You are on page 1of 36

1

G.R. No. 176800

September 5, 2011

ELMER
LOPEZ,
Petitioner,
vs.
KEPPEL BANK PHILIPPINES, INC., MANUEL BOSANO III and STEFAN TONG
WAI MUN, Respondents.
DECISION

complaint for lack of merit. The NLRC found merit in the banks submission that by
issuing the questioned POs without authority and against the banks express orders,
Lopez thereby committed a willful disobedience against his superiors a sufficient
basis for the bank to lose its trust and confidence in him as branch manager. It thus
found that Lopez had been dismissed for cause after the observance of due
process. Lopez moved for reconsideration, but the NLRC denied the motion in its
resolution of January 25, 2006.12 Lopez sought relief from the CA through a petition
for certiorari, charging the NLRC with grave abuse of discretion for setting aside the
labor arbiters decision.
The CA Decision

BRION, J.:

13

On December 19, 2006, the CA rendered its now assailed decision, denying the
petition and affirming the October 11, 2005 decision of the NLRC. It fully agreed
with the NLRC finding that Lopez had not been illegally dismissed.
1

We resolve the present petition for review on certiorari seeking the nullification of
the decision2 and the resolution3 of the Court of Appeals (CA), dated December 19,
2006 and February 7, 2007, respectively, rendered in CA-G.R. CEB-SP. No. 01754.
The Antecedents
The facts, as set out in the assailed CA decision, are summarized below.
Petitioner Elmer Lopez was the Branch Manager of the respondent Keppel Bank
Philippines, Inc. (bank) in Iloilo City. Allegedly, through his efforts, Hertz Exclusive
Cars, Inc. (Hertz) became a client of the bank.
By notice dated August 12, 2003,4 the bank asked Lopez to explain in writing why
he should not be disciplined for issuing, without authority, two purchase orders
(POs) for the Hertz account amounting to a total of P6,493,000.00, representing the
purchase price of 13 Suzuki Bravo and two Nissan Exalta vehicles.
Lopez submitted his written explanation on the same day,5 but the bank refused to
give it credit. Through respondents Manuel Bosano III (Vice-President and Head of
Retail Banking Division/Consumer Banking Division) and Stefan Tong Wai Mun
(Vice-President/Comptroller), the bank terminated Lopezs employment effective
immediately.6
Lopez asked the bank for reconsideration.7 In response, the bank, through the
respondent officers, met with Lopez at its headquarters in Cubao, Quezon City on
September 25, 2003. Lopez came with his lawyer (Atty. Edmundo V. Buensuceso)
and a military man (one Col. Flordeliza). After the meeting, the bank found no
reason to reconsider and reiterated its decision to dismiss Lopez.8
Lopez filed a complaint for illegal dismissal and money claims against the bank,
Bosano and Tong.
The Compulsory Arbitration Proceedings
Lopez alleged before the labor arbiter that he issued the POs as part of his strategy
to enhance the banks business, in line with his duty as branch manager to promote
the growth of the bank. He claimed that the bank honored the first PO for P1.8M
from which the bank derived an income of P142,000.00. He added that the second
PO did not materialize because Mr. James Puyat Concepcion, a Hertz incorporator
and director who opened the Hertz account, stopped depositing with the bank
because of the negative credit rating he received from the banks credit committee.
Allegedly, the committee discovered that James Puyat Concepcion had several
pending court cases.
For its part, the bank denied approving the first PO, arguing that Lopez did not have
the authority to issue the POs for the Hertz account as there was a standing advice
that no Hertz loan application was to be approved. It stressed that Lopez committed
a serious violation of company rules when he issued the POs.
In a decision dated April 28, 2004,9 Labor Arbiter Cesar D. Sideo ruled that Lopez
was illegally dismissed. Accordingly, the labor arbiter ordered Lopezs immediate
reinstatement, and awarded him backwages of P392,000.00, moral and exemplary
damages of P8M, and P550,000.00 the purchase price of a Toyota Revo which
Lopez allegedly brought over from his stint with Global Bank (now Metrobank). The
labor arbiter found that contrary to the banks claim, the evidence showed that
Lopez had been issuing POs which the bank had paid, including the first of the two
POs that led to his dismissal.10
On appeal by the bank, the National Labor Relations Commission (NLRC) rendered
a decision on October 11, 200511 reversing the labor arbiters ruling. It dismissed the

Lopez moved for, but failed to obtain, a reconsideration of the CA decision. The CA
14
denied the motion on February 7, 2007.
The Case for Lopez
Through the present petition,15 the reply to the banks comment dated February 11,
2008,16 and the memorandum dated September 22, 2008,17 Lopez entreats the
Court to nullify the CA decision, contending that the CA erred in: (1) not ruling that
the banks appeal with the NLRC should have been dismissed on the ground of
non-perfection; and (2) affirming the decision of the NLRC that he was dismissed for
a just cause (loss of trust and confidence) and that he was afforded due process.
Lopez argues, with respect to the first assignment of error, that the bank failed to
comply with Sections 4 and 6, Rule VI, of the 2002 Rules of Procedure of the
NLRC.18 He points out that the bank did not file a notice of appeal together with its
memorandum of appeal, which in turn was not supported by a certificate of nonforum shopping; and neither did the bank furnish him, as appellee, a certified copy
of the appeal bond.
On the substantive aspect of the case, Lopez posits that the bank failed to justify his
dismissal on the ground of loss of trust and confidence. He insists that, as branch
manager, he had the authority to issue POs as in fact he issued several of them in
the past, which POs were honored and paid by the bank. The labor arbiter properly
relied on the past transactions in his decision. These included, he reiterates, the first
PO for the Hertz account which was paid by the bank on July 18, 2003, a
transaction where the bank even earned a substantial income (P142,000.00). He
maintains that the bank failed to substantiate its position that he was not authorized
to issue the POs. He adds that the banks claim that his issuance of the POs
exposed the bank to financial loss is a lame excuse to justify the termination of his
employment.
Lopez argues that his dismissal was a mere afterthought on the part of the bank
management, particularly Bosano, to cover up its embarrassment when he (Lopez)
made inquiries and discovered that Hertzs James Puyat Concepcion had no
pending court cases and was therefore credit worthy. He adds that assuming that
he did not have the authority to issue POs, still, he cannot be held guilty of willful
disobedience; even if he had been guilty, dismissal was a very harsh penalty.
Finally, Lopez submits that the bank failed to accord him due process because the
bank did not give him the opportunity to prepare for his defense. He points out that
his written explanation (dated August 12, 2003)19 preceded the banks letter (of the
same date)20 that required him to explain why he issued the POs in question. Lopez
contends in this regard that on August 12, 2003, he went to Bosanos office in
Quezon City all the way from Iloilo City and there, he was cornered by Bosano who
verbally instructed him to immediately write down his explanation even before he
was served with the banks August 12, 2003 letter. He maintains that Bosanos
preemptive move deprived him of the opportunity to secure the services of a
counsel.
While Lopez believes his dismissal to be illegal, he does not seek reinstatement due
to the antagonism that has developed between him, and the bank and its officers,
due to the present case. He only asks for separation pay of one month pay for every
year of service, full backwages, allowances and other benefits. Additionally, he
prays for moral and exemplary damages, as well as attorneys fees, to compensate
him for a dismissal that was attended by bad faith and effected in a wanton,
oppressive and malevolent manner.
The Case for the Bank and its Officers
Through its comment to the petition21 and memorandum,22 the bank submits that the
CA committed no reversible error in denying Lopezs petition for certiorari, and in

2
affirming the ruling of the NLRC that Lopez was dismissed for a just cause and after
due process.
The bank is puzzled why Lopez is standing firm on his position that he did nothing
wrong when he issued the questioned POs despite the express directive not to
proceed with the Hertz loan application unless its adverse credit investigation report
is explained to the banks credit committee. It posits that no bank would gamble to
maintain as branch manager a person who dares to supplant a major decision of the
banks top leadership with his personal decision. It argues that in this situation, the
law (Labor Code) provides protection to the employer through its management
prerogative rights and the right to dismiss employees on just and valid grounds.
The bank refutes Lopezs contention that there was no willful disobedience that
warranted his dismissal. It points out that there was an order for him not to proceed
with the Hertz loan application. The order was very reasonable as it is the standard
policy of every bank to conduct an investigation on the credit worthiness of any loan
applicant. Since it appeared from the investigation of its credit committee that
James Puyat Concepcion of Hertz had various court cases, it was only proper for
the bank to put on hold the loan application of Hertz until the adverse finding could
be cleared. It insists that Lopez willfully and knowingly disobeyed this order.
Further, the bank questions Lopezs submission, through a supplemental addendum
to his position paper, of evidence that it honored and paid POs issued by Lopez in
the past. It maintains that it was not furnished a copy of this submission; hence, it
was unable to controvert this evidence.
On the procedural due process issue, the bank denies Lopezs allegation that he
was not given the opportunity to defend himself. It points out that both the NLRC
and the CA confirmed that Lopez was not deprived the opportunity to be heard; the
opportunity commenced with: (1) the notice for him to explain his side regarding his
unauthorized issuance of POs; (2) the notice of his termination from employment;
and (3) the hearing called in response to his motion for reconsideration where he
was assisted by his lawyer and his soldier friend.
The Courts Ruling
The procedural issue
Lopez faults the CA for not ruling that the banks appeal to the NLRC should have
been dismissed for non-perfection. He argues that no notice of appeal accompanied
the memorandum of appeal; neither was there a certificate of non-forum shopping
nor any copy furnished to him of the certified true copy of the appeal bond.
The procedural question is a non-issue.1wphi1 Lopez did not raise it before the
CA; in fact, he challenged the NLRC decision of October 11, 200523 on its merits
and not on its form. We, therefore, see no need to further discuss this argument.
The merits of the case
On the substantive aspect of the case, we note that Lopez was dismissed from the
service by reason of loss of trust and confidence, a just cause for an employees
dismissal under the law.24 Lopez insists though that the act which triggered the
dismissal action does not justify his separation from the service.
Is Lopez liable for loss of trust and confidence for issuing the two disputed POs?
The right of an employer to freely select or discharge his employee is a recognized
prerogative of management; an employer cannot be compelled to continue
employing one who has been guilty of acts inimical to its interests. When this
happens, the employer can dismiss the employee for loss of confidence.25
At the same time, loss of confidence as a just cause of dismissal was never
intended to provide employers with a blank check for terminating employment. Loss
of confidence should ideally apply only (1) to cases involving employees occupying
positions of trust and confidence, or (2) to situations where the employee is routinely
charged with the care and custody of the employers money or property. To the first
class belong managerial employees, i.e., those vested with the powers and
prerogatives to lay down management polices and/or to hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees, or effectively recommend such
managerial actions. To the second class belong cashiers, auditors, property
custodians, or those who, in the normal and routine exercise of their functions,
regularly handle significant amounts of money or property.26
As branch manager, Lopez clearly occupies a "position of trust." His hold on his
position and his stay in the service depend on the employers trust and confidence

27

in him and on his managerial services. According to the bank, Lopez betrayed this
trust and confidence when he issued the subject POs without authority and despite
the express directive to put the clients application on hold. In response, Lopez
insists that he had sufficient authority to act as he did, as this authority is inherent in
his position as bank manager. He points to his record in the past when he issued
POs which were honored and paid by the bank and which constituted the arbiters
"overwhelming evidence"28 in support of the finding that "complainants dismissal
29
from work was without just cause, hence, illegal."
We disagree with Lopezs contention. Despite evidence of his past exercise of
authority (as found by the labor arbiter), we cannot disregard evidence showing that
in August 2003, the bank specifically instructed Lopez not to proceed with the Hertz
loan application because of the negative credit rating issued by the banks credit
committee. We find it undisputed that Lopez processed the loan despite the adverse
credit rating. In fact, he admitted that he overlooked the "control aspects" of the
transaction as far as the bank was concerned because of his eagerness to get a
bigger share of the market.30
Lopezs good intentions, assuming them to be true, are beside the point for,
ultimately, what comes out is his defiance of a direct order of the bank on a matter
of business judgment. He went over the heads of the bank officers, including the
credit committee, when, based on inquiries he made on his own regarding the credit
worthiness of James Puyat Concepcion, he simply proceeded to act on the basis of
his own judgment. Evident in his written explanation31 was his failure to inform the
credit committee of his own efforts to check on the committees adverse findings
against Hertz and his independent action based solely on his own authority.
As a bank official, the petitioner must have been aware that it is basic in every
sound management that people under ones supervision and direction are bound to
follow instructions or to inform their superior of what is going on in their respective
areas of concern, especially regarding matters of vital interest to the enterprise.
Under these facts, we find it undisputed that Lopez disobeyed the banks directive to
put the Hertz loan application on hold, and did not wait until its negative credit rating
was cleared before proceeding to act. That he might have been proven right is
immaterial. Neither does the submission that the bank honored and paid the first PO
and even realized a profit from the transaction, mitigate the gravity of Lopezs
defiance of the directive of higher authority on a business judgment. What appears
clear is that the bank cannot in the future trust the petitioner as a manager who
would follow directives from higher authorities on business policy and directions.
The bank can be placed at risk if this kind of managerial attitude will be repeated,
especially if it becomes an accepted rule among lower managers.
In Nokom v. NLRC,32 we reiterated the guidelines for the application of loss of
confidence as follows: (1) loss of confidence, should not be simulated; (2) it should
not be used as a subterfuge for causes which are improper, illegal or unjustified; (3)
it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and (4) it must be genuine, not a mere afterthought to justify an earlier
action taken in bad faith.1avvphil
Under the circumstances of this case, we are convinced that the bank was justified
in terminating Lopezs employment by reason of loss of trust and confidence. He
admitted issuing the two POs, claiming merely that he had the requisite authority.
He could not present any proof in this regard, however, except to say that it was
part of his inherent duty as bank manager. He also claimed that the bank
acquiesced to the issuance of the POs as it paid the first PO and the POs he issued
in the past. This submission flies in the face of the banks directive for him not to
proceed unless matters are cleared with the banks credit committee. The bank had
a genuine concern over the issue as it found through its credit committee that Hertz
was a credit risk. Whether the credit committee was correct or not is immaterial as
the banks direct order left Lopez without any authority to clear the loan application
on his own. After this defiance, we cannot blame the bank for losing its confidence
in Lopez and in separating him from the service.
The due process issue
As the NLRC and the CA did, we find Lopez to have been afforded due process
when he was dismissed. He was given the required notices. More importantly, he
was actually given the opportunity to be heard; when he moved for reconsideration
of the banks decision to terminate his employment, it scheduled a hearing where he
appeared together with his lawyer and a military man. This was an opportunity to be
heard that the law recognizes.
In fine, we find no merit in the petition.
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit.
The assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs
against petitioner Elmer Lopez.

3
G.R. No. 169260

March 23, 2011

SANDEN
AIRCON
PHILIPPINES
vs.
LORESSA P. ROSALES, Respondent.

5. So based on the facts that we have gathered it is highly probable that


Ms. Loressa Rosales was the culprit in the said incident.
and

ANTONIO

ANG,

Petitioners,
On June 26, 1997, Atty. Reynaldo B. Destura (Atty. Reynaldo), the Personnel and
8
Administrative Services Manager sent a letter to Loressa charging her with data
sabotage and absences without leave (AWOL). She was given 24 hours to explain
her side.

DECISION

DEL CASTILLO, J.:


An employer has the discretion to dismiss an employee for loss of trust and
confidence but the former may not use the same to cloak an illegal dismissal.
1

This Petition for Review on Certiorari assails the Decision dated May 24, 2005 of
the Court of Appeals (CA) in CA-G.R. SP No. 85698, which granted the petition for
3
certiorari and reversed and set aside the Resolution dated November 28, 2003 of
the National Labor Relations Commission (NLRC) in NLRC CASE No. RAB-IV-94
9330-97-L (NLRC NCR CA No. 016826-98) and reinstated the Resolution dated
November 29, 2000 of the NLRC.

On July 2, 1997, Loressa submitted her letter to Atty. Reynaldo where she
vehemently denied the allegations of data sabotage. According to her, only a
computer programmer equipped with the necessary expertise and not a mere data
custodian like her would be capable of such an act. As to the charge of incurring
absences without leave, she challenged Sanden to specify the dates and
circumstances of her alleged AWOL.
10

In a memorandum
dated July 3, 1997, Atty. Reynaldo scheduled the
administrative investigation on the charge of "data sabotage" in the afternoon of the
next day. The investigation pushed through as scheduled.
11

Factual Antecedents

On July 17, 1997, the husband of Loressa received a Notice of Disciplinary Action
from Sanden notifying Loressa that management is terminating Loressas
employment effective upon receipt of the said communication. The reason cited by
Sanden was the loss of trust on her capability to continue as its Coordinator and
Data Custodian. Sanden indicated in the said letter that based on all the documents
and written testimonies gathered during the investigation, Loressa caused the
deliberate sabotage of the marketing data involving the Delivery Receipts.

Sanden Aircon Philippines (Sanden) is a corporation engaged in the business of


manufacturing, assembling, and fabricating automotive air-conditioning systems.

On September 9, 1997, Loressa filed a complaint12 for illegal dismissal with a prayer
for the payment of 13th month pay, attorneys fees and other benefits.

In August 1992, Sanden employed Loressa P. Rosales (Loressa) as Management


Information System (MIS) Department Secretary. On December 26, 1996, she was
promoted as Data Custodian and Coordinator. As such, Loressa had access to all
computer programs and marketing computer data, including the Delivery Receipt
Transaction files of Sanden. The Finance Department based its billing and collection
activities on the marketing delivery receipt transactions. Loressas functions and
authority include opening, editing and copying files in Sandens computers. She was
also charged with the duty of creating back-up copies of all files under her custody.
For this purpose, she can request all computer users at a particular time to log out
or exit from the system.

In her position paper,13 Loressa alleged that no evidence was presented during the
investigation conducted by Sanden to prove that she indeed committed "data
sabotage." She claimed that she was singled out as the culprit based on mere
suspicion unsupported by any testimonial or documentary evidence. The Delivery
Receipts, which Sanden claims to have been deleted, were not presented during
the investigation process. Moreover, there were no witnesses presented who
pointed to Loressa as the one who actually committed the "data sabotage."

Also assailed is the Resolution5 dated August 1, 2005 denying the Motion for
Reconsideration

On May 16, 1997, Sanden discovered that the marketing delivery receipt
transactions computer files were missing. The Internal Auditing Department, through
its Audit Officer, Ernesto M. Bayubay (Ernesto), immediately sent a memorandum 6
dated May 17, 1997 to Garrick L. Ang (Garrick), the MIS Manager, requesting that a
technical investigation be conducted.
On May 19, 1997, Garrick issued a memorandum 7 enumerating the findings of the
MIS Department, the pertinent portions of which read:
This is in response on [sic] your request for a technical investigation regarding the
missing Marketing Delivery Receipt (DR) transactions filed inside our computer
system. The incident happened at [sic] the 16 of May 1997 12:35 noon in which we
discovered a data corruption in the Marketing DR transactions file wherein all the
data were missing. We immediately conducted an investigation of the incident and
found out the following:
1. Before the incident, [the] Marketing Staff are still using the said file
until 12:00 noon [when they] were instructed by the Data Custodian (Ms.
Loressa Rosales) to log out from the system because a back-up was to
be conducted. The back-up activities never took place for [unknown
reasons];
2. We dont have an updated back up on the mentioned file which was
the responsibility of the Data Custodian, the last back up of the file was
[conducted] on 10 of May 1997.
3. The incident can only happen when only one user [was] using the file
and after the incident we immediately look[ed] into the Server Manager,
a security auditing tool of the system, and found out that Ms. Loressa
Rosales was the only one log[ged] in on the system at 12:05 noon to
12:21 noon with 16 minutes of usage time as witnesse[d] by many MIS
personnel including one audit officer.
4. The Data Custodian [has] all the rights of Add, Edit, Delete on all the
files found in the system.

On the other hand, in Sandens position paper,14 it alleged that at around noon of
May 16, 1997, Loressa requested the Marketing Staff to log out or exit from the
computer system because she would create a backup of the Marketing Delivery
Receipt Transaction files. At that time, some members of the Marketing Staff were
still using and encoding additional data but as requested, all of them logged out
from the network. The Server Manager showed that from 12:05 p.m. to 12:21 p.m.,
the only computer logged in was that of Loressa. This is precisely the period when
the deletion of the Marketing Delivery Receipt Transaction files occurred.
Ruling of the Labor Arbiter
On May 28, 1998, Labor Arbiter Nieves De Castro rendered a Decision15 finding that
Sanden is guilty of illegal dismissal. She ruled that there exists no justifiable basis
for Sandens act of terminating the services of Loressa. Nowhere in the records can
be found evidence, documentary or otherwise (i) that will directly point to Loressas
having committed "data sabotage" or (ii) that she absented herself without leave.
The Labor Arbiter also ruled that since animosity between Sanden and Loressa
already exists, the award of separation pay in lieu of reinstatement is in order and in
accord with industrial peace and harmony. The dispositive portion of the Labor
Arbiters Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered, declaring the
dismissal of the complainant illegal and respondent Sanden Aircon Philippines, Inc.
is ordered:
1. To pay complainant backwages from the time of [her] dismissal up to
the date of promulgation of this decision[;]
2. To pay complainant separation pay of one (1) month for every year of
service [from] the date of employment up to the date of promulgation of
this decision[;]
3. To pay attorneys fees of 10% of the total award[; and]
4. [To have its] financial analyst x x x compute the monetary award[s
which form] part of this decision.

4
All other claims are dismissed for lack of merit.
SO ORDERED.

These matters boil down to a single issue of whether Sanden legally terminated
Loressas employment on the ground of willful breach of trust and confidence as
Coordinator and Data Custodian.

16

Petitioners Arguments

Ruling of the National Labor Relations Commission


Sanden sought recourse to the NLRC by submitting its Notice
Memorandum on Appeal on September 28, 1998.

17

of Appeal and

On November 29, 2000, the NLRC issued a Resolution18 affirming the May 28, 1998
Decision of the Labor Arbiter with the modification that the computation of the
amount of separation pay to be awarded be reckoned from December 26, 1996
which was the date when Loressa was hired by Sanden as Data Custodian and
Coordinator. The NLRC found that Loressa was paid separation pay corresponding
to the period beginning August 1992 (the date she was hired) up to December 26,
1996.
Sanden filed a Motion for Reconsideration19 of the NLRC Resolution.

Petitioners contend that Loressa was vested with the delicate position of
safekeeping the records of Sanden. She was charged with the duty of creating back
up files so that Sanden may be fully protected in any eventuality. Loressas act,
therefore, of maliciously deleting the Marketing Delivery Receipt Transaction files is
a valid ground to dismiss her from her employment on the ground of loss of trust. It
is betrayal of the highest order when the very custodian of the records deleted the
same.
According to petitioners, it was clearly shown by evidence that before the deletion of
said files, the Marketing Staff were still using the files until noon when they were
instructed by Loressa to log out from the system because a back up was to be
conducted. The back up activities never took place and worse the data were deleted
from the system. Petitioners emphasized that as Data Custodian, Loressa has
capability to add, edit, or delete all the files in the system of Sanden.

20

On November 28, 2003, the NLRC issued another Resolution which reversed its
November 29, 2000 Resolution and dismissed the complaint for lack of merit.
Ruling of the Court of Appeals

Petitioners also aver that from the time the data sabotage occurred on May 16,
1997 to May 30, 1997, Loressa went on AWOL for at least five times.
Respondents Arguments

21

Aggrieved, Loressa filed with the CA a petition for certiorari. The CA through a
Resolution22 dated August 19, 2004, directed her to submit within five days from
receipt of said resolution copies of Sandens appeal memorandum and motion for
reconsideration of the November 29, 2000 resolution which were mentioned in her
petition but were not attached thereto. On September 8, 2004, Loressa submitted
the documents as directed by the CA.23 On September 27, 2004, the CA issued its
Resolution24 noting the compliance of Loressa and also directing Sanden to file its
comment.
On October 18, 2004, Sanden filed a Motion for Extension of Time to File
Comment.25 This was granted by the CA through its Resolution26 dated November
3, 2004. On November 5, 2004, Sanden filed its comment.27
On May 24, 2005, the CA granted the petition and reversed and set aside the
November 28, 2003 Resolution of the NLRC and reinstated the latters November
29, 2000 Resolution.

Loressa insists that Sanden failed to provide sufficient evidence which would clearly
point to her as the one who erased the files. For loss of trust and confidence to be a
valid ground for dismissal of an employee, it must be founded on clearly established
facts.
In this case, the fact that Loressas computer was the only one logged on during the
period that the alleged deletion of data occurred does not mean that she was the
one who deleted the missing files. Loressa maintains that Sanden failed to
substantially prove her direct involvement in the alleged deletion of the files except
for a mere suspicion that it was she who deleted the data in question.
As to the charge of her absences without leave, Loressa claims that they were not
substantiated by any documentary evidence or testimony of a witness. As such, her
dismissal from employment is without any legal ground.
Our Ruling

Petitioners moved for reconsideration,28 but to no avail. Hence, this appeal


anchored on the following grounds:

The petition is bereft of merit.

Issues

Article 282 of the Labor Code states:

THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER SANDEN


FAILED TO SUBSTANTIATE RESPONDENT ROSALESS DISMISSAL,
CONSIDERING THAT:

ART. 282. TERMINATION BY EMPLOYER. An employer may terminate an


employment for any of the following causes:

A. THE ASSERTION MADE BY THE COURT OF APPEALS AS TO


THE POSSIBLE EXISTENCE OF A PARALLEL SET OF DOCUMENTS
CORRESPONDING TO THE DELETED FILES, AS WELL AS THE
POSSIBILITY OF A GLITCH IN THE COMPUTER SYSTEM WHICH
CAUSED THE DELETION OF THE SUBJECT FILES, ARE HIGHLY
SPECULATIVE AND CANNOT STAND AGAINST THE EVIDENCE ON
RECORD.
B. SIMILARLY, THE CLAIM THAT THE DELETION OF THE SUBJECT
FILES COULD HAVE OCCURRED AT ANY POINT IN TIME IS
PURELY SPECULATIVE AND CANNOT STAND AGAINST THE
EVIDENCE ON RECORD.
C. LIKEWISE, THE CLAIM THAT ANOTHER PERSON COULD HAVE
CAUSED THE DELETION OF THE SUBJECT FILES CONSIDERING
THAT RESPONDENT ROSALES COULD NOT POSSIBLY HAVE
BEEN THE SOLE PERSON WITH ACCESS THERETO IS PURELY
SPECULATIVE AND CANNOT STAND AGAINST THE EVIDENCE ON
RECORD.
D. HENCE, THERE IS MORE THAN SUFFICIENT SUBSTANTIAL
EVIDENCE
WARRANTING
THE
VALID
DISMISSAL
OF
RESPONDENT ROSALES.29

(a) Serious misconduct or willful disobedience by the employee of the


lawful orders of his employer or representative in connection with his
work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his
duly authorized representative; and
(e) Other causes analogous to the foregoing.
Article 282(c) of the Labor Code prescribes two separate and distinct grounds for
termination of employment, namely: (1) fraud or (2) willful breach by the employee
of the trust reposed in him by his employer or duly authorized representative.
Settled is the rule that under Article 282(c), the breach of trust must be willful.
Ordinary breach will not suffice. "A breach is willful if it is done intentionally and

5
knowingly without any justifiable excuse, as distinguished from an act done
30
carelessly, thoughtlessly or inadvertently."
"As firmly entrenched in our jurisprudence, loss of trust and confidence as a just
cause for termination of employment is premised on the fact that an employee
concerned holds a position where greater trust is placed by management and from
whom greater fidelity to duty is correspondingly expected." 31 "The betrayal of this
32
trust is the essence of the offense for which an employee is penalized."

Marketing could not use their system due to error encountered such as an abnormal
program termination (problem in pairing). Warehouse A is affected by this. o.e. in
39
updating marketing inventory qty. (DR Transaction)
xxxx
Furthermore, in the entry dated March 27, 1996, it was indicated:

Sanden has the burden of proof to prove its allegations.

Restored Marketing Data from March 23 back-up.

"Unlike in other cases where the complainant has the burden of proof to [prove] its
allegations, the burden of establishing facts as bases for an employers loss of
confidence in an employee facts which reasonably generate belief by the
employer that the employee was connected with some misconduct and the nature of
his participation therein is such as to render him unworthy of trust and confidence
33
demanded of his position is on the employer."

Files restored:

While it is true that loss of trust and confidence is one of the just causes for
termination, such loss of trust and confidence must, however, have some basis.
Proof beyond reasonable doubt is not required. It is sufficient that there must only
be some basis for such loss of confidence or that there is reasonable ground to
believe if not to entertain the moral conviction that the concerned employee is
responsible for the misconduct and that the nature of his participation therein
rendered him absolutely unworthy of trust and confidence demanded by his
position.34

Reindexed both.

Sanden failed to discharge the burden of proof that the dismissal of Loressa
is for a just cause.
The first requisite for dismissal on the ground of loss of trust and confidence is that
the employee concerned must be holding a position of trust and confidence.
In this case, we agree that Loressa, who had immediate access to Sandens
confidential files, papers and documents, held a position of trust and confidence as
Coordinator and Data Custodian of the MIS Department.
"The second requisite is that there must be an act that would justify the loss of trust
and confidence. Loss of trust and confidence, to be a valid cause for dismissal,
must be based on a willful breach of trust and founded on clearly established facts.
The basis for the dismissal must be clearly and convincingly established but proof
beyond reasonable doubt is not necessary."35
Sandens evidence against Loressa fails to meet this standard.
Worth noting are the pertinent portions of the Resolution of the NLRC
dated November 29, 2000 before it reversed itself, to wit:
As correctly found by the Labor Arbiter, nowhere in the records can be found
evidence that directly point to complainant as having committed acts of sabotage.
Also, during the administrative investigation, the guilt of complainant-appellee was
based on mere allegations not supported by documentary evidence nor any factual
basis. Even appellants cannot directly pinpoint appellee as the culprit. They were
only thinking of her as the one probably responsible thereto, considering that when
she used the computer, she told the other users to log out and thereafter, used the
computer for 16 minutes, with only 1 minute as usage time. But these allegations
would not suffice (sic) termination of employment of appellee. Note that security of
tenure is protected by constitutional mandate.
The same holds true with AWOL. Appellant failed to prove that complainantappellee went on absence without official leave. The appellant should have at least
presented the daily time record of appellee to prove that the latter was absent. Mere
allegations again would not suffice.36
During the Administrative Investigation conducted by Sanden, there was no
evidence presented to prove that Loressa indeed committed "data sabotage." The
Minutes37 of the Discussion with respect to the May 16, 1997 data only made
mention that "Bobots theory is that it was zapped, meaning permanently deleted." It
is therefore a mere theory with no apparent factual basis, testimonial or
documentary evidence, that would establish the guilt of Loressa for the charges of
"data sabotage."
On the other hand, Loressa was able to provide documentary evidence to show that
Sandens computer system was experiencing some problems even before May 16,
1997. The March 22, 1996 Report38 of the System Administrator, stated, viz:

1. DR HEAD
2. DR ITEM

*lacking data shall be reentered 3/25/95 & 3/26/95 transactions40


The following entries as reported by the System Administrator clearly show that the
problem of missing data already existed as early as 1995, when Loressa was still an
MIS Secretary and was not yet tasked to back up the Marketing Delivery Receipt
Transaction files.1awphil
We also fully agree with the CA when it ruled that:
On the contrary, we find the records bereft of any substantial evidence to show that
the petitioner was indeed directly responsible for the deletion of the subject files or
the alleged data sabotage. It is not difficult to see that the imputed guilt of the
petitioner was based on mere allegations and theories held by private respondents
as possible causes for the deletion of the subject files. In the first place, if the
subject delivery receipt files were as crucial to the operations of the company as
what the private respondents claimed them to be, then sound business judgment
would dictate that it keep a record or paper trail of all its delivery transactions which
could still be made available to the Finance Department for its billing and collection
activities. It is common knowledge that no computer system is absolutely crash
proof" or "bug-free" and that a total obliteration of a particular computer file could be
attributed to so many other causes other than the deliberate deletion of the same. In
the second place, the deletion of the subject files could have occurred at any one
point or time and not necessarily during the time at which the petitioner was the only
registered user in the system. In this case, the private respondents failed to
determine with absolute certainty and to show proof of the exact date or time when
it occurred. Third and last, while it may be true that the petitioner had access to the
subject files as well as the code to delete the same, it is hardly believable that she
would be the sole person in the company who could access the same. It is noted
that the petitioner worked under the supervision of an MIS Manager as well as other
company officers, who in all probability also had access to the same files and codes
available to the petitioner. x x x41
Having shown that Sanden failed in discharging the burden of proof that the
dismissal of Loressa is for a just cause, we have no other recourse but to declare
that she was illegally dismissed based on the ground of loss of trust and confidence.
This is in consonance with the constitutional guarantee of security of tenure.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision
of the Court of Appeals in CA-G.R. SP No. 85698 dated May 24, 2005 and its
Resolution dated August 1, 2005 are AFFIRMED.

G.R. No. 164662

February 18, 2013

MARIA
LOURDES
C.
DE
JESUS,
Petitioner,
vs.
HON. RAUL T. AQUINO, PRESIDING COMMISSIONER, NATIONAL LABOR
RELATIONS COMMISSION, SECOND DIVISION, QUEZON CITY, and
SUPERSONIC SERVICES, INC., Respondents.
x-----------------------x
G.R. No. 165787

6
SUPERSONIC
SERVICES,
vs.
MARIA LOURDES C. DE JESUS, Respondent.

INC.,

Petitioner

DECISION
BERSAMIN, J.:
The dismissal of an employee for a just or authorized cause is valid despite the
employer's non-observance of the due process of law the Labor Code has
guaranteed to the employee. The dismissal is effective against the employee
subject to the payment by the employer of an indemnity.
Under review on certiorariis the July 23, 2004 Decision promulgated in C.A.-G.R.
SP No. 81798 entitled Maria Lourdes C. De Jesus v. Hon. Raul T. Aquino, Presiding
Commissioner, NLRC, Second Division, Quezon City, and Supersonic Services,
1
Inc., whereby the Court of Appeals (CA) affirmed the validity of the dismissal from
her employment of Maria Lourdes C. De Jesus(petitionerin G.R. No. 164622), but
directedher employer, Supersonic Services, Inc. (Supersonic), to pay her full
backwages from the time her employment was terminated until the finality of the
decision because of the failure of Supersonic to comply with the two-written notice
rule, citing the rulinginSerrano v. National Labor Relations Commission.2
Antecedents
The antecedent facts, as summarized by the CA, follow:
On February 20, 2002, petitioner Ma. Lourdes De Jesus (De Jesus for brevity) filed
with the Labor Arbiter a complaint for illegal dismissal against private respondents
Supersonic Services Inc., (Supersonic for brevity), Pakistan Airlines, Gil Puyat, Jr.
and Divina Abad Santos praying for the payment of separation pay, full backwages,
moral and exemplary damages, etc.
De Jesus alleged that: she was employed by Supersonic since February 1976 until
her illegal dismissal of March 15, 2001; from 1976 to 1992, she held the position of
eservation staff, and from 1992 until her illegal dismissal on March 15, 2001, she
held the position of Sales Promotion Officer where she solicited clients for
Supersonic and sold plane tickets to various travel agencies on credit; on March 12,
2001, she had an emergency hysterectomy operation preceded by continuous
bleeding; she stayed at the Makati Medical Center for three (3) days and applied for
a sixty-(60) day leave in the meantime; on June 1, 2001, she went to Supersonic
and found the drawers of her desk opened and her personal belongings packed,
without her knowledge and consent; while there, Divina Abad Santos (Santos for
brevity), the companys general manager, asked her to sign a promissory note and
directed her secretary, Cora Malubay (Malubay for brevity) not to allow her to leave
unless she execute a promissory note; she was later forced to execute a promissory
note which she merely copied from the draft prepared by Santos and Malubay; she
was also forced to indorse to Supersonic her SSS check in the amount of
P25,000.00 which represents her benefits from the hysterectomy operation; there
was no notice and hearing nor any opportunity given her to explain her side prior to
the termination of her employment; Supersonic even filed a case for Estafa against
her for her alleged failure to remit collections despite the fact that she had
completely remitted all her collections; and the termination was done in bad faith
and in violation of due process.
Supersonic countered that: as Sales Promotion Officer, De Jesus was fully
authorized to solicit clients and receive payments for and in its behalf, and as such,
she occupied a highly confidential and financially sensitive position in the company;
De Jesus was able to solicit several ticket purchases for Pakistan International
Airlines (PIA) routed from Manila to various destinations abroad and received all
payments for the PIA tickets in its behalf; for the period starting May 30, 2000 until
September 28, 2000, De Jesus issued PIA tickets to Monaliza Placement Agency, a
client under her special solicitation and account, in the amount of U.S.$15,085.00;
on January 24, 2001, the companys general manager sent a memorandum to De
Jesus informing her of the official endorsement of collectibles from clients under her
account; in March 2001, another memorandum was issued to De Jesus reminding
her to collect payments of accounts guaranteed by her and which had been past
due since the year 2000; based on the company records, an outstanding balance of
U.S.$36,168.39 accumulated under the account of De Jesus; after verifications with
its clients, it discovered that the amount of U.S.$36, 168.39 were already paid to De
Jesus but this was not turned over and duly accounted for by her; hence, another
memorandum was issued to De Jesus directing her to explain in writing why she
should not be dismissed for cause for failure to account for the total amount of
U.S.$36, 168.39; De Jesus was informed that her failure to explain in writing shall
be construed that she misappropriated said amount for her own use and benefit to
the damage of the company; De Jesus was likewise verbally notified of the
companys intention to dismiss her for cause; after due investigation and
confrontation, De Jesus admitted that she received the U.S.$36,168.39 from their
clients and even executed a promissory note in her own handwriting acknowledging

her obligation; she was fully aware of her dismissal and even obligated herself to
offset her obligation with any amount she would receive from her retirement; when
De Jesus failed to comply with her promise to settle her obligation, a demand letter
was sent to her; because of her persistent failure to settle the unremitted collections,
it was constrained to suspend her as a precautionary measure and to protect its
interests; despite demands, De Jesus failed to fulfill her promise, hence, a criminal
case for estafa was filed against her; and in retaliation to the criminal case filed
3
against her, she filed this illegal dismissal case.
After due proceedings, on October 30, 2002, the Labor Arbiterruled against De
4
Jesus, declaring her dismissal to be for just cause and finding that she had been
accorded due process of law.
Aggrieved, De Jesusappealed to the National Labor Relations Commission (NLRC),
insisting that she had not been afforded the opportunity to explain her side.
On July 31, 2003, however, the NLRC rendered its Resolution,5 affirming the Labor
Arbiters Decision and dismissing De Jesus appeal for its lack of merit, stating:
Records show that pursuant to a Memorandum dated May 12, 2001, complainant
was required to explain in writing why she should not be dismissed from
employment for her failure to account for the cash collections in her custody
(Records, p. 37). In a letter dated June 1, 2001, complainant acknowledged her
failure to effect a turn-over of the amount of US$36,168.39 to the respondent
(Records, p. 40). More than this, she offered no explanation for her failure to
immediately account for her collections. Further, her allegation of duress may not be
accorded credence, there being no evidence as to the circumstances under which
her consent was allegedly vitiated. Having been given the opportunity to explain her
side, complainant may not successfully claim that she was denied due process.
Further, her admission and other related evidence, particularly the finding of a prima
facie case for estafa against her, and corroborative statements from respondents
client, sufficiently controvert complainants assertion that no just cause existed for
the dismissal.
WHEREFORE, premises considered, the decision under review is AFFIRMED, and
complainants appeal, DISMISSED, for lack of merit.
SO ORDERED.
The NLRC denied the Motion for Reconsideration filed by De Jesus on October 30,
2003.6
De Jesusbrought a petition for certiorari to the CA, charging the NLRC with
committing grave abuse of discretion amounting to lack or excess of jurisdiction in
finding that she had not been denied due process; and in finding that her dismissal
had been for just cause.
On July 23, 2004, the CA promulgated its assailed decision,7 relevantly stating as
follows:
The petition is partly meritorious.
In termination of employment based on just cause , it is not enough that the
employee is guilty of misfeasance towards his employer, or that his continuance in
service is patently inimical to the employers interest. The law requires the employer
to furnish the employee concerned with two written notices one, specifying the
ground or grounds for termination and giving said employee reasonable opportunity
within which to explain his side, and another, indicating that upon due consideration
of all the circumstances, rounds have been established to justify his termination. In
addition to this, a hearing or conference is also required, whereby the employee
may present evidence to rebut the accusations against him.
There appears to be no dispute upon the fact that De Jesus failed to remit and
account for some of her collections. This she admitted and explained in her letters
dated April 5, 2001 and May 15, 2001 to Santos, the companys general manager.
Without totally disregarding her allegations of duress in executing the promissory
note, the facts disclose therein also coincide with the fact that De Jesus was
somehow remiss in her duties. Considering that she occupied a confidential and
sensitive position in the company, the circumstances presented fairly justified her
termination from employment based on just cause. De Jesus failure to fully account
her collections is sufficient justification for the company to lose its trust and
confidence in her. Loss of trust and confidence as a ground for dismissing an
employee does not require proof beyond reasonable doubt. It is sufficient if there is
"some basis" for such loss of confidence, or if the employer has reasonable grounds
to believe that the employee concerned is responsible for the misconduct, as to be
unworthy of the trust and confidence demanded by his position.

7
Nonetheless, while this Court is inclined to rule that De Jesus dismissal was for just
cause, the manner by which the same was effected does not comply with the
procedure outlined under the Labor Code and as enunciated in the landmark case
of Serrano vs. NLRC.
The evidence on record is bereft of any indicia that the two written notices were
furnished to De Jesus prior to her dismissal. The various memoranda given her
were not the same notices required by law, as they were mere internal
correspondence intended to remind De Jesus of her outstanding accountabilities to
the company. Assuming for the sake of argument that the memoranda furnished to
De Jesus may have satisfied the minimum requirements of due process, still, the
same did not satisfy the notice requirement under the Labor Code because the
intention to sever the employees services must be made clear in the notice. Such
was not apparent from the memoranda. As the Supreme Court held in Serrano, the
violation of the notice requirement is not strictly a denial of due process. This is
because such notice is precisely intended to enable the employee not only to
prepare himself for the legal battle to protect his tenure of employment, but also to
find other means of employment and ease the impact of the loss of his job and,
necessarily, his income.

We partially grant the petition for review of Supersonic in G.R. No. 165787.
Anent the first issue, Supersonic substantially proved that De Jesus had failed to
remit and had misappropriated the amounts she had collected in behalf of
Supersonic. In that regard, the factual findings of the Labor Arbiter and NLRC on the
presence of the just cause for terminating her employment, being already affirmed
by the CA, are binding if not conclusive upon this Court. There being no cogent
reason to disturb such findings, the dismissal of De Jesus was valid.
Article 282 of the Labor Code enumerates the causes by which the employer may
validly terminate the employment of the employee, viz:
Article 282.Termination by employer. - An employer may terminate an employment
for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;

Conformably with the doctrine laid down in Serrano vs. NLRC, the dismissal of De
Jesus should therefore be struck as ineffectual.

(b) Gross and habitual neglect by the employee of his duties;

WHEREFORE, premises considered, the Resolutions dated July 31, 2003 and
October 30, 2003 of the NLRC, Second Division in NLRC NCR 30-02-01058-02 (CA
NO. 033714-02) are herebyMODIFIED, in that while the dismissal is hereby held to
be valid, the same must declaredineffectual. As a consequence thereof, Supersonic
is hereby required to pay petitioner Maria Lourdes De Jesus full backwages from
the time her employment was terminated up to the finality of this decision.

(c) Fraud or willful breach by the employee of the trust reposed in


him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his
duly authorized representatives; and

SO ORDERED.
(e) Other causes analogous to the foregoing.
De Jesusappealed by petition for review on certiorari to the Court (G.R. No.
164662), while Supersonic first sought the reconsideration of the Decision in the
CA.Upon the denial of its motion for reconsideration on October 21, 2004,
Supersonic likewise appealed to the Court by petition for review on certiorari(G.R.
No. 165787).Theappeals were consolidated on October 5, 2005.8
In G.R. No. 164662, De Jesus avers that:
I. The Honorable Court of Appeals erred in finding that respondent
Supersonic is liable only on the backwages and not for the damages
prayed for.
II. The Honorable Court of Appeals erred in finding that the dismissal
was valid and at the same time, declaring it ineffectual.9
In G.R. No. 165787,Supersonic ascribes the following errors to the CA, to wit:
I. Respondent Court of Appeals committed serious errors which are not
in accordance with law and applicable decisions of the Honorable
Supreme Court when it concluded that the two-notice requirement has
not been complied with when respondent De Jesus was terminated from
service.
II. Respondent Court of Appeals committed serious errors by concluding
that the Serrano Doctrine applies squarely to the facts and legal issues
of the present case which are contrary to the law and jurisprudence.

The CA observed that De Jesus had not disputed her failure to remit and account
for some of her collections, for, in fact, she herself had expressly admitted her
failure to do so through her letters dated April 5, 2001 and May 15, 2001 sent to
Supersonics general manager. Thereby, the CA concluded, she defrauded her
employer or willfully violated the trust reposed in her by Supersonic. In that regard,
the CA rightly observed that proof beyond reasonable doubt of her violation of the
trust was not required, for it was sufficient that the employer had "reasonable
grounds to believe that the employee concerned is responsible for the misconduct
as to be unworthy of the trust and confidence demanded by [her] position."11
Concerning the second issue, the NLRC and the CA differed from each other, with
the CA concluding, unlike the NLRC, that Supersonic did not comply with the twowritten notice rule. In the exercise of its equity jurisdiction, then, this Court should
now re-evaluate and re-examine the relevant findings.12
A careful consideration of the records persuades us to affirm the decision of the CA
holding that Supersonic had not complied with the twowritten notice rule.
It ought to be without dispute that the betrayal of the trust the employer reposed in
De Jesus was the essence of the offense for which she was to be validly penalized
with the supreme penalty of dismissal. 13 Nevertheless, she was still entitled to due
processin order to effectivelysafeguard her security of tenure. The law affording to
her due process as an employee imposed on Supersonic as the employer the
obligation to send to her two written notices before finally dismissing her. This
requirement of two written notices is enunciated in Article 277of the Labor Code, as
amended, which relevantly states:
Article 277.Miscellaneous provisions.xxx

III. Serrano Doctrine has already been abandoned in the case of Agabon
v. NLRC, which is prevailing and landmark doctrine applicable in the
resolution of the present case.
IV. Respondent Court of Appeals committed serious errors by
disregarding the law and jurisprudence when it awarded damages to
private respondent which is excessive and unduly penalized petitioner
SSI.10
Based on the foregoing, thedecisive issues to be passed upon are: (1) Whether or
not Supersonic was justified in terminating De Jesus employment; (2) Whether or
not Supersonic complied with the two-written notice rule; and (3) Whether or not De
Jesus was entitled to full backwages and damages.
Ruling

xxxx
(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 without
prejudice to the requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be terminateda
written notice containing a statement of the causes for termination and shall
afford the latter ample opportunity to be heard and to defend himself with the
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. Any decision taken by the employer shall
be without prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor
Relations Commission. The burden of proving that the termination was for a valid or
authorized cause shall rest on the employer. The Secretary of the Department of
Labor and Employment may suspend the effects of the termination pending

8
resolution of the dispute in the event of a prima facie finding by the appropriate
official of the Department of Labor and Employment before whom such dispute is
pending that the termination may cause a serious labor dispute or is in
14
implementation of a mass lay-off.

Rubies

2,678

Adel

1,125
$36,168.39

xxxx
and in Section 2 and Section7, Rule I, Book VI of the Implementing Rules of the
Labor Code. The firstwritten notice would inform her of the particular acts or
omissions for which her dismissal was being sought. The second written notice
would notify her of the employers decision to dismiss her. But the second written
notice must not be made until after she was given a reasonable period after
receiving the first written notice within which to answer the charge, and after she
was given the ample opportunity to be heard and to defend herself with the
17
assistance of her representative, if she so desired. The requirement was
18
mandatory.

Please give us an updated report on your collection efforts and the status of each of
the above accounts to enable us to take necessary actions. This would be
submitted on or before April 2, 2001

Did Supersonic observe due process before dismissing De Jesus?

12 May 2001

Supersonic contends that it gave the two written notices to De Jesus in the form of
the memoranda dated March 26, 2001 and May 12, 2001, to wit:

MEMORANDUM

15

16

(SGD)
19
General Manager

DIVINA

ABAD

SANTOS

Memorandum dated May 12, 2001

TO : MA. LOURDES DE JESUS SALES PROMOTION OFFICER


Memorandum dated March 26, 2001
FROM : DIVINA S. ABAD SANTOS GENERAL MANAGER
26 March 2001
SUBJECT : PAST DUE ACCOUNTS
MEMORANDUM
TO : MA LOURDES DE JESUS SALES PROMOTION OFFICER

You are asked to refer to my memorandum dated 26 March 2001. We were


informed that the following accounts have been paid to you but not
accounted/turned over to the office:

FROM : DIVINA S. ABAD SANTOS


NAME

AMOUNTS

SUBJECT : PAST DUE ACCOUNTS


Wafa

$6,585

We have repeatedly reminded you to collect payment of accounts guaranteed by


you and which have been past due since last year. You have assured us that these
will be settled by the end of February 2001.

Monaliza/Ragab

4,326.39

Salah

1,950

Our books show, that as of today, March 26, 2001, the following accounts have
outstanding balances:

Jerico

1,300

Rafat

4,730

Wafa

$6,585

Mahmood/Alhirsh

3,205

Monaliza/Ragab

4,326.39

Amina

2,000

Salah

1,950

MMML

1,653

Jerico

1,300

RDRI

361

Rafat

4,730

HMD

2,100

Mahmood/Alhirsh

3,205

Amru

1,388

Amina

2,000

Iyad Ali

97

MMML

1,653

Ali

740

RDRI

361

Maher

675

HMD

2,100

Sharikat

350

Amru

1,388

Imad

905

Iyad Ali

97

Rubies

2,678

Ali

740

Adel

1,125

Maher

675

Sharikat

350

Imad

905

$36,168.39

You are hereby directed to explain in writing within 72 hours from receipt of this
memorandum, why you should not be dismissed for cause for failure to account for
above amounts.

9
By your failure to explain in writing the above accountabilities, within the set
deadline, we shall assume that you have misappropriated the same for your own
use and benefit to the damage of the office.
(SGD.)DIVINA
20
General Manager

S.

ABAD

reversal ofthe doctrine, the new doctrine should be applied prospectively and should
24
not apply to parties who relied on the old doctrine and acted in good faith. To hold
otherwise would be to deprive the law of its quality of fairness and justice, for, then,
25
there is no recognition of what had transpired prior to such adjudication.

SANTOS

Contrary to Supersonics contention, however, the aforequotedmemoranda did not


satisfy the requirement for the two written notices under the law. The March 26,
2001 memorandum did not specify the grounds for which her dismissal would be
sought, and for that reasonwas at best a mere reminder to De Jesus to submit her
report on the status of her accounts. The May 12, 2001 memorandumdid not
provide the notice of dismissal under the law because itonly directed her to explain
why she should not be dismissed for cause. The latter memorandum was
apparently only the first written noticeunder the requirement.The insufficiency of the
two memoranda as compliance with the two-written notices requirement of due
process was, indeed, indubitable enough to impelthe CA to hold:
The evidence on record is bereft of any indicia that the two written notices were
furnished to De Jesus prior to her dismissal. The various memoranda given her
were not the same notices required by law, as they were mere internal
correspondences intended to remind De Jesus of her outstanding accountabilities to
the company. Assuming for the sake of argument that the memoranda furnished to
De Jesus may have satisfied the minimum requirements of due process, still, the
same did not satisfy the notice requirement under the Labor Code because the
intention to sever the employees services must be made clear in the notice. Such
was not apparent from the memoranda. As the Supreme Court held in Serrano, the
violation of the notice requirement is not strictly a denial of due process. This is
because such notice is precisely intended to enable the employee not only to
prepare himself for the legal battle to protect his tenure of employment, but also to
find other means of employment and ease the impact of the loss of his job and,
necessarily, his income.
Conformably with the doctrine laid down in Serrano vs. NLRC, the dismissal of De
Jesus should therefore be struck (down) as ineffectual.21
On the third issue, Supersonicposits that the CA gravely erred in declaring the
dismissal of De Jesus ineffectual pursuant to the ruling inSerrano v. National Labor
Relations Commission;andinsiststhat the CA should have instead applied the ruling
in Agabonv. National Labor Relations Commission,22 which meanwhile abandoned
Serrano.

Although Agabon,being promulgatedonly on November 17, 2004, ought to be


prospective, not retroactive, in its operation because its language did not expressly
26
state that it would also operate retroactively, the Court has already deemed it to be
the wise judicial course to let its abandonment of Serranobe retroactive as its
means of giving effect to its recognition of the unfairness of declaring illegal or
ineffectual dismissals for valid or authorized causes but not complying with statutory
due process.27 Under Agabon, the new doctrine is that the failure of the employer to
observe the requirements of due process in favor of the dismissed employee (that
is, the two-written notices rule) should not invalidate or render ineffectual the
dismissal for just or authorized cause. The Agabon Court plainly saw the likelihood
of Serrano producing unfair butfar-reaching consequences, such as, but not limited
to, encouraging frivolous suits where even the most notorious violators of company
policies would be rewarded by invoking due process; to having the constitutional
policy of providing protection to labor be used as a sword to oppress the employers;
and to compelling the employers to continue employing persons who were
admittedly guilty of misfeasance or malfeasance and whose continued employment
would be patently inimical to the interest of employers.28
Even so, the Agabon Court still deplored the employer's violation of the employee's
right to statutory due process by directing the payment of indemnity in the form of
nominal damages, the amount of which would be addressed to the sound discretion
of the labor tribunal upon taking into account the relevant circumstances. Thus, the
Agabon Court designed such form of damages as a deterrent to employers from
committing in the future violations of the statutory due process rights of employees,
and, at the same time, as at the very least a vindication or recognition of the
fundamental right granted to the employees under the Labor Code and its
implementing rules.29 Accordingly, consistent with precedent30 the amount of
P50,000.00 as nominal damages is hereby fixed for the purpose of indemnifying De
Jesus for the violation of her right to due process.1wphi1
WHEREFORE, the Court DENIES the petition for review on certiorari in G.R. No.
164662 entitled Maria Lourdes C. De Jesus v. Han. Raul T Aquino, Presiding
Commissioner, NLRC, Second Division, Quezon City, and Supersonic Services,
Inc.; PARTIALLY GRANTS the petition for review on certiorari in G.R. No. 165787
entitled Supersonic Services, Inc. v. Maria Lourdes C. De Jesus and, accordingly,
DECLARES the dismissal of Maria Lourdes C. De Jesus for just or authorized
cause as valid and effectual; and ORDERS Supersonic Services, Inc. to pay to
Maria Lourdes C. De Jesus P50,000.00 as nominal damages to indemnify her for
the violation of her right to due process. No pronouncements on costs of suit.

InSerrano, the Court pronounced as follows:


G.R. No. 187232
x xx, with respect to dismissals for cause under Art. 282, if it is shown that the
employee was dismissed for any of the just causes mentioned in said Art. 282, then,
in accordance with that article, he should not be reinstated. However, he must be
paid backwages from the time his employment was terminated until it is determined
that the termination of employment is for a just cause because the failure to hear
him before he is dismissed renders the termination of his employment without legal
effect.
WHEREFORE, the petition is GRANTED and the resolution of the National Labor
Relations Commission is MODIFIED by ordering private respondent Isetann
Department Store, Inc. to pay petitioner separation pay equivalent to one (1) month
pay for every year of service, his unpaid salary, and his proportionate 13th month
pay and, in addition, full backwages from the time his employment was terminated
on October 11, 1991 up to the time the decision herein becomes final. For this
purpose, this case is REMANDED to the Labor Arbiter for computation of the
separation pay, backwages, and other monetary awards to petitioner.
SO ORDERED.23
The CA did not err. Relying on Serrano,the CA precisely ruled that the violation by
Supersonic of the two-written notice requirement renderedineffectual the dismissal
of De Jesus for just cause under Article 282 of the Labor Code, and entitled her to
be paid full backwages from the time of her dismissal until the finality of its
decision.The Court cannot ignore thatthe applicable case law when the CA
promulgated its decision on July 23, 2004, and when it denied Supersonics motion
for reconsideration on October 21, 2004 was still Serrano. Considering that the
Court determines in this appeal by petition for review on certiorarionly whether or
not the CA committed an error of law in promulgating its assailed decision of July
23, 2004,the CA cannot be declared to have erred on the basis of Serrano being
meanwhile abandoned through Agabonif all thatthe CA did was to fully apply the law
and jurisprudence applicable at the time of its rendition of the judgment.As a rule, a
judicial interpretation becomes a part of the law as of the date that the law was
originally passed, subject only to the qualification that when a doctrine of the Court
is overruled and the Court adoptsa different view, and more so when there is a

April 17, 2013

ZENAIDA
D.
MENDOZA,
Petitioner,
vs.
HMS CREDIT CORPORATION and/or FELIPE R. DIEGO, MA. LUISA B. DIEGO,
HONDA MOTOR SPORTS CORPORATION and/or FELIPE R. DIEGO, MA.
LUISA B. DIEGO, BETA MOTOR TRADING INCORPORATED and/or FELIPE
DIEGO, MA. LUISA B. DIEGO, JIANSHE CYCLE WORLD IN CORPORATED
and/or JOSE B. DIEGO, Respondents.
DECISION
SERENO, CJ.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, assailing the Decision dated 14 November 20081 issued by the Court of
Appeals (CA) in CA G.R. SP No. 82653.
Petitioner Zenaida D. Mendoza (Mendoza) was the Chief Accountant of respondent
HMS Credit Corporation (HMS Credit) beginning 1 August 1999.2 During her
employment, she simultaneously serviced three other respondent companies, all
part of the Honda Motor Sports Group (HMS Group),3 namely, Honda Motor Sports
Corporation (Honda Motors), Beta Motor Trading Incorporated (Beta Motor) and
Jianshe Cycle World (Jianshe).4 Respondent Luisa B. Diego (Luisa) was the
Managing Director of HMS Credit, while respondent Felipe R. Diego (Felipe) was
the company officer to whom Mendoza directly reported.5
Mendoza avers that on 11 April 2002, after she submitted to Luisa the audited
financial statements of Honda Motors, Beta Motor, and Jianshe, Felipe summoned
Mendoza to advise her of her termination from service.6

10
She claims that she was even told to leave the premises without being given the
7
opportunity to collect her personal belongings.
Mendoza also contends that when she went back to the office building on 13 April
2012, the stationed security guard stopped her and notified her of the instruction of
8
Felipe and Luisa to prohibit her from entering the premises. Later that month, she
returned to the office to pick up her personal mail and to settle her food bills at the
canteen, but the guard on duty told her that respondents had issued a
9
memorandum barring her from entering the building.
On the other hand, respondents maintain that Mendoza was hired on the basis of
her qualification as a Certified Public Accountant (CPA),10 which turned out to be a
11
misrepresentation. They likewise contend that not only did she fail to disclose
knowledge of the resignations of two HMS Group officers, Art Labasan (Labasan)
and Jojit de la Cruz (de la Cruz), and their subsequent transfer to a competitor
company, but she also had a hand in pirating them. Thus, on 12 April 2002, they
supposedly confronted her about these matters. In turn, she allegedly told them that
12
if they had lost their trust in her, it would be best for them to part ways.
Accordingly, they purportedly asked her to propose an amount representing her
entitlement to separation benefits. Before she left that night, they allegedly handed
her P30,000 as payment for the external auditor she had contracted to examine the
books of the HMS Group.13
On 30 April 2002, Mendoza filed with the National Labor Relations Commission
(NLRC) a Complaint for Illegal Dismissal and Non-payment of Salaries/Wages, 13th
Month Pay and Mid-Year Bonus.14 The case was docketed as NLRC-NCR North
Sector Case No. 00-04-02576-2002.15
On 28 January 2003, the Labor Arbiter rendered a Decision ruling that Mendoza
had been illegally dismissed, and that the dismissal had been effected in violation of
due process requirements.16 Thus, the Labor Arbiter held respondents jointly and
severally liable for the payment of separation pay, backwages, moral and exemplary
damages, and attorneys fees in the total amount of P1,025,081.82.17
Respondents filed an Appeal dated 14 March 200318 and a Motion to Reduce
Appeal Bond dated 21 March 2003 with the National Labor Relations Commission
(NLRC), tendering the amount of only P650,000 on the ground of purported
business losses.19 In its Order dated 30 May 2003, the NLRC denied the request for
the reduction of the appeal bond, and directed respondents to put up the additional
amount of P122,801.66 representing the differential between the judgment award
not including the moral and exemplary damages and attorneys fees and the sum
previously tendered by them.20 Respondents complied with the Order.21
On 30 September 2008, the NLRC rendered a Decision reversing the ruling of the
Labor Arbiter.22 In declaring that Mendoza had not been summarily dismissed, the
NLRC held as follows: (a) her claim that she was terminated was incompatible with
respondents act of entrusting the amount of P30,000 to her as payment for the
external auditor; (b) the same act demonstrated that the parties parted amicably,
and that she had the intention to resign; and (c) her admission that respondents
allowed her to take a leave of absence subsequent to their confrontation also belied
her claim that she was dismissed.23 Further, it also ruled that her misrepresentation
as to her qualifications, her concealment of her meeting with a rival motorcycle
dealership, and her non-disclosure of her meeting with the officers and mechanics
of HMS Group amounted to a breach of trust, which constituted a just cause for
termination, especially of managerial employees like her.24 Nevertheless, it ordered
respondents to pay her separation pay equivalent to one month for every year of
service.25
26

The NLRC denied the Motion for Reconsideration filed by Mendoza, prompting her
to file a Petition for Certiorari with the CA, which rendered a Decision affirming that
of the lower tribunal.27 The CA ruled that that there was no dismissal, as the parties
had entered into a compromise agreement whereby respondents offered to pay
Mendoza separation benefits in exchange for her voluntary resignation.28 It further
explained:
On the merits, this case involves neither dismissal on the part of the employer nor
abandonment on the part of the employee. On the evening of April 11, 2002,
respondents and petitioner had already agreed on an amicable settlement with
petitioner voluntarily resigning her employment and respondents paying her
separation benefits. This is evident from the amiable manner with which the parties
ended their meeting, with respondents entrusting to petitioner the P30,000.00
payment for the external auditor and the petitioner considering her absence the
following day as a previously approved leave from work. It appears, however, that
respondents had a sudden change of heart while petitioner was away on leave on
April 12, 2002 because when the latter returned on April 13, 2002 she was already
prevented from entering the office premises per strict instructions from respondents.
Clearly, this was an attempt on the part of respondents to effectively renege on its
commitment to pay separation benefits to petitioner.

While, generally, an employee who voluntarily resigns from employment is not


entitled to separation pay, an arrangement whereby the employee would receive
separation pay despite having resigned voluntarily constitutes a contract which is
freely entered into and which must be performed in good faith. Thus, the NLRC
correctly sustained the prior commitment of respondents to pay separation benefits
to petitioner. For although loss of trust and confidence could have been a valid
ground available to respondents, they did not institute the appropriate dismissal
procedures against petitioner. Instead, they opted to enter into a compromise
agreement with an offer to pay separation benefits in exchange for the latters
voluntary resignation. It is an accepted practice for parties to adjust their difficulties
by mutual consent and, through the execution of a compromise agreement, prevent
or to put an end to a lawsuit. And, since there was no dismissal, valid or otherwise,
involved in this case, the non-observance of the notice requirements is of no
29
relevance.
Mendoza consequently filed the present Petition for Review, raising the following
grounds:
a. The CA erred in concluding that respondents had timely filed their
appeal with the NLRC.
b. The CA erred in ruling that there was no illegal dismissal.30
Thus, in disposing of the instant case, the following issues must be discussed: (a)
whether the appeal of respondents to the NLRC was timely filed, and (b) whether
Mendoza was illegally dismissed.
First
issue:
appeal before the NLRC

Timely

filing

of

the

The relevant portion of Article 223 of the Labor Code on appeals of decisions,
awards or orders of the Labor Arbiter as follows:
Art. 223. x x x In case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond issued
by a reputable bonding company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed from.
31

In Pasig Cylinder v. Rollo, this Court explained that the required posting of a bond
equivalent to the monetary award in the appealed judgment may be liberally
interpreted as follows:
x x x. True, Article 223 of the Labor Code requires the filing of appeal bond "in the
amount equivalent to the monetary award in the judgment appealed from."
However, both the Labor Code and this Courts jurisprudence abhor rigid application
of procedural rules at the expense of delivering just settlement of labor cases.
Petitioners reasons for their filing of the reduced appeal bond the downscaling of
their operations coupled with the amount of the monetary award appealed are
not unreasonable. Thus, the recourse petitioners adopted constitutes substantial
compliance with Article 223 consistent with our ruling in Rosewood Processing, Inc.
v. NLRC, where we allowed the appellant to file a reduced bond of P50,000
(accompanied by the corresponding motion) in its appeal of an arbiters ruling in an
illegal termination case awarding P789,154.39 to the private respondents.32
In the case at bar, respondents filed a Motion to Reduce Appeal Bond, tendering the
sum of P650,000 instead of the P1,025,081.82 award stated in the Decision of the
Labor Arbiter because it was allegedly what respondents could afford, given the
33
business losses they had suffered at that time. Upon the denial by the NLRC of
this Motion, respondents promptly complied with its directive to post the differential
in the amount of P122,801.66, which had been computed without including the
award of moral and exemplary damages and attorneys fees.34 Following the
pronouncement in Pasig Cylinder, the CA was correct in holding that the appeal was
timely filed on account of respondents substantial compliance with the requirement
under Article 223.
Second issue: Illegal dismissal of
Mendoza
The Labor Code provides for instances when employment may be legally
terminated by either the employer or the employee, to wit:
Art. 282. Termination by employer. An employer may terminate an employment for
any of the following causes:

11
a. Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
d. Commission of a crime or offense by the employee against the person
of his employer or any immediate member of his family or his duly
authorized representatives; and

personal reasons cannot be sacrificed in favor of the exigency of the service, and he
has then no other choice but to disassociate himself from employment. The intent to
relinquish must concur with the overt act of relinquishment; hence, the acts of the
employee before and after the alleged resignation must be considered in
determining whether he in fact intended to terminate his employment. In illegal
dismissal cases, fundamental is the rule that when an employer interposes the
defense of resignation, on him necessarily rests the burden to prove that the
38
employee indeed voluntarily resigned. (Emphases supplied)
In this case, the NLRC and the CA were in agreement that although Mendoza
committed acts that amounted to breach of trust, the termination of her employment
was not on that basis.39 Instead, both tribunals held that the parties parted amicably,
with Mendoza evincing her voluntary intention to resign and respondents proposed
40
settlement to pay her separation benefits. This Court does not agree with these
findings in their entirety.

e. Other causes analogous to the foregoing.


xxx

xxx

xxx

Art. 285. Termination by employee.


a. An employee may terminate without just cause the employeeemployer relationship by serving a written notice on the employer at
least one (1) month in advance. The employer upon whom no such
notice was served may hold the employee liable for damages.
b. An employee may put an end to the relationship without serving any
notice on the employer for any of the following just causes:
1. Serious insult by the employer or his representative on the
honor and person of the employee;
2. Inhuman and unbearable treatment accorded the
employee by the employer or his representative;
3. Commission of a crime or offense by the employer or his
representative against the person of the employee or any of
the immediate members of his family; and

Whether Mendoza was a Chief Accountant of HMS Credit, as stated in her


41
appointment letter, or a Finance Officer of all the corporations under the HMS
42
Group, as claimed by respondents, what is certain is that she was a managerial
employee. In securing this position, she fraudulently misrepresented her
professional qualifications by stating in her Personal Information Sheet that she was
a CPA. Based on the records, she never controverted this imputation of dishonesty
or, at the very least, provided any explanation therefor. Thus, this deceitful action
alone was sufficient basis for respondents loss of confidence in her as a managerial
employee.
In addition, this Court finds no reason to deviate from the factual findings of the
NLRC and the CA as regards the existence of other circumstances that
demonstrated Mendozas breach of trust. The NLRC held in this wise:
In sum, the commission finds that Mendoza was not illegally dismissed.1wphi1
Respondents could have validly dismissed her for just cause because she had
forfeited her employment by having incurred breach of trust that they had reposed in
her. She had concealed from them the fact that she was going to visit a rival
motorcycle dealership in Tarlac, called Honda Mar, on the afternoon of April 5,
2002, in the company of its owner; the notice she had given was that, on the
morning of that date, she would get her childs report card from her school. She also
failed to disclose to them the fact that she saw in that store Labasan and De la
Cruz, and respondents mechanics, Gatus and Mejis, who cleaned and painted the
same. And she gave the appearance of giving aid and support to respondents
competitor, to the prejudice of their business standing and goodwill. These were
acts of disloyalty for which [they] would have been justified in terminating her
service on the ground of loss of confidence.43

4. Other causes analogous to any of the foregoing.


In instances in which the termination of employment by the employer is based on
breach of trust, a distinction must be made between rank-and-file employees and
managerial employees, thus:
The degree of proof required in labor cases is not as stringent as in other types of
cases. It must be noted, however, that recent decisions of this Court have
distinguished the treatment of managerial employees from that of rank-and-file
personnel, insofar as the application of the doctrine of loss of trust and confidence is
concerned. Thus, with respect to rank-and-file personnel, loss of trust and
confidence as ground for valid dismissal requires proof of involvement in the alleged
events in question, and that mere uncorroborated assertions and accusations by the
employer will not be sufficient. But as regards a managerial employee, the mere
existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of managerial
employees, proof beyond reasonable doubt is not required, it being sufficient that
there is some basis for such loss of confidence, such as when the employer has
reasonable ground to believe that the employee concerned is responsible for the
purported misconduct, and the nature of his participation therein renders him
unworthy of the trust and confidence demanded by his position.35 (Emphasis
supplied)
Further, in the case of termination by the employer, it is not enough that there exists
a just cause therefor, as procedural due process dictates compliance with the twonotice rule in effecting a dismissal: (a) the employer must inform the employee of
the specific acts or omissions for which the dismissal is sought, and (b) the
employer must inform the employee of the decision to terminate employment after
affording the latter the opportunity to be heard.36
On the other hand, if the termination of employment is by the employee, the
resignation must show the concurrence of the intent to relinquish and the overt act
of relinquishment, as held in San Miguel Properties v. Gucaban:37
Resignation the formal pronouncement or relinquishment of a position or office
is the voluntary act of an employee who is in a situation where he believes that

However, despite the existence of a just cause for termination, Mendoza was
nevertheless dismissed from service in violation of procedural due process, as
respondents failed to observe the two-notice requirement. Instead, respondents
insisted that she voluntarily resigned, which argument the NLRC and the CA
sustained. This Court is not persuaded.
Respondents were unable to discharge their burden to prove the contemporaneous
existence of an intention on the part of Mendoza to resign and an overt act of
resignation. Aside from their self-serving allegation that she had offered to resign
after they had expressed their loss of trust in her, there is nothing in the records to
show that she voluntarily resigned from her position in their company. In this regard,
it is worthy to underscore the established rule that the filing of a complaint for illegal
dismissal is inconsistent with resignation or abandonment.44
Moreover, the conclusion of the NLRC and the CA that Mendoza voluntarily
resigned in consideration of respondents supposed payment of a settlement is
bereft of any basis. The lower tribunals merely surmised that the parties forged a
compromise agreement despite respondents own admission that they never
decided thereon.45 In fact, the records are clear that none of the parties claimed the
existence of any settlement in exchange for her resignation.
From the foregoing discussion, it is evident that although there was a just cause for
terminating the services of Mendoza, respondents were amiss in complying with the
two-notice requirement. Following the prevailing jurisprudence on the matter, if the
dismissal is based on a just cause, then the non-compliance with procedural due
process should not render the termination from employment illegal or ineffectual. 46
Instead, the employer must indemnify the employee in the form of nominal
damages.47 Therefore, the dismissal of Mendoza should be upheld, and
respondents cannot be held liable for the payment of either backwages or
separation pay. Considering all the circumstances surrounding this case, this Courts
finds the award of nominal damages in the amount of P30,00048 to be in order.
WHEREFORE, the Petition for Review is DENIED. The Decision dated 14
November 2008 of the CA in CA G.R. SP No. 82653 is AFFIRMED WITH

12
MODIFICATION: the award of separation pay is deleted and in lieu thereof, nominal
damages in the amount of P30,000 is awarded in favor of petitioner.

G.R. No. 184520

March 13, 2013

ROLANDO
DS.TORRES,
Petitioner,
vs.
RURAL BANK OF SAN JUAN, INC., ANDRES CANO CHUA, JOBEL GO CHUA,
JESUS CANO CHUA, MEINRADO DALISAY, JOSE MANALANSAN III, OFELIA
GINA BE and NATY ASTRERO, Respondents.

2. The petitioner is not in any authority to issue said clearance which is a


violation of the Company Code of Conduct and Discipline under
Category B Grave Offense No. 1 (falsifying or misrepresenting persons
or other company records, documents or papers) equivalent to
termination; and
3. The nature of his participation in the issuance of the said clearance
could be a reasonable ground for the Management to believe that he is
unworthy of the trust and confidence demanded by his position which is
also a ground for termination under Article 282 of the Labor Code.8
On May 19, 1997, RBSJIs Board of Directors adopted the above recommendation
and issued Resolution No. 97-102 terminating the petitioner from employment, the
9
import of which was communicated to him in a Memorandum dated May 30, 1997.

DECISION
REYES, J.:
1

This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to
reverse and set aside the Decision2 dated February 21, 2008 of the Court of
Appeals (CA) in CA-G.R. SP No. 94690 dismissing the complaint for illegal
dismissal filed by petitioner Rolando OS. Torres (petitioner) against respondent
Rural Bank of San Juan, Inc. (RBSJT) and its officers who are the herein individual
respondents, namely: Andres Cano Chua (Andres), Jobel Go Chua (Jobel), Jesus
Cano Chua (Jesus), Meinrado Dalisay, Jose Manalansan III (Jose), Ofelia Ginabe
(Ofelia) and Naty Astrero (collectively referred to as respondents).3
Likewise assailed is the CA Resolution4 dated June 3, 2008 which denied
reconsideration.

Feeling aggrieved, the petitioner filed the herein complaint for illegal dismissal,
illegal deduction, non-payment of service incentive, leave pay and retirement
10
benefits. The petitioner averred that the supposed loss of trust and confidence on
him was a sham as it is in fact the calculated result of the respondents dubious plot
to conveniently oust him from RBSJI.
He claimed that he was deceived to accept a Vice-President position, which turned
out to be a mere clerical and menial work, so the respondents can install Jobel, the
son of a major stockholder of RBSJI, as Personnel and Marketing Manager. The
plot to oust the petitioner allegedly began in 1996 when Jobel annexed the
Personnel and Marketing Departments to the Business Development and Corporate
Planning Department thus usurping the functions of and displacing the petitioner,
who was put on a floating status and stripped of managerial privileges and
allowances.

The antecedents
Culled from the rulings of the labor tribunals and the appellate court are the ensuing
factual milieu:5
The petitioner was initially hired by RBSJI as Personnel and Marketing Manager in
1991. After a six-month probationary period and finding his performance to be
satisfactory, RBSJI renewed his employment for the same post to a
permanent/regular status. In June 1996, the petitioner was offered the position of
Vice-President for RBSJIs newly created department, Allied Business Ventures. He
accepted the offer and concomitantly relinquished his post. The vacancy created
was filled by respondent Jobel who temporarily held the position concurrently as a
Corporate Planning and Human Resources Development Head.
On September 24, 1996, the petitioner was temporarily assigned as the manager of
RBSJIs N. Domingo branch in view of the resignation of Jacinto Figueroa (Jacinto).
On September 27, 1996, Jacinto requested the petitioner to sign a standard
employment clearance pertaining to his accountabilities with RBSJI. When the
petitioner declined his request, Jacinto threw a fit and shouted foul invectives. To
pacify him, the petitioner bargained to issue a clearance but only for Jacintos paid
cash advances and salary loan.
About seven months later or on April 17, 1997, respondent Jesus issued a
memorandum to the petitioner requiring him to explain why no administrative action
should be imposed on him for his unauthorized issuance of a clearance to Jacinto
whose accountabilities were yet to be audited. Jacinto was later found to have
unliquidated cash advances and was responsible for a questionable transaction
involving P11 million for which RBSJI is being sued by a certain Actives Builders
Manufacturing Corporation. The memorandum stressed that the clearance petitioner
issued effectively barred RBSJI from running after Jacinto.6
The petitioner submitted his explanation on the same day clarifying that the
clearance was limited only to Jacintos paid cash advances and salary loan based
on the receipts presented by Lily Aguilar (Lily), the cashier of N. Domingo branch.
He emphasized that he had no foreknowledge nor was he forewarned of Jacintos
unliquidated cash advances and questionable transactions and that the clearance
did not extend to those matters.7
After conducting an investigation, RBSJIs Human Resources Department
recommended the petitioners termination from employment for the following
reasons, to wit:
1. The issuance of clearance to Mr. Jacinto Figueroa by the petitioner
have been prejudicial to the Bank considering that damages [sic] found
caused by Mr. Figueroa during his stay with the bank;

The petitioner further alleged that he was cunningly assigned at N. Domingo branch
so he can be implicated in the anomalous transaction perpetrated by Jacinto. He
narrated that on September 27, 1996, the officers of RBSJI, namely: Jobel, Andres,
Jose and Ofelia, were actually at the N. Domingo branch but they all suspiciously
left him to face the predicament caused by Jacinto.
He recounted that the next day he was assigned back at the Tarlac extension office
and thereafter repeatedly harassed and forced to resign. He tolerated such
treatment and pleaded that he be allowed to at least reach his retirement age. On
March 7, 1996, he wrote a letter to George Cano Chua (George) expressing his
detestation of how the "new guys" are dominating the operations of the company by
destroying the image of pioneer employees, like him, who have worked hard for the
good image and market acceptability of RBSJI. The petitioner requested for his
transfer to the operations or marketing department. His request was, however, not
acted upon.
The petitioner claimed that on March 19, 1997, respondent Jesus verbally
terminated him from employment but he later on retracted the same and instead
asked the petitioner to tender a resignation letter. The petitioner refused. A month
thereafter, the petitioner received the memorandum asking him to explain why he
cleared Jacinto of financial accountabilities and thereafter another memorandum
terminating him from employment.
For their part, the respondents maintained that the petitioner was validly dismissed
for loss of trust and confidence precipitated by his unauthorized issuance of a
financial accountability clearance sans audit to a resigned employee. They averred
that a copy of the clearance mysteriously disappeared from RBSJIs records hence,
the petitioners claim that it pertained only to Jacintos paid cash advances and
salary loan cannot stand for being uncorroborated.
Attempts at an amicable settlement were made but the same proved futile hence,
the Labor Arbiter11 (LA) proceeded to rule on the complaint.
Ruling of LA
In its Decision12 dated November 27, 1998, the LA sustained the claims of the
petitioner as against the factually unsubstantiated allegation of loss of trust and
confidence propounded by the respondents. The LA observed that the petitioners
selfless dedication to his job and efforts to achieve RBSJIs stability, which the
respondents failed to dispute, negate any finding of bad faith on his part when he
issued a clearance of accountabilities in favor of Jacinto. As such, the said act
cannot serve as a valid and justifiable ground for the respondents to lose trust and
confidence in him.
The LA further held that the failure of both parties to present a copy of the subject
clearance amidst the petitioners explanation that it did not absolutely release

13
Jacinto from liability, should work against the respondents since it is the proof that
will provide basis for their supposed loss of trust and confidence.

prejudicing the interests of RBSJI. Accordingly, the dispositive portion of the


decision reads:

The LA upheld the petitioners contention that the loss of trust and confidence in him
was indeed a mere afterthought to justify the respondents premeditated plan to
ease him out of RBSJI. The LAs conclusion was premised on the convergence of
the following circumstances: (1) the petitioners stint from 1991-1996 was not
marred with any controversy or complaint regarding his performance; (2) when
Jobel joined RBSJI in the latter part of 1996, he took over the department led by the
petitioner thus placing the latter in a floating status; and (3) the petitioners
temporary transfer to the N. Domingo branch was designed to deliberately put him
in a bind and blame him on whatever course of action he may take to resolve the
same.

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE.
Let a new one [sic] entered DISMISSING the instant case for lack of merit.
However, respondent should pay the petitioner his proportionate 13th month pay for
1997 as he was dismissed on May 30, 1997.

Accordingly, the petitioner was found to have been illegally dismissed and thus
accorded the following reliefs in the decretal portion of the LA Decision, viz:

SO ORDERED.

15

16

The petitioner sought reconsideration which was admitted by the NLRC in an


Order dated September 30, 2005. From such Order, the respondents filed a motion
for reconsideration on the ground that the petitioner failed to present a copy of his
17
purported motion bearing the requisite proof of filing.
18

WHEREFORE, premises considered, judgment is hereby rendered ordering


respondent Bank and individual respondents, to reinstate [the petitioner to his
previous or equivalent position, without loss of seniority rights and other benefits
and privileges appurtaining [sic] to him, and to pay the petitioner the following:
1. The petitioners partial backwages and other emoluments in the form
of allowances, as gasoline, maintenance, representation, uniform and
membership allowances, from the time of his dismissal up to his actual
date of reinstatement, which as of this date amount to:
Backwages (Partial) P244,800.00
Gasoline Allowances .. 63,000.00
Maintenance Allowance . 45,000.00
Representation Allowance .. 54,000.00
Membership Allowance .. 12,000.00

Traversing both motions, the NLRC issued its Decision dated March 3, 2006: (1)
granting the petitioners plea for the reconsideration of its Resolution dated April 14,
2000 thus effectively reversing and nullifying the same; and (2) denying the
respondents motion for reconsideration of the Order dated September 30, 2005.
Anent the first disposition, the NLRC accorded weight to the explanations proffered
by the petitioner that the clearance issued to Jacinto was limited only to his paid
cash advances and salary loan. The NLRC further held that the offense imputed to
the petitioner is not covered by Category B, Grave Offense No. 1 of RBSJIs Code
of Conduct and Discipline as it does not appear that he falsified or misrepresented
personal or other company records, documents or papers.19
Taking an entirely opposite stance, the NLRC declared that the clearance issued by
the petitioner did not prejudice RBSJIs interest as it was limited in scope and did
not entirely clear Jacinto from all his financial accountabilities. Also, the petitioner
was only "a day old" at the N. Domingo branch and thus he cannot be reasonably
expected to be aware of the misdeeds purportedly committed by Jacinto.20
For the foregoing reasons, the NLRC reversed its earlier ruling and reinstated the
LAs Decision dated November 27, 1998, thus:
WHEREFORE, the Arbiters decision of 27 November 1998 is hereby AFFIRMED
and REINSTATED.

Uniform Allowance 8,000.00


Accordingly, the Resolution of 14 April 2000 is REVERSED and SET ASIDE.
Total P426,800.00
2. The petitioners 13th month pay from the time of his dismissal up to
actual date of reinstatement, which as of this date amounts to TwentySeven Thousand Two Hundred (P27,200.00) Pesos;
3. Moral and exemplary damages in the amount of Fifty Thousand
([P]50,000.00) Pesos each, respectively; and
4. Attorneys fees amounting to ten percent (10%) of the total award,
specifically amounting to Fifty-Five Thousand Nine Hundred TwentyThree Pesos and Eight ([P]55,923.08) Centavos.
All other claims are hereby Dismissed for lack of merit.
SO ORDERED.13

Finally, the respondents Motion for Reconsideration dated 2 November 2005 is


DENIED for lack of merit.
SO ORDERED.21
Ruling of the CA
The respondents sought recourse with the CA,22 which in its Decision23 dated
February 21, 2008 reversed and set aside the NLRC Decision dated March 3, 2006
and ruled that the petitioner was dismissed for a just cause. The appellate court
articulated that as the Acting Manager of RBSJIs N. Domingo branch, the petitioner
held a highly sensitive and critical position which entailed the conscientious
observance of company procedures. Not only was he unauthorized to issue the
clearance, he also failed to exercise prudence in clearing Jacinto of his
accountabilities given the fact that the same were yet to be audited. Such omission
financially prejudiced RBSJI and it amounted to gross negligence and incompetence
sufficient to sow in his employer the seed of mistrust and loss of confidence. 24 The
decretal portion of the CA Decision thus reads:

Ruling of the National Labor Relations Commission (NLRC)


In its Resolution14 dated April 14, 2000, the NLRC disagreed with the LAs
conclusion and opined that it was anchored on irrelevant matters such as the
petitioners performance and the preferential treatment given to relatives of RBSJIs
stockholders. The NLRC held that the legality of the petitioners dismissal must be
based on an appreciation of the facts and the proof directly related to the offense
charged, which NLRC found to have weighed heavily in favor of the respondents.
The NLRC remarked that the petitioner was indisputably not authorized to issue the
clearance. Also, the tantrums and furious attitude exhibited by Jacinto are not valid
reasons to submit to his demands. The fact that the N. Domingo branch had been
sued civilly on February 25, 1997 for a tax scam while under Jacintos leadership,
should have alerted the petitioner into issuing him a clearance. The action taken by
the petitioner lacked the prudence expected from a man of his stature thus

IN VIEW OF ALL THE FOREGOING, the petition is GRANTED. The March 03,
2006 Decision of the National Labor Relations Commission is REVERSED and SET
ASIDE. The April 14, 2000 Decision of the National Labor Relations Commission is
hereby REINSTATED. No costs.
SO ORDERED.25
The petitioner moved for reconsideration26 but the motion was denied in the CA
Resolution27 dated June 3, 2008. Hence, the present appeal.
Arguments of the parties

14
The petitioner avers that the respondents claim of loss of trust and confidence is
not worthy of credence since they failed to present a copy of the clearance
purportedly showing that he cleared Jacinto of all his financial accountabilities and
not merely as to his paid cash advances and salary loan. He points out that RBSJI
must be in custody thereof considering that it is a vital official record.
The petitioner insists that the alleged loss of trust and confidence in him is a mere
subterfuge to cover the respondents ploy to oust him out of RBSJI. He asserts that
the seven-month gap between the date when he issued the subject clearance and
the date when he was sent a memorandum for the said act shows that the
28
respondents supposed loss of trust and confidence was a mere afterthought.
On the other hand, the respondents invoke the ratiocinations of the CA that they
were justified in losing the trust and confidence reposed on the petitioner since he
failed to exercise the degree of care expected of his managerial position. They
reiterate the petitioners admission that no audit was yet conducted as to the
accountabilities of Jacinto when he issued the clearance.
The respondents further assert that as a former Personnel Manager, the petitioner
is well-aware of RBSJIs policy that before a resigned employee can be cleared of
accountabilities, he must be first examined or audited. However, the petitioner opted
to violate this policy and yield to Jacintos tantrums.29
The above arguments yield the focal issue of whether or not the petitioner was
validly dismissed from employment.

respondents, the clearance barred RBSJI from running after Jacinto. The records
are, however, barren of any evidence in support of these claims.
As correctly argued by the petitioner and as above set forth, the onus of submitting
a copy of the clearance allegedly exonerating Jacinto from all his accountabilities
fell on the respondents. It was the single and absolute evidence of the petitioners
act that purportedly kindled the respondents loss of trust. Without it, the
respondents allegation of loss of trust and confidence has no leg to stand on and
must thus be rejected. Moreover, one can reasonably expect that a copy of the
clearance, an essential personnel document, is with the respondents. Their failure
to present it and the lack of explanation for such failure or the documents
unavailability props up the presumption that its contents are unfavorable to the
respondents assertions.
At any rate, the absence of the clearance upon which the contradicting claims of the
parties could ideally be resolved, should work against the respondents. With only
sworn pleadings as proof of their opposite claims on the true contents of the
clearance, the Court is bound to apply the principle that the scales of justice should
37
be tilted in favor of labor in case of doubt in the evidence presented.
RBSJI also failed to substantiate its claim that the petitioners act estopped them
from pursuing Jacinto for his standing obligations. There is no proof that RBSJI
attempted or at least considered to demand from Jacinto the payment of his unpaid
cash advances. Neither was RBSJI able to show that it filed a civil or criminal suit
against Jacinto to make him responsible for the alleged fraud. There is thus no
factual basis for RBSJIs allegation that it incurred damages or was financially
prejudiced by the clearance issued by the petitioner.

The Courts Ruling


The petition is impressed with merit.
Settled is the rule that when supported by substantial evidence, the findings of fact
of the CA are conclusive and binding on the parties and are not reviewable by this
Court.30 As such, only errors of law are reviewed by the Court in petitions for review
of CA decisions. By way of exception, however, the Court will exercise its equity
jurisdiction and re-evaluate, review and re-examine the factual findings of the CA
when, as in this case, the same are contradicting31 with the findings of the labor
tribunals.
The respondents failed to prove that the petitioner was dismissed for a just cause.
As provided in Article 28232 of the Labor Code and as firmly entrenched in
jurisprudence,33 an employer has the right to dismiss an employee by reason of
willful breach of the trust and confidence reposed in him.
To temper the exercise of such prerogative and to reconcile the same with the
employees Constitutional guarantee of security of tenure, the law imposes the
burden of proof upon the employer to show that the dismissal of the employee is for
just cause failing which would mean that the dismissal is not justified. Proof beyond
reasonable doubt is not necessary but the factual basis for the dismissal must be
clearly and convincingly established.34
Further, the law mandates that before validity can be accorded to a dismissal
premised on loss of trust and confidence, two requisites must concur, viz: (1) the
employee concerned must be holding a position of trust; and (2) the loss of trust
must be based on willful breach of trust founded on clearly established facts.35
There is no arguing that the petitioner was part of the upper echelons of RBSJIs
management from whom greater fidelity to trust is expected. At the time when he
committed the act which allegedly led to the loss of RBSJIs trust and confidence in
him, he was the Acting Manager of N. Domingo branch. It was part of the
petitioners responsibilities to effect a smooth turn-over of pending transactions and
to sign and approve instructions within the limits assigned to the position under
existing regulations.36 Prior thereto and ever since he was employed, he has
occupied positions that entail the power or prerogative to dictate management
policies as Personnel and Marketing Manager and thereafter as Vice-President.
The presence of the first requisite is thus certain. Anent the second requisite, the
Court finds that the respondents failed to meet their burden of proving that the
petitioners dismissal was for a just cause.
The act alleged to have caused the loss of trust and confidence of the respondents
in the petitioner was his issuance, without prior authority and audit, of a clearance to
Jacinto who turned out to be still liable for unpaid cash advances and for an P11million fraudulent transaction that exposed RBSJI to suit. According to the

More importantly, the complained act of the petitioner did not evince intentional
breach of the respondents trust and confidence. Neither was the petitioner grossly
negligent or unjustified in pursuing the course of action he took.
It must be pointed out that the petitioner was caught in the quandary of signing on
the spot a standard employment clearance for the furious Jacinto sans any
information on his outstanding accountabilities, and refusing to so sign but risk
alarming or scandalizing RBSJI, its employees and clients. Contrary to the
respondents allegation, the petitioner did not concede to Jacintos demands. He
was, in fact, able to equalize two equally undesirable options by bargaining to
instead clear Jacinto only of his settled financial obligations after proper verification
with branch cashier Lily. It was only after Lily confirmed Jacintos recorded
payments that the petitioner signed the clearance. The absence of an audit was
precisely what impelled the petitioner to decline signing a standard employment
clearance to Jacinto and instead issue a different one pertaining only to his paid
accountabilities.
Under these circumstances, it cannot be concluded that the petitioner was in any
way prompted by malicious motive in issuing the clearance. He was also able to
ensure that RBSJIs interests are protected and that Jacinto is pacified. He did what
any person placed in a similar situation can prudently do. He was able to
competently evaluate and control Jacintos demands and thus prevent
compromising RBSJIs image, employees and clients to an alarming scene.
The Court has repeatedly emphasized that the act that breached the trust must be
willful such that it was done intentionally, knowingly, and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently.38 The conditions under which the clearance was issued
exclude any finding of deliberate or conscious effort on the part of the petitioner to
prejudice his employer.
Also, the petitioner did not commit an irregular or prohibited act. He did not falsify or
misrepresent any company record as it was officially confirmed by Lily that the items
covered by the clearance were truly settled by Jacinto. Hence, the respondents had
no factual basis in declaring that the petitioner violated Category B Grave Offense
No. 1 of the Company Code of Conduct and Discipline.
The respondents cannot capitalize on the petitioners lack of authority to issue a
clearance to resigned employees. First, it remains but an unsubstantiated allegation
despite the several opportunities for them in the proceedings below to show,
through bank documents, that the petitioner is not among those officers so
authorized. Second, it is the Courts considered view that by virtue of the petitioners
stature in respondent bank, it was well-within his discretion to sign or certify the
truthfulness of facts as they appear in RBSJIs records. Here, the records of RBSJI
cashier Lily clearly showed that Jacinto paid the cash advances and salary loan
covered by the clearance issued by the petitioner.
Lastly, the seven-month gap between the clearance incident and the April 17, 1997
memorandum asking the petitioner to explain his action is too lengthy to be ignored.
It likewise remains uncontroverted that during such period, respondent Jesus

15
verbally terminated the petitioner only to recall the same and instead ask the latter
to tender a resignation letter. When the petitioner refused, he was sent the
memorandum questioning his issuance of a clearance to Jacinto seven months
earlier. The confluence of these undisputed circumstances supports the inference
that the clearance incident was a mere afterthought used to gain ground for the
petitioners dismissal.
Loss of trust and confidence as a ground for dismissal has never been intended to
afford an occasion for abuse because of its subjective nature. It should not be used
as a subterfuge for causes which are illegal, improper and unjustified. It must be
genuine, not a mere afterthought intended to justify an earlier action taken in bad
39
faith.
All told, the unsubstantiated claims of the respondents fall short of the standard
proof required for valid termination of employment. They failed to clearly and
convincingly establish that the petitioners act of issuing a clearance to Jacinto
rendered him unfit to continue working for RBSJI. The petitioner was illegally
dismissed from employment and is entitled to back wages, to be computed from the
40
date he was illegally dismissed until the finality of this decision.
The disposition of the case made by the LA in its Decision dated November 27,
1998, as affirmed by the NLRC in its Decision dated March 6, 2006, is most in
accord with the above disquisitions hence, must be reinstated. However, the
monetary awards therein should be clarified.
The petitioner is entitled to separation pay in lieu of reinstatement and his back
wages shall earn legal interest.
In accordance with current jurisprudence, the award of back wages shall earn legal
interest at the rate of six percent (6%) per annum from the date of the petitioners
illegal dismissal until the finality of this decision.41 Thereafter, it shall earn 12% legal
interest until fully paid42 in accordance with the guidelines in Eastern Shipping Lines,
Inc., v. Court of Appeals.43
In addition to his back wages, the petitioner is also entitled to separation pay. It
cannot be gainsaid that animosity and antagonism have been brewing between the
parties since the petitioner was gradually eased out of key positions in RBSJI and to
reinstate him will only intensify their hostile working atmosphere.44 Thus, based on
strained relations, separation pay equivalent to one (1) month salary for every year
of service, with a fraction of a year of at least six (6) months to be considered as
one (1) whole year, should be awarded in lieu of reinstatement, to be computed
from date of his engagement by RBSJI up to the finality of this decision.45
The award of separation pay in case of strained relations is more beneficial to both
parties in that it liberates the employee from what could be a highly oppressive work
environment in as much as it releases the employer from the grossly unpalatable
obligation of maintaining in its employ a worker it could no longer trust.46
The award of moral and exemplary damages is not warranted.
In M+W Zander Philippines, Inc. v. Enriquez,47 the Court decreed that illegal
dismissal, by itself alone, does not entitle the dismissed employee to moral
damages; additional facts must be pleaded and proven to warrant the grant of moral
damages, thus:
Moral damages are recoverable only where the dismissal of the employee was
attended by bad faith or fraud, or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs or public policy. Such an award
cannot be justified solely upon the premise that the employer fired his employee
without just cause or due process. Additional facts must be pleaded and proven to
warrant the grant of moral damages under the Civil Code, i.e., that the act of
dismissal was attended by bad faith or fraud, or constituted an act oppressive to
labor, or was done in a manner contrary to morals, good customs or public policy;
and, of course, that social humiliation, wounded feelings, grave anxiety, and similar
injury resulted therefrom.48 (Citations omitted)
Bad faith does not connote bad judgment or negligence; it imports a dishonest
purpose or some moral obliquity and conscious doing of wrong; it means breach of
a known duty through some motive or interest or ill will; it partakes of the nature of
fraud.49
Here, the petitioner failed to prove that his dismissal was attended by explicit
oppressive, humiliating or demeaning acts. The following events merely sketch the
struggle for power within the upper management of RBSJI between the "old guys"
and the "new guys"; they do not convincingly prove that the respondents schemed
to gradually ease the petitioner out, viz: (1) his promotion as Vice-President; (2) his
replacement by Jobel as Personnel and Marketing Manager; (2) his designation as

Acting Manager of N. Domingo branch and the recall thereof on the very next day;
(3) the presence of Andres, Jose and Ofelia at the N. Domingo branch in the
morning of
September 27, 1996; and (4) Georges inaction on the petitioners request to be
transferred to the operations or marketing department. As disagreeable as they may
seem, these acts cannot be equated with bad faith that can justify an award of
damages.
Since no moral damages can be granted under the facts of the case, exemplary
50
damages cannot also be awarded.
The solidary liability of individual respondents as corporate officers must be
recalled.
In the same vein, the individual respondents cannot be made solidarily liable with
RBSJI for the illegal dismissal. Time and again, the Court has held that a
corporation has its own legal personality separate and distinct from those of its
stockholders, directors or officers. Hence, absent any evidence that they have
exceeded their authority, corporate officers are not personally liable for their official
acts. Corporate directors and officers may be held solidarily liable with the
corporation for the termination of employment only if done with malice or in bad
faith.51 As discussed above, the acts imputed to the respondents do not support a
finding of bad faith.
In addition, the lack of a valid cause for the dismissal of an employee does not ipso
facto mean that the corporate officers acted with malice or bad faith. There must be
an independent proof of malice or bad faith,52 which is absent in the case at bar.
The award of 13th month pay is ncorrect.
Being a managerial employee, the petitioner is not entitled to 13th month
pay.1wphi1 Pursuant to Memorandum Order No. 28, as implemented by the
Revised Guidelines on the Implementation of the 13th Month Pay Law dated
November 16, 1987, managerial employees are exempt from receiving such benefit
without prejudice to the granting of other bonuses, in lieu of the 13th month pay, to
managerial employees upon the employers discretion.53
The award of attorneys fees is proper.
It is settled that where an employee was forced to litigate and, thus, incur expenses
to protect his rights and interest, the award of attorneys fees is legally and morally
justifiable.54 Pursuant to Article 111 of the Labor Code, ten percent (10%) of the
total award is the reasonable amount of attorneys fees that can be awarded.
WHEREFORE, the petition is GRANTED. The Decision dated February 21, 2008
and Resolution dated June 3, 2008 of the Court of Appeals in CA-G.R. SP No.
94690 are REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated
November
27,
1998
is
REINSTATED
with
the
following
MODIFICATIONS/CLARIFICATIONS: Petitioner Rolando DS. Torres is entitled to
the payment of: (a) back wages reckoned from May 30, 1997 up to the finality of this
Decision, with interest at six percent (6%) per annum, and 12% legal interest
thereafter until fully paid; and (b) in lieu of reinstatement, separation pay equivalent
to one (1) month salary for every year of service, with a fraction of at least six (6)
months to be considered as one (1) whole year, to be computed from the date of his
employment up to the finality of this decision.
The amounts awarded as moral damages, exemplary damages and 13th month pay
are DELETED. Only respondent Rural Bank of San Juan, Inc. is liable for the illegal
dismissal and the consequential monetary awards arising therefrom. The other
portions of and monetary awards in the Labor Arbiter's Decision dated November
27, 1998 are AFFIRMED.

G.R. No. 191459

January 17, 2011

BERNADETH
LONDONIO
AND
JOAN
CORCORO,
vs.
BIO RESEARCH, INC. AND WILSON Y. ANG, Respondents.
DECISION
CARPIO MORALES, J.:

Petitioners,

16
Petitioners Bernadeth E. Londonio (Bernadeth) and Joan T. Corcoro (Joan) were
hired by respondent Bio Research Inc. (Bio Research) as graphic/visual artists on
February 12 and October 19, 2004, respectively.

until actually reinstated, and to pay them moral and exemplary damages in the
combined amount of P125,000.00 each, plus to pay them 10% of the total award as
attorneys fees. Complainants full backwages, as of date of this decision is shown
hereunder:

In a Memorandum dated April 30, 2005 which petitioners received on May 7, 2005,
Bio Research informed its employees including petitioners that pursuant to its plan
to reduce the workforce in order to prevent losses, it would be severing their
employment with the company. On May 9, 2005, Bio Research filed an
2
Establishment Termination Report with the Department of Labor and Employment
(DOLE) stating that it was retrenching 18 of its employees including petitioners due
to redundancy and to prevent losses.

Bernadeth and Joan were in fact retrenched on May 26 and May 18, 2005,
respectively.
Joan accepted her retrenchment pay in the sum of P9,990.14 and executed a
3
Quitclaim and Waiver reading:
FOR AND IN CONSIDERATION OF THE SUM OF NINE THOUSAND NINE
HUNDRED NINETY PESOS & 14/100 (P9,990.14), as financial assistance, receipt
whereof in settlement of my claims, I x x x do hereby release/discharge xxx with
principal office at x x x and/or its officers, from any or all claims/liabilities by way of
unpaid wages, overtime pay, separation pay, retirement benefits, 13th month, or
otherwise as may be due me incident to my past employment with the said x x x. I
hereby state further that I have no more claim or cause of action of whatsoever
nature whether past, present or contingent, including my alleged right for continued
employment with xxx, and/or any of its officers.
This QUITCLAIM AND WAIVER may be used to secure dismissal of any complaint
or action already filed or may be subsequently filed either by myself, my heirs and
successors in interests.
I have executed this QUITCLAIM AND WAIVER voluntarily and of my own freewill
and I understand the legal and factual consequences.
<="" p="">
Petitioners later filed a complaint for illegal dismissal, moral and exemplary
damages and attorneys fees against respondent Bio Research and its corespondent President/CEO Wilson Y. Ang (Ang). Petitioners claimed that their
dismissal was done in bad faith and tainted with malice, being retaliatory in nature,
following the filing by Bernadeth of a complaint against Jose Ang, Jr. (Jose), one of
Bio Researchs managers, for a sexual harassment incident that occurred in his
office on February 19, 2005.
In support of their claim that their dismissal was retaliatory in nature, petitioners
alleged that soon after the filing by Bernadeth of the sexual harassment complaint,4
several members of the management approached Joan, to whom Bernadeth had
poured her heart out after the incident, urging her to convince her friend Bernadeth
to drop the complaint, to which she (Joan) paid no heed as she expressed support
for Bernadeths cause.
Petitioners added that an administrative investigation5 of the sexual harassment
complaint was in fact conducted by Bio Research but before it could be resolved,
Jose resigned on April 15, 2005.6
To refute Bio Researchs claim that it had been incurring business losses, Joan
cited the recommendation for her regularization on April 12, 2005, 18 days before
she received a copy of the Memorandum of April 30, 2005.
Bio Research, disclaiming that the sexual harassment case had anything to do with
its decision to terminate the services of petitioners, maintained that financial
reverses prompted it to take such drastic action. It went on to stress that as Joan
had already received her separation pay and had in fact signed a waiver and
quitclaim in its favor, she is estopped from challenging the validity of her dismissal.
By Decision of March 31, 2006,7 the Labor Arbiter (LA) ruled in favor of petitioners,
the dispositive portion of which reads:

Bernadette Londonio
1wphi1
1) Basic

P95,000.00

(05/26/2005-03/31/2006 10

2) 13th month pay

P7,307.69

(1/12 P95,000.00)

3) 5 days SILP

P1,314.16

(P9,500.00/30=P316.66 x 5

4) COLA

P15,208.33

(P50.00 X 365/12 P1,520.

Total FB

P118,830.18

Joan Corcoro

1) Basic

P93,600.00

(05/18/2005 03/31/2006 10

2) 13th month pay

P7,800.00

(1/12 P93,600.00)

3) 5 days SILP

P1,290.00

(P9,000.00/30 = P300.00 X 5

4) COLA

P15,816.66

(P50.00 X 365/12+p1,520.00

Total FB

P118,506.66

In finding against Bio Research, the LA held that it failed to prove financial losses to
justify its call for the retrenchment of petitioners, and to use fair and reasonable
criteria to ascertain who to dismiss or retain; and that Bio Research failed to comply
with the requirements of Article 283 of the Labor Code that notice should be given
to the DOLE and employees concerned at least a month before the intended
retrenchment.
Finally, the LA held that since Joans receipt of her salary for the period April 11,
2005 April 18, 2005, the amount which was lumped with her retrenchment pay,
was conditioned on her signing the quitclaim, the execution thereof was done
through force, hence, not valid.
On appeal by respondents, the National Labor Relations Commission (NLRC), by
Resolution of February 18, 2008,8 affirmed the LAs decision. And it denied
respondents reconsideration of its decision by Resolution of May 30, 2008.
The Court of Appeals to which respondents assailed the NLRC resolutions by
certiorari, sustained the ratio decidendi behind the NLRC decision in favor of
petitioners, by Decision of May 27, 2009.9 Specifically with respect to Joan,
however, it pronounced that she could no longer question the legality of her
dismissal in light of her execution of the quitclaim and waiver.
Further, the appellate court departed from the NLRC ruling holding respondent Ang
solidarily liable with Bio Research for the money claims of petitioners, the latter
having failed to show that Ang was impelled by malice and bad faith in dismissing
them. Thus the appellate court held:
Settled is the rule in this jurisdiction that a corporation is invested by law with a legal
personality separate and distinct from those acting for and in behalf and, in general,
from the people comprising it. Thus, obligations incurred by corporate officers acting
as corporate agents are not theirs but the direct accountabilities of the corporation
they represent. True, solidary liabilities may at times be incurred by corporate
officers, but only when exceptional circumstances so warrant. For instance, in labor
cases, corporate directors and officers may be held solidarily liable with the
corporation for the termination of employment if done with malice or in bad faith.10
Finally, the appellate court deleted the award of moral and exemplary damages.11
The appellate court thus disposed:

WHEREFORE, premises considered, judgment is entered finding that complainants


were illegally dismissed by respondents in bad faith, ORDERING respondents BIO
RESEARCH CORP. and/or WILSON ANG (President/Manager), to reinstate
complainants to their former positions, without loss of seniority rights and benefits,
and pay them full backwages from date of illegal dismissal/illegal retrenchments of
complainants, Bernadette Londonio on 05/26/2005, Joan Corcoro is 05/18/2005,

WHEREFORE, the instant petition for certiorari is PARTIALLY GRANTED. The


assailed Resolutions of the public respondent National Labor Relations
Commission, in NLRC NCR-06-05472(05) CA No. 050702-06, are AFFIRMED with
the following MODIFICATIONS: (1) petitioner Wilson Y. Ang is ABSOLVED from
any liability adjudged against co-petitioner Bio Research, Inc.; (2) the awards of

17
moral and exemplary damages in favor of the private respondents Bernadeth E.
Londonio and Joan Corcoro are DELETED; and (3) the complaint for illegal
dismissal insofar as private respondent Joan Corcoro is concerned is DISMISSED.
SO ORDERED.12 (underscoring supplied)
Petitioners Motion for Reconsideration of the appellate courts decision having been
13
denied, they filed the present petition for review on certiorari, contending that
. . . petitioner [Joan] is not barred to question the validity of her dismissal
notwithstanding the execution of a waiver and quitclaim;
. . . they are entitled to the award of damages; and
. . . Wilson Y. Ang is solidarily liable with Bio Research.
Absent any showing that the appellate court ignored, misconstrued and misapplied
facts and circumstances of substance, its affirmance of the NLRC decision holding
that petitioners were illegally dismissed stands. It is settled that where the Labor
Arbiter, the NLRC and the Court of Appeals all concur in their factual findings and it
does not appear that they acted with grave abuse of discretion or otherwise acted
without jurisdiction or in excess of the same, this Court is bound by the said
findings.14 The Labor Arbiter and the NLRC, being the most equipped and having
acquired expertise in the specific matters entrusted to their jurisdiction, their findings
of fact are accorded not only respect but even finality if they are supported by
substantial evidence, or that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion.15
Verily, in determining that petitioners were illegally retrenched, the appellate court
pointed out that not only did Bio Research fail to "submit in evidence its audited
financial statements to show its financial condition prior to and at the time it
enforced its retrenchment program"; it also failed to show that it adopted fair and
reasonable standards in ascertaining who would be retained or dismissed among it
employees.16
It is, however, with respect to the appellate courts ruling that Joan is, on account of
her execution of the waiver and quitclaim, estopped from questioning her dismissal
that this Court takes exception.
An employees execution of a final settlement and receipt of amounts agreed upon
do not foreclose his right to pursue a claim for illegal dismissal.17 For, as reflected
above, Joan was illegally retrenched. She is thus entitled to reinstatement without
loss of seniority rights and privileges, as well as to payment of full backwages from
the time of her separation until actual reinstatement, less the amount of P9,990.14
which she received as retrenchment pay.
Respecting the appellate courts freeing Ang from liability, the same is in
order.1wphi1 Corporate officers, absent any evidence that they have exceeded
their authority, are not personally liable for their official acts. For a corporation has,
by legal fiction a personality separate and distinct from its officers, stockholders and
members. In cases of illegal dismissal, this fictional veil may be pierced and its
directors and officers held solidarily liable with it, where the dismissals of its
employees are done with malice or in bad faith, which was not proven to be the
case here.18
As for the deletion by the appellate court of the award of moral and exemplary
damages, the same is in order too, petitioners having failed to substantiate their
claim that their dismissal was made in bad faith.
WHEREFORE, the challenged Decision and Resolution of the Court of Appeals are
AFFIRMED with the MODIFICATION in that petitioner Joan Corcoro is ordered
reinstated to her former position, without loss of seniority rights and with full
backwages from the time of the termination of her employment until reinstated less
the amount of P9,990.14, or if reinstatement is not possible, the payment of
separation pay equivalent to one half month salary for every year of service.
The Decision is, in all other respects, including the reinstatement of Bernadeth
Londonio, AFFIRMED.

18
G.R. No. 183390

February 16, 2011

In its 25 October 2006 Resolution, the NLRC denied the motion.

PLASTIMER INDUSTRIAL CORPORATION and TEO KEE BIN, Petitioners,


vs.
NATALIA C. GOPO, KLEENIA R. VELEZ, FILEDELFA T. AMPARADO, MIGNON
H. JOSEPH, AMELIA L. CANDA, MARISSA D. LABUNOS, MELANIE T.
CAYABYAB, MA. CORAZON DELA CRUZ, and LUZVIMINDA CABASA,
Respondents.
DECISION
CARPIO, J.:

Respondents filed a petition for certiorari before the Court of Appeals.


The Decision of the Court of Appeals
In its 13 August 2007 Decision, the Court of Appeals reversed the NLRC decision.
The Court of Appeals ruled that there was no valid cause for retrenchment. The
Court of Appeals noted that the change of management and majority stock
ownership was brought about by execution of deeds of assignment by several
stockholders in favor of other stockholders. Further, the Court of Appeals noted that
while Plastimer claimed financial losses from 2001 to 2004, records showed an
improvement of its finances in 2003.

The Case
1

Before the Court is a petition for review assailing the 13 August 2007 Decision and
3
5 June 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 97271.
The Antecedent Facts
On 7 May 2004, the Personnel and Administration Manager of Plastimer Industrial
Corporation (Plastimer) issued a Memorandum informing all its employees of the
decision of the Board of Directors to downsize and reorganize its business
operations due to withdrawal of investments and shares of stocks which resulted in
the change of its corporate structure. On 14 May 2004, the employees of Plastimer,
including Natalia C. Gopo, Kleenia R. Velez, Filedelfa T. Amparado, Mignon H.
Joseph, Amelia L. Canda, Marissa D. Labunos, Melanie T. Cayabyab, Ma. Corazon
dela Cruz and Luzviminda Cabasa (respondents) were served written notices of
their termination effective 13 June 2004. On 24 May 2004, Plastimer and Plastimer
Industrial Corporation Christian Brotherhood (PICCB), the incumbent sole and
exclusive collective bargaining representative of all rank and file employees, entered
into a Memorandum of Agreement (MOA) relative to the terms and conditions that
would govern the retrenchment of the affected employees. On 26 May 2004,
Plastimer submitted to the Department of Labor and Employment (DOLE) an
Establishment Termination Report containing the list of the employees affected by
the reorganization and downsizing. On 28 May 2004, the affected employees,
including respondents, signed individual "Release Waiver and Quitclaim."

The Court of Appeals further ruled that Plastimer failed to use a reasonable and fair
standard or criteria in ascertaining who would be dismissed and who would be
retained among its employees. The Court of Appeals ruled that the MOA between
Plastimer and PICCB only recognized the need for partial retrenchment and the
computation of retrenchment pay without disclosing the criteria in the selection of
the employees to be retrenched.
Finally, the Court of Appeals ruled that the union President and the PICCBs
counsel were not present when the retrenched employees were made to sign the
waivers and quitclaims.
The dispositive portion of the Court of Appeals decision reads:
WHEREFORE, the instant petition is GRANTED. The assailed Resolutions of the
NLRC in NLRC-NCR CA No. 046013-05 are hereby REVERSED AND SET ASIDE
and a new judgment is entered finding petitioners to have been illegally dismissed.
Plastimer Industrial Corporation is hereby ordered to reinstate petitioners to their
former positions, without loss of seniority rights and other privileges, and to pay
them their backwages from June 14, 2004 up to the time of actual reinstatement
less the amounts they respectively received as separation pay.
SO ORDERED.7

Thereafter, respondents filed a complaint against Plastimer and its President Teo
Kee Bin (petitioners) before the Labor Arbiter for illegal dismissal with prayer for
reinstatement and full backwages, underpayment of separation pay, moral and
exemplary damages and attorneys fees. Respondents alleged that they did not
voluntarily relinquish their jobs and that they were required to sign the waivers and
quitclaims without giving them an opportunity to read them and without explaining
their contents. Respondents further alleged that Plastimer failed to establish the
causes/valid reasons for the retrenchment and to comply with the one-month notice
to the DOLE as well as the standard prescribed under the Collective Bargaining
Agreement between Plastimer and the employees. Petitioners countered that the
retrenchment was a management prerogative and that respondents got their
retrenchment or separation pay even before the effective date of their separation
from service.

Petitioners filed a motion for reconsideration.

The Decisions of the Labor Arbiter and the NLRC

The Ruling of this Court

In its 22 August 2005 Decision,4 the Labor Arbiter ruled that petitioners were able to
prove that there was a substantial withdrawal of stocks that led to the downsizing of
the workforce. The Labor Arbiter ruled that notice to the affected employees were
given on 14 May 2004, 30 days before its effective date on 14 June 2004. It was
only the notice to the DOLE that was filed short of the 30-day period. The Labor
Arbiter further ruled that respondents claimed their separation pay in accordance
with the MOA. The Labor Arbiter further ruled that respondents could not claim
ignorance of the contents of the waivers and quitclaims because they were assisted
by the union President and their counsel in signing them.

The petition has merit.

Respondents appealed the Labor Arbiters decision before the National Labor
Relations Commission (NLRC).

In a special civil action for certiorari, the Court of Appeals has ample authority to
make its own factual determination.8 Thus, the Court of Appeals can grant a petition
for certiorari when it finds that the NLRC committed grave abuse of discretion by
disregarding evidence material to the controversy.9 To make this finding, the Court
of Appeals necessarily has to look at the evidence and make its own factual
determination.10 In the same manner, this Court is not precluded from reviewing the
factual issues when there are conflicting findings by the Labor Arbiter, the NLRC
and the Court of Appeals.11 In this case, we find that the findings of the Labor
Arbiter and the NLRC are more in accord with the evidence on record.

In its 29 December 2005 Resolution,5 the NLRC affirmed the Labor Arbiters
decision. The NLRC noted that respondents did not signify any protest to the MOA
entered into between Plastimer and PICCB. The NLRC held that there was no proof
that respondents were intimidated or coerced into signing the waivers and
quitclaims because they were assisted by the union President and their counsel.
The NLRC ruled that the filing of the complaint was just an afterthought on the part
of respondents.
Respondents filed a motion for reconsideration.

In its 5 June 2008 Resolution, the Court of Appeals denied the motion.
Hence, the petition before this Court.
The Issue
The only issue in this case is whether respondents were illegally retrenched by
petitioners.

Petitioners assail the Court of Appeals in substituting its own findings of facts to the
findings of the Labor Arbiter and the NLRC. Petitioners argue that the findings of
fact of the Labor Arbiter and the NLRC are accorded with respect if not finality.
Petitioners allege that the Court of Appeals did not find any arbitrariness or grave
abuse of discretion on the part of the NLRC and thus, it had no basis in reversing
the NLRC resolutions which affirmed the Labor Arbiters decision.

One-Month Notice of Termination of Employment


Article 283 of the Labor Code provides:

19
ART. 283. Closure of establishment and reduction of personnel. - The employer
may also terminate the employment of any employee due to the installation of laborsaving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Department of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation
of labor saving devices or redundancy, the worker affected thereby shall be entitled
to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.

WHEREFORE, we SET ASIDE the 13 August 2007 Decision and 5 June 2008
Resolution of the Court of Appeals in CA-G.R. SP No. 97271. We REINSTATE the
22 August 2005 Decision of the Labor Arbiter and the 29 December 2005
Resolution of the NLRC upholding the validity of respondents retrenchment with
MODIFICATION that petitioners pay each of the respondents the amount of
P30,000 as nominal damages for non-compliance with statutory due process.

In this case, Plastimer submitted the notice of termination of employment to the


DOLE on 26 May 2004. However, notice to the affected employees were given to
them on 14 May 2004 or 30 days before the effectivity of their termination from
employment on 13 June 2004. While notice to the DOLE was short of the onemonth notice requirement, the affected employees were sufficiently informed of their
retrenchment 30 days before its effectivity. Petitioners failure to comply with the
one-month notice to the DOLE is only a procedural infirmity and does not render the
retrenchment illegal. In Agabon v. NLRC,12 we ruled that when the dismissal is for a
just cause, the absence of proper notice should not nullify the dismissal or render it
illegal or ineffectual. Instead, the employer should indemnify the employee for the
violation of his statutory rights.13 Here, the failure to fully comply with the one-month
notice of termination of employment did not render the retrenchment illegal but it
entitles respondents to nominal damages.

RESOLUTION

G.R. No. 190001

March 23, 2011

GENUINO ICE COMPANY, INC., HECTOR S. GENUINO and EDGAR A.


CARRIAGA,
Petitioners,
vs.
ERIC Y. LAVA and EDDIE BOY SODELA, Respondents.

BRION, J.:
Before us is the petition for review on certiorari filed by petitioners Genuino Ice
Company, Inc. (GICI), Hector S. Genuino and Edgar A. Carriaga (collectively,
petitioners) to challenge the Court of Appeals (CA) Decision1 and Resolution2 in CAG.R. No. SP 109429. These CA dispositions, in turn, affirmed the decision 3 and
4
resolution of the National Labor Relations Commission (NLRC ) in NLRC CA No.
049477-06.
THE FACTUAL ANTECEDENTS

Validity of Retrenchment
The Court of Appeals ruled that there was no valid cause for retrenchment.1avvphil
The Court of Appeals noted that while Plastimer claimed financial losses from 2001
to 2004, records showed an improvement of its finances in 2003.

Petitioner GICI hired the respondents Eric Y. Lava and Eddie Boy Sodela
(respondents) as ice plant machine operators. Sometime in March 2005,5 due to the
continuous decline of demand for ice products, the company was forced to shut
down a part of its plant facilities and operations, and to implement a work rotation or
reduction of workdays program affecting its seven (7) workers (including the present
respondents).

We do not agree.
The Court of Appeals acknowledged that an independent auditor confirmed
petitioners losses for the years 2001 and 2002.14 The fact that there was a net
income in 2003 does not justify the Court of Appeals ruling that there was no valid
reason for the retrenchment. Records showed that the net income of P6,185,707.05
for 2003 was not even enough for petitioners to recover from the P52,904,297.88
loss in 2002.15 Article 283 of the Labor Code recognizes retrenchment to prevent
losses as a right of the management to meet clear and continuing economic threats
or during periods of economic recession to prevent losses.16 There is no need for
the employer to wait for substantial losses to materialize before exercising ultimate
and drastic option to prevent such losses.17
Validity of Waivers and Quitclaims
The Court has ruled that a waiver or quitclaim is a valid and binding agreement
between the parties, provided that it constitutes a credible and reasonable
settlement, and that the one accomplishing it has done so voluntarily and with a full
understanding of its import.18
We agree with the Labor Arbiter and the NLRC that respondents were sufficiently
apprised of their rights under the waivers and quitclaims that they signed. Each
document contained the signatures of Edward Marcaida (Marcaida), PICCB
President, and Atty. Bayani Diwa, the counsel for the union, which proved that
respondents were duly assisted when they signed the waivers and quitclaims.
Further, Marcaidas letter to Teo Kee Bin, dated 28 May 2004, proved that proper
assistance was extended upon respondents, thus:
Nais po naming iparating sa inyo na ginagampanan ng pamamahala ng unyon ang
kanilang tungkulin lalo na sa pag "assist" ng mga miyembrong kasali sa
retrenchment program at tumanggap ng kanilang separation pay sa ilalim ng
napagkasunduang "Memorandum of Agreement."
Naipaliwanag po sa bawat miyembro ang epekto ng kanilang pagtanggap ng
kanilang mga separation pay. Wala kaming natanggap na masamang reaksiyon
nang sila ay aming makausap at kanilang naiintindihan ang sitwasyon ng
kumpanya.19
Hence, we rule that the waivers and quitclaims that respondents signed were valid.

On September 30, 2005, GICI, through its personal manager, issued a


memorandum ordering the deletion of the respondents names from the work
schedule. The memorandum had the effect of banning the respondents from
entering the company premises. The respondents reacted to this move by filing a
complaint for illegal dismissal with the Labor Arbiter (LA).
The petitioners alleged that the respondents were contractual employees who were
under the control of VICAR General Contractor & Management Services (VICAR),
and L.C. Moreno General Contractor & Management Services (MORENO). They
argue that there is no employer-employee relationship between GICI and the
respondents so that the latter have no cause of action against the petitioners. Also,
the petitioners reason that due to the partial shut-down of the company, GICI was
excused from complying with the 30-day notice or clearance requirement under the
law.
The LA rejected the petitioners argument and declared that the respondents
adduced convincing evidence that they were the employees of GICI. The LA went
on to say that VICAR was engaged in "management services" and merely supplied
or processed workers for GICI, in a manner akin to the services of a labor-only
contractor.6 In this sense, the LA believed that GICIs liability in the illegal dismissal
is solidary with that of VICAR and MORENO.
Notwithstanding the observation that an arrangement akin to labor-only contracting
existed, the LA ruled that the respondents were validly retrenched. The LA
reasoned out that due to the continuous decline in the sales output of the ice plant,
the temporary shut down had become permanent and GICI had no alternative but to
trim-down its manpower requirements.7 However, the LA also found that GICI failed
to comply with the procedural requirements for a valid retrenchment. Hence, he
awarded the respondents their separation pay equivalent to one-half (1/2) month
salary for every year of service in accordance with Art. 283 of the Labor Code.
On appeal, the NLRC reversed the LAs decision and found that the respondents
were illegally dismissed from service.
The petitioners responded to the NLRCs adverse decision through a petition for
certiorari8 under Rule 65 before the CA. The CA saw no grave abuse of discretion in
the NLRCs decision, observing that the petitioners failed to prove that GICI incurred
or was about to incur financial losses leading to the retrenchment it undertook; no
documentary evidence was in fact presented to support the retrenchment claim.9
The CA also found no malice or bad faith on the part of Hector S. Genuino,
president of Genuino Ice Company, Inc., to hold him solidarily liable with the
corporation for illegal dismissal.

20
After the denial of their motion for reconsideration, the petitioners came to this Court
through the present petition on the sole issue of whether there had been a valid
retrenchment (and hence, a valid termination of the respondents service).
THE COURTS RULING

Factual Antecedents
Petitioner Reno Foods, Inc. (Reno Foods) is a manufacturer of canned meat
products of which Vicente Khu is the president and is being sued in that capacity.
Respondent Nenita Capor (Capor) was an employee of Reno Foods until her
dismissal on October 27, 1998.

We dismiss the petition for lack of merit.


Under Article 283 of the Labor Code, there are three (3) basic requisites for a valid
retrenchment, namely: (a) proof that the retrenchment is necessary to prevent
losses or impending losses; (b) service of written notices to the employees and to
the DOLE at least one (1) month prior to the intended date of retrenchment; and (c)
payment of separation pay equivalent to one (1) month pay, or at least one-half
(1/2) month pay for every year of service, whichever is higher.
We see no reason to reverse the NLRC and CA findings that no documentary
evidence exists in the records to substantiate the claimed business losses; in fact,
the petitioners also failed to show its financial conditions prior to and at the time
GICI enforced its retrenchment program. In the absence of any attendant grave
abuse of discretion, these findings are entitled not only to respect but to our final
recognition in this appellate review.
The CA was also correct in affirming the NLRCs award of full backwages and
separation pay in lieu of reinstatement. In FF Marine Corporation v. NLRC, 10 we
ruled that an illegally dismissed employee is entitled to reinstatement without loss of
seniority rights and to other established employment privileges, and to his full
backwages. In the event, reinstatement is no longer feasible, the employer must pay
him his separation pay.
In the present case, the respondents were illegally dismissed as the employer failed
to prove that their dismissal was for a duly authorized cause. The CA was thus
correct in awarding them full backwages and separation pay in lieu of reinstatement
since the positions the respondents formerly held no longer exist.1awphi1
We must however modify the CA decision to reflect the correct monetary award due
to the respondents. The dispositive portion of the CA decision is incomplete as it
failed to specify the separation pay to be awarded to the respondents as well as the
reckoning point for the computation of the backwages. FF Marine Corporation11 tells
us that the separation pay shall be computed at one (1) month pay (for those with
one year or less of service), or one-half (1/2) month pay for every year of service
(for those with more than a year of service), whichever is higher, a fraction of at
least six (6) months being considered one whole year.12 The backwages shall be
computed from the date of termination of service (September 30, 2005) until the
finality of this Courts decision.
WHEREFORE, we hereby DISMISS the petition for lack of merit. The August 24,
2009 Decision and the October 22, 2009 Resolution of the Court of Appeals in CAG.R. No. SP 109429 affirming the ruling of the NLRC in NLRC CA No. 049477-06
are hereby AFFIRMED, with MODIFICATION that Eric Lava shall be awarded full
backwages from September 30, 2005 until the finality of this Courts Decision.
Separation pay in lieu of reinstatement shall be computed at 1 month pay for every
year of service, with years of service reckoned from the respondents first day of
employment up to the finality of this Decision. Costs against the petitioners.

G.R. No. 164016

March 15, 2010

RENO
FOODS,
INC.,
and/or
VICENTE
KHU,
Petitioners,
vs.
Nagkakaisang Lakas ng Manggagawa (NLM) - KATIPUNAN on behalf of its
member, NENITA CAPOR, Respondent.
DECISION
DEL CASTILLO, J.:
There is no legal or equitable justification for awarding financial assistance to an
employee who was dismissed for stealing company property. Social justice and
equity are not magical formulas to erase the unjust acts committed by the employee
against his employer. While compassion for the poor is desirable, it is not meant to
coddle those who are unworthy of such consideration.
This Petition for Review on Certiorari1 assails the June 3, 2004 Decision2 of the
Court of Appeals (CA) in CA-G.R. SP No. 76789 which denied the petition for
certiorari filed by the petitioners and affirmed the award of financial assistance to
respondent Nenita Capor.

It is a standard operating procedure of petitioner-company to subject all its


employees to reasonable search of their belongings upon leaving the company
premises. On October 19, 1998, the guard on duty found six Reno canned goods
wrapped in nylon leggings inside Capors fabric clutch bag. The only other contents
of the bag were money bills and a small plastic medicine container.
Petitioners accorded Capor several opportunities to explain her side, often with the
assistance of the union officers of Nagkakaisang Lakas ng Manggagawa (NLM)
Katipunan. In fact, after petitioners sent a Notice of Termination to Capor, she was
given yet another opportunity for reconsideration through a labor-management
grievance conference held on November 17, 1999. Unfortunately, petitioners did not
find reason to change its earlier decision to terminate Capors employment with the
company.
On December 8, 1998, petitioners filed a complaint-affidavit against Capor for
qualified theft in the Office of the City Prosecutor, Malabon-Navotas Substation. On
April 5, 1999, a Resolution3 was issued finding probable cause for the crime
charged. Consequently, an Information was filed against Capor docketed as
Criminal Case No. 207-58-MN.
Meanwhile, the Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan filed on
behalf of Capor a complaint4 for illegal dismissal and money claims against
petitioners with the Head Arbitration Office of the National Labor Relations
Commission (NLRC) for the National Capital Region. The complaint prayed that
Capor be paid her full backwages as well as moral and exemplary damages. The
complaint was docketed as NLRC NCR Case No. 00-01-00183-99.
Ruling of the Labor Arbiter
In the proceedings before the Labor Arbiter, Capor alleged that she was unaware
that her clutch bag contained the pilfered canned products. She claimed that
petitioners might have planted the evidence against her so it could avoid payment of
her retirement benefits, as she was set to retire in about a years time.
After the submission of the parties respective position papers, the Labor Arbiter
rendered his Decision5 dated November 16, 1999 finding Capor guilty of serious
misconduct which is a just cause for termination.
The Labor Arbiter noted that Capor was caught trying to sneak out six cans of Reno
products without authority from the company. Under Article 232 of the Labor Code,
an employer may terminate the services of an employee for just cause, such as
serious misconduct. In this case, the Labor Arbiter found that theft of company
property is tantamount to serious misconduct; as such, Capor is not entitled to
reinstatement and backwages, as well as moral and exemplary damages.
Moreover, the Labor Arbiter ruled that consistent with prevailing jurisprudence, an
employee who commits theft of company property may be validly terminated and
consequently, the said employee is not entitled to separation pay.6
Ruling of the National Labor Relations Commission
On appeal, the NLRC affirmed the factual findings and monetary awards of the
Labor Arbiter but added an award of financial assistance. The decretal portion of the
September 20, 2002 Decision7 reads:
WHEREFORE, premises considered, the decision under review is hereby
MODIFIED by granting an award of financial assistance in the form of separation
pay equivalent to one-half month pay for every year of service. In all other respects
the decision stands affirmed. All other claims of the complainant are dismissed for
lack of merit.8
Both parties moved for a reconsideration of the NLRC Decision. Petitioners asked
that the award of financial assistance be deleted, while Capor asked for a finding of
illegal dismissal and for reinstatement with full backwages.9
On February 28, 2003, the NLRC issued its Resolution10 denying both motions for
reconsideration for lack of merit.

21
Ruling of the Court of Appeals
11

Aggrieved, petitioners filed a Petition for Certiorari before the CA imputing grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the
NLRC for awarding financial assistance to Capor.
Citing Philippine Long Distance Telephone Company v. National Labor Relations
12
Commission, petitioners argued that theft of company property is a form of serious
misconduct under Article 282(a) of the Labor Code for which no financial assistance
in the form of separation pay should be allowed.
Unimpressed, the appellate court affirmed the NLRCs award of financial assistance
to Capor. It stressed that the laborers welfare should be the primordial and
paramount consideration when carrying out and interpreting provisions of the Labor
Code. It explained that the mandate laid down in Philippine Long Distance
13
Telephone Company v. National Labor Relations Commission was not absolute,
but merely directory.
Hence, this petition.

transcript of stenographic notes that it must have been submitted to the NLRC. This
is indicative of a labor dispute which, although not claimed directly by the accused,
could be one of the reasons why she insinuated that evidence was planted against
her in order to deprive her of the substantial benefits she will be receiving when she
retires from the company. Incidentally, this document was never included in the
written offer of evidence of the prosecution.
Doubt has, therefore, crept into the mind of the Court concerning the guilt of
accused Nenita Capor which in this jurisdiction is mandated to be resolved in favor
of her innocence.
Pertinent to the foregoing doubt being entertained by this Court, the Court of
Appeals citing People v. Bacus, G.R. No. 60388, November 21, 1991: "the phrase
beyond reasonable doubt means not a single iota of doubt remains present in the
mind of a reasonable and unprejudiced man that a person is guilty of a crime.
Where doubt exists, even if only a shred, the Court must and should set the
accused free." (People v. Felix, CA-G.R. No. 10871, November 24, 1992)
WHEREFORE, premises considered, judgment is hereby rendered acquitting
accused Nenita Capor of the crime charged against her in this case on the ground
of reasonable doubt, with costs de oficio.

Issue
SO ORDERED.17
The issue before us is whether the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in granting financial assistance to an
employee who was validly dismissed for theft of company property.
Our Ruling
We grant the petition.
Conviction in a criminal case is not necessary to find just cause for termination of
employment.
On the date that the appellate court issued its Decision, Capor filed a
Manifestation14 informing the CA of her acquittal in the charge of qualified theft. The
dispositive portion of said Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered acquitting
Nenita Capor of the crime charged against her in this case on the ground of
reasonable doubt with costs de oficio.

In Nicolas v. National Labor Relations Commission,18 we held that a criminal


conviction is not necessary to find just cause for employment termination. Otherwise
stated, an employees acquittal in a criminal case, especially one that is grounded
on the existence of reasonable doubt, will not preclude a determination in a labor
case that he is guilty of acts inimical to the employers interests.19
Criminal cases require proof beyond reasonable doubt while labor disputes require
only substantial evidence, which means such relevant evidence as a
reasonable mind might accept as adequate to justify a conclusion.20 The evidence in
this case was reviewed by the appellate court and two labor tribunals endowed with
expertise on the matter the Labor Arbiter and the NLRC. They all found
substantial evidence to conclude that Capor had been validly dismissed for
dishonesty or serious misconduct. It is settled that factual findings of quasi-judicial
agencies are generally accorded respect and finality so long as these are supported
by substantial evidence. In the instant case, we find no compelling reason to doubt
the common findings of the three reviewing bodies.
The award of separation pay is not warranted under the law and jurisprudence.

Capor thus claims that her acquittal in the criminal case proves that petitioners
failed to present substantial evidence to justify her termination from the company.
She therefore asks for a finding of illegal dismissal and an award of separation pay
equivalent to one month pay for every year of service.

We find no justification for the award of separation pay to Capor. This award is a
deviation from established law and jurisprudence. 21

On the other hand, petitioners argue that the dismissal of a criminal action should
not carry a corresponding dismissal of the labor action since a criminal conviction is
unnecessary in warranting a valid dismissal for employment.

The law is clear. Separation pay is only warranted when the cause for termination is
not attributable to the employees fault, such as those provided in Articles 283 and
284 of the Labor Code, as well as in cases of illegal dismissal in which
reinstatement is no longer feasible.22 It is not allowed when an employee is
dismissed for just cause,23 such as serious misconduct.

Petitioners further maintain that the ruling in Philippine Long Distance Telephone
Company v. National Labor Relations Commission15 regarding the disallowance of
separation pay for those dismissed due to serious misconduct or moral turpitude is
mandatory. Petitioners likewise argue that in Zenco Sales, Inc. v. National Labor
Relations Commission,16 the Supreme Court found grave abuse of discretion on the
part of the NLRC when it ignored the principles laid down in the Philippine Long
Distance Telephone Company v. National Labor Relations Commission. Thus,
petitioners pray for the reversal of the CA Decision and reinstatement of the Labor
Arbiters Decision dated November 16, 1999.
Capor was acquitted in Criminal Case No. 207-58-MN based on reasonable doubt.
In his Decision, the trial judge entertained doubts regarding the guilt of Capor
because of two circumstances: (1) an ensuing labor dispute (though it omitted to
state the parties involved), and (2) the upcoming retirement of Capor. The trial judge
made room for the possibility that these circumstances could have motivated
petitioners to plant evidence against Capor so as to avoid paying her retirement
benefits. The trial court did not categorically rule that the acts imputed to Capor did
not occur. It did not find petitioners version of the event as fabricated, baseless, or
unreliable. It merely acknowledged that seeds of doubt have been planted in the
jurors mind which, in a criminal case, is enough to acquit an accused based on
reasonable doubt. The pertinent portion of the trial courts Decision reads:
During the cross examination of the accused, she was confronted with a document
that must be related to a labor dispute. x x x The Court noted very clearly from the

Jurisprudence has classified theft of company property as a serious misconduct and


denied the award of separation pay to the erring employee.24 We see no reason
why the same should not be similarly applied in the case of Capor. She attempted to
steal the property of her long-time employer. For committing such misconduct, she
is definitely not entitled to an award of separation pay.
It is true that there have been instances when the Court awarded financial
assistance to employees who were terminated for just causes, on grounds of equity
and social justice. The same, however, has been curbed and rationalized in
Philippine Long Distance Telephone Company v. National Labor Relations
Commission.25 In that case, we recognized the harsh realities faced by employees
that forced them, despite their good intentions, to violate company policies, for
which the employer can rightfully terminate their employment. For these instances,
the award of financial assistance was allowed. But, in clear and unmistakable
language, we also held that the award of financial assistance shall not be given to
validly terminated employees, whose offenses are iniquitous or reflective of some
depravity in their moral character. When the employee commits an act of
dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced
compassion. It is tantamount not only to condoning a patently illegal or dishonest
act, but an endorsement thereof. It will be an insult to all the laborers who, despite
their economic difficulties, strive to maintain good values and moral conduct.

22
In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association
26
(TMPCWA) v. National Labor Relations Commission, we ruled that separation pay
shall not be granted to all employees who are dismissed on any of the four grounds
provided in Article 282 of the Labor Code. Such ruling was reiterated and further
explained in Central Philippines Bandag Retreaders, Inc. v. Diasnes:27
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur
the award of separation pay based on social justice when an employees dismissal
is based on serious misconduct or willful disobedience; gross and habitual neglect
of duty; fraud or willful breach of trust; or commission of a crime against the person
of the employer or his immediate family grounds under Art. 282 of the Labor Code
that sanction dismissals of employees. They must be most judicious and
circumspect in awarding separation pay or financial assistance as the constitutional
policy to provide full protection to labor is not meant to be an instrument to oppress
the employers. The commitment of the Court to the cause of labor should not
embarrass us from sustaining the employers when they are right, as here. In fine,
we should be more cautious in awarding financial assistance to the undeserving and
those who are unworthy of the liberality of the law.1avvphi1
We are not persuaded by Capors argument that despite the finding of theft, she
should still be granted separation pay in light of her long years of service with
petitioners. We held in Central Pangasinan Electric Cooperative, Inc. v. National
28
Labor Relations Commission that:
Although long years of service might generally be considered for the award of
separation benefits or some form of financial assistance to mitigate the effects of
termination, this case is not the appropriate instance for generosity x x x. The fact
that private respondent served petitioner for more than twenty years with no
negative record prior to his dismissal, in our view of this case, does not call for such
award of benefits, since his violation reflects a regrettable lack of loyalty and worse,
betrayal of the company. If an employees length of service is to be regarded as
justification for moderating the penalty of dismissal, such gesture will actually
become a prize for disloyalty, distorting the meaning of social justice and
undermining the efforts of labor to clean its ranks of undesirables.
Indeed, length of service and a previously clean employment record cannot simply
erase the gravity of the betrayal exhibited by a malfeasant employee.29 Length of
service is not a bargaining chip that can simply be stacked against the employer.
After all, an employer-employee relationship is symbiotic where both parties benefit
from mutual loyalty and dedicated service. If an employer had treated his employee
well, has accorded him fairness and adequate compensation as determined by law,
it is only fair to expect a long-time employee to return such fairness with at least
some respect and honesty. Thus, it may be said that betrayal by a long-time
employee is more insulting and odious for a fair employer. As stated in another
case:
x x x The fact that [the employer] did not suffer pecuniary damage will not obliterate
respondents betrayal of trust and confidence reposed by petitioner. Neither would
his length of service justify his dishonesty or mitigate his liability. His length of
service even aggravates his offense. He should have been more loyal to petitioner
company from which he derived his family bread and butter for seventeen years.30
While we sympathize with Capors plight, being of retirement age and having served
petitioners for 39 years, we cannot award any financial assistance in her favor
because it is not only against the law but also a retrogressive public policy. We have
already explained the folly of granting financial assistance in the guise of
compassion in the following pronouncements:
x x x Certainly, a dishonest employee cannot be rewarded with separation pay or
any financial benefit after his culpability is established in two decisions by
competent labor tribunals, which decisions appear to be well-supported by
evidence. To hold otherwise, even in the name of compassion, would be to send a
wrong signal not only that "crime pays" but also that one can enrich himself at the
expense of another in the name of social justice. And courts as well as quasi-judicial
entities will be overrun by petitioners mouthing dubious pleas for misplaced social
justice. Indeed, before there can be an occasion for compassion and mercy, there
must first be justice for all. Otherwise, employees will be encouraged to steal and
misappropriate in the expectation that eventually, in the name of social justice and
compassion, they will not be penalized but instead financially rewarded. Verily, a
contrary holding will merely encourage lawlessness, dishonesty, and duplicity.
These are not the values that society cherishes; these are the habits that it
abhors.31
WHEREFORE, the petition is GRANTED. The assailed June 3, 2004 Decision of
the Court of Appeals in CA-G.R. SP No. 76789 affirming the September 20, 2002
Decision of the National Labor Relations Commission is ANNULLED and SET
ASIDE. The November 16, 1999 Decision of the Labor Arbiter is REINSTATED and
AFFIRMED.

G.R. No. 169191

June 1, 2011

ROMEO
VILLARUEL,
Petitioner,
vs.
YEO HAN GUAN, doing business under the name and style YUHANS
ENTERPRISES, Respondent.
DECISION
PERALTA, J.:
1

Assailed in the present petition are the Decision and Resolution of the Court of
Appeals (CA) dated February 16, 2005 and August 2, 2005, respectively, in CAG.R. SP No. 79105. The CA Decision modified the March 31, 2003 Decision of the
National Labor Relations Commission (NLRC) in NLRC NCR CA 028050-01, while
the CA Resolution denied petitioner's Motion for Reconsideration.
The antecedents of the case are as follows:
On February 15, 1999, herein petitioner filed with the NLRC, National Capital
Region, Quezon City a Complaint3 for payment of separation pay against Yuhans
Enterprises.
Subsequently, in his Amended Complaint and Position Paper4 dated December 6,
1999, petitioner alleged that in June 1963, he was employed as a machine operator
by Ribonette Manufacturing Company, an enterprise engaged in the business of
manufacturing and selling PVC pipes and is owned and managed by herein
respondent Yeo Han Guan. Over a period of almost twenty (20) years, the company
changed its name four times. Starting in 1993 up to the time of the filing of
petitioner's complaint in 1999, the company was operating under the name of
Yuhans Enterprises. Despite the changes in the company's name, petitioner
remained in the employ of respondent. Petitioner further alleged that on October 5,
1998, he got sick and was confined in a hospital; on December 12, 1998, he
reported for work but was no longer permitted to go back because of his illness; he
asked that respondent allow him to continue working but be assigned a lighter kind
of work but his request was denied; instead, he was offered a sum of P15,000.00 as
his separation pay; however, the said amount corresponds only to the period
between 1993 and 1999; petitioner prayed that he be granted separation pay
computed from his first day of employment in June 1963, but respondent refused.
Aside from separation pay, petitioner prayed for the payment of service incentive
leave for three years as well as attorney's fees.
On the other hand, respondent averred in his Position Paper5 that petitioner was
hired as machine operator from March 1, 1993 until he stopped working sometime
in February 1999 on the ground that he was suffering from illness; after his
recovery, petitioner was directed to report for work, but he never showed up.
Respondent was later caught by surprise when petitioner filed the instant case for
recovery of separation pay. Respondent claimed that he never terminated the
services of petitioner and that during their mandatory conference, he even told the
latter that he could go back to work anytime but petitioner clearly manifested that he
was no longer interested in returning to work and instead asked for separation pay.
On November 27, 2000, the Labor Arbiter handling the case rendered judgment in
favor of petitioner. The dispositive portion of the Labor Arbiter's Decision reads,
thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
complainant and against herein respondent, as follows:
1. Ordering the respondents to pay separation benefits equivalent to
one-half () month salary per year of service, a fraction of six months
equivalent to one year to herein complainant based on the complainant's
length of service reckoned from June 1963 up to October 1998 as
provided under Article 284 of the Labor Code, the same computed by
the Computation and Examination Unit which we hereby adopt and
approved (sic) as our own in the amount of NINETY-ONE THOUSAND
FOUR HUNDRED FORTY-FIVE PESOS (P91,445.00);
2. Ordering the respondents to pay service incentive leave equivalent to
fifteen days salary in the amount of THREE THOUSAND FIFTEEN
PESOS (P3,015.00).
All other claims are dismissed for lack of merit.
SO ORDERED.6

23
Aggrieved, respondent filed an appeal with the NLRC.
On March 31, 2003, the Third Division of the NLRC rendered its Decision
dismissing respondent's appeal and affirming the Labor Arbiter's Decision.

Respondent filed a Motion for Reconsideration, but the same was denied by the
9
NLRC in a Resolution dated May 30, 2003.
Respondent then filed with the CA a petition for certiorari under Rule 65 of the Rules
of Court.
On February 16, 2005, the CA promulgated its presently assailed Decision
disposing as follows:
WHEREFORE, premises considered, the petition is partially GRANTED. The award
of separation pay is hereby DELETED, but the Decision insofar as it awards private
respondent [herein petitioner] service incentive leave pay of three thousand and
fifteen pesos (P3,015.00) stands. The NLRC is permanently ENJOINED from
partially executing its Decision dated November 27, 2000 insofar as the award of
separation pay is concerned; or if it has already effected execution, it should order
the private respondent to forthwith restitute the same.
SO ORDERED.10
Herein petitioner filed his Motion for Reconsideration11 of the CA Decision, but it
was denied by the CA via a Resolution12 dated August 2, 2005.
Hence, the instant petition based on the following assignment of errors:
I
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FAILURE
TO APPRECIATE THE ADMISSION BY [PETITIONER] OF THE FACT AND
VALIDITY OF HIS TERMINATION BY THE [RESPONDENT].
II
[THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED] IN DENYING
[PETITIONER'S] ENTITLEMENT TO SEPARATION PAY UNDER ARTICLE 284 OF
THE LABOR CODE AND UNDER THE OMNIBUS RULES IMPLEMENTING THE
LABOR CODE.
III
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING
THAT THE BURDEN OF PROOF THAT AN EMPLOYEE IS SUFFERING FROM
DISEASE THAT HAS TO BE TERMINATED REST[S] UPON THE EMPLOYER IN
ORDER FOR THE EMPLOYEE TO BE ENTITLED TO SEPARATION PAY.
IV
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING
THE DELETION OF THE AWARD OF SEPARATION PAY TO THE
[PETITIONER].13
The Court finds the petition without merit.
The assigned errors in the instant petition essentially boil down to the question of
whether petitioner is entitled to separation pay under the provisions of the Labor
Code, particularly Article 284 thereof, which reads as follows:
An employer may terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is prohibited by law or
is prejudicial to his health as well as to the health of his co-employees: Provided,
That he is paid separation pay equivalent to at least one (1) month salary or to onehalf () month salary for every year of service whichever is greater, a fraction of at
least six months being considered as one (1) whole year.
A plain reading of the abovequoted provision clearly presupposes that it is the
employer who terminates the services of the employee found to be suffering from
any disease and whose continued employment is prohibited by law or is prejudicial

to his health as well as to the health of his co-employees. It does not contemplate a
situation where it is the employee who severs his or her employment ties. This is
14
precisely the reason why Section 8, Rule 1, Book VI of the Omnibus Rules
Implementing the Labor Code, directs that an employer shall not terminate the
services of the employee unless there is a certification by a competent public health
authority that the disease is of such nature or at such a stage that it cannot be cured
within a period of six (6) months even with proper medical treatment.
Hence, the pivotal question that should be settled in the present case is whether
respondent, in fact, dismissed petitioner from his employment.
A perusal of the Decisions of the Labor Arbiter and the NLRC would show, however,
that there was no discussion with respect to the abovementioned issue. Both lower
tribunals merely concluded that petitioner is entitled to separation pay under Article
284 of the Labor Code without any explanation. The Court finds no convincing
justification, in the Decision of the Labor Arbiter on why petitioner is entitled to such
pay. In the same manner, the NLRC Decision did not give any rationalization as the
gist thereof simply consisted of a quoted portion of the appealed Decision of the
Labor Arbiter.
On the other hand, the Court agrees with the CA in its observation of the following
circumstances as proof that respondent did not terminate petitioner's employment:
first, the only cause of action in petitioner's original complaint is that he was "offered
a very low separation pay"; second, there was no allegation of illegal dismissal, both
in petitioner's original and amended complaints and position paper; and, third, there
was no prayer for reinstatement.
In consonance with the above findings, the Court finds that petitioner was the one
who initiated the severance of his employment relations with respondent. It is
evident from the various pleadings filed by petitioner that he never intended to
return to his employment with respondent on the ground that his health is failing.
Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's
offer for him to return to work. This is tantamount to resignation.
Resignation is defined as the voluntary act of an employee who finds himself in a
situation where he believes that personal reasons cannot be sacrificed in favor of
the exigency of the service and he has no other choice but to disassociate himself
from his employment.15
It may not be amiss to point out at this juncture that aside from Article 284 of the
Labor Code, the award of separation pay is also authorized in the situations dealt
with in Article 28316 of the same Code and under Section 4 (b), Rule I, Book VI of
the Implementing Rules and Regulations of the said Code17 where there is illegal
dismissal and reinstatement is no longer feasible. By way of exception, this Court
has allowed grants of separation pay to stand as "a measure of social justice" where
the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character.18 However, there is no provision in the Labor Code
which grants separation pay to voluntarily resigning employees. In fact, the rule is
that an employee who voluntarily resigns from employment is not entitled to
separation pay, except when it is stipulated in the employment contract or CBA, or it
is sanctioned by established employer practice or policy.19 In the present case,
neither the abovementioned provisions of the Labor Code and its implementing
rules and regulations nor the exceptions apply because petitioner was not
dismissed from his employment and there is no evidence to show that payment of
separation pay is stipulated in his employment contract or sanctioned by established
practice or policy of herein respondent, his employer.
Since petitioner was not terminated from his employment and, instead, is deemed to
have resigned therefrom, he is not entitled to separation pay under the provisions of
the Labor Code.
The foregoing notwithstanding, this Court, in a number of cases, has granted
financial assistance to separated employees as a measure of social and
compassionate justice and as an equitable concession. Taking into consideration
the factual circumstances obtaining in the present case, the Court finds that
petitioner is entitled to this kind of assistance.
Citing Eastern Shipping Lines, Inc. v. Sedan,20 this Court, in the more recent case of
Eastern Shipping Lines v. Antonio,21 held:
But we must stress that this Court did allow, in several instances, the grant of
financial assistance. In the words of Justice Sabino de Leon, Jr., now deceased,
financial assistance may be allowed as a measure of social justice and exceptional
circumstances, and as an equitable concession. The instant case equally calls for
balancing the interests of the employer with those of the worker, if only to
approximate what Justice Laurel calls justice in its secular sense.

24
In this instance, our attention has been called to the following circumstances: that
private respondent joined the company when he was a young man of 25 years and
stayed on until he was 48 years old; that he had given to the company the best
years of his youth, working on board ship for almost 24 years; that in those years
there was not a single report of him transgressing any of the company rules and
regulations; that he applied for optional retirement under the company's noncontributory plan when his daughter died and for his own health reasons; and that it
would appear that he had served the company well, since even the company said
that the reason it refused his application for optional retirement was that it still
needed his services; that he denies receiving the telegram asking him to report back
to work; but that considering his age and health, he preferred to stay home rather
than risk further working in a ship at sea.
In our view, with these special circumstances, we can call upon the same "social
and compassionate justice" cited in several cases allowing financial assistance.
These circumstances indubitably merit equitable concessions, via the principle of
"compassionate justice" for the working class. x x x
In the present case, respondent had been employed with the petitioner for almost
twelve (12) years.lawwphil On February 13, 1996, he suffered from a "fractured left
transverse process of fourth lumbar vertebra," while their vessel was at the port of
Yokohama, Japan. After consulting a doctor, he was required to rest for a month.
When he was repatriated to Manila and examined by a company doctor, he was
declared fit to continue his work. When he reported for work, petitioner refused to
employ him despite the assurance of its personnel manager. Respondent patiently
waited for more than one year to embark on the vessel as 2nd Engineer, but the
position was not given to him, as it was occupied by another person known to one of
the stockholders. Consequently, for having been deprived of continued employment
with petitioner's vessel, respondent opted to apply for optional retirement. In
addition, records show that respondent's seaman's book, as duly noted and signed
by the captain of the vessel was marked "Very Good," and "recommended for hire."
Moreover, respondent had no derogatory record on file over his long years of
service with the petitioner.1avvphi1
Considering all of the foregoing and in line with Eastern, the ends of social and
compassionate justice would be served best if respondent will be given some
equitable relief. Thus, the award of P100,000.00 to respondent as financial
assistance is deemed equitable under the circumstances.22
While the abovecited cases authorized the grant of financial assistance in lieu of
retirement benefits, the Court finds no cogent reason not to employ the same
guiding principle of compassionate justice applied by the Court, taking into
consideration the factual circumstances obtaining in the present case. In this regard,
the Court finds credence in petitioner's contention that he is in the employ of
respondent for more than 35 years. In the absence of a substantial refutation on the
part of respondent, the Court agrees with the findings of the Labor Arbiter and the
NLRC that respondent company is not distinct from its predecessors but, in fact,
merely continued the operation of the latter under the same owners and the same
business venture. The Court further notes that there is no evidence on record to
show that petitioner has any derogatory record during his long years of service with
respondent and that his employment was severed not by reason of any infraction on
his part but because of his failing physical condition. Add to this the willingness of
respondent to give him financial assistance. Hence, based on the foregoing, the
Court finds that the award of P50,000.00 to petitioner as financial assistance is
deemed equitable under the circumstances.
WHEREFORE, the instant petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals are AFFIRMED with MODIFICATION by
awarding petitioner with financial assistance in the amount of P50,000.00.

G.R. No. 165381

February 9, 2011

NELSON
A.
CULILI,
Petitioner,
vs.
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON
(President and Chief Executive Officer), EMILIANO JURADO (Chairman of the
Board), VIRGILIO GARCIA (Vice President) and STELLA GARCIA (Assistant
Vice President), Respondents.

Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a


telecommunications company engaged mainly in the business of establishing
commercial telecommunications systems and leasing of international datalines or
7
circuits that pass through the international gateway facility (IGF). The other
respondents are ETPIs officers: Salvador Hizon, President and Chief Executive
Officer; Emiliano Jurado, Chairman of the Board; Virgilio Garcia, Vice President;
and Stella Garcia, Assistant Vice President.
Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician in its Field
Operations Department on January 27, 1981. On December 12, 1996, Culili was
promoted to Senior Technician in the Customer Premises Equipment Management
8
Unit of the Service Quality Department and his basic salary was increased.
As a telecommunications company and an authorized IGF operator, ETPI was
required, under Republic Act. No. 7925 and Executive Order No. 109, to establish
9
landlines in Metro Manila and certain provinces. However, due to interconnection
problems with the Philippine Long Distance Telephone Company (PLDT), poor
subscription and cancellation of subscriptions, and other business difficulties, ETPI
was forced to halt its roll out of one hundred twenty-nine thousand (129,000)
landlines already allocated to a number of its employees.10
In 1998, due to business troubles and losses, ETPI was compelled to implement a
Right-Sizing Program which consisted of two phases: the first phase involved the
reduction of ETPIs workforce to only those employees that were necessary and
which ETPI could sustain; the second phase entailed a company-wide
reorganization which would result in the transfer, merger, absorption or abolition of
certain departments of ETPI.11
As part of the first phase, ETPI, on December 10, 1998, offered to its employees
who had rendered at least fifteen years of service, the Special Retirement Program,
which consisted of the option to voluntarily retire at an earlier age and a retirement
package equivalent to two and a half (2) months salary for every year of service.12
This offer was initially rejected by the Eastern Telecommunications Employees
Union (ETEU), ETPIs duly recognized bargaining agent, which threatened to stage
a strike. ETPI explained to ETEU the exact details of the Right-Sizing Program and
the Special Retirement Program and after consultations with ETEUs members,
ETEU agreed to the implementation of both programs.13 Thus, on February 8, 1999,
ETPI re-offered the Special Retirement Program and the corresponding retirement
package to the one hundred two (102) employees who qualified for the program.14
Of all the employees who qualified to avail of the program, only Culili rejected the
offer.15
After the successful implementation of the first phase of the Right-Sizing Program,
ETPI, on March 1, 1999 proceeded with the second phase which necessitated the
abolition, transfer and merger of a number of ETPIs departments.16
Among the departments abolished was the Service Quality Department. The
functions of the Customer Premises Equipment Management Unit, Culilis unit, were
absorbed by the Business and Consumer Accounts Department. The abolition of
the Service Quality Department rendered the specialized functions of a Senior
Technician unnecessary. As a result, Culilis position was abolished due to
redundancy and his functions were absorbed by Andre Andrada, another employee
already with the Business and Consumer Accounts Department.17
On March 5, 1999, Culili discovered that his name was omitted in ETPIs New Table
of Organization. Culili, along with three of his co-employees who were similarly
situated, wrote their union president to protest such omission.18
In a letter dated March 8, 1999, ETPI, through its Assistant Vice President Stella
Garcia, informed Culili of his termination from employment effective April 8, 1999.
The letter reads:
March 8, 1999
To: N. Culili
Thru: S. Dobbin/G. Ebue

DECISION
From: AVP-HRD
LEONARDO-DE CASTRO, J.:
-----------------------------------------------------------------------------------------Before Us is a petition for review on certiorari1 of the February 5, 2004 Decision2
and September 13, 2004 Resolution3 of the Court of Appeals in CA-G.R. SP No.
75001, wherein the Court of Appeals set aside the March 1, 2002 Decision 4 and
September 24, 2002 Resolution5 of the National Labor Relations Commission
(NLRC), which affirmed the Labor Arbiters Decision6 dated April 30, 2001.

As you are aware, the current economic crisis has adversely affected our operations
and undermined our earlier plans to put in place major work programs and activities.
Because of this, we have to implement a Rightsizing Program in order to cut

25
administrative/operating costs and to avoid losses. In line with this program, your
employment with the company shall terminate effective at the close of business
hours on April 08, 1999. However, to give you ample time to look for other
employment, provided you have amply turned over your pending work and settled
your accountabilities, you are no longer required to report to work starting tomorrow.
You will be considered on paid leave until April 08, 1999.
You will likewise be paid separation pay in compliance with legal requirements (see
attached), as well as other benefits accruing to you under the law, and the CBA. We
take this opportunity to thank you for your services and wish you well in your future
endeavors.

practice/discrimination and illegal dismissal and ordered to pay complainant


backwages and such other benefits due him if he were not illegally dismissed,
including moral and exemplary damages and 10% attorneys fees. Complainant
likewise is to be reinstated to his former position or to a substantially equivalent
position in accordance with the pertinent provisions of the Labor Code as
interpreted in the case of Pioneer texturing [Pioneer Texturizing Corp. v. National
Labor Relations Commission], G.R. No. 11865[1], 16 October 1997. Hence,
Complainant must be paid the total amount of TWO MILLION SEVEN HUNDRED
FORTY[-]FOUR THOUSAND THREE [HUNDRED] SEVENTY[-] NINE and 41/100
(P2,744,379.41), computed as follows:

I. Backwages (from 16 March 1999 to 16 March 2001)


(Signed)
19
Stella J. Garcia
This letter was similar to the memo shown to Culili by the union president weeks
before Culili was dismissed. The memo was dated December 7, 1998, and was
advising him of his dismissal effective January 4, 1999 due to the Right-Sizing
20
Program ETPI was going to implement to cut costs and avoid losses.
Culili alleged that neither he nor the Department of Labor and Employment (DOLE)
were formally notified of his termination. Culili claimed that he only found out about it
sometime in March 1999 when Vice President Virgilio Garcia handed him a copy of
the March 8, 1999 letter, after he was barred from entering ETPIs premises by its
armed security personnel when he tried to report for work.21 Culili believed that ETPI
had already decided to dismiss him even prior to the March 8, 1999 letter as
evidenced by the December 7, 1998 version of that letter. Moreover, Culili asserted
that ETPI had contracted out the services he used to perform to a labor-only
contractor which not only proved that his functions had not become unnecessary,
but which also violated their Collective Bargaining Agreement (CBA) and the Labor
Code. Aside from these, Culili also alleged that he was discriminated against when
ETPI offered some of his co-employees an additional benefit in the form of
motorcycles to induce them to avail of the Special Retirement Program, while he
was not.22
ETPI denied singling Culili out for termination. ETPI claimed that while it is true that
they offered the Special Retirement Package to reduce their workforce to a
sustainable level, this was only the first phase of the Right-Sizing Program to which
ETEU agreed. The second phase intended to simplify and streamline the functions
of the departments and employees of ETPI. The abolition of Culilis department - the
Service Quality Department - and the absorption of its functions by the Business
and Consumer Accounts Department were in line with the programs goals as the
Business and Consumer Accounts Department was more economical and versatile
and it was flexible enough to handle the limited functions of the Service Quality
Department. ETPI averred that since Culili did not avail of the Special Retirement
Program and his position was subsequently declared redundant, it had no choice
but to terminate Culili.23 Culili, however, continued to report for work. ETPI said that
because there was no more work for Culili, it was constrained to serve a final notice
of termination24 to Culili, which Culili ignored. ETPI alleged that Culili informed his
superiors that he would agree to his termination if ETPI would give him certain
special work tools in addition to the benefits he was already offered. ETPI claimed
that Culilis counter-offer was unacceptable as the work tools Culili wanted were
worth almost a million pesos. Thus, on March 26, 1999, ETPI tendered to Culili his
final pay check of Eight Hundred Fifty-Nine Thousand Thirty-Three and 99/100
Pesos (P859,033.99) consisting of his basic salary, leaves, 13th month pay and
separation pay.25 ETPI claimed that Culili refused to accept his termination and
continued to report for work.26 ETPI denied hiring outside contractors to perform
Culilis work and denied offering added incentives to its employees to induce them
to retire early. ETPI also explained that the December 7, 1998 letter was never
given to Culili in an official capacity. ETPI claimed that it really needed to reduce its
workforce at that time and that it had to prepare several letters in advance in the
event that none of the employees avail of the Special Retirement Program.
However, ETPI decided to wait for a favorable response from its employees
regarding the Special Retirement Program instead of terminating them.27

a. Basic Salary (P29,030 x 24 mos.)

P696,720.96

b. 13th Month Pay (P692,720.96/12)

58,060.88

c. Leave Benefits
1. Vacation Leave
P1,116.54 x 60 days

d.

(30

days/annum)

66,992.40

2. Sick Leave (30 days/annum) P1,116.54 x


60 days

66,992.40

3. Birthday Leave (1 day/annum) P1,116.54 x


2 days

2,233.08

Rice and Meal Subsidy 16


(P1,750 x 4.5 mos. = P7,875.00)

March

01
August
1991

(P1,850 x 12 mos = P22,200.00)

31

01 August 2000 16 March


(P1,950 x 7.5 mos. = P14,625.00)

2001

31

July

July

1999

2000

44,700.00

e. Uniform Allowance
P7,000/annum x 2 years

14,000.00
P949,699.72

II. Damages
a. Moral P500,000.00
b. Exemplary P250,000.00
III. Attorneys Fees (10% of award)

94,969.97

GRAND TOTAL:

P2,744,379.4128

On February 8, 2000, Culili filed a complaint against ETPI and its officers for illegal
dismissal, unfair labor practice, and money claims before the Labor Arbiter.

The Labor Arbiter believed Culilis claim that ETPI intended to dismiss him even
before his position was declared redundant. He found the December 7, 1998 letter
to be a telling sign of this intention. The Labor Arbiter held that a reading of the
termination letter shows that the ground ETPI was actually invoking was
retrenchment and not redundancy, but ETPI stuck to redundancy because it was
easier to prove than retrenchment. He also did not believe that Culilis functions
were as limited as ETPI made it appear to be, and held that ETPI failed to present
any reasonable criteria to justify the declaration of Culilis position as redundant. On
the issue of unfair labor practice, the Labor Arbiter agreed that the contracting out of
Culilis functions to non-union members violated Culilis rights as a union member.
Moreover, the Labor Arbiter said that ETPI was not able to dispute Culilis claims of
discrimination and subcontracting, hence, ETPI was guilty of unfair labor practice.

On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI guilty of illegal
dismissal and unfair labor practice, to wit:

On appeal, the NLRC affirmed the Labor Arbiters decision but modified the amount
of moral and exemplary damages awarded, viz:

WHEREFORE, decision is hereby rendered declaring the dismissal of complainant


Nelson A. Culili illegal for having been made through an arbitrary and malicious
declaration of redundancy of his position and for having been done without due
process for failure of the respondent to give complainant and the DOLE written
notice of such termination prior to the effectivity thereof.

WHEREFORE, the Decision appealed from is AFFIRMED granting complainant the


money claims prayed for including full backwages, allowances and other benefits or
their monetary equivalent computed from the time of his illegal dismissal on 16
March 1999 up to his actual reinstatement except the award of moral and exemplary
damages which is modified to P200,000.00 for moral and P100,000.00 for
exemplary damages. For this purpose, this case is REMANDED to the Labor Arbiter
for computation of backwages and other monetary awards to complainant.29

In view of the foregoing, respondents Eastern Telecommunications Philippines and


the individual respondents are hereby found guilty of unfair labor

26
ETPI filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure
before the Court of Appeals on the ground of grave abuse of discretion. ETPI
prayed that a Temporary Restraining Order be issued against the NLRC from
implementing its decision and that the NLRC decision and resolution be set aside.
The Court of Appeals, on February 5, 2004, partially granted ETPIs petition. The
dispositive portion of the decision reads as follows:

CONTRARY TO APPLICABLE LAW AND JURISPRUDENCE, THE COURT OF


APPEALS, IN A CERTIORARI PROCEEDING, REVIEWED THE FACTUAL
FINDINGS OF THE NLRC WHICH AFFIRMED THAT OF THE LABOR ARBITER
AND, THEREAFTER, ISSUED A WRIT OF CERTIORARI REVERSING THE
DECISIONS OF THE NLRC AND THE LABOR ARBITER EVEN IN THE ABSENCE
31
OF GRAVE ABUSE OF DISCRETION.

Procedural Issue:
WHEREFORE, all the foregoing considered, the petition is PARTIALLY GRANTED.
The assailed Decision of public respondent National Labor Relations Commission is
MODIFIED in that petitioner Eastern Telecommunications Philippines Inc. (ETPI) is
hereby ORDERED to pay respondent Nelson Culili full backwages from the time his
salaries were not paid until the finality of this Decision plus separation pay in an
amount equivalent to one (1) month salary for every year of service. The awards for
moral and exemplary damages are DELETED. The Writ of Execution issued by the
30
Labor Arbiter dated September 8, 2003 is DISSOLVED.
The Court of Appeals found that Culilis position was validly abolished due to
redundancy. The Court of Appeals said that ETPI had been very candid with its
employees in implementing its Right-Sizing Program, and that it was highly unlikely
that ETPI would effect a company-wide reorganization simply for the purpose of
getting rid of Culili. The Court of Appeals also held that ETPI cannot be held guilty of
unfair labor practice as mere contracting out of services being performed by union
members does not per se amount to unfair labor practice unless it interferes with the
employees right to self-organization. The Court of Appeals further held that ETPIs
officers cannot be held liable absent a showing of bad faith or malice. However, the
Court of Appeals found that ETPI failed to observe the standards of due process as
required by our laws when it failed to properly notify both Culili and the DOLE of
Culilis termination. The Court of Appeals maintained its position in its September
13, 2004 Resolution when it denied Culilis Motion for Reconsideration and Urgent
Motion to Reinstate the Writ of Execution issued by the Labor Arbiter, and ETPIs
Motion for Partial Reconsideration.
Culili is now before this Court praying for the reversal of the Court of Appeals
decision and the reinstatement of the NLRCs decision based on the following
grounds:
I
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH THE APPLICABLE LAW AND JURISPRUDENCE WHEN IT
REVERSED THE DECISIONS OF THE NLRC AND THE LABOR ARBITER
HOLDING THE DISMISSAL OF PETITIONER ILLEGAL IN THAT:
A. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS,
RESPONDENTS CHARACTERIZATION OF PETITIONERS POSITION AS
REDUNDANT WAS TAINTED BY BAD FAITH.
B. THERE WAS NO ADEQUATE JUSTIFICATION TO DECLARE PETITIONERS
POSITION AS REDUNDANT.
II
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH LAW AND JURISPRUDENCE IN FINDING THAT NO UNFAIR
LABOR PRACTICE ACTS WERE COMMITTED AGAINST THE PETITIONER.
III
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH LAW AND JURISPRUDENCE IN DELETING THE AWARD OF
MORAL AND EXEMPLARY DAMAGES AND ATTORNEYS FEES IN FAVOR OF
PETITIONER AND IN DISSOLVING THE WRIT OF EXECUTION DATED 8
SEPTEMBER 2003 ISSUED BY THE LABOR ARBITER.
IV
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH LAW AND JURISPRUDENCE IN ABSOLVING THE INDIVIDUAL
RESPONDENTS OF PERSONAL LIABILITY.
V

Court
of
Appeals'
Power to Review Facts in a Petition
For Certiorari under Rule 65

Culili argued that the Court of Appeals acted in contravention of applicable law and
jurisprudence when it reexamined the facts in this case and reversed the factual
findings of the Labor Arbiter and the NLRC in a special civil action for certiorari.
This Court has already confirmed the power of the Court of Appeals, even on a
32
Petition for Certiorari under Rule 65, to review the evidence on record, when
necessary, to resolve factual issues:
The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition
for Certiorari has been settled as early as in our decision in St. Martin Funeral Home
v. National Labor Relations Commission. This Court held that the proper vehicle for
such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of
Court, and that this action should be filed in the Court of Appeals in strict
observance of the doctrine of the hierarchy of courts. Moreover, it is already settled
that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No.
7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for
the purpose of Section Nine of Batas Pambansa Blg. 129 as amended, known as
the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to the
exercise of its original jurisdiction over Petitions for Certiorari is specifically given
the power to pass upon the evidence, if and when necessary, to resolve factual
issues.33
While it is true that factual findings made by quasi-judicial and administrative
tribunals, if supported by substantial evidence, are accorded great respect and even
finality by the courts, this general rule admits of exceptions. When there is a
showing that a palpable and demonstrable mistake that needs rectification has been
committed34 or when the factual findings were arrived at arbitrarily or in disregard of
the evidence on record, these findings may be examined by the courts.35
In the case at bench, the Court of Appeals found itself unable to completely sustain
the findings of the NLRC thus, it was compelled to review the facts and evidence
and not limit itself to the issue of grave abuse of discretion.
With the conflicting findings of facts by the tribunals below now before us, it
behooves this Court to make an independent evaluation of the facts in this case.
Main Issue: Legality of Dismissal
Culili asserted that he was illegally dismissed because there was no valid cause to
terminate his employment. He claimed that ETPI failed to prove that his position had
become redundant and that ETPI was indeed incurring losses. Culili further alleged
that his functions as a Senior Technician could not be considered a superfluity
because his tasks were crucial and critical to ETPIs business.
Under our laws, an employee may be terminated for reasons involving measures
taken by the employer due to business necessities. Article 283 of the Labor Code
provides:
Art. 283. Closure of establishment and reduction of personnel. - The employer may
also terminate the employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Department of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation
of labor-saving devices or redundancy, the worker affected thereby shall be entitled
to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.

27
There is redundancy when the service capability of the workforce is greater than
what is reasonably required to meet the demands of the business enterprise. A
position becomes redundant when it is rendered superfluous by any number of
factors such as over-hiring of workers, decrease in volume of business, or dropping
a particular product line or service activity previously manufactured or undertaken
36
by the enterprise.
This Court has been consistent in holding that the determination of whether or not
an employees services are still needed or sustainable properly belongs to the
employer. Provided there is no violation of law or a showing that the employer was
prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise
of business judgment is not subject to the discretionary review of the Labor Arbiter
37
and the NLRC.
However, an employer cannot simply declare that it has become overmanned and
dismiss its employees without producing adequate proof to sustain its claim of
redundancy.38 Among the requisites of a valid redundancy program are: (1) the
good faith of the employer in abolishing the redundant position; and (2) fair and
39
reasonable criteria in ascertaining what positions are to be declared redundant,
such as but not limited to: preferred status, efficiency, and seniority.40
This Court also held that the following evidence may be proffered to substantiate
redundancy: the new staffing pattern, feasibility studies/ proposal on the viability of
the newly created positions, job description and the approval by the management of
the restructuring.41
In the case at bar, ETPI was upfront with its employees about its plan to implement
a Right-Sizing Program. Even in the face of initial opposition from and rejection of
the said program by ETEU, ETPI patiently negotiated with ETEUs officers to make
them understand ETPIs business dilemma and its need to reduce its workforce and
streamline its organization. This evidently rules out bad faith on the part of ETPI.
In deciding which positions to retain and which to abolish, ETPI chose on the basis
of efficiency, economy, versatility and flexibility. It needed to reduce its workforce to
a sustainable level while maintaining functions necessary to keep it operating. The
records show that ETPI had sufficiently established not only its need to reduce its
workforce and streamline its organization, but also the existence of redundancy in
the position of a Senior Technician. ETPI explained how it failed to meet its
business targets and the factors that caused this, and how this necessitated it to
reduce its workforce and streamline its organization. ETPI also submitted its old and
new tables of organization and sufficiently described how limited the functions of the
abolished position of a Senior Technician were and how it decided on whom to
absorb these functions.
In his affidavit dated April 10, 2000,42 Mr. Arnel D. Reyel, the Head of both the
Business Services Department and the Finance Department of ETPI, described how
ETPI went about in reorganizing its departments. Mr. Reyel said that in the course
of ETPIs reorganization, new departments were created, some were transferred,
and two were abolished. Among the departments abolished was the Service Quality
Department. Mr. Reyel said that ETPI felt that the functions of the Service Quality
Department, which catered to both corporate and small and medium-sized clients,
overlapped and were too large for a single department, thus, the functions of this
department were split and simplified into two smaller but more focused and efficient
departments. In arriving at the decision to abolish the position of Senior Technician,
Mr. Reyel explained:
11.3. Thus, in accordance with the reorganization of the different departments of
ETPI, the Service Quality Department was abolished and its functions were
absorbed by the Business and Consumer Accounts Department and the Corporate
and Major Accounts Department.
11.4. With the abolition and resulting simplification of the Service Quality
Department, one of the units thereunder, the Customer Premises Equipment
Maintenance ("CPEM") unit was transferred to the Business and Consumer
Accounts Department. Since the Business and Consumer Accounts Department
had to remain economical and focused yet versatile enough to meet all the needs of
its small and medium sized clients, it was decided that, in the judgment of ETPI
management, the specialized functions of a Senior Technician in the CPEM unit
whose sole function was essentially the repair and servicing of ETPIs
telecommunications equipment was no longer needed since the Business and
Consumer [Accounts] Department had to remain economical and focused yet
versatile enough to meet all the multifarious needs of its small and medium sized
clients.
11.5. The business reason for the abolition of the position of Senior Technician was
because in ETPIs judgment, what was needed in the Business and Consumer
Accounts Department was a versatile, yet economical position with functions which
were not limited to the mere repair and servicing of telecommunications equipment.
It was determined that what was called for was a position that could also perform

varying functions such as the actual installation of telecommunications products for


medium and small scale clients, handle telecommunications equipment inventory
monitoring, evaluation of telecommunications equipment purchased and the
preparation of reports on the daily and monthly activation of telecommunications
equipment by these small and medium scale clients.
11.6. Thus, for the foregoing reasons, ETPI decided that the position of Senior
Technician was to be abolished due to redundancy. The functions of a Senior
Technician was to be abolished due to redundancy. The functions of a Senior
Technician would then be absorbed by an employee assigned to the Business and
Consumer Accounts Department who was already performing the functions of
actual installation of telecommunications products in the field and handling
telecommunications
equipment
inventory
monitoring,
evaluation
of
telecommunications equipment purchased and the preparation of reports on the
daily and monthly activation of telecommunications equipment. This employee
would then simply add to his many other functions the duty of repairing and
servicing telecommunications equipment which had been previously performed by a
43
Senior Technician.
In the new table of organization that the management approved, one hundred
twelve (112) employees were redeployed and nine (9) positions were declared
44
redundant.
It is inconceivable that ETPI would effect a company-wide
reorganization of this scale for the mere purpose of singling out Culili and
terminating him. If Culilis position were indeed indispensable to ETPI, then it would
be absurd for ETPI, which was then trying to save its operations, to abolish that one
position which it needed the most. Contrary to Culilis assertions that ETPI could not
do away with his functions as long as it is in the telecommunications industry, ETPI
did not abolish the functions performed by Culili as a Senior Technician. What ETPI
did was to abolish the position itself for being too specialized and limited. The
functions of that position were then added to another employee whose functions
were broad enough to absorb the tasks of a Senior Technician.
Culili maintains that ETPI had already decided to dismiss him even before the
second phase of the Right-Sizing Program was implemented as evidenced by the
December 7, 1998 letter.
The December 7, 1998 termination letter signed by ETPIs AVP Stella Garcia hardly
suffices to prove bad faith on the part of the company. The fact remains that the
said letter was never officially transmitted and Culili was not terminated at the end of
the first phase of ETPIs Right-Sizing Program. ETPI had given an adequate
explanation for the existence of the letter and considering that it had been
transparent with its employees, through their union ETEU, so much so that ETPI
even gave ETEU this unofficial letter, there is no reason to speculate and attach
malice to such act. That Culili would be subsequently terminated during the second
phase of the Right-Sizing Program is not evidence of undue discrimination or
"singling out" since not only Culilis position, but his entire unit was abolished and
absorbed by another department.
Unfair Labor Practice
Culili also alleged that ETPI is guilty of unfair labor practice for violating Article
248(c) and (e) of the Labor Code, to wit:
Art. 248. Unfair labor practices of employers. - It shall be unlawful for an
employer to commit any of the following unfair labor practice:
xxxx
c. To contract out services or functions being performed by union members when
such will interfere with, restrain or coerce employees in the exercise of their rights to
self-organization;
xxxx
e. To discriminate in regard to wages, hours of work, and other terms and conditions
of employment in order to encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall stop the parties from
requiring membership in a recognized collective bargaining agent as a condition for
employment, except those employees who are already members of another union at
the time of the signing of the collective bargaining agreement. Employees of an
appropriate collective bargaining unit who are not members of the recognized
collective bargaining agent may be assessed a reasonable fee equivalent to the
dues and other fees paid by members of the recognized collective bargaining agent,
if such non-union members accept the benefits under the collective agreement:
Provided, that the individual authorization required under Article 242, paragraph (o)
of this Code shall not apply to the non-members of the recognized collective
bargaining agent.

28
Culili asserted that ETPI is guilty of unfair labor practice because his functions were
sourced out to labor-only contractors and he was discriminated against when his coemployees were treated differently when they were each offered an additional
motorcycle to induce them to avail of the Special Retirement Program. ETPI denied
hiring outside contractors and averred that the motorcycles were not given to his coemployees but were purchased by them pursuant to their Collective Bargaining
Agreement, which allowed a retiring employee to purchase the motorcycle he was
assigned during his employment.
The concept of unfair labor practice is provided in Article 247 of the Labor Code
which states:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof. - Unfair labor practices violate the constitutional right of workers and employees to
self-organization, are inimical to the legitimate interest of both labor and
management, including their right to bargain collectively and otherwise deal with
each other in an atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-management relations.
In the past, we have ruled that "unfair labor practice refers to acts that violate the
workers' right to organize. The prohibited acts are related to the workers' right to
45
self-organization and to the observance of a CBA." We have likewise declared that
"there should be no dispute that all the prohibited acts constituting unfair labor
practice in essence relate to the workers' right to self-organization."46 Thus, an
employer may only be held liable for unfair labor practice if it can be shown that his
acts affect in whatever manner the right of his employees to self-organize.47
There is no showing that ETPI, in implementing its Right-Sizing Program, was
motivated by ill will, bad faith or malice, or that it was aimed at interfering with its
employees right to self-organize. In fact, ETPI negotiated and consulted with ETEU
before implementing its Right-Sizing Program.
Both the Labor Arbiter and the NLRC found ETPI guilty of unfair labor practice
because of its failure to dispute Culilis allegations.
According to jurisprudence, "basic is the principle that good faith is presumed and
he who alleges bad faith has the duty to prove the same." 48 By imputing bad faith to
the actuations of ETPI, Culili has the burden of proof to present substantial evidence
to support the allegation of unfair labor practice. Culili failed to discharge this burden
and his bare allegations deserve no credit.
Observance of Procedural Due Process
Although the Court finds Culilis dismissal was for a lawful cause and not an act of
unfair labor practice, ETPI, however, was remiss in its duty to observe procedural
due process in effecting the termination of Culili.
We have previously held that "there are two aspects which characterize the concept
of due process under the Labor Code: one is substantive whether the termination
of employment was based on the provision of the Labor Code or in accordance with
the prevailing jurisprudence; the other is procedural the manner in which the
dismissal was effected."49
Section 2(d), Rule I, Book VI of the Rules Implementing the Labor Code provides:
(d) In all cases of termination of employment, the following standards of due
process shall be substantially observed:
xxxx
For termination of employment as defined in Article 283 of the Labor Code, the
requirement of due process shall be deemed complied with upon service of a written
notice to the employee and the appropriate Regional Office of the Department of
Labor and Employment at least thirty days before effectivity of the termination,
specifying the ground or grounds for termination.
In Mayon Hotel & Restaurant v. Adana,50 we observed:
The requirement of law mandating the giving of notices was intended not only to
enable the employees to look for another employment and therefore ease the
impact of the loss of their jobs and the corresponding income, but more importantly,
to give the Department of Labor and Employment (DOLE) the opportunity to
ascertain the verity of the alleged authorized cause of termination.51

ETPI does not deny its failure to provide DOLE with a written notice regarding
Culilis termination. It, however, insists that it has complied with the requirement to
serve a written notice to Culili as evidenced by his admission of having received it
and forwarding it to his union president.
52

In Serrano v. National Labor Relations Commission, we noted that "a job is more
than the salary that it carries." There is a psychological effect or a stigma in
53
immediately finding ones self laid off from work. This is exactly why our labor laws
have provided for mandating procedural due process clauses. Our laws, while
recognizing the right of employers to terminate employees it cannot sustain, also
recognize the employees right to be properly informed of the impending severance
of his ties with the company he is working for. In the case at bar, ETPI, in effecting
Culilis termination, simply asked one of its guards to serve the required written
notice on Culili. Culili, on one hand, claims in his petition that this was handed to
him by ETPIs vice president, but previously testified before the Labor Arbiter that
54
this was left on his table. Regardless of how this notice was served on Culili, this
Court believes that ETPI failed to properly notify Culili about his termination. Aside
from the manner the written notice was served, a reading of that notice shows that
ETPI failed to properly inform Culili of the grounds for his termination.
The Court of Appeals, in finding that Culili was not afforded procedural due process,
held that Culilis dismissal was ineffectual, and required ETPI to pay Culili full
backwages in accordance with our decision in Serrano v. National Labor Relations
Commission.55 Over the years, this Court has had the opportunity to reexamine the
sanctions imposed upon employers who fail to comply with the procedural due
process requirements in terminating its employees. In Agabon v. National Labor
Relations Commission,56 this Court reverted back to the doctrine in Wenphil
Corporation v. National Labor Relations Commission57 and held that where the
dismissal is due to a just or authorized cause, but without observance of the due
process requirements, the dismissal may be upheld but the employer must pay an
indemnity to the employee. The sanctions to be imposed however, must be stiffer
than those imposed in Wenphil to achieve a result fair to both the employers and the
employees.58
In Jaka Food Processing Corporation v. Pacot,59 this Court, taking a cue from
Agabon, held that since there is a clear-cut distinction between a dismissal due to a
just cause and a dismissal due to an authorized cause, the legal implications for
employers who fail to comply with the notice requirements must also be treated
differently:
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under
Article 282 but the employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because the dismissal
process was, in effect, initiated by an act imputable to the employee; and (2) if the
dismissal is based on an authorized cause under Article 283 but the employer failed
to comply with the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employer's exercise of his management
prerogative.60
Hence, since it has been established that Culilis termination was due to an
authorized cause and cannot be considered unfair labor practice on the part of
ETPI, his dismissal is valid. However, in view of ETPIs failure to comply with the
notice requirements under the Labor Code, Culili is entitled to nominal damages in
addition to his separation pay.1avvphi1
Personal
Liability
And Award of Damages

of

ETPIs

Officers

Culili asserts that the individual respondents, Salvador Hizon, Emiliano Jurado,
Virgilio Garcia, and Stella Garcia, as ETPIs officers, should be held personally
liable for the acts of ETPI which were tainted with bad faith and arbitrariness.
Furthermore, Culili insists that he is entitled to damages because of the sufferings
he had to endure and the malicious manner he was terminated.
As a general rule, a corporate officer cannot be held liable for acts done in his
official capacity because a corporation, by legal fiction, has a personality separate
and distinct from its officers, stockholders, and members. To pierce this fictional veil,
it must be shown that the corporate personality was used to perpetuate fraud or an
illegal act, or to evade an existing obligation, or to confuse a legitimate issue. In
illegal dismissal cases, corporate officers may be held solidarily liable with the
corporation if the termination was done with malice or bad faith. 61
In illegal dismissal cases, moral damages are awarded only where the dismissal
was attended by bad faith or fraud, or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs or public policy.62 Exemplary
damages may avail if the dismissal was effected in a wanton, oppressive or
malevolent manner to warrant an award for exemplary damages.63

29
It is our considered view that Culili has failed to prove that his dismissal was
orchestrated by the individual respondents herein for the mere purpose of getting rid
of him. In fact, most of them have not even dealt with Culili personally. Moreover, it
has been established that his termination was for an authorized cause, and that
there was no bad faith on the part of ETPI in implementing its Right-Sizing Program,
which involved abolishing certain positions and departments for redundancy. It is
not enough that ETPI failed to comply with the due process requirements to warrant
an award of damages, there being no showing that the companys and its officers
acts were attended with bad faith or were done oppressively.
WHEREFORE, the instant petition is DENIED and the assailed February 5, 2004
Decision and September 13, 2004 Resolution of the Court of Appeals in CA-G.R.
SP No. 75001 are AFFIRMED with the MODIFICATION that petitioner Nelson A.
Culilis dismissal is declared valid but respondent Eastern Telecommunications
Philippines, Inc. is ordered to pay petitioner Nelson A. Culili the amount of Fifty
Thousand Pesos (P50,000.00) representing nominal damages for non-compliance
with statutory due process, in addition to the mandatory separation pay required
under Article 283 of the Labor Code.

G.R. No. 181738

January 30, 2013

GENERAL
MILLING
vs.
VIOLETA L. VIAJAR, Respondent.

CORPORATION,

Petitioner,

DECISION
REYES, J.:
This is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court filed
by petitioner General Milling Corporation (GMC), asking the Court to set aside the
Decision2 dated September 21, 2007 and the Resolution3 dated January 30, 2008 of
the Court of Appeals (CA) in CA-G.R. SP No. 01734; and to reinstate the Decision4
dated October 28, 2005 and Resolution5 dated January 31, 2006 of the National
Labor Relations Commission (NLRC) in NLRC Case No. V-000416-05.

11

her dismissal was not necessary. At the time of her termination, the respondent
12
was receiving the salary rate of P19,651.41 per month.
For its part, the petitioner insisted that Viajars dismissal was due to the redundancy
of her position. GMC reasoned out that it was forced to terminate the services of the
respondent because of the economic setbacks the company was suffering which
affected the companys profitability, and the continuing rise of its operating and
interest expenditures. Redundancy was part of the petitioners concrete and actual
cost reduction measures. GMC also presented the required "Establishment
Termination Report" which it filed before the Department of Labor and Employment
(DOLE) on October 28, 2003, involving thirteen (13) of its employees, including
Viajar. Subsequently, GMC issued to the respondent two (2) checks respectively
13
amounting to P440,253.02 and P21,211.35 as her separation pay.
On April 18, 2005, the Labor Arbiter (LA) of the NLRC RAB No. VII, Cebu City,
rendered a Decision, the decretal portion of which reads:
WHEREFORE, foregoing considered, judgment is hereby rendered declaring that
respondents acted in good faith in terminating the complainant from the service due
to redundancy of works, thus, complainants refusal to accept the payment of her
allowed separation pay and other benefits under the law is NOT JUSTIFIED both in
fact and law, and so, therefore complainants case for illegal dismissal against the
herein respondents and so are complainants monetary claims are hereby ordered
DISMISSED for lack of merit.
SO ORDERED.14
The LA found that the respondent was properly notified on October 30, 2003
through a Letter-Memorandum dated October 27, 2003, signed by GMCs HRD
Manager Almocera, that her position as Purchasing Staff had been declared
redundant. It also found that the petitioner submitted to the DOLE on October 28,
2003 the "Establishment Termination Report." The LA even faulted the respondent
for not questioning the companys action before the DOLE Regional Office, Region
VII, Cebu City so as to compel the petitioner to prove that Viajars position was
indeed redundant. It ruled that the petitioner complied with the requirements under
Article 283 of the Labor Code, considering that the nation was then experiencing an
economic downturn and that GMC must adopt measures for its survival.15

The antecedent facts are as follows:


Viajar appealed the aforesaid decision to the NLRC. On October 28, 2005, the
NLRC promulgated its decision, the dispositive portion of which reads:
GMC is a domestic corporation with principal office in Makati City and a
manufacturing plant in Lapu-Lapu City.
In October 2003, GMC terminated the services of thirteen (13) employees for
redundancy, including herein respondent, Violeta Viajar (Viajar). GMC alleged that it
has been gradually downsizing its Vismin (Visayas-Mindanao) Operations in Cebu
where a sizeable number of positions became redundant over a period of time. 6
On December 2, 2003, Viajar filed a Complaint7 for Illegal Dismissal with damages
against GMC, its Human Resource Department (HRD) Manager, Johnny T.
Almocera (Almocera), and Purchasing Manager, Joel Paulino before the Regional
Arbitration Branch (RAB) No. VII, NLRC, Cebu City.
In her Position Paper,8 Viajar alleged that she was employed by GMC on August 6,
1979 as Invoicing Clerk. Through the years, the respondent held various positions in
the company until she became Purchasing Staff.
On October 30, 2003, Viajar received a Letter-Memorandum dated October 27,
2003 from GMC, through Almocera, informing her that her services were no longer
needed, effective November 30, 2003 because her position as Purchasing Staff at
the Purchasing Group, Cebu Operations was deemed redundant. Immediately
thereafter, the respondent consulted her immediate superior at that time, Thaddeus
Oyas, who told her that he too was shocked upon learning about it.9
When Viajar reported for work on October 31, 2003, almost a month before the
effectivity of her severance from the company, the guard on duty barred her from
entering GMCs premises. She was also denied access to her office computer and
was restricted from punching her daily time record in the bundy clock.10
On November 7, 2003, Viajar was invited to the HRD Cebu Office where she was
asked to sign certain documents, which turned out to be an "Application for
Retirement and Benefits." The respondent refused to sign and sought clarification
because she did not apply for retirement and instead asserted that her services
were terminated for alleged redundancy. Almocera told her that her signature on the
Application for Retirement and Benefits was needed to process her separation pay.
The respondent also claimed that between the period of July 4, 2003 and October
13, 2003, GMC hired fifteen (15) new employees which aroused her suspicion that

WHEREFORE, premises considered, the Decision of the Labor Arbiter declaring the
validity of complainants termination due to redundancy is hereby AFFIRMED.
Respondent General Milling Corporation is hereby ordered to pay complainants
separation pay in the amount of P461,464.37.
SO ORDERED.16
The NLRC, however, stated that it did not agree with the LA that Viajar should be
faulted for failing to question the petitioners declaration of redundancy before the
DOLE Regional Office, Region VII, Cebu City. It was not imperative for Viajar to
challenge the validity of her termination due to redundancy.17 Notwithstanding, the
NLRC affirmed the findings of the LA that Viajars dismissal was legal considering
that GMC complied with the requirements provided for under Article 283 of the
Labor Code and existing jurisprudence, particularly citing Asian Alcohol Corporation
v. NLRC.18 The NLRC further stated that Viajar was aware of GMCs "reduction
mode," as shown in the GMC Vismin Manpower Complement, as follows:

No.
of
Employees
Terminated (Redundancy)

Year

Manpower Profile

2000

795

2001

782

2002

736

41

2003

721

24

2004

697

16

2005

696 (As of June 2005)

0619

The NLRC stated that the characterization of positions as redundant is an exercise


of the employers business judgment and prerogative. It also ruled that the petitioner

30
did not exercise this prerogative in bad faith and that the payment of separation pay
in the amount of P461,464.37 was in compliance with Article 283 of the Labor
20
Code.
Respondent Viajar filed a Motion for Reconsideration which was denied by the
NLRC in its Resolution dated January 31, 2006.
Undaunted, Viajar filed a petition for certiorari before the CA. In the now assailed
Decision dated September 21, 2007, the CA granted the petition, reversing the
decision of the NLRC in the following manner:
WHEREFORE, premises considered, this Petition for Certiorari is GRANTED. The
Decision, dated 28 October 2005, and Resolution, dated 31 January 2006
respectively, of public respondent National Labor Relations Commission-Fourth
Division, Cebu City, in NLRC Case No. V-000416-05 (RAB VII-12-2495-03) are SET
ASIDE. A new judgment is entered DECLARING the dismissal ILLEGAL and
ordering respondent to reinstate petitioner without loss of seniority rights and other
privileges with full backwages inclusive of allowances and other benefits computed
from the time she was dismissed on 30 November 2003 up to the date of actual
reinstatement. Further, moral and exemplary damages, in the amount of Fifty
Thousand Pesos ([P]50,000.00) each; and attorneys fees equivalent to ten percent
(10%) of the total monetary award, are awarded.
Costs against respondent.
SO ORDERED.21
Aggrieved by the reversal of the NLRC decision, GMC filed a motion for
reconsideration. However, in its Resolution dated January 30, 2008, the CA denied
the same; hence, this petition.
The petitioner raises the following issues, to wit:
I. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION
OF JANUARY 30, 2008 OF THE COURT OF APPEALS ARE
CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE.
II. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION
OF JANUARY 30, 2008 OF THE COURT OF APPEALS VIOLATE THE
LAW AND ESTABLISHED JURISPRUDENCE ON THE OBSERVANCE
OF RESPECT AND FINALITY TO FACTUAL FINDINGS OF THE
NATIONAL LABOR RELATIONS COMMISSION.
III. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN ITS DECISION OF SEPTEMBER 21, 2007 AND
RESOLUTION OF JANUARY 30, 2008 AS THE SAME ARE
CONTRARY TO THE EVIDENCE ON RECORD.22
The petition is denied.
The petitioner argues that the factual findings of the NLRC, affirming that of the LA
must be accorded respect and finality as it is supported by evidence on record. Both
the LA and the NLRC found the petitioners evidence sufficient to terminate the
employment of respondent on the ground of redundancy. The evidence also shows
that GMC has complied with the procedural and substantive requirements for a valid
termination. There was, therefore, no reason for the CA to disturb the factual
findings of the NLRC.23
The rule is that factual findings of quasi-judicial agencies such as the NLRC are
generally accorded not only respect, but at times, even finality because of the
special knowledge and expertise gained by these agencies from handling matters
falling under their specialized jurisdiction.24 It is also settled that this Court is not a
trier of facts and does not normally embark in the evaluation of evidence adduced
during trial.25 This rule, however, allows for exceptions. One of these exceptions
covers instances when the findings of fact of the trial court, or of the quasi-judicial
agencies concerned, are conflicting or contradictory with those of the CA. When
there is a variance in the factual findings, it is incumbent upon the Court to reexamine the facts once again.26
Furthermore, another exception to the general rule is when the said findings are not
supported by substantial evidence or if on the basis of the available facts, the
inference or conclusion arrived at is manifestly erroneous.27 Factual findings of
administrative agencies are not infallible and will be set aside when they fail the test
of arbitrariness.28 In the instant case, the Court agrees with the CA that the
conclusions arrived at by the LA and the NLRC are manifestly erroneous.

GMC claims that Viajar was validly dismissed on the ground of redundancy which is
one of the authorized causes for termination of employment. The petitioner asserts
that it has observed the procedure provided by law and that the same was done in
good faith. To justify the respondents dismissal, the petitioner presented: (i) the
notification Letter-Memorandum dated October 27, 2003 addressed to the
29
respondent which was received on October 30, 2003; (ii) the "Establishment
Termination Report" as prescribed by the DOLE;30 (iii) the two (2) checks issued in
the respondents name amounting to P440,253.02 and P21,211.35 as separation
31
pay; and (iv) the list of dismissed employees as of June 6, 2006 to show that GMC
32
was in a "reduction mode." Both the LA and the NLRC found these sufficient to
prove that the dismissal on the ground of redundancy was done in good faith.
The Court does not agree.
Article 283 of the Labor Code provides that redundancy is one of the authorized
causes for dismissal. It reads:
Article 283. Closure of establishment and reduction of personnel. The employer
may also terminate the employment of any employee due to the installment of laborsaving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, by serving a written notice
on the worker and the Ministry of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected thereby shall be entitled to
a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or reverses, the separation pay
shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall
be considered one (1) whole year. (Emphasis supplied)
From the above provision, it is imperative that the employer must comply with the
requirements for a valid implementation of the companys redundancy program, to
wit: (a) the employer must serve a written notice to the affected employees and the
DOLE at least one (1) month before the intended date of retrenchment; (b) the
employer must pay the employees a separation pay equivalent to at least one
month pay or at least one month pay for every year of service, whichever is higher;
(c) the employer must abolish the redundant positions in good faith; and (d) the
employer must set fair and reasonable criteria in ascertaining which positions are
33
redundant and may be abolished.
In Smart Communications, Inc., v. Astorga,34 the Court held that:
The nature of redundancy as an authorized cause for dismissal is explained in the
leading case of Wiltshire File Co., Inc. v. National Labor Relations Commission, viz:
"x x x redundancy in an employers personnel force necessarily or even ordinarily
refers to duplication of work. That no other person was holding the same position
that private respondent held prior to termination of his services does not show that
his position had not become redundant. Indeed, in any well organized business
enterprise, it would be surprising to find duplication of work and two (2) or more
people doing the work of one person. We believe that redundancy, for purposes of
the Labor Code, exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. Succinctly put,
a position is redundant where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product line or service
activity previously manufactured or undertaken by the enterprise."
The characterization of an employees services as superfluous or no longer
necessary and, therefore, properly terminable, is an exercise of business judgment
on the part of the employer. The wisdom and soundness of such characterization or
decision is not subject to discretionary review provided, of course, that a violation of
law or arbitrary or malicious action is not shown.35 (Emphasis supplied and citations
omitted)
While it is true that the "characterization of an employees services as superfluous
or no longer necessary and, therefore, properly terminable, is an exercise of
business judgment on the part of the employer,"36 the exercise of such judgment,
however, must not be in violation of the law, and must not be arbitrary or malicious.
The Court has always stressed that a company cannot simply declare redundancy
without basis. To exhibit its good faith and that there was a fair and reasonable
criteria in ascertaining redundant positions, a company claiming to be over manned
must produce adequate proof of the same.
We reiterate what was held in Caltex (Phils.), Inc. v. NLRC:37

31
In Asufrin, Jr. v. San Miguel Corporation, we ruled that it is not enough for a
company to merely declare that it has become overmanned (sic). It must produce
adequate proof of such redundancy to justify the dismissal of the affected
employees.
In Panlilio v. National Labor Relations Commission, we held that evidence must be
presented to substantiate redundancy such as but not limited to the new staffing
pattern, feasibility studies/proposal, on the viability of the newly created positions,
38
job description and the approval by the management of the restructuring.
(Emphasis supplied and citations omitted)
In the instant case, the Court agrees with the CA when it held that the petitioner
failed to present substantial proof to support GMCs general allegations of
redundancy. As shown from the records, the petitioner simply presented as its
evidence of good faith and compliance with the law the notification letter to
39
respondent Viajar; the "Establishment Termination Report" it submitted to the
DOLE Office;40 the two (2) checks issued in the respondents name amounting to
41
P440,253.02 and P21,211.35; and the list of terminated employees as of June 6,
42
2006. We agree with the CA that these are not enough proof for the valid
termination of Viajars employment on the ground of redundancy.
The letter-memorandum which contains general allegations is not enough to
convince this Court that Viajars termination of employment due to redundancy was
warranted under the circumstances. There is no showing that GMC made an
evaluation of the existing positions and their effect to the company. Neither did GMC
exert efforts to present tangible proof that it was experiencing business slow down
or over hiring. The "Establishment Termination Report" it submitted to the DOLE
Office did not account for anything to justify declaring the positions redundant. The
Court notes that the list of terminated employees presented by GMC was a list
taken as of June 6, 2006 or almost three years after the respondent was illegally
dismissed and almost a year after the LA promulgated its decision. While the
petitioner had been harping that it was on a "reduction mode" of its employees, it
has not presented any evidence (such as new staffing pattern, feasibility studies or
proposal, viability of newly created positions, job description and the approval of the
management of the restructuring,43 audited financial documents like balance sheets,
annual income tax returns and others)44 which could readily show that the
companys declaration of redundant positions was justified. Such proofs, if
presented, would suffice to show the good faith on the part of the employer or that
this business prerogative was not whimsically exercised in terminating respondents
employment on the ground of redundancy. Unfortunately, these are wanting in the
instant case. The petitioner only advanced a self-serving general claim that it was
experiencing business reverses and that there was a need to reduce its manpower
complement.

employer liable for termination without cause. The employees intent is the focal
point of analysis. In determining such intent, the fairness of the process governing
the retirement decision, the payment of stipulated benefits, and the absence of
48
badges of intimidation or coercion are relevant parameters. (Emphasis supplied
and citations omitted)
Clearly, the instant case is not about retirement since the term has its peculiar
meaning and is governed by Article 287 of the Labor Code. Rather, this is a case of
termination due to redundancy under Article 283 of the Labor Code. Thus, the
demand of GMC for the respondent to sign an "Application for Retirement and
Benefits" is really suspect.
Finally, the Court agrees with the CA that the award of moral and exemplary
damages is proper.1wphi1 The Court has awarded moral damages in termination
cases when bad faith, malice or fraud attend the employees dismissal or where the
act oppresses labor, or where it was done in a manner contrary to morals, good
49
customs or public policy. We quote with favor the findings of the CA:
We also award moral and exemplary damages to petitioner. While it is true that
good faith is presumed, the circumstances surrounding the dismissal of petitioner
negate its existence. Moral damages may be recovered only where the dismissal of
the employee was tainted by bad faith or fraud, or where it constituted an act
oppressive to labor, and done in a manner contrary to morals, good customs or
public policy while exemplary damages are recoverable only if the dismissal was
done in a wanton, oppressive, or malevolent manner. To reiterate, immediately after
receipt of her termination letter which was effective on 30 November 2003,
petitioner was no longer treated as an employee of respondent as early as the 31st
of October 2003; she was already barred from entering the company premises; she
was deprived access to her office computer; and she was excluded from the bandy
[sic] clock. She was also made to sign documents, including an "APPLICATION
FOR RETIREMENT AND BENEFITS" in the guise of payment of her separation
pay. When petitioner confronted her immediate superior regarding her termination,
the latters shock aggravated her confusion and suffering. She also learned about
the employment of a number of new employees, several of whom were even
employed in her former department. Petitioner likewise suffered mental torture
brought about by her termination even though its cause was not clear and
substantiated.50 (Citations omitted)
WHEREFORE, the petition is DENIED. The Decision dated September 21, 2007 of
the Court of Appeals, as well as its Resolution dated January 30, 2008 in CA-G.R.
SP No. 01734, are hereby AFFIRMED.

G.R. No. 161787


On the other hand, the respondent presented proof that the petitioner had been
hiring new employees while it was firing the old ones,45 negating the claim of
redundancy. It must, however, be pointed out that in termination cases, like the one
before us, the burden of proving that the dismissal of the employees was for a valid
and authorized cause rests on the employer. It was incumbent upon the petitioner to
show by substantial evidence that the termination of the employment of the
respondent was validly made and failure to discharge that duty would mean that the
dismissal is not justified and therefore illegal.46
Furthermore, the Court cannot overlook the fact that Viajar was prohibited from
entering the company premises even before the effectivity date of termination; and
was compelled to sign an "Application for Retirement and Benefits." These acts
exhibit the petitioners bad faith since it cannot be denied that the respondent was
still entitled to report for work until November 30, 2003. The demand for her to sign
the "Application for Retirement and Benefits" also contravenes the fact that she was
terminated due to redundancy. Indeed, there is a difference between voluntary
retirement of an employee and forced termination due to authorized causes.
In Quevedo v. Benguet Electric Cooperative, Incorporated,47 this Court explained
the difference between retirement and termination due to redundancy, to wit:
While termination of employment and retirement from service are common modes of
ending employment, they are mutually exclusive, with varying juridical bases and
resulting benefits. Retirement from service is contractual (i.e. based on the bilateral
agreement of the employer and employee), while termination of employment is
statutory (i.e. governed by the Labor Code and other related laws as to its grounds,
benefits and procedure). The benefits resulting from termination vary, depending on
the cause. For retirement, Article 287 of the Labor Code gives leeway to the parties
to stipulate above a floor of benefits.
xxxx
The line between voluntary and involuntary retirement is thin but it is one which this
Court has drawn. Voluntary retirement cuts employment ties leaving no residual
employer liability; involuntary retirement amounts to a discharge, rendering the

April 27, 2011

MASING AND SONS DEVELOPMENT CORPORATION and CRISPIN CHAN,


Petitioners,
vs.
GREGORIO P. ROGELIO, Respondent.
DECISION
BERSAMIN, J.:
In any controversy between a laborer and his master, doubts reasonably arising
from the evidence are resolved in favor of the laborer.
We re-affirm this principle, as we uphold the decision of the Court of Appeals (CA)
that reversed the uniform finding that there existed no employment relationship
between the petitioners, as employers, and the respondent, as employee, made by
the National Labor Relations Commission (NLRC) and the Labor Arbiter (LA).
Petitioners Masing and Sons Development Corporation (MSDC) and Crispin Chan
assail the October 24, 2003 decision,1 whereby the CA reversed the decision dated
January 28, 2000 of the NLRC that affirmed the decision of the LA (dismissing the
claim of the respondent for retirement benefits on the ground that he had not been
employed by the petitioners but by another employer).
Antecedents
On May 19, 1997, respondent Gregorio P. Rogelio (Rogelio) brought against Chan
a complaint for retirement pay pursuant to Republic Act No. 7641,2 in relation to
Article 287 of the Labor Code, holiday and rest days premium pay, service incentive
leave, 13th month pay, cost of living allowances (COLA), underpayment of wages,
and attorneys fees. On January 20, 1998, Rogelio amended his complaint to
include MSDC as a co-respondent. His version follows.

32
Rogelio was first employed in 1949 by Pan Phil. Copra Dealer, MSDCs
predecessor, which engaged in the buying and selling of copra in Ibajay, Aklan, with
its main office being in Kalibo, Aklan. Masing Chan owned and managed Pan Phil.
Copra Dealer, and the Branch Manager in Ibajay was a certain So Na. In 1965,
Masing Chan changed the business name of Pan Phil. Copra Dealer to Yao Mun
Tek, and appointed Jose Conanan Yap Branch Manager in Ibajay. In the 1970s, the
business name of Yao Mun Tek was changed to Aklan Lumber and General
Merchandise, and Leon Chan became the Branch Manager in Ibajay. Finally, in
1984, Masing Chan adopted the business name of Masing and Sons Development
Corporation (MSDC), appointing Wynne or Wayne Lim (Lim) as the Branch
Manager in Ibajay. Crispin Chan replaced his father, Masing Chan, in 1990 as the
manager of the entire business.
In all that time, Rogelio worked as a laborer in the Ibajay Branch, along with twelve
other employees. In January 1974, Rogelio was reported for Social Security System
(SSS) coverage. After paying contributions to the SSS for more than 10 years, he
became entitled to receive retirement benefits from the SSS. Thus, in 1991, he
availed himself of the SSS retirement benefits, and in order to facilitate the grant of
such benefits, he entered into an internal arrangement with Chan and MSDC to the
effect that MSDC would issue a certification of his separation from employment
notwithstanding that he would continue working as a laborer in the Ibajay Branch.
The certification reads as follows:

CRISPIN
AMIGO
IBAJAY, AKLAN

CHAN

COPRA

DEALER

August 10, 1991

MSDC and Chan submitted the affidavit of Lim, whereby Lim stated that Rogelio
8
was one of his employees from 1989 until the termination of his services. They also
submitted SSS Form R-1A, Lims SSS Report of Employee-Members (showing that
9
Rogelio and Palomata were reported as Lims employees); Lims application for
10
11
12
registration as copra buyer; Chans affidavit; and the affidavit of Guevarra and
13
Seeres, whereby said affiants denied having executed or signed the January 19,
1998 affidavits submitted by Rogelio.
In his affidavit, Guevarra recanted the statement attributed to him that he had been
employed by Chan and MSDC, and declared that he had been an employee of Lim.
14
Likewise, Guevarras daughter executed an affidavit, averring that his father had
been an employee of Lim and that his father had not signed the affidavit dated
January 19, 1998.
On April 5, 1999, the LA dismissed the complaint against Chan and MSDC, ruling
thus:
From said evidence, it is our considered view that there exists no employeremployee relationship between the parties effective July 1, 1989 up to the date of
the filing of the instant complaint complainant was an employee of Wynne O. Lim.
Hence, his claim for retirement should have been filed against the latter for he
admitted that he was the employer of herein complainant in his sworn statement
dated June 9, 1998.
Complainants claim for retirement benefits against herein respondents under RA
No. 7641 has been barred by prescription considering the fact that it partakes of the
nature of a money claim which prescribed after the lapse of three years after its
accrual.
The rest of the claims are also dismissed for the same accrued during complainants
employment with Wynne O. Lim.

CERTIFICATION OF SEPARATION FROM EMPLOYMENT


To whom it may concern:
This is to certify that my employee, GREGORIO P. ROGELIO bearing SSS ID No.
07-0495213-7 who was first covered effective January, 1974 up to June 30, 1989
inclusive, is now officially separated from my employ effective the 1st of July, 1989.
Please be guided accordingly.
(SGD.)
CRISPIN
Proprietor
SSS ID No. 07-0595800-4

AMIGO

CHAN

On March 17, 1997, Rogelio was paid his last salary. Lim, then the Ibajay Branch
Manager, informed Rogelio that he was deemed retired as of that date. Chan
confirmed to Rogelio that he had already reached the compulsory retirement age
when he went to the main office in Kalibo to verify his status. Rogelio was then 67
years old.
Considering that Rogelio was supposedly receiving a daily salary of P70.00 until
1997, but did not receive any 13th month pay, service incentive leave, premium pay
for holidays and rest days and COLA, and even any retirement benefit from MSDC
upon his retirement in March 1997, he commenced his claim for such pay and
benefits.
In substantiation, Rogelio submitted the January 19, 1998 affidavits of his coworkers, namely: Domingo Guevarra,4 Juanito Palomata,5 and Ambrosio Seeres,6
whereby they each declared under oath that Rogelio had already been working at
the Ibajay Branch by the time that MSDCs predecessor had hired them in the
1950s to work in that branch; and that MSDC and Chan had continuously employed
them until their own retirements, that is, Guevarra in 1994, and Palomata and
Seeres in 1997. They thereby corroborated the history of MSDC and the names of
the various Branch Managers as narrated by Rogelio, and confirmed that like
Rogelio, they did not receive any retirement benefits from Chan and MSDC upon
their retirement.
In their defense, MSDC and Chan denied having engaged in copra buying in Ibajay,
insisting that they did not ever register in such business in any government agency.
They asserted that Lim had not been their agent or employee, because he had been
an independent copra buyer. They averred, however, that Rogelio was their former
employee, hired on January 3, 1977 and retired on June 30, 1989;7 and that Rogelio
was thereafter employed by Lim starting from July 1, 1989 until the filing of the
complaint.

WHEREFORE, PREMISES CONSIDERED, this case is hereby DISMISSED for


lack of merit.
SO ORDERED.15
Rogelio appealed, but the NLRC affirmed the decision of the LA on January 28,
2000, observing that there could be no double retirement in the private sector; that
with the double retirement, Rogelio would be thereby enriching himself at the
expense of the Government; and that having retired in 1991, Rogelio could not avail
himself of the benefits under Republic Act No. 7641 entitled An Act Amending
Article 287 of Presidential Decree No. 442, As Amended, Otherwise Known as The
Labor Code Of The Philippines, By Providing for Retirement Pay to Qualified Private
Sector Employees in the Absence Of Any Retirement Plan in the Establishment,
which took effect only on January 7, 1993.16
The NLRC denied Rogelios motion for reconsideration.
Ruling of the CA
Rogelio commenced a special civil action for certiorari in the CA, charging the
NLRC with grave abuse of discretion in denying to him the benefits under Republic
Act No. 7641, and in rejecting his money claims on the ground of prescription.
On October 24, 2003, the CA promulgated its decision,17 holding that Rogelio had
substantially established that he had been an employee of Chan and MSDC, and
that the benefits under Republic Act No. 7641 were apart from the retirement
benefits that a qualified employee could claim under the Social Security Law,
conformably with the ruling in Oro Enterprises, Inc. v. NLRC (G.R. No. 110861,
November 14, 1994, 238 SCRA 105).
The CA decreed:
WHEREFORE, premises considered, the Decision of the public respondent NLRC
is hereby VACATED and SET ASIDE. This case is remanded to the Labor Arbiter
for the proper computation of the retirement benefits of the petitioner based on
Article 287 of the Labor Code, as amended, to be pegged at the minimum wage
prevailing in Ibajay, Aklan as of March 17, 1997, and attorneys fees based on the
same. Without costs.
SO ORDERED.
Chan and MSDCs motion for reconsideration was denied by the CA.

33
Issues
In this appeal, Chan and MSDC contend that the CA erred: (a) in taking cognizance
of Rogelios petition for certiorari despite the decision of the NLRC having become
final and executory almost two months before the petition was filed; (b) in
concluding that Rogelio had remained their employee from July 6, 1989 up to March
17, 1997; and (c) in awarding retirement benefits and attorneys fees to Rogelio.
Ruling
The petition for review is barren of merit.
I
Certiorari was timely commenced in the CA
Anent the first error, the Court finds that the CA did not err in taking cognizance of
the petition for certiorari of Rogelio.
Based on the records, Rogelio received the NLRCs denial of his motion for
reconsideration on January 16, 2003. He then had 60 days from January 16, 2003,
or until March 17, 2003, within which to file his petition for certiorari. It is without
doubt, therefore, that his filing was timely considering that the CA received his
petition for certiorari at 2:44 oclock in the afternoon of March 17, 2003.
The petitioners insistence, that the issuance of the entry of judgment with respect to
the NLRCs decision precluded Rogelio from filing a petition for certiorari, was
unwarranted. It ought to be without debate that the finality of the NLRCs decision
was of no consequence in the consideration of whether or not he could bring a
special civil action for certiorari within the period of 60 days for doing so under
Section 4, Rule 65, Rules of Court, simply because the question being thereby
raised was jurisdictional.
II
Respondent
remained
employee despite his supposed separation

the

petitioners

Did Rogelio remain the employee of the petitioners from July 6, 1989 up to March
17, 1997?
The issue of whether or not an employer-employee relationship existed between the
petitioners and the respondent in that period was essentially a question of fact.18 In
dealing with such question, substantial evidence that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion 19 is
sufficient. Although no particular form of evidence is required to prove the existence
of the relationship, and any competent and relevant evidence to prove the
relationship may be admitted,20 a finding that the relationship exists must
nonetheless rest on substantial evidence.
Generally, the Court does not review errors that raise factual questions, primarily
because the Court is not a trier of facts. However, where, like now, there is a conflict
between the factual findings of the Labor Arbiter and the NLRC, on the one hand,
and those of the CA, on the other hand,21 it is proper, in the exercise of our equity
jurisdiction, to review and re-evaluate the factual issues and to look into the records
of the case and re-examine the questioned findings.
The CA delved on and resolved the issue of the existence of an employer-employee
relationship between the petitioners and the respondent thusly:
As to the factual issue, the petitioners evidence consists of his own statements and
those of his alleged co-worker from 1950 until 1997, Juanito Palomata, who unlike
his former co-workers Domingo Guevarra and Ambrosio Seeres, did not disown
the "Sinumpaang Salaysay" he executed, in corroboration of petitioners allegations;
and the Certification dated August 10, 1991 stating that petitioner was first placed
under coverage of the SSS in January 1974 to June 30, 1989 and was separated
from service effective July 1, 1989, a certification executed by respondent Crispin
Amigo Chan which, petitioner maintains, was only intended for his application for
retirement benefits with the SSS.
Private respondents evidence, on the other hand, consisted of respondent Crispin
Amigo Chans counter statements as well as documentary evidence consisting of
(1) Wayne Lims Affidavit which petitioner acknowledged in his Reply dated July 11,
1998, par. 8, admitting to being the employer of petitioner from July 1, 1989 until the

filing of the complaint; (2) Certification dated October 22, 1991 showing petitioners
employment with respondents to have been between January 3, 1977 until July 1,
1989; (3) Affidavits of Guevarra and Seeres disowning their signatures in the
affidavits submitted in evidence by the petitioner; (4) SSS report executed by
Wayne Lim of his initial list of employees as of July 1, 1989 which includes the
petitioner. On appeal, the respondents further submitted documentary evidence
showing that Wayne Lim registered his business name on July 11, 1989 and
apparently went into business buying copra.
At this point, we should note the following factual discrepancies in the evidence on
hand: First, the respondents issued certificates stating the commencement of
petitioners employment on different dates, i.e. January 1974 and January 1977,
although the earlier date referred only to the period when petitioner was first placed
under the coverage of the SSS, which need not necessarily refer to the
commencement of his employment. Secondly, while respondent Crispin Amigo
Chan denied having ever engaged in copra buying in Ibajay, the certificates he
issued both dated in 1991 state otherwise, for he declared himself as a "copra
dealer" with address in Ibajay. Then there is the statement of the petitioner that
Wayne Lim was the respondents manager in their branch office in Ibajay since
1984, a statement that respondents failed to disavow. Instead, respondents insisted
on their non sequitur argument that they had never engaged in copra buying
activities in Ibajay, and that Wayne Lim was in business all by himself in regard to
such activity.
The denial on respondents part of their copra buying activities in Ibajay begs the
obvious question: What were petitioner and his witness Juanito Palomata then
doing for respondents as laborers in Ibajay prior to July 1, 1989? Indeed, what did
petitioner do for the respondents as the latters laborer prior to July 1, 1989, which
was different from what he did after said date? The records showed that he
continued doing the same job, i.e. as laborer and trusted employee tasked with the
responsibility of getting money from the Kalibo office of respondents which was
used to buy copra and pay the employees salaries. He did not only continue doing
the same thing but he apparently did the same at or from the same place, i.e. the
bodega in Ibajay, which his co-worker Palomata believed to belong to the
respondent Masing & Sons. Since respondents admitted to employing petitioner
from 1977 to 1989, we have to conclude that, indeed, the bodega in Ibajay was
owned by respondents at least prior to July 1, 1989 since petitioner had consistently
stated that he worked for the respondents continuously in their branch office in
Ibajay under different managers and nowhere else.
We believe that the respondents strongest evidence in regard to the alleged
separation of petitioner from service effective July 1, 1989 would be the affidavit of
Wayne Lim, owning to being the employer of petitioner since July 1, 1989 and the
SSS report that he executed listing petitioner as one of his employees since said
date. But in light of the incontrovertible physical reality that petitioner and his coworkers did go to work day in and day out for such a long period of time, doing the
same thing and in the same place, without apparent discontinuity, except on paper,
these documents cannot be taken at their face value. We note that Wayne Lim
apparently inherited, at least on paper, ten (10) employees of respondent Crispin
Amigo Chan, including petitioner, all on the same day, i.e. on July 1, 1989. We note,
too, that while there exists an initial report of employees to the SSS by Wayne Lim,
no other document apart from his affidavit and business registration was offered by
respondents to bolster their contention, irrespective of the fact that Wayne Lim was
not a party respondent. What were the circumstances underlying such alleged mass
transfer of employment? Unfortunately, the evidence for the respondents does not
provide us with ready answers. We could conclude that respondents sold their
business in Ibajay and assets to Wayne Lim on July 1, 1989; however, as pointed
out above, respondent Crispin Amigo Chan himself said that he was a "copra
dealer" from Ibajay in August and October of 1991. Whether or not he was
registered as a copra buyer is immaterial, given that he declared himself a "copra
dealer" and had apparently engaged in the activity of buying copra, as shown
precisely by the employment of petitioner and Palomata. If Wayne Lim, from being
the respondents manager in Ibajay became an independent businessman and took
over the respondents business in Ibajay along with all their employees, why did not
the respondents simply state that fact for the record? More importantly, why did the
petitioner and Palomata continue believing that Wayne Lim was only the
respondents manager? Given the long employment of petitioner with the
respondents, was it possible for him and his witness to make such mistake? We do
not think so. In case of doubt, the doubt is resolved in favor of labor, in favor of the
safety and decent living for the laborer as mandated by Article 1702 of the Civil
Code. The reality of the petitioners toil speaks louder than words. xxx22
We agree with the CAs factual findings, because they were based on the evidence
and records of the case submitted before the LA. The CA essentially complied with
the guidepost that the substantiality of evidence depends on both its quantitative
and its qualitative aspects.23 Indeed, the records substantially established that Chan
and MSDC had employed Rogelio until 1997. In contrast, Chan and MSDC failed to
adduce credible substantiation of their averment that Rogelio had been Lims
employee from July 1989 until 1997. Credible proof that could outweigh the showing
by Rogelio to the contrary was demanded of Chan and MSDC to establish the
veracity of their allegation, for their mere allegation of Rogelios employment under
Lim did not constitute evidence,24 but they did not submit such proof, sadly failing to
discharge their burden of proving their own affirmative allegation.25 In this regard, as

34
we pointed out at the start, the doubts reasonably arising from the evidence are
resolved in favor of the laborer in any controversy between a laborer and his
master.

SOUTHEASTERN SHIPPING, SOUTHEASTERN SHIPPING GROUP, LTD.,


Petitioners,
vs.
FEDERICO U. NAVARRA, JR., Respondent.

III
DECISION
Respondent
from the petitioners

entitled

to

retirement

benefits
DEL CASTILLO, J.:

Article 287 of the Labor Code, as amended by Republic Act No. 7641, provides:
Article 287. Retirement. Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements; Provided, however, That an employees
retirement benefits under any collective bargaining and other agreements shall not
be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.

Money claims arising from employer-employee relations, including those specified in


the Standard Employment Contract for Seafarers, prescribe within three years from
1
the time the cause of action accrues. However, for death benefit claims to prosper,
the seafarers death must have occurred during the effectivity of said contract.
This Petition for Review assails the January 31, 2005 Decision2 and the April 4,
3
2005 Resolution of the Court of Appeals (CA) in CA-G.R. SP. No. 85584. The CA
dismissed the petition for certiorari filed before it assailing the May 7, 2003
4
Decision of the National Labor Relations Commission (NLRC) ordering petitioners
to pay to Evelyn J. Navarra (Evelyn), the surviving spouse of deceased Federico U.
Navarra, Jr. (Federico), death compensation, allowances of the three minor
children, burial expenses plus 10% of the total monetary awards as and for
attorney's fees.
Factual Antecedents

Unless the parties provide for broader inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay
and the cash equivalent of not more than five (5) days of service incentive leaves.

Petitioner Southeastern Shipping, on behalf of its foreign principal, petitioner


Southeastern Shipping Group, Ltd., hired Federico to work on board the vessel
"George McLeod." Federico signed 10 successive separate employment contracts
of varying durations covering the period from October 5, 1995 to March 30, 1998.
His latest contract was approved by the Philippine Overseas Employment
Administration (POEA) on January 21, 1998 for 56 days extendible for another 56
days. He worked as roustabout during the first contract and as a motorman during
the succeeding contracts.

Retail, service and agricultural establishments or operations employing not more


than ten (10) employees or workers are exempted from the coverage of this
provision.

On March 6, 1998, Federico, while on board the vessel, complained of having a


sore throat and on and off fever with chills. He also developed a soft mass on the
left side of his neck. He was given medication.

Violation of this provision is hereby declared unlawful and subject to the penal
provisions provided under Article 288 of this Code.

On March 30, 1998, Federico arrived back in the Philippines. On April 21, 1998 the
specimen excised from his neck lymph node was found negative for malignancy.5
On June 4, 1998, he was diagnosed at the Philippine General Hospital to be
suffering from a form of cancer called Hodgkin's Lymphoma, Nodular Sclerosing
Type (also known as Hodgkin's Disease). This diagnosis was confirmed in another
test conducted at the Medical Center Manila on June 8, 1998.

Was Rogelio entitled to the retirement benefits under Article 287 of the Labor Code,
as amended by Republic Act No. 7641?
The CA held so in its decision, to wit:
Having reached the conclusion that petitioner was an employee of the respondents
from 1950 to March 17, 1997, and considering his uncontroverted allegation that in
the Ibajay branch office where he was assigned, respondents employed no less
than 12 workers at said later date, thus affording private respondents no relief from
the duty of providing retirement benefits to their employees, we see no reason why
petitioner should not be entitled to the retirement benefits as provided for under
Article 287 of the Labor Code, as amended. The beneficent provisions of said law,
as applied in Oro Enterprises Inc. v. NLRC, is apart from the retirement benefits that
can be claimed by a qualified employee under the social security law. Attorneys
fees are also granted to the petitioner. But the monetary benefits claimed by
petitioner cannot be granted on the basis of the evidence at hand.26
We concur with the CAs holding. The third paragraph of the aforequoted provision
of the Labor Code entitled Rogelio to retirement benefits as a necessary
consequence of the finding that Rogelio was an employee of MSDC and Chan.
Indeed, there should be little, if any, doubt that the benefits under Republic Act No.
7641, which was enacted as a labor protection measure and as a curative statute to
respond, in part at least, to the financial well-being of workers during their twilight
years soon following their life of labor, can be extended not only from the date of its
enactment but retroactively to the time the employment contracts started.27
WHEREFORE, the Court denies the petition for review on certiorari, and affirms the
decision promulgated on October 24, 2003 in CA-G.R. SP No.75983.Costs of suit to
be paid by the petitioners.

On September 6, 1999, Federico filed a complaint against petitioners with the


arbitration branch of the NLRC claiming entitlement to disability benefits, loss of
earning capacity, moral and exemplary damages, and attorney's fees.
During the pendency of the case, on April 29, 2000, Federico died. His widow,
Evelyn, substituted him as party complainant on her own behalf and in behalf of
their three children. The claim for disability benefits was then converted into a claim
for death benefits.
Ruling of the Labor Arbiter
On May 10, 2000, Labor Arbiter Ermita T. Abrasaldo-Cuyuca rendered a Decision
dismissing the complaint on the ground that "Hodgkin's Lymphoma is not one of the
occupational or compensable diseases or the exact cause is not known," the
dispositive portion of which states:
WHEREFORE, premises considered judgment is hereby rendered dismissing the
complaint for lack of merit.
SO ORDERED.6
Evelyn appealed the Decision to the NLRC.
Ruling of the NLRC

G.R. No. 167678

June 22, 2010


On May 7, 2003, the NLRC rendered a Decision reversing that of the Labor Arbiter,
the dispositive portion of which provides:

35
WHEREFORE, the appealed decision is REVERSED and SET ASIDE. Judgment is
hereby rendered ordering the respondents Southeastern Shipping/Southeastern
Shipping Group Ltd. jointly and severally, to pay complainant Evelyn J. Navarra the
following:

Death compensation -

US$ 50,000.00

because he had already finished his contract, not because he had to undergo
further medical treatment.
They also insist that the complaint has already prescribed. Despite having been
diagnosed on June 4, 1998 of Hodgkin's Disease, the complaint was filed only on
September 6, 1999, one year and five months after Federico arrived in Manila from
Qatar.

Minor child allowance


(3 x US$ 7,000) -

21,000.00

Burial expense -

1,000.00

They also posit that respondents are not entitled to the benefits claimed because
Federico did not die during the term of his contract and the cause of his death was
not contracted by him during the term of his contract.
Respondents' Arguments

Total

US$ 72,000.00

Plus 10% of the total monetary awards as and for attorney's fees.
SO ORDERED.

Respondents also submit that Federico contracted on board the vessel the illness
which later caused his death, hence it is compensable.

Petitioners filed a Motion for Reconsideration which was denied by the NLRC. They,
thus, filed a petition for certiorari with the CA.
Ruling of the Court of Appeals
The CA found that the claim for benefits had not yet prescribed despite the
complaint being filed more than one year after Federico's return to the Philippines. It
also found that although Federico died 17 months after his contract had expired, his
heirs could still claim death benefits because the cause of his death was the same
illness for which he was repatriated. The dispositive portion of the CA Decision
states:
WHEREFORE, premises considered, petition is hereby DISMISSED for lack of
merit and the May 7, 2003 Decision of the National Labor Relations Commission is
hereby AFFIRMED en toto.1avvphi1
SO ORDERED.

Respondents on the other hand contend that the complaint has not prescribed and
that the prescriptive period for filing seafarer claims is three years from the time the
cause of action accrued. They claim that in case of conflict between the law and the
POEA Contract, it is the law that prevails.

After the denial by the CA of their motion for reconsideration, petitioners filed the
present petition for review.

Our Ruling
The petition is partly meritorious.
Prescription
The employment contract signed by Federico stated that "the same shall be
deemed an integral part of the Standard Employment Contract for Seafarers,"
Section 28 of which states:
SECTION 28. JURISDICTION
The Philippine Overseas Employment Administration (POEA) or the National Labor
Relations Commission (NLRC) shall have original and exclusive jurisdiction over
any and all disputes or controversies arising out of or by virtue of this Contract.
Recognizing the peculiar nature of overseas shipboard employment, the employer
and the seafarer agree that all claims arising from this contract shall be made within
one (1) year from the date of the seafarer's return to the point of hire.

Issues
On the other hand, the Labor Code states:
Petitioners raise the following issues:
I
THE HON. COURT OF APPEALS ERRED IN RULING THAT PRESCRIPTION
DOES NOT APPLY DESPITE THE LATE FILING OF THE COMPLAINT OF THE
RESPONDENT FEDERICO U. NAVARRA, JR.

Art. 291. Money claims.-All money claims arising from employer-employee relations
during the effectivity of this Code shall be filed within three (3) years from the time
the cause of action accrued; otherwise they shall forever be barred.
The Constitution affirms labor as a primary social economic force.10 Along this vein,
the State vowed to afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment
opportunities for all.11

II
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT HODGKIN'S
DISEASE IS A COMPENSABLE ILLNESS.
III
THE HON. COURT OF APPEALS ERRED IN ITS CONCLUSION THAT
PETITIONERS ARE LIABLE FOR THE DEATH OF THE RESPONDENT AS SUCH
DEATH WAS DURING THE TERM OF HIS EMPLOYMENT CONTRACT. 9
Petitioners' Arguments
Petitioners contend that the factual findings of the CA were not supported by
sufficient evidence. They argue that as can be seen from the medical report of Dr.
Salim Marangat Paul, Federico suffered from and was treated for Acute Respiratory
Tract Infection, not Hodgkin's Disease, during his employment in March 1998. They
further contend that Federico returned to the Philippines on March 30, 1998

"The employment of seafarers, including claims for death benefits, is governed by


the contracts they sign every time they are hired or rehired; and as long as the
stipulations therein are not contrary to law, morals, public order or public policy, they
have the force of law between the parties."12
In Cadalin v. POEA's Administrator,13 we held that Article 291 of the Labor Code
covers all money claims from employer-employee relationship. "It is not limited to
money claims recoverable under the Labor Code, but applies also to claims of
overseas contract workers".14
Based on the foregoing, it is therefore clear that Article 291 is the law governing the
prescription of money claims of seafarers, a class of overseas contract workers.
This law prevails over Section 28 of the Standard Employment Contract for
Seafarers which provides for claims to be brought only within one year from the date
of the seafarers return to the point of hire. Thus, for the guidance of all, Section 28
of the Standard Employment Contract for Seafarers, insofar as it limits the
prescriptive period within which the seafarers may file their money claims, is hereby
declared null and void. The applicable provision is Article 291 of the Labor Code, it
being more favorable to the seafarers and more in accord with the States declared

36
policy to afford full protection to labor. The prescriptive period in the present case is
thus three years from the time the cause of action accrues.1avvphi1
In the present case, there is no exact showing of when the cause of action accrued.
Nevertheless, it could not have accrued earlier than January 21, 1998 which is the
date of his last contract. Hence, the claim has not yet prescribed, since the
complaint was filed with the arbitration branch of the NLRC on September 6, 1999.
Compensability and Liability
In petitions for review on certiorari, only questions of law may be raised, the only
exceptions being when the factual findings of the appellate court are erroneous,
absurd, speculative, conjectural, conflicting, or contrary to the findings culled by the
court of origin. Considering the conflicting findings of the NLRC, the CA and the
Labor Arbiter, we are impelled to resolve the factual issues in this case along with
15
the legal ones.
Section 20 of the Standard Terms and Conditions Governing the Employment of
Filipino Seafarers On-Board Ocean-Going Vessels states:
A. COMPENSATION AND BENEFITS FOR DEATH
1. In case of death of the seafarer during the term of his contact, the employer
shall pay his beneficiaries the Philippine currency equivalent to the amount of Fifty
Thousand US Dollars (US$50,000) and an additional amount of Seven Thousand
US Dollars (US$7,000) to each child under the age of twenty-one (21) but not
exceeding four children, at the exchange rate prevailing during the time of payment.
(Emphasis supplied)
Thus, as we declared in Gau Sheng Phils., Inc. v. Joaquin, Hermogenes v. Oseo
Shipping Services, Inc., Prudential Shipping and Management Corporation v. Sta.
Rita, Klaveness Maritime Agency, Inc. v. Beneficiaries of Allas, in order to avail of
death benefits, the death of the employee should occur during the effectivity of the
employment contract.16 For emphasis, we reiterate that the death of a seaman
during the term of employment makes the employer liable to his heirs for death
compensation benefits, but if the seaman dies after the termination of his contract of
employment, his beneficiaries are not entitled to the death benefits.17 Federico did
not die while he was under the employ of petitioners. His contract of employment
ceased when he arrived in the Philippines on March 30, 1998, whereas he died on
April 29, 2000. Thus, his beneficiaries are not entitled to the death benefits under
the Standard Employment Contract for Seafarers.
Moreover, there is no showing that the cancer was brought about by Federico's stint
on board petitioners' vessel. The records show that he got sick a month after he
boarded M/V George Mcleod. He was then brought to a doctor who diagnosed him
to have acute respiratory tract infection. It was only on June 6, 1998, more than two
months after his contract with petitioners had expired, that he was diagnosed to
have Hodgkin's Disease. There is no proof and we are not convinced that his
exposure to the motor fumes of the vessel, as alleged by Federico, caused or
aggravated his Hodgkin's Disease.
While the Court adheres to the principle of liberality in favor of the seafarer in
construing the Standard Employment Contract, we cannot allow claims for
compensation based on surmises. When the evidence presented negates
compensability, we have no choice but to deny the claim, lest we cause injustice to
the employer.
The law in protecting the rights of the employees, authorizes neither oppression nor
self-destruction of the employer there may be cases where the circumstances
warrant favoring labor over the interests of management but never should the scale
be so tilted as to result in an injustice to the employer.18
WHEREFORE, the petition is PARTLY GRANTED. The January 31, 2005 Decision
of the Court of Appeals in CA-G.R. SP No. 85584 holding that the claim for death
benefits has not yet prescribed is AFFIRMED with MODIFICATION that petitioners
are not liable to pay to respondents death compensation benefits for lack of showing
that Federicos disease was brought about by his stint on board petitioners vessels
and also considering that his death occurred after the effectivity of his contract.

You might also like