. Indeed, for a man who was terminally ill and in need of urgent
medical attention one could not reasonably expect that he would immediately resort to and avail of the required
medical examination, assuming that he was still capable of submitting himself to such examination at that time. It is
quite understandable that his immediate desire was to be with his family in Nueva Ecija whom he knew would take
care of him. Surely, under the circumstances, we cannot deny him, or his surviving heirs after his death, the right to
claim benefits under the law.
Similarly, neither could private respondent Elizabeth Inductivo be expected to have thought of, much less had
the leisure of time to travel all the way to Manila, to notify petitioners of her husbands condition. Her primary concern
then was to take care of her husband who was at the brink of death.
At any rate, it appears that in early February 1994 private respondent went to petitioners to claim the balance of
her husbands leave wages. She then informed petitioners of the condition of her husband as well as his confinement
in a hospital, and inquired about the sickness benefits she intended to claim. This was more than sufficient actual
notice to petitioners.
It is relevant to state that the POEA standard employment contract is designed primarily for the protection and
benefit of Filipino seamen in the pursuit of their employment on board ocean-going vessels. Its provisions must,
therefore, be construed and applied fairly, reasonably and liberally in favor or for the benefit of the seamen and their
dependents. Only then can its beneficent provisions be fully carried into effect.
Finally, petitioner WALLEM SERVICES as manning agent is jointly and severally liable with its principal,
WALLEM MANAGEMENT, for the claims of the heirs of Faustino Inductivo in accordance with Sec. 1, Rule II of the
POEA Rules and Regulations.
[9]

WHEREFORE, the petition is DISMISSED. The assailed Resolutions of public respondent National Labor
Relations Commission dated 30 June 1997 and 29 August 1997, respectively dismissing petitioners appeal for lack
of merit and denying reconsideration thereof, are AFFIRMED. Petitioners are ordered to pay, jointly and severally,
the following amounts to private respondent for herself and in her capacity as guardian of her two (2) minor
children: US$50,000.00 as death benefits; US$14,000.00 as children's allowances; and US$1,000.00 as burial
expenses. Costs against petitioners.
SO ORDERED.

CONRADO SAMILLANO and MYRNA V. SAMILLANO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
DAN-AGSA DAKBAYAN BROADCASTING CORPORATION RADIO STATION DXDD, MSGR. JESUS DOSADO
and SIMPLICIA NERI, respondents.
D E C I S I O N
PADILLA, J .:
This petition for certiorari under Rule 65 of the Rules of Court refers to two (2) cases filed by petitioner-spouses
Conrado and Myrna Samillano against private respondents Dan-ag sa Dakbayan Broadcasting Corporation-Radio
Station DXDD and/or Msgr. Jesus Dosado and/or Simplicia Neri, Chairman of the Board and Manager respectively of
said respondent corporation.
The first case, filed by petitioner-spouses on 8 February 1991, is a complaint for illegal demotion while the
second complaint filed on 20 May 1991 is for illegal dismissal, payment of backwages, commissions and other
monetary claims.
The two (2) complaints before Regional Arbitration Branch No. 10, Cagayan de Oro City of the National Labor
Relations Commission (NLRC) docketed as NLRC RAB Case Nos. 10-03-00195 and 10-06-00371-91 were later
consolidated since they involve the same parties and issues.
The undisputed facts of the two (2) cases are as follows:
1. Petitioner-spouses Conrado and Myrna Samillano were hired by private respondents on 1 October 1981 and 1
August 1983 respectively;
2. On 2 October 1990, Conrado Samillano was transferred to the Technical Department as an SSB Operator from
his previous position as Traffic Supervisor of private respondent corporation. On the same day, his wife Myrna V.
Samillano was transferred to the AM Production Department from her position as cashier of respondent corporation;
3. As a result of the transfers, the petitioner-spouses filed the complaint for illegal demotion contending that the
transfers resulted in loss of commissions and violated their security of tenure;
4. On 20 May 1991, petitioner-spouses filed the complaint for illegal dismissal contending that private respondents
terminated their employment on 23 April 1991 without any lawful cause;
5. Private respondents relied on allegations that petitioner-spouses misappropriated funds of the radio station and
committed acts of insubordination which resulted in loss of trust and confidence, upon which their dismissals were
based;
6. In a supplemental position paper, herein petitioners contended that their demotion and subsequent dismissal were
retaliatory acts of private respondents for their having reported violations by private respondents of labor laws
particularly underpayment/nonpayment of salaries and other benefits;
Labor Arbiter Noel Augusto S. Magbanua, to whom the cases were assigned, found that sometime in July 1989,
the Department of Labor and Employment conducted an inspection of the premises of private respondent corporation
and initially found deficiencies in wages and other benefits given to employees.
It was further determined that in March or April 1990, private respondents conducted meetings with their
employees seeking a compromise of the unpaid benefits. Some employees executed waivers of further claims
against private respondents. Herein petitioners refused to sign said waivers.
The labor arbiter formulated the following issues for resolution:
[1]

1) whether complainants demotion and subsequent termination of employment were retaliatory acts for
complainants having allegedly reported respondents violations of labor laws,
2) whether complainants demotions were illegal; and
3) whether complainants terminations from employment were illegal.
The labor arbiter resolved the first two (2) issues in the negative. He declared that no evidence was presented
to show that the demotions of petitioners were linked to their reporting of alleged violations by private respondents of
the Labor Code.
The labor arbiter further upheld managements prerogative, in the absence of bad faith, to protect its rights in
relation to the alleged offenses committed by petitioners. The demotions of petitioners were therefore upheld.
With respect to the dismissal of petitioners from employment, however, the labor arbiter found that the alleged
misappropriations of funds committed by petitioners were not adequately substantiated. Hence, the dismissal of
petitioners was declared illegal.
The labor arbiter ruled however that instead of reinstatement, it would be for the best interest of the parties
considering the strained relations between them, to award petitioners separation pay equivalent to one (1) month
salary for every year of service. Full backwages were not awarded based on findings that petitioners acted in an
arrogant and uncooperative manner during the investigation of their case which could be a possible reason why
private respondents were not able to prove the formers involvement in the financial irregularities subject of this
case.
[2]
Only six (6) months backwages were awarded to each of the complainants (herein petitioners).
Finally, the labor arbiter denied petitioners claims for unpaid commissions for lack of evidence.
Appeal by private respodnents to the NLRC was dismissed on 9 February 1994 for their failure to properly
perfect their appeal. The NLRC found that private respondents had filed their notice of appeal without attaching
thereto their appeal memorandum as required by Section 3 Rule VI of the Rules of Procedure of the NLRC. There
was therefore failure to perfect the appeal within the reglementary period of ten (10) days from receipt of the assailed
labor arbiters decision.
On 30 June 1994, the NLRC reinstated the appeal based on findings that while the notice of appeal and appeal
memorandum were received by the NLRC on 15 July 1993 and 20 July 1993 respectively, or way beyond the period
for appeal which expired on 3 July 1993, both pleadings were, however, actually mailed on 2 July 1993 as evidenced
by Registry Receipt No. 77 of the Tangub Post Office.
[3]

On the merits of the appeal, the NLRC ruled that private respondents have substantiated their claim of having
lost trust and confidence in petitioners due to serious irregularities in the performance of their duties.
The NLRC held that, contrary to the findings of the labor arbiter, an audit report submitted by a certain
Domeciano Adaya dated 17 September 1990 showed substantial evidence of petitioners involvement in irregularities
including misappropriations of funds, non-turnover of collections and misuse of funds for personal purposes. The
NLRC relied on reports made by Janice Poncianos, the Finance Department Business Head of respondent
corporations radio station addressed to the station manager as well as the report of the station manager to the
chairman of the board of respondent corporation on the alleged acts of herein petitioners.
[4]

Based on the above findings, the NLRC set aside the assailed decision and ruled that petitioners were validly
dismissed. However, private respondents were ordered to indemnify petitioners the amount of P2,000.00 each for
violation of the latters right to due process. The NLRC agreed with the petitioners that there was no formal
investigation wherein the latter were given the chance to defend themselves against the charges levelled against
them.
[5]

In their petition before this Court, it is argued by petitioners that:
1. The NLRC gravely abused its discretion in holding that the dismissals of herein petitioners were valid; and
2. The NLRC gravely abused its discretion in merely imposing a sanction on private respondents for violation of
petitioners right to due process.
[6]

Before ruling on the merits of this petition, the Court takes notice of a peculiar circumstance regarding the
appeal of the private respondents from the decision of the labor arbiter.
In the resolution reinstating private respondents appeal, the NLRC found that the notice of appeal and
memorandum on appeal were received on 15 July 1993 and 20 July 1993 respectively. The reason for reinstating the
appeal was the finding that both pleadings were actually mailed on 2 July 1993 as evidenced by Registry Receipt No.
77 postmarked on the same date at the Tangub City Post Office.
It is unexplained however why two (2) pleadings mailed together using a single registry receipt and presumably
contained in one (1) envelope would be received on two (2) different dates. It should be pointed out that in the
motion for reconsideration of the resolution dismissing the appeal, herein private respondents averred
mailing only the notice of appeal and a postal money order to cover appeal fees on 2 July l993. Be that as it may, the
Court shall proceed to resolve this case on the merits despite the possible technicality of the appeal being filed late
with the NLRC. The NLRC is however reminded to be more accurate in recording the dates of mailing and receipt of
pleadings filed before it since this is essential in the speedy and correct disposition of cases.
Petitioners do not dispute before this Court the validity of their re-assignments. It is clear that the re-
assignments were a valid exercise of management prerogative pending investigation of the alleged irregularities. The
purpose of the re-assignments is no different from that of preventive suspension which private respondents could
likewise have validly imposed on petitioners; to protect the employers property pending investigation of the alleged
malfeasance or misfeasance committed by the employee.
[7]

In the present case, the labor arbiter correctly held that there is no evidence to show that the transfer of
petitioners to other positions and the subsequent termination of their employment were retaliatory acts of private
respondents for petitioners reporting of the alleged violations by private respondents of the Labor Code.
The legality of petitioners dismissal would be determined based on whether or not private respondents have
proved the basis for loss of trust and confidence upon which the dismissals are based.
In China City Restaurant Corporation v. NLRC
[8]
the Court held thus:
For loss of trust and confidence to be a valid ground for the dismissal of employees, it must be substantial and not
arbitrary, whimsical, capricious or concocted.
Irregularities or malpractices should not be allowed to escape the scrutiny of this Court. Solicitude for the protection
of the rights of the working class are of prime importance. Although this is not a license to disregard the rights of
management, still the Court must be wary of the ploys of management to get rid of employees it considers as
undesirable.
The NLRC based its decision upholding petitioners dismissal on the conclusion that the irregularities involving
petitioners were more than sufficient to make out a case of loss of trust and confidence.
[9]

Said irregularities allegedly involving petitioners were enumerated in An Updated Report dated 17 August 1990
submitted by the Finance Department Business Head Janice Procianos and various letter-memos to petitioners as
well as the audit report dated 17 September 1990 submitted by Domeciano Adaya.
But petitioners correctly argue that the above-mentioned documents do not provide enough basis for termination
of their employment based on loss of trust and confidence.
The Adaya audit report in part reads:
I am suggesting with a request that the above-mentioned observations be reviewed and confirmed by the Station
Accountant, Bookkeeper, Collector and Cashier or Cash Custodian in my presence in fairness to everyone before I
give conclusion, implication or opinion to these observations. They may also give comments or raise objections, if
any. The comments or objections may be made orally or in writing.
In this connection, as I dont have line authority over the personnel concerned may I request you to ask them to
review and confirm by observations.
There is no evidence to show that herein private respondents undertook to review and/or confirm the
observations contained in the audit report as recommended by the audit report itself.
On the contrary, even in their comment on the petition filed with this Court, which respondents later adopted as
their memorandum, the dismissal of herein petitioners is justified mainly on the basis of said audit report submitted by
Domeciano Adaya.
[10]

It is, however, clear from the above-quoted portion of the audit report that the findings contained therein do not
categorically find herein petitioners guilty of committing irregularities. The clear import of the said audit report is that
further investigation and verification would be necessary to pinpoint the source of the irregularities.
There is thus no evidence on record to show that any further investigation and verification were done by private
respondents. What is apparent is that petitioners were made to answer charges of misconduct based on suspicions
which lacked adequate basis.
While the law and this Court recognize the right of an employer to dismiss an employee based on loss of trust
and confidence, the formers evidence must clearly and convincingly establish the facts upon which the loss of trust
and confidence in the employee is based.
[11]

In the present case, the unsubstantiated suspicions and baseless conclusions of private respondents do not
provide legal justification for dismissing herein petitioners. The doubt in this case should be resolved in favor of labor
pursuant to the social justice policy of labor laws and the Constitution.
Finally, on petitioners right to due process, we uphold the NLRC findings that no formal investigation was
conducted prior to dismissal of petitioners. Private respondents thus failed to adequately comply with the
requirement that an employee should be given the opportunity to be heard and to defend himself before he is
dismissed. In San Antonio v. NLRC,
[12]
the Court stated that Proper compliance with the twin requirements of notice
and hearing are conditions sine qua non before a dismissal may be validly effected. x x x Any procedural shortcut,
that effectively allows an employer to assume the roles of both accuser and judge at the same time, should not be
countenanced. (emphasis supplied).
In the present case, the notices/memoranda to petitioners requiring explanations/answers to the charges
against them were plainly meant to provide a semblance of compliance with the due process requirement which the
NLRC correctly ruled to be inadequate.
The Court will not be deceived by schemes to circumvent the requirements of law and the Constitution. For
failure to fully comply with the requirements of due process, private respondents should, as a matter of course,
indemnify the petitioners but we refrain from awarding damages on this score since we are awarding separation pay
and backwages due to petitioners illegal dismissal.
The above-finding that petitioners were illegally dismissed normally requires that they be reinstated to their
former or equivalent positions with full backwages. In this case, however, the relationships between petitioners and
private respondents have undoubtedly become very strained, hence, separation pay in lieu of reinstatement is
proper.
[13]
However, as a consequence of petitioners illegal dismisal, full backwages from date of dismissal to the
finality of this decision are due the petitioners in line with the ruling in the Bustamante case.
[14]

WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one entered:
1. DECLARING the dismissal from employment of petitioners NULL and VOID;
2. ORDERING private respondents to pay petitioners separation pay at the rate of ONE-HALF (1/2) MONTH salary
for every year of service; and
3. ORDERING private respondents to pay petitioners full backwages from date of illegal dismissal to the finality of this
decision.
SO ORDERED.

STOLT-NIELSEN MARINE SERVICES, INC., petitioner vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR
ARBITER MANUEL R. CADAY and RENATO SIOJO, respondent.
D E C I S I O N
ROMERO, J .:
Before us is a special civil action for certiorari filed by the petitioner seeking to annul the decision of the labor
arbiter and the resolution of the National Labor Relations Commission (NLRC) (Third Division, Quezon City) finding
that petitioner illegally dismissed private respondent Renato Siojo from his employment. The labor arbiter ordered
petitioner to pay Siojo the unexpired portion of his contract equivalent to three months salaries and attorneys
fees. On appeal, the NLRC affirmed the decision of the labor arbiter and later dismissed petitioners motion for
reconsideration.
The relevant facts are as follows:
Sometime in January 1994, private respondent Renato Siojo was hired as a Second Officer of Stolt Falcon, a
vessel of petitioner Stolt-Nielsen Marine Services, Inc., for a period of nine months with a basic salary of
US$1,024.00. He boarded the vessel on February 22, 1994, and immediately commenced to discharge his duties
and responsibilities as Second Officer. After working for just two months, however, he was sent home and it was only
upon his arrival in Manila that he learned of the reason for his termination.
For its part, petitioner claimed that after a month on board the Stolt Falcon, Siojo started committing acts of
gross insubordination towards his superiors by refusing to communicate with them with regard to navigation, safety,
and cargo. He also allegedly failed to acknowledge or relay to the relieving personnel/officer any bride night order
and wilfully refused to take part in cargo operations. Furthermore, on at least three occasions, he refused to wear his
safety hat during mooring and unmooring, in violation of the companys safety procedures.
It was also alleged that Siojo refused to follow instructions given by the Chief Officer regarding cargo operations
and did not read the Cargo Safety Data Sheets, such that , on one occasion, he blew the lines against a closed shore
connection valve resulting in the spillage of 100 litters of cargo into the deck air compressor tank.
Thus, on March 28, 1994, Siojo was summoned to explain his attitude to the master of the vessel. He, however,
allegedly became very agitated and rude, stating that he should not be made to sign any statement. Convinced that
Siojos acts of insubordination and hostile attitude were prejudicial to the safety and operations of the vessel, and
finding that he failed to perform his duty as deck officer as confirmed by his unsatisfactory ratings, his superiors
recommended his discharge.
On the other hand, Siojo insisted that all the acts imputed to him were fabricated by petitioner in order to avoid
its liability for his illegal dismissal. In support of his allegations, Siojo submitted photocopies of the ships logbook for
the period March 25 to April 11, 1994, showing that there was no report of any offense or violati on of company rules
he had supposedly committed. He pointed out that the logbook had no entries of the infractions he allegedly
committed on March 27 and 28, 1994, respectively.
On June 21, 1996, Labor Arbiter Manuel Caday ruled that Siojo was dismissed without just cause and without
being accorded due process. The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of the complainant illegal
and ordering respondent Stolt Nielsen Marine Services, Inc. to pay the corresponding salaries for the unexpired
portion of his contract but not exceeding the equivalent of three (3) months salaries or in the amount of $3,072.00
which under the current peso dollar exchange rate is equivalent to P80,486.40.
For having been compelled to hire services of counsel to prosecute his valid and just claims, the respondent is further
ordered to pay the complainant (sic), the equivalent of 10% of the recoverable award in this case.
All other claims are hereby dismissed for lack of merit.
SO ORDERED.
[1]

Aggrieved by the labor arbiters decision, petitioner appealed to the NLRC. The latter denied the appeal for lack
of merit and affirmed the decision of the labor arbiter. The NLRC likewise denied petitioners motion for
reconsideration.
Hence, this petition for certiorari.
Petitioner claims that the labor arbiter and the NLRC committed grave abuse of discretion in not considering its
evidence and in finding that Siojo was illegally dismissed.
On the labor arbiters and NLRCs appreciation of the facts, it is worth reiterating the well-entrenched rule that
when the conclusions of the labor arbiter are sufficiently corroborated by the evidence on record, the same should be
respected by appellate tribunals since he is in a better position to assess and evaluate the credibility of the
contending parties.
[2]
Moreover, it should be noted that factual issues are not a proper subject forcertiorari, as the
power of the Supreme Court to review labor cases is limited to the issue of jurisdiction and grave abuse of
discretion.
[3]

In the case at bar, the findings of the labor arbiter Siojo was dismissed without just cause and without being
accorded due process is supported by the facts and evidence on record. In support of his denial of the infractions he
allegedly committed, Siojo presented in evidence photocopies of the ships official logbook entries for the period
March 25 to April 11, 1994. Such entries failed to reflect any of the infractions allegedly committed by Siojo; neither
did they contain any statement regarding the investigation supposedly conducted on board the vessel.
Petitioners evidence, on the other hand, consisting of the notice of investigation and notice of termination which
were authenticated by the Honorary Consulate General of the Philippines in Rotterdam, Netherlands, appear to be
irrelevant. The date of the authentication appeared as 3/5/94 which the labor arbiter read as March 5, 1994. He
correctly disregarded such evidence since it is obvious that said notices were authenticated even before the dates of
the alleged infractions, that is, from March 26 to 28, 1994.
Petitioner explained that the date 3/5/94 actualy stands for May 3, 1994, as it is customary in European
countries to write dates in numbers with the first digit representing the day and the second digit, the month. In any
case, the Philippine Consul General in Rotterdam would not have authenticated the documents if they were indeed
anomalous or irregular.
On this point, it should be observed that the entries in official records made in the performance of his duty by a
public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law, areprima
facie evidence of the facts therein stated. This means that such evidence is satisfactory only if they are
uncontradicted by contrary evidence. In the case at bar, the employee refuted the authenticity of the notices of
investigation and termination, presenting for his part photocopies of certain pages of the vessels logbook showing
that there was, in fact, no record of the violations he was accused of.
Furthermore, the labor arbiters finding that 3/5/94 meant March 5, 1994, not May 3, 1994, is logical since the
documents were authenticated by Philippine consular officials whose customary manner of writing dates in numbers
is by making the first digit represent the month, the second digit the day, and the last digits the year. Second,
petitioner could have presented other evidence to support its allegation that the documents were indeed
authenticated on May 3, 1994, but it did not. It is a basic rule in evidence that each party must prove his affirmative
allegation.
[4]
While technical rules are not strictly followed in the NLRC, this does not mean that the rules on proving
allegations are entirely dispensed with. Bare allegations are not enough; these must be supported by substantial
evidence at the very least.
Petitioner further asserts that even assuming that Siojo was not afforded the opportunity to explain his side, his
discharge was not thereby rendered illegal since there was just cause for his removal, that is, gross
insubordination. In support of this argument, petitioner relies on the ruling in Wenphil Corp. vs. NLRC
[5]
, as reiterated
in Cathedral School of Technology vs. NLRC,
[6]
where it was held that an employee who was dismissed for just cause
but was not given an notice and hearing is not entitled to reinstatement and back wages. In such case, the employer
should be made to pay an indemnity for his failure to observe the requirements of due process.
The rule is well established that in termination cases, the burden of proving just and valid cause for dismissing
an employee rests on the employer and his failure to do so shall result in a finding that the dismissal is
unjustified.
[7]
In the present case, petitioner failed to prove by substantial evidence that Siojo indeed committed acts
of insubordination which would warrant his dismissal. Its reliance on Wenphil is, therefore, misplaced since in that
case, there was just cause for the employees dismissal.
Article 277 of the Labor Code provides, inter alia:
(a) xxx xxx xxx"
"(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal
except for a just and authorized cause and 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 causes for
termination and shall afford the latter ample opportunity to be heard and to defend himself with assistance of his
representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines
set by the Department of Labor and Employment. xxx
In particular, Rule XXIII , Book V of the Omnibus Rules Implementing the Labor Code states:
Section 2. Standards of due process: requirements of notice. In all cases of termination of employment, the
following standards of due process shall be substantially observed:
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so
desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against
him; and
(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination.
xxx xxx xxx."
In sum, to effect a completely valid and unassailable dismissal, the employer must show not only sufficient
ground therefore, but must also prove that procedural due process had been observed by giving the employee two
notices.
[8]
In this, petitioner was remiss, hence, it should suffer the consequences.
WHEREFORE, premises considered, the instant petition is DISMISSED. Accordingly, the decision of the labor
arbiter dated June 21, 1996, and the resolution of the NLRC dated November 14, 1996, are hereby AFFIRMED with
the MODIFICATION that petitioner is ordered to pay private respondent Siojo his salary for the entire unexpired
portion of the employment contract, that is, one thousand twenty-four US dollars ($1,024.00) multiplied by seven
months, for a total of seven thousand one hundred sixty-eight US dollars (US$7,168.00), or its equivalent in
Philippine pesos plus interest and attorneys fees. No pronouncement as to costs.

DELFIN GARCIA, doing business under the name NAPCO-LUZMART, Inc., petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION and CARLITO LACSON, respondents.
D E C I S I O N
GONZAGA-REYES, J .:
Before us is a Petition for Certiorari under Rule 65 of the Rules of Court to annul and set aside the decision of
the National Labor Relations Commission
[1]
in NLRC CA No. L-001268 dated April 12, 1994 which affirmed the
decision of the Sub-Regional Arbitration Branch No. I in Dagupan City finding that the private respondent Carlito
Lacson was constructively dismissed by the petitioner Delfin Garcia doing business under the name NAPCO-
LUZMART, Inc. and awarding respondent backwages and separation pay.
The following facts as adopted by the National Labor Relations Commission (NLRC) are uncontroverted:
Complainant Carlito Lacson was employed on March 5, 1987 as boiler operator technician by Northwest Agro-
Marine Products Corporation (NAPCO). On December 12, 1990 respondent Luzmart, Inc., acquired NAPCO in a
foreclosure sale. Both companies were managed by respondent Delfin Garcia.
On January 28, 1993, there was a mauling incident which involved the complainant and Julius Z. Viray, his immediate
supervisor and allegedly a friend and compadre of respondent Garcia. As complainant suffered injuries as a result
thereof he reported the matter to police authorities and he sought treatment at the Teofilo Sison Memorial Provincial
Hospital. Both the complainant and Viray were asked to explain their sides. After the submission of the written
explanations, Delfin Garcia suspended both of them from work for a period of one month effective April 15, 1993. In
the same suspension order, complainant was further directed to explain in writing why he should not be dealt with
disciplinary action or terminated for his continued absences from February 15, 1993 up to the date of the
memorandum order. Complainant filed a complaint for illegal dismissal and other monetary claims but the same was
dismissed without prejudice. On September 1, 1993, the complainant refiled this case.
[2]

The Labor Arbiter
[3]
ruled in favor of the respondent Carlito Lacson (LACSON). Petitioner NAPCO-Luzmart
(LUZMART) appealed to the NLRC which affirmed the decision of the Labor Arbiter after finding that the Labor Arbiter
did not commit any reversible error. The NLRC however deleted the award of attorneys fees in favor of
LACSON. Its decision, which adopted the conclusions of the Labor Arbiter, reads:
In finding for the complainant, the Labor Arbiter ruled:
The issues to be resolved in this case are: (1) whether or not the complainant was dismissed from his employment;
(2) whether or not he is entitled to his claim for overtime services, separation pay, 13
th
month pay, premium pay for
working on holidays and rest days, separation pay, 13
th
month pay and service incentive leave pay; and, (3) whether
or not the complainant is considered an employee of the respondents since March 1987.
The first issue: Respondent Delfin Garcia insists that he did not dismiss the complainant and that he can return to his
work after his one month suspension, (affidavit of respondent Garcia, marked as Annex H of his position paper). On
the other hand, complainant Lacson maintains that he reported for work several times but respondent Garcia refused
to take him back and that the former told him to look for another job.
Let us scrutinize the evidence. The incident involving the complainant and Julius Viray, also an employee of the
respondents, wherein Viray allegedly mauled the complainant, happened on January 28, 1993. On February 1993,
the complainant submitted his handwritten explanation blaming Viray as the aggressor. According to the
complainant, Viray was drunk at the time of the incident and although he avoided Viray, the latter armed with a lead
pipe, followed him and wanted to kill him (Annex C complainant). Viray also submitted his handwritten
explanation on February 2, 1993 (see Annex E-1 of respondents position paper). Viray only stated that a heated
argument transpired. On March 31, 1993, respondent Garcia issued a Memorandum suspending both the
complainant and Viray for one (1) month effective April 15, 1993 and at the same time required the complainant to
explain why he should not be terminated for being absent from Feb. 15, 1993, (Annex F, respondents). The
question is, why did it take respondent Delfin Garcia one (1) month or more to decide and issue an order suspending
the complainant and Viray? Why did he not suspend the two immediately after the incident? This leads credence to
the complainants allegation that he reported for work after submitting his explanation but respondent Garcia refused
to admit him back and told him to take a vacation or to look for another work, hence he decided to file a complaint
against him on Feb. 4, 1993, which was later dismissed without prejudice, the reason for the dismissal of which was
not explained to us by the complainant. Moreover, it is true that the complainant failed to report for work since Feb.
15, 1993, why did respondent Garcia not issue an order or memorandum after the complainant failed to report for a
number of days and directing the complainant to report immediately otherwise his employment will be
terminated? We also agree with the complainants argument that the respondents should not have asked him to
explain his alleged failure to report for work since Feb. 15, 1993, because he has already filed a complaint against
Garcia earlier.
The second issue; Annexes G, G-1 to G-14 of the respondents, which are samples of respondents payroll, show
that whenever the complainant rendered overtime services, he was paid accordingly. Is he entitled to his claim for
13
th
monthpay, service incentive leave pay, vacation in sick leave pay and separation pay? Respondents maintain
that since the complainant was employed by them only on February 1, 1991, he has no right to claim benefits that
arose before his employment with them. That since he was not dismissed from his employment, he is not also
entitled to his claim for separation pay. (The resolution of this issue will also resolve the second issue)
Respondents argue that the services of the complainant with NAPCO since March 1987, cannot be credited or
counted to his length of service with LUZMART because his subsequent employment with LUZMART is a new
employment as shown in his employment contract (Annex D respondents) with LUZMART.
In the case of MDII Supervisors and Confidential Employees Association (FFW) vs. Presidential Assistant on Legal
Affairs, 79 SCRA 40 (1977), the Supreme Court ruled that:
xxx And there is no law which requires the purchaser to absorb the employees of the selling corporation.
As there is no such law, the most that the purchasing company may do, for purposes of public policy and social
justice, is to give preference to the qualified separated employees of the selling company, who in their judgment are
necessary in the continued operation of the business establishment. This RCAM did. It required private respondents
to reapply as new employees as a condition for rehiring subject to the usual probationary status, the latters past
services with the petitioners, transferors not recognized (San Felipe Neri School of Mandaluyong, Inc., et. Al. Vs.
NLRC, Roman Catholic Archbishop of Manila (RCAM), et. al., G.R. No. 78350, Sept. 11, 1991.).
Except for his bare allegation that LUZMART was only organized by the controlling stockholders of NAPCO to
acquire or gain control of the latter, the complainant did not present sufficient evidence to prove his allegation,
LUZMART is an entirely new corporation or entity with a distinct personality from NAPCO, and is not an alter ego of
NAPCO. Therefore, LUZMART is not under obligation to absorb the workers of NAPCO or to absorb the length of
service earned by its employees.
The respondents are therefore correct in their assertion that they should not be answerable for the complainants
claim for benefits that may be due him before January 1, 1991.
As we have discussed earlier, the complainant herein was constructively dismissed from his employment by
respondent Delfin Garcia because of the latters refusal to admit him back to work inspite of the complainants
insistence to resume his work after he has given his explanation.
On appeal, respondent contends that the Labor Arbiter erred in awarding backwages to the complainant from
February 1, 1993 up to the date of the promulgation of the decision, and in awarding separation pay of one month
pay for every year of service.
We are in full accord with the Labor Arbiters conclusion that the complainant was constructively dismissed by the
respondent Delfin Garcia when he refused to admit the complainant despite his insistence to go back to work.
However, we delete the award of attorneys fees as this is not a case of unlawful withholding of wages.
WHEREFORE, premises considered, the appealed decision is modified by deleting the award of attorneys fees. In
all other respect, the same is affirmed.
SO ORDERED.
[4]

LUZMARTs motion for reconsideration
[5]
was denied hence, this petition wherein LUZMART claims that the
NLRC committed grave abuse of discretion in holding that LACSON was illegally dismissed.
In support of its petition, LUZMART claims that LACSON was not dismissed but was merely suspended as
shown by the March 31, 1993 memorandum.
[6]
His suspension was a consequence of the imposition of disciplinary
measures on him as fighting within the company premises constitutes serious misconduct and disorderly
behavior. The fact that LUZMART did not immediately suspend him after the fighting incident does not establish that
he was dismissed from his employment as there is no law which requires an employer to immediately rule on any
infraction under investigation after the filing of the explanation of the person under investigation. Neither is LACSON
entitled to backwages nor separation pay as these are only granted to employees who have been illegally dismissed
from work and not to employees like LACSON who abandoned his employment as he failed to report to work from
February 15, 1993 to March 31, 1993.
[7]

We resolve to affirm the judgment of the NLRC.
LUZMARTs claim that LACSON was merely suspended and was still employed by LUZMART does not
convince us that LACSON was not dismissed from his employment. Said claim was a mere afterthought to preempt
or thwart the impending illegal dismissal case filed by LACSON against LUZMART. As found by the labor arbiter,
LACSONs failure to report to work was due to LUZMARTs refusal to admit him back. In fact, LUZMART told him to
go on vacation or to look for other work.
[8]

LACSONs dismissal is clearly established by the following chronology of events: The mauling incident
occurred on January 28, 1993. LACSON submitted his written explanation of the event on February 1, 1993. On
February 4, 1993, LACSON attempted to report for work but LUZMART refused to admit him. On February 11, 1993,
LACSON filed an action for illegal dismissal with the NLRC.
[9]
On April 13, 1993, LUZMART sent LACSON the
memorandum ordering LACSONs suspension dated on March 31, 1993. By this time, LUZMART already knew of
the pending illegal dismissal case against it as it was already directed by the NLRC to submit its position paper on
April 5, 1993. LUZMARTs reliance on the March 31, 1993 memorandum
[10]
and the February 1-15, 1993 payroll
[11]
to
prove that LACSON was merely suspended is therefore unavailing. The March 31, 1993 memorandum is at most
self-serving; a ploy to cover up the dismissal of LACSON since this was issued after LUZMART had knowledge of the
illegal dismissal case filed against it by LACSON on February 11, 1993. Likewise, the veracity of the February 1-15,
1993 payroll that purportedly shows that LACSON was included in LUZMARTs payroll is of doubtful probative
value. First of all, it does not contain a certification by Charito Fernandez at its back page, unlike the other
payrolls
[12]
attached as annexes to LUZMARTs petition. Secondly, said payroll does not contain the signatures of the
other employees as proof that they received their salaries for the said period. Given these circumstances, both
documents appear to have been prepared in contemplation of the pending illegal dismissal case fi led against
LUZMART.
The contention that LACSON abandoned his employment is also without merit. Mere absence or failure to
report for work, after notice to return, is not enough to amount to such abandonment.
[13]
For a valid finding of
abandonment, two factors must be present, viz; (1) the failure to report for work or absence without valid or justifiable
reason; and (2) a clear intention to sever the employer-employee relationship,
[14]
with the second element as the
more determinative factor being manifested by some overt acts.
[15]
There must be a concurrence of the intention to
abandon and some overt acts from which an employee may be deduced as having no more intention to work.
[16]
Such
intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.
[17]

LACSONs absence from work was not without a valid reason. It was petitioner who did not allow him to work
and in fact told him to go on vacation or to look for other work. This is tantamount to a constructive dismissal which is
defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer
involving a demotion in rank and diminution in pay
[18]
Since LACSON was denied entry into his workplace, it was
impossible for him to return to work. It would be unjust to allow herein petitioners to claim as a ground for
abandonment a situation which they themselves had brought about.
[19]
Moreover, LACSONs filing of the complaint
for illegal dismissal on February 11, 1993, or seven days after his alleged abandonment, negates said charge. It is
highly illogical for an employee to abandon his employment and thereafter file a complaint for illegal dismissal.
[20]

We also do not agree with LUZMART that LACSON gave just cause for the imposition of disciplinary measures
upon him. Although fighting within company premises may constitute serious misconduct under Article 282
[21]
of the
Labor Code and may be a just cause to terminate ones employment
[22]
, every fight within company premises in which
an employee is involved would not warrant his dismissal. This is especially true when the employee concerned did
not instigate the fight and was in fact the victim who was constrained to defend himself. In the present case, it
appears that LACSON was assaulted by Julius Viray (VIRAY), a co-employee, after they were questioned about
missing diesel fuel. LACSON attempted to avoid the conflict since VIRAY was intoxicated but VIRAY followed him
and after an exchange of words, VIRAY punched him while saying Papatayin Kita (I will kill you). After being
punched a second time, LACSON punched back. He thereafter ran towards the dressing plant after his companion, a
certain DANNY, told him to run. VIRAY was persistent and followed LACSON and continued delivering punches at
him. LACSON ran away for a second time but VIRAY still pursued him and even armed himself with a lead
pipe. LACSON sustained wounds on his head and forehead due to VIRAYs use of the lead pipe. The Medico-Legal
Certificate
[23]
issued by the Gov. Teofilo Sison Memorial Hospital corroborates LACSONs injuries. Given the above
circumstances, it is not difficult to understand why LACSON had to defend himself.
Even assuming that there was just cause to dismiss LACSON, strict compliance by the employer with the
demands of both procedural and substantive due process is a condition sine qua non for the termination to be
declared valid. The law requires that the employer must furnish the worker sought to be dismissed with two written
notices before termination of employment can be legally effected:
1. notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and
2. the subsequent notice which informs the employee of the employers decision to dismiss him.
[24]

It is unclear whether LUZMART complied with the first required written notice; apparently, LACSON was able to
give his account of the fight. However, even assuming that LUZMART complied with the first written notice i.e. the
charge against LACSON with fighting within company premises, the evidence fails to show compliance with the
second notice requirement; to inform LACSON of the decision to dismiss him. Such failure to comply with said
requirements taints LACSONs dismissal with illegality.
An illegally dismissed employee is entitled to 1) either reinstatement or separation pay if reinstatement is no
longer viable, and 2) backwages.
[25]
In the present case, LACSON is entitled to be reinstated, as there is no evidence
to show that reinstatement is no longer possible considering LUZMARTs position in this appeal is that LACSON was
never dismissed but merely suspended. He is also entitled to backwages computed from the time of illegal dismissal,
in this case on February 4, 1993
[26]
(not February 1, 1993 as found by the NLRC) up to the time of actual
reinstatement, without qualification or deduction
[27]

WHEREFORE, the assailed decision of the NLRC is AFFIRMED and the instant petition is hereby DISMISSED
with the MODIFICATION that LUZMART reinstate LACSON to his former position and pay him backwages computed
from the date of illegal dismissal on February 4, 1993 up to the time of actual reinstatement.
No pronouncement as to costs.
SO ORDERED.

Arsenio Lumiqued vs Apolonio Exevea et al
Due Process Assistance by Counsel
Lumiqued was the Regional Director of DAR-CAR. He was charged by Zamudio, the Regional Cashier, for
dishonesty due to questionable gas expenses under his office. It was alleged that he was falsifying gas receipts for
reimbursements and that he had an unliquidated cash advance worth P116,000.00. Zamudio also complained that
she was unjustly removed by Lumiqued two weeks after she filed the two complaints. The issue was referred to the
DOJ. Committee hearings on the complaints were conducted on July 3 and 10, 1992, but Lumiqued was not assisted
by counsel. On the second hearing date, he moved for its resetting to July 17, 1992, to enable him to employ the
services of counsel. The committee granted the motion, but neither Lumiqued nor his counsel appeared on the date
he himself had chosen, so the committee deemed the case submitted for resolution. The Investigating Committee
recommended the dismissal of Lumiqued. DOJ Sec Drilon adopted the recommendation. Fidel Ramos issued AO 52
dismissing Lumiqued.
ISSUE: Does the due process clause encompass the right to be assisted by counsel during an administrative inquiry?
HELD: The SC ruled against Lumiqued. The right to counsel, which cannot be waived unless the waiver is in writing
and in the presence of counsel, is a right afforded a suspect or an accused during custodial investigation. It is not an
absolute right and may, thus, be invoked or rejected in a criminal proceeding and, with more reason, in an
administrative inquiry. In the case at bar, petitioners invoke the right of an accused in criminal proceedings to have
competent and independent counsel of his own choice. Lumiqued, however, was not accused of any crime in the
proceedings below. The investigation conducted by the committee created by Department Order No. 145 was for the
purpose of determining if he could be held administratively liable under the law for the complaints filed against
him. The right to counsel is not indispensable to due process unless required by the Constitution or the law.
. . . There is nothing in the Constitution that says that a party in a non-criminal proceeding is entitled to be
represented by counsel and that, without such representation, he shall not be bound by such proceedings. The
assistance of lawyers, while desirable, is not indispensable. The legal profession was not engrafted in the due
process clause such that without the participation of its members, the safeguard is deemed ignored or violated. The
ordinary citizen is not that helpless that he cannot validly act at all except only with a lawyer at his side.
In administrative proceedings, the essence of due process is simply the opportunity to explain ones side. Whatever
irregularity attended the proceedings conducted by the committee was cured by Lumiqueds appeal and his
subsequent filing of motions for reconsideration.

EN BANC

G.R. No. 188920

DECISION

This petition is an offshoot of two earlier cases already resolved by the Court involving a leadership dispute
within a political party. In this case, the petitioners question their expulsion from that party and assail the validity of
the election of new party leaders conducted by the respondents.

Statement of the Facts and the Case

For a better understanding of the controversy, a brief recall of the preceding events is in order.

On July 5, 2005 respondent Franklin M. Drilon (Drilon), as erstwhile president of the Liberal Party (LP),
announced his partys withdrawal of support for the administration of President Gloria Macapagal -Arroyo. But
petitioner Jose L. Atienza, Jr. (Atienza), LP Chairman, and a number of party members denounced Drilons move,
claiming that he made the announcement without consulting his party.

On March 2, 2006 petitioner Atienza hosted a party conference to supposedly discuss local autonomy and
party matters but, when convened, the assembly proceeded to declare all positions in the LPs ruling body vacant and
elected new officers, with Atienza as LP president. Respondent Drilon immediately filed a petition
[1]
with the
Commission on Elections (COMELEC) to nullify the elections. He claimed that it was illegal considering that the
partys electing bodies, the National Executive Council (NECO) and the National Political Council (NAPOLCO), were
not properly convened. Drilon also claimed that under the amended LP Constitution,
[2]
party officers were elected to
a fixed three-year term that was yet to end on November 30, 2007.

On the other hand, petitioner Atienza claimed that the majority of the LPs NECO and NAPOLCO attended the
March 2, 2006 assembly. The election of new officers on that occasion could be likened to people power, wherein
the LP majority removed respondent Drilon as president by direct action. Atienza also said that the amendments
[3]
to
the original LP Constitution, or the Salonga Constitution, giving LP officers a fixed three-year term, had not been
properly ratified. Consequently, the term of Drilon and the other officers already ended on July 24, 2006.

On October 13, 2006, the COMELEC issued a resolution,
[4]
partially granting respondent Drilons petition. It
annulled the March 2, 2006 elections and ordered the holding of a new election under COMELEC supervision. It held
that the election of petitioner Atienza and the others with him was invalid since the electing assembly did not convene
in accordance with the Salonga Constitution. But, since the amendments to the Salonga Constitution had not been
properly ratified, Drilons term may be deemed to have ended. Thus, he held the position of LP president in a
holdover capacity until new officers were elected.

Both sides of the dispute came to this Court to challenge the COMELEC rulings. On April 17, 2007 a divided
Court issued a resolution,
[5]
granting respondent Drilons petition and denying that of petitioner Atienza. The Court
held, through the majority, that the COMELEC had jurisdiction over the intra-party leadership dispute; that the
Salonga Constitution had been validly amended; and that, as a consequence, respondent Drilons term as LP
president was to end only on November 30, 2007.

Subsequently, the LP held a NECO meeting to elect new party leaders before respondent Drilons term
expired. Fifty-nine NECO members out of the 87 who were supposedly qualified to vote attended. Before the
election, however, several persons associated with petitioner Atienza sought to clarify their membership status and
raised issues regarding the composition of the NECO. Eventually, that meeting installed respondent Manuel A.
Roxas II (Roxas) as the new LP president.

On January 11, 2008 petitioners Atienza, Matias V. Defensor, Jr., Rodolfo G. Valencia, Danilo E. Suarez,
Solomon R. Chungalao, Salvacion Zaldivar-Perez, Harlin Cast-Abayon, Melvin G. Macusi, and Eleazar P. Quinto,
filed a petition for mandatory and prohibitory injunction
[6]
before the COMELEC against respondents Roxas, Drilon
and J.R. Nereus O. Acosta, the party secretary general. Atienza, et al. sought to enjoin Roxas from assuming the
presidency of the LP, claiming that the NECO assembly which elected him was invalidly convened. They questioned
the existence of a quorum and claimed that the NECO composition ought to have been based on a list appearing in
the partys 60th Anniversary Souvenir Program. Both Atienza and Drilon adopted that list as common exhibit in the
earlier cases and it showed that the NECO had 103 members.

Petitioners Atienza, et al. also complained that Atienza, the incumbent party chairman, was not invited to the
NECO meeting and that some members, like petitioner Defensor, were given the status of guests during the
meeting. Atienzas allies allegedly raised these issues but respondent Drilon arbitrarily thumbed them down and
railroaded the proceedings. He suspended the meeting and moved it to another room, where Roxas was elected
without notice to Atienzas allies.

On the other hand, respondents Roxas, et al. claimed that Roxas election as LP president faithfully complied
with the provisions of the amended LP Constitution. The partys 60
th
Anniversary Souvenir Program could not be
used for determining the NECO members because supervening events changed the bodys number and
composition. Some NECO members had died, voluntarily resigned, or had gone on leave after accepting positions in
the government. Others had lost their re-election bid or did not run in the May 2007 elections, making them ineligible
to serve as NECO members. LP members who got elected to public office also became part of the NECO. Certain
persons of national stature also became NECO members upon respondent Drilons nomination, a privilege granted
the LP president under the amended LP Constitution. In other words, the NECO membership was not fixed or static;
it changed due to supervening circumstances.

Respondents Roxas, et al. also claimed that the party deemed petitioners Atienza, Zaldivar-Perez, and Cast-
Abayon resigned for holding the illegal election of LP officers on March 2, 2006. This was pursuant to a March 14,
2006 NAPOLCO resolution that NECO subsequently ratified. Meanwhile, certain NECO members, like
petitioners Defensor,Valencia, and Suarez, forfeited their party membership when they ran under other political
parties during the May 2007 elections. They were dropped from the roster of LP members.

On June 18, 2009 the COMELEC issued the assailed resolution denying petitioners Atienza, et al.s petition. It
noted that the May 2007 elections necessarily changed the composition of the NECO since the amended LP
Constitution explicitly made incumbent senators, members of the House of Representatives, governors and mayors
members of that body. That some lost or won these positions in the May 2007 elections affected the NECO
membership. Petitioners failed to prove that the NECO which elected Roxas as LP president was not properly
convened.

As for the validity of petitioners Atienza, et al.s expulsion as LP members, the COMELEC observed that this
was a membership issue that related to disciplinary action within the political party. The COMELEC treated it as an
internal party matter that was beyond its jurisdiction to resolve.

Without filing a motion for reconsideration of the COMELEC resolution, petitioners Atienza, et al. filed this
petition for certiorari under Rule 65.

The Issues Presented

Respondents Roxas, et al. raise the following threshold issues:

1. Whether or not the LP, which was not impleaded in the case, is an indispensable party; and

2. Whether or not petitioners Atienza, et al., as ousted LP members, have the requisite legal standing to
question Roxas election.

Petitioners Atienza, et al., on the other hand, raise the following issues:

3. Whether or not the COMELEC gravely abused its discretion when it upheld the NECO membership
that elected respondent Roxas as LP president;

4. Whether or not the COMELEC gravely abused its discretion when it resolved the issue concerning the
validity of the NECO meeting without first resolving the issue concerning the expulsion of Atienza, et al. from the
party; and

5. Whether or not respondents Roxas, et al. violated petitioners Atienza, et al.s constitutional right to
due process by the latters expulsion from the party.


The Courts Ruling

One. Respondents Roxas, et al. assert that the Court should dismiss the petition for failure of petitioners
Atienza, et al. to implead the LP as an indispensable party. Roxas, et al. point out that, since the petition seeks the
issuance of a writ of mandatory injunction against the NECO, the controversy could not be adjudicated with finality
without making the LP a party to the case.
[7]


But petitioners Atienza, et al.s causes of action in this case consist in respondents Roxas, et al.s
disenfranchisement of Atienza, et al. from the election of party leaders and in the illegal election of Roxas as party
president. Atienza, et al. were supposedly excluded from the elections by a series of despotic acts of Roxas, et al.,
who controlled the proceedings. Among these acts are Atienza, et al.s expulsion from the party, their exclusion from
the NECO, and respondent Drilons railroading of election proceedings. Atienza, et al. attributed all these illegal and
prejudicial acts to Roxas, et al.

Since no wrong had been imputed to the LP nor had some affirmative relief been sought from it, the LP is
not an indispensable party. Petitioners Atienza, et al.s prayer for the undoing of respondents Roxas, et al.s acts and
the reconvening of the NECO are directed against Roxas, et al.

Two. Respondents Roxas, et al. also claim that petitioners Atienza, et al. have no legal standing to question
the election of Roxas as LP president because they are no longer LP members, having been validly expelled from the
party or having joined other political parties.
[8]
As non-members, they have no stake in the outcome of the action.

But, as the Court held in David v. Macapagal-Arroyo,
[9]
legal standing in suits is governed by the real
parties-in-interest rule under Section 2, Rule 3 of the Rules of Court. This states that every action must be
prosecuted or defended in the name of the real party-in-interest. And real party-in-interest is one who stands to be
benefited or injured by the judgment in the suit or the party entitled to the avails of the suit. In other words, the
plaintiffs standing is based on his own right to the relief sought. In raising petitioners Atienza, et al.s lack of standing
as a threshold issue, respondents Roxas, et al. would have the Court hypothetically assume the truth of the
allegations in the petition.

Here, it is precisely petitioners Atienza, et al.s allegations that respondents Roxas, et al. deprived them of
their rights as LP members by summarily excluding them from the LP roster and not allowing them to take part in the
election of its officers and that not all who sat in the NECO were in the correct list of NECO members. If Atienza, et
al.s allegations were correct, they would have been irregularly expelled from the party and the election of officers,
void. Further, they would be entitled to recognition as members of good standing and to the holding of a new election
of officers using the correct list of NECO members. To this extent, therefore, Atienza, et al. who want to take part in
another election would stand to be benefited or prejudiced by the Courts decision in this case. Consequently, they
have legal standing to pursue this petition.

Three. In assailing respondent Roxas election as LP president, petitioners Atienza, et al. claim that the
NECO members allowed to take part in that election should have been limited to those in the list of NECO members
appearing in the partys 60
th
Anniversary Souvenir Program. Atienza, et al. allege that respondent Drilon, as holdover
LP president, adopted that list in the earlier cases before the COMELEC and it should thus bind respondents
Roxas, et al. The Courts decision in the earlier cases, said Atienza, et al., anointed that list for the next party
election. Thus, Roxas, et al. in effect defied the Courts ruling when they removed Atienza as party chairman and
changed the NECOs composition.
[10]


But the list of NECO members appearing in the partys 60
th
Anniversary Souvenir Program was drawn
before the May 2007 elections. After the 2007 elections, changes in the NECO membership had to be redrawn to
comply with what the amended LP Constitution required. Respondent Drilon adopted the souvenir program as
common exhibit in the earlier cases only to prove that the NECO, which supposedly elected Atienza as new LP
president on March 2, 2006, had been improperly convened. It cannot be regarded as an immutable list, given the
nature and character of the NECO membership.

Nothing in the Courts resolution in the earlier cases implies that the NECO membership should be pegged
to the partys 60
th
Anniversary Souvenir Program. There would have been no basis for such a position. The
amended LP Constitution did not intend the NECO membership to be permanent. Its Section 27
[11]
provides that the
NECO shall include all incumbent senators, members of the House of Representatives, governors, and mayors who
were LP members in good standing for at least six months. It follows from this that with the national and local
elections taking place in May 2007, the number and composition of the NECO would have to yield to changes
brought about by the elections.

Former NECO members who lost the offices that entitled them to membership had to be dropped. Newly
elected ones who gained the privilege because of their offices had to come in. Furthermore, former NECO members
who passed away, resigned from the party, or went on leave could not be expected to remain part of the NECO that
convened and held elections on November 26, 2007. In addition, Section 27 of the amended LP Constitution
expressly authorized the party president to nominate persons of national stature to the NECO. Thus, petitioners
Atienza, et al. cannot validly object to the admission of 12 NECO members nominated by respondent Drilon when he
was LP president. Even if this move could be regarded as respondents Roxas, et al.s way of ensuring their election
as party officers, there was certainly nothing irregular about the act under the amended LP Constitution.

The NECO was validly convened in accordance with the amended LP Constitution. Respondents Roxas, et al.
explained in details how they arrived at the NECO composition for the purpose of electing the party leaders.
[12]
The
explanation is logical and consistent with party rules. Consequently, the COMELEC did not gravely abuse its
discretion when it upheld the composition of the NECO that elected Roxas as LP president.

Petitioner Atienza claims that the Courts resolution in the earlier cases recognized his right as party
chairman with a term, like respondent Drilon, that would last up to November 30, 2007 and that, therefore, his ouster
from that position violated the Courts resolution. But the Courts resolution in the earlier cases did not preclude the
party from disciplining Atienza under Sections 29
[13]
and 46
[14]
of the amended LP Constitution. The party could very
well remove him or any officer for cause as it saw fit.

Four. Petitioners Atienza, et al. lament that the COMELEC selectively exercised its jurisdiction when it ruled
on the composition of the NECO but refused to delve into the legality of their expulsion from the party. The two
issues, they said, weigh heavily on the leadership controversy involved in the case. The previous rulings of the
Court, they claim, categorically upheld the jurisdiction of the COMELEC over intra-party leadership disputes.
[15]


But, as respondents Roxas, et al. point out, the key issue in this case is not the validity of the expulsion of
petitioners Atienza, et al. from the party, but the legitimacy of the NECO assembly that elected respondent Roxas as
LP president. Given the COMELECs finding as upheld by this Court that the membership of the NECO in question
complied with the LP Constitution, the resolution of the issue of whether or not the party validly expelled petitioners
cannot affect the election of officers that the NECO held.

While petitioners Atienza, et al. claim that the majority of LP members belong to their faction, they did not
specify who these members were and how their numbers could possibly affect the composition of the NECO and the
outcome of its election of party leaders. Atienza, et al. has not bothered to assail the individual qualifications of the
NECO members who voted for Roxas. Nor did Atienza, et al. present proof that the NECO had no quorum when it
then assembled. In other words, the claims of Atienza, et al. were totally unsupported by evidence.

Consequently, petitioners Atienza, et al. cannot claim that their expulsion from the party impacts on the party
leadership issue or on the election of respondent Roxas as president so that it was indispensable for the COMELEC
to adjudicate such claim. Under the circumstances, the validity or invalidity of Atienza, et al.s expulsion was purely a
membership issue that had to be settled within the party. It is an internal party matter over which the COMELEC has
no jurisdiction.

What is more, some of petitioner Atienzas allies raised objections before the NECO assembly regarding the
status of members from their faction. Still, the NECO proceeded with the election, implying that its membership,
whose composition has been upheld, voted out those objections.

The COMELECs jurisdiction over intra-party disputes is limited. It does not have blanket authority to resolve
any and all controversies involving political parties. Political parties are generally free to conduct their activities
without interference from the state. The COMELEC may intervene in disputes internal to a party only when
necessary to the discharge of its constitutional functions.

The COMELECs jurisdiction over intra-party leadership disputes has already been settled by the Court. The
Court ruled in Kalaw v. Commission on Elections
[16]
that the COMELECs powers and functions under Section 2,
Article IX-C of the Constitution, include the ascertainment of the identity of the political party and its legitimate
officers responsible for its acts. The Court also declared in another case
[17]
that the COMELECs power to register
political parties necessarily involved the determination of the persons who must act on its behalf. Thus, the
COMELEC may resolve an intra-party leadership dispute, in a proper case brought before it, as an incident of its
power to register political parties.

The validity of respondent Roxas election as LP president is a leadership issue that the COMELEC had to
settle. Under the amended LP Constitution, the LP president is the issuing authority for certificates of nomination of
party candidates for all national elective positions. It is also the LP president who can authorize other LP officers to
issue certificates of nomination for candidates to local elective posts.
[18]
In simple terms, it is the LP president who
certifies the official standard bearer of the party.

The law also grants a registered political party certain rights and privileges that will redound to the benefit of its
official candidates. It imposes, too, legal obligations upon registered political parties that have to be carried out
through their leaders. The resolution of the leadership issue is thus particularly significant in ensuring the peaceful
and orderly conduct of the elections.
[19]


Five. Petitioners Atienza, et al. argue that their expulsion from the party is not a simple issue of party
membership or discipline; it involves a violation of their constitutionally-protected right to due process of law. They
claim that the NAPOLCO and the NECO should have first summoned them to a hearing before summarily expelling
them from the party. According to Atienza, et al., proceedings on party discipline are the equivalent of administrative
proceedings
[20]
and are, therefore, covered by the due process requirements laid down in Ang Tibay v. Court of
Industrial Relations.
[21]


But the requirements of administrative due process do not apply to the internal affairs of political
parties. The due process standards set in Ang Tibay cover only administrative bodies created by the state and
through which certain governmental acts or functions are performed. An administrative agency or instrumentality
contemplates an authority to which the state delegates governmental power for the performance of a state
function.
[22]
The constitutional limitations that generally apply to the exercise of the states powers thus, apply too, to
administrative bodies. The constitutional limitations on the exercise of the states powers are found in Article III of the
Constitution or the Bill of Rights. The Bill of Rights, which guarantees against the taking of life, property, or liberty
without due process under Section 1 is generally a limitation on the states powers in relation to the rights of its
citizens. The right to due process is meant to protect ordinary citizens against arbitrary government action, but not
from acts committed by private individuals or entities. In the latter case, the specific statutes that provide reliefs from
such private acts apply. The right to due process guards against unwarranted encroachment by the state into the
fundamental rights of its citizens and cannot be invoked in private controversies involving private parties.
[23]


Although political parties play an important role in our democratic set-up as an intermediary between the
state and its citizens, it is still a private organization, not a state instrument. The discipline of members by a political
party does not involve the right to life, liberty or property within the meaning of the due process clause. An individual
has no vested right, as against the state, to be accepted or to prevent his removal by a political party. The only rights,
if any, that party members may have, in relation to other party members, correspond to those that may have been
freely agreed upon among themselves through their charter, which is a contract among the party
members. Members whose rights under their charter may have been violated have recourse to courts of law for the
enforcement of those rights, but not as a due process issue against the government or any of its agencies.

But even when recourse to courts of law may be made, courts will ordinarily not interfere in membership and
disciplinary matters within a political party. A political party is free to conduct its internal affairs, pursuant to its
constitutionally-protected right to free association. In Sinaca v. Mula,
[24]
the Court said that judicial restraint in internal
party matters serves the public interest by allowing the political processes to operate without undue interference. It is
also consistent with the state policy of allowing a free and open party system to evolve, according to the free choice
of the people.
[25]


To conclude, the COMELEC did not gravely abuse its discretion when it upheld Roxas election as LP
president but refused to rule on the validity of Atienza, et al.s expulsion from the party. While the question of party
leadership has implications on the COMELECs performance of its functions under Section 2, Article IX-C of the
Constitution, the same cannot be said of the issue pertaining to Atienza, et al.s expulsion from the LP. Such
expulsion is for the moment an issue of party membership and discipline, in which the COMELEC cannot intervene,
given the limited scope of its power over political parties.

WHEREFORE, the Court DISMISSES the petition and UPHOLDS the Resolution of the Commission on
Elections dated June 18, 2009 in COMELEC Case SPP 08-001.

SO ORDERED.