[G.R. No. 125735.

August 26, 1999]

LORLENE A. GONZALES, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, FIFTH DIVISION, CAGAYAN DE ORO CITY, and ATENEO
DE DAVAO UNIVERSITY, respondents.
D E C I S I O N

SYNOPSIS
Petitioner has been a schoolteacher in Ateneo de Davao since 1974. In 1991,
petitioner was informed of complaints from two parents for her alleged use of corporal
punishment on her students. She demanded that she be formally informed of the
complaint and be duly investigated. An Investigative Committee was then organized
and petitioner was duly furnished with the rules of procedure. However, petitioner
refused to take part in the investigation, asking for the revision of the rules as the
same are violative of her right to due process. The Committee, steadfast in adopting
its rules of procedure, commenced with the investigation over the objection and non-
participation of petitioner. Later, based on the findings of the Committee, petitioner
was served a Notice of Termination. She then filed a complaint for illegal dismissal
and the Labor Arbiter ruled in her favor saying that there was failure to establish
substantial evidence as to the guilt of petitioner of the offense charged. But on appeal
to the NLRC, the same was reversed.
Upon being notified of the termination, petitioner, in her demand for compliance
with the basic requirements of due process, at the very onset of the investigation,
asked for the revision of the rules laid down by the Investigative Committee. And the
adamant refusal of the Committee to accede to this demand resulted in petitioners
failure to confront and cross-examine her accusers. This is a serious violation of
petitioners right to due process that ultimately vitiated the investigation. Further, there
was failure to prove by substantial evidence that petitioner had indeed inflicted
corporal punishment on her students. The NLRC relied solely on the witnesses
affidavits with questionable veracity, while petitioner proved by means of affidavits,
letters of petition and manifesto made by her students and co-teachers that she was a
competent and dedicated teacher. The conclusion of the NLRC being unwarranted,
the same was reversed and set aside.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT;
ILLEGAL DISMISSAL; DUE PROCESS; ELUCIDATED. - Upon being notified
of her termination, petitioner has the right to demand compliance with the basic
requirements of due process. Compliance entails the twin requirements of
procedural and substantial due process. Ample opportunity must be afforded the
employee to defend herself either personally and/or with assistance of a
representative; to know the nature of her offense; and, to cross examine and
confront face to face the witnesses against her. Likewise, due process requires
that the decision must be based on established facts and on a sound legal
foundation.
2. ID.; ID.; ID.; ID.; NOT AFFORDED PETITIONER IN CASE AT BAR. - It is
precisely to demand compliance with the requirements of due process that
petitioner at the very onset of the investigation demanded the revision of the
rules laid down by the Investigative Committee. The adamant refusal of the
Committee to accede to this demand resulted in her failure to confront and
cross-examine her accusers. This is not harping at technicalities as wrongfully
pointed out by the NLRC but a serious violation of petitioners statutory and
constitutional right to due process that ultimately vitiated the investigation.
3. ID.; ID.; ID.; NOT JUSTIFIED BY SUBSTANTIAL EVIDENCE IN CASE AT BAR. -
The failure of ATENEO to refute the contention of petitioner that the joint
affidavits executed by the students and parents were pre-prepared raises
serious doubts as to the probative value of this evidence. They are hearsay
evidence that has no probative value whether objected to or not. ATENEO failed
to prove by substantial evidence that petitioner had inflicted corporal punishment
on her students. In Ang Tibay v. CIR, the Court set the measure of evidence to
be presented in an administrative investigation when it said, substantial
evidence is more than mere scintilla. It means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion. The
evidence of private respondent did not measure up to this standard. It relied
solely on the witnesses affidavits with questionable veracity. Moreover, the
affidavit of recantation executed by some students and their parents all the more
weakened the case of private respondent. Failure in this regard negates the
very existence of the ground for dismissal.
4. ID.; EMPLOYMENT; SIGNIFICANCE AS A RIGHT. -Employment is not merely a
contractual relationship; it has assumed the nature of property right. It may spell
the difference whether or not a family will have food on their table, roof over their
heads and education for their children. It is for this reason that the State has
taken up measures to protect employees from unjustified dismissals. It is also
because of this that the right to security of tenure is not only a statutory right but,
more so, a constitutional right.

BELLOSILLO, J .:
By way of certiorari under Rule 65 of the Rules of Court petitioner seeks the
nullification of the Decision of public respondent National Labor Relations
Commission, Fifth Division, which reversed and set aside that of Executive Labor
Arbiter Conchita J. Martinez.
Lorlene Gonzales, petitioner, has been a schoolteacher in the Elementary
Department of private respondent Ateneo de Davao University (hereafter ATENEO)
since 1974 assigned to teach Reading, Mathematics, Language and Pilipino in the
Grade VI class, while ATENEO is an educational institution, a corporation duly
organized under the laws of the Philippines, with principal address at Jacinto St.,
Davao City.
Sometime in 1991 Fr. Oscar Millar, S.J., Ateneo Grade School Headmaster,
sent a letter dated 11 April 1991 informing petitioner Lorlene A. Gonzales of the
complaints of two (2) parents for alleged use of corporal punishment on her
students. Petitioner claimed that she was not informed of the identity of the parents
who allegedly complained of the corporal punishment she purportedly inflicted in
school-year 1990-1991. She likewise claimed that she was not confronted about it by
private respondent ATENEO in 1991 and that it was only two (2) years after the
complaints were made that she discovered, through her students and their parents,
that ATENEO was soliciting complainants to lodge written complaints against her.
On 31 March 1993 she wrote a letter to Fr. Oscar Millar, S.J., demanding that
she be formally informed of the complaint and be duly investigated.
On 9 June 1993 petitioner was informed of the composition of an investigative
committee organized by Fr. Oscar Millar, S.J., to look into the alleged use of corporal
punishment by petitioner in disciplining her students. It can be gleaned from the
records that she was duly furnished with the rules of procedure, informed of the
schedule of the hearings, and given copies of the affidavits executed by the students
who testified against her.
Petitioner refused to take part in the investigation unless the rules of procedure
laid down by the Committee be revised, contending that the same were violative of
her right to due process. Petitioner specifically objected to the provision which
stated: x x x 3) Counsel for Ms. Lorlene Gonzales shall not directly participate in the
investigation but will merely advise Ms. Gonzales x x x (par. 3).
[1]

But the Committee was steadfast in its resolve to adopt the aforementioned
rules. In its letter dated 9 August 1993, private respondent informed petitioner that
the rules of procedure to be applied were substantially the same rules that were used
in the investigation of a former Ateneo employee and therefore we are under legal
advice not to change these rules."
[2]
Over the objection of petitioner the Committee
commenced with its investigation without petitioners participation. Out of the twenty -
two (22) invitations sent out by ATENEO to petitioners students and their parents to
shed light on the matter of corporal punishment allegedly administered by her,
eleven (11) appeared and testified before the committee. The eleven (11) witnesses
also executed written statements denominated as affidavits.
On 10 November 1993 private respondent served a Notice of Termination on
petitioner pursuant to the findings and recommendation of the
Committee. Thereafter, petitioner received a letter from the president of ATENEO
demanding her voluntary resignation a week from receipt of the letter, otherwise, she
would be considered resigned from the service.
On 29 November 1993 petitioner filed a complaint before the Labor Arbiter for
illegal dismissal. After trial, Executive Labor Arbiter Conchita J. Martinez found her
dismissal illegal for lack of factual basis and ordered ATENEO to award petitioner
separation pay, back wages and 13th month pay. In her decision, the Executive
Labor Arbiter opined that although petitioner was afforded procedural due process
respondent institution failed to establish substantial evidence as to the guilt of the
complainant of the offense charged"
[3]
thus -
x x x the complainant was afforded procedural due process. There is convincing and
sufficient evidence x x x showing respondent complied with the notice and hearing
requirement x x x x.
[4]

After considering the evidence, arguments and counter-arguments of the parties, this
office finds that the respondent failed to establish substantial evidence as to the guilt
of complainant of the offense charged x x x x.
[5]

Complainant has sufficiently established that she is a very good teacher. She is
equipped with the appropriate educational qualifications, trainings, seminars and work
experiences. Such fact was affirmed by her present and former students, their
parents, colleagues and the former headmaster of the grade school x x x x
[6]

As a matter of fact, six (6) out of the nine (9) students and their parents/guardians
have retracted and withdrawn their statements x x x x
[7]

Both parties appealed to the NLRC which on 25 March 1996 reversed the
decision of the Executive Labor Arbiter by declaring petitioners dismissal valid and
legal but added that since ATENEO offered petitioner her retirement benefits it was
but proper that she be extended said benefits. Petitioner now seeks the reversal of
the decision; hence, this petition.
The crux of the controversy is whether the NLRC committed grave abuse of
discretion in sustaining as valid and legal the dismissal of petitioner by private
respondent ATENEO.
The NLRC, in our view, appears to have skirted several important issues raised
by petitioner foremost of which is the absence of due process. Upon being notified of
her termination, she has the right to demand compliance with the basic requirements
of due process. Compliance entails the twin requirements of procedural and
substantial due process. Ample opportunity must be afforded the employee to defend
herself either personally and/or with assistance of a representative; to know the
nature of her offense; and, to cross examine and confront face to face the witnesses
against her. Likewise, due process requires that the decision must be based on
established facts and on a sound legal foundation.
It is precisely to demand compliance with these requirements that petitioner at
the very onset of the investigation demanded the revision of the rules laid down by
the Investigative Committee. The adamant refusal of the Committee to accede to this
demand resulted in her failure to confront and cross-examine her accusers. This is
not harping at technicalities as wrongfully pointed out by the NLRC but a serious
violation of petitioner's statutory and constitutional right to due process that ultimately
vitiated the investigation.
Moreover, the failure of ATENEO to refute the contention of petitioner that the
joint affidavits executed by the students and parents were "pre-prepared" raises
serious doubts as to the probative value of this evidence. As correctly pointed out by
the Executive Labor Arbiter, there is more reason to disregard it especially where the
same was challenged and has remained unexplained. Hearsay evidence, in the strict
sense, has no probative value whether objected to or not.
In the instant case, ATENEO failed to prove by substantial evidence that
petitioner had inflicted corporal punishment on her students. In Ang Tibay v. CIR, the
Court set the measure of evidence to be presented in an administrative investigation
when it said, substantial evidence is more than mere scintilla. It means such
relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. The evidence of private respondent did not measure up to this
standard. It relied solely on the witnesses affidavits with questionable
veracity. Moreover, the affidavit of recantation executed by some students and their
parents all the more weakened the case of private respondent. Failure in this regard
negates the very existence of the ground for dismissal.
On the other hand, petitioner adequately proved, by means of affidavits, letters
of petition and manifesto made by her students and co-teachers, that she was a
competent and dedicated teacher having spent seventeen (17) years of her life in the
service of the very institution which is now seeking her dismissal.
In view of the foregoing, the conclusion of the NLRC is
unwarranted. Employment is not merely a contractual relationship; it has assumed
the nature of property right. It may spell the difference whether or not a family will
have food on their table, roof over their heads and education for their children. It is
for this reason that the State has taken up measures to protect employees from
unjustified dismissals. It is also because of this that the right to security of tenure is
not only a statutory right but, more so, a constitutional right.
WHEREFORE, the assailed Decision of public respondent National Labor
Relations Commission dated 25 March 1996 is REVERSED and SET ASIDE, and the
decision of Executive Labor Arbiter Conchita J. Martinez declaring the dismissal of
complainant Lorlene A. Gonzales illegal for lack of factual basis and ordering
respondent Ateneo de Davao University to pay complainant separation pay, back
wages and 13th month pay in the total amount of TWO HUNDRED SIXTEEN
THOUSAND NINE HUNDRED THIRTY-EIGHT and 70/100 PESOS (P216,938.70) x
x x [f]urther, ordering respondent to pay 10% of the total monetary award as
attorney's fees to counsel for complainant x x x [d]ismissing all other claims for lack of
merit, is REINSTATED, AFFIRMED and ADOPTED herein as the decision in the
instant case.
SO ORDERED.
Mendoza, Quisumbing, and Buena JJ., concur.

SECOND DIVISION
[G.R. No. 108405. April 4, 2003]
JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO, DANILO C.
BALANAG, FERDINAND DELLA, EDWARD A. ABELLERA, ALEXANDER
ABANAG, DOMINGO ASIA, FRANCISCO BAYUGA, ARTHUR M.
ORIBELLO, BUENAVENTURA DE GUZMAN, JR., ROBERT A. ORDOO,
BERNARD V. JULARBAL, IGNACIO C. ALINGBAS and LEODEL N.
SORIANO, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION (THIRD DIVISION), and BENGUET ELECTRIC
COOPERATIVE, INC. (BENECO) respondents.
D E C I S I O N
AUSTRIA-MARTINEZ, J .:
Before us is a petition for certiorari seeking to annul the decision promulgated by
the National Labor Relations Commission (NLRC) on July 2, 1992 in NLRC CA No. L-
000384-92,
[1]
and its resolution dated September 24, 1992 denying petitioners motion
for reconsideration.
The factual background of this case, as summarized by the Labor Arbiter, is as
follows:
Fifteen (15) in all, these are consolidated cases for illegal dismissal, underpayment of
wages and claim for indemnity pay against a common respondent, the Benguet
Electric Cooperative, Inc., (BENECO for short) represented by its Acting General
Manager, Gerardo P. Versoza.
Complainants services as meter readers were contracted for hardly a months
duration, or from October 8 to 31, 1990. Their employment contracts, couched in
identical terms, read:
You are hereby appointed as METER READER (APPRENTICE) under BENECO-
NEA Management with compensation at the rate of SIXTY-SIX PESOS AND
SEVENTY-FIVE CENTAVOS (P66.75) per day from October 08 to 31, 1990.
x x x. (Annex B, Complainants Joint Position Paper)
The said term notwithstanding, the complainants were allowed to work beyond
October 31, 1990, or until January 2, 1991. On January 3, 1991, they were each
served their identical notices of termination dated December 29, 1990. The same
read:
Please be informed that effective at the close of office hours of December 31, 1990,
your services with the BENECO will be terminated. Your termination has nothing to
do with your performance. Rather, it is because we have to retrench on personnel as
we are already overstaffed.
x x x. (Annex C, CJPP)
On the same date, the complainants filed separate complaints for illegal
dismissal. And following the amendment of said complaints, they submitted their joint
position paper on April 4, 1991. Respondent filed its position paper on April 2, 1991.
It is the contention of the complainants that they were not apprentices but regular
employees whose services were illegally and unjustly terminated in a manner that
was whimsical and capricious. On the other hand, the respondent invokes Article 283
of the Labor Code in defense of the questioned dismissal.
[2]

On October 18, 1991, the Labor Arbiter rendered a decision, the dispositive
portion of which reads as follows:
WHEREFORE, judgment is hereby rendered:
1. Dismissing the complaints for illegal dismissal filed by the complainants for lack
of merit. However in view of the offer of the respondent to enter into another
temporary employment contract with the complainants, the respondent is directed to
so extend such contract to each complainant, with the exception of Jaime Viernes,
and to pay each the amount of P2,590.50, which represents a months salary, as
indemnity for its failure to give complainants the 30-day notice mandated under Article
283 of the Labor Code; or, at the option of the complainants, to pay each financial
assistance in the amount ofP5,000.00 and the P2,590.50 above-mentioned.
2. Respondent is also ordered:
A. To pay complainants the amount representing underpayment of their wages:
a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward Abellera, Francisco
Bayuga, Arthur Oribello, Buenaventura de Guzman, Jr., Robert Ordoo, Bernard
Jularbal and Leodel Soriano, P1,994.25 each;
b) Bernard Bustillo and Domingo Asia, P1,838.50 each; and
c) Ferdinand Della, Alexander Abanag and Ignacio Alingbas, P1,816.25 each.
B. To extend to complainant Jaime Viernes an appointment as regular
employee for the position of meter reader, the job he held prior to his termination, and
to pay him P2,590.50 as indemnity, plus the underpayment of his wages as above
stated.
C. To pay P7,000.00 as and for attorneys fees.
No damages.
SO ORDERED.
[3]

Aggrieved by the Labor Arbiters decision, the complainants and the respondent
filed their respective appeals to the NLRC.
On July 2, 1992, the NLRC modified its judgment, to wit:
WHEREFORE, premises considered, judgment is hereby rendered modifying the
appealed decision by declaring complainants dismissal illegal, thus ordering their
reinstatement to their former position as meter readers or to any equivalent position
with payment of backwages limited to one year and deleting the award of indemnity
and attorneys fees. The award of underpayment of wages is hereby AFFIRMED.
SO ORDERED.
[4]

On August 27, 1992, complainants filed a Motion for Clarification and Partial
Reconsideration.
[5]
On September 24, 1992, the NLRC issued a resolution denying
the complainants motion for reconsideration.
[6]

Hence, complainants filed herein petition.
Private respondent BENECO filed its Comment; the Office of the Solicitor
General (OSG) filed a Manifestation and Motion in Lieu of Comment; public
respondent NLRC filed its own Comment; and petitioners filed their Manifestation and
Motion In Lieu of Consolidated Reply. Public respondent NLRC, herein petitioners,
and private respondent filed their respective memoranda, and the OSG, its
Manifestation in 1994.
Pursuant to our ruling in Rural Bank of Alaminos Employees Union vs.
NLRC,
[7]
to wit:
in the decision in the case of St. Martin Funeral Homes vs. National Labor
Relations Commission, G.R. No. 130866, promulgated on September 16, 1998, this
Court pronounced that petitions for certiorarirelating to NLRC decisions must be filed
directly with the Court of Appeals, and labor cases pending before this Court should
be referred to the appellate court for proper disposition. However, in cases where the
Memoranda of both parties have been filed with this Court prior to the promulgation of
the St. Martin decision, the Court generally opts to take the case itself for its final
disposition.
[8]

and considering that the parties have filed their respective memoranda as of 1994, we
opt to resolve the issues raised in the present petition.
The parties raised the following issues:
1. Whether the respondent NLRC committed grave abuse of discretion in ordering
the reinstatement of petitioners to their former position as meter readers on
probationary status in spite of its finding that they are regular employees under Article
280 of the Labor Code.
2. Whether the respondent NLRC committed grave abuse of discretion in limiting
the backwages of petitioners to one year only in spite of its finding that they were
illegally dismissed, which is contrary to the mandate of full backwages until actual
reinstatement but not to exceed three years.
3. Whether the respondent NLRC committed grave abuse of discretion in deleting
the award of indemnity pay which had become final because it was not appealed and
in deleting the award of attorneys fees because of the absence of a trial-type hearing.
4. Whether the mandate of immediately executory on the reinstatement aspect
even pending appeal as provided in the decision of Labor Arbiters equally applies in
the decision of the National Labor Relations Commission even pending appeal, by
means of a motion for reconsideration of the order reinstating a dismissed employee
or pending appeal because the case is elevated on certiorari before the Supreme
Court.
[9]

We find the petition partly meritorious.
As to the first issue: We sustain petitioners claim that they should be reinstated
to their former position as meter readers, not on a probationary status, but as regular
employees.
Reinstatement means restoration to a state or condition from which one had
been removed or separated.
[10]
In case of probationary employment, Article 281 of the
Labor Code requires the employer to make known to his employee at the time of the
latters engagement of the reasonable standards under which he may qualify as a
regular employee.
A review of the records shows that petitioners have never been probationary
employees. There is nothing in the letter of appointment, to indicate that their
employment as meter readers was on a probationary basis. It was not shown that
petitioners were informed by the private respondent, at the time of the latters
employment, of the reasonable standards under which they could qualify as regular
employees. Instead, petitioners were initially engaged to perform their job for a
limited duration, their employment being fixed for a definite period, from October 8 to
31, 1990.
Private respondents reliance on the case of Brent School, Inc. vs.
Zamora,
[11]
wherein we held as follows:
Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code clearly appears to have
been, as already observed, to prevent circumvention of the employees right to be
secure in his tenure, the clause in said article indiscriminately and completely ruling
out all written or oral agreements conflicting with the concept of regular employment
as defined therein should be construed to refer to the substantive evil that the Code
itself has singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties, without any
force, duress or improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent, or where it satisfactorily
appears that the employer and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former over the
latter.
[12]

is misplaced.
The principle we have enunciated in Brent applies only with respect to fixed term
employments. While it is true that petitioners were initially employed on a fixed term
basis as their employment contracts were only for October 8 to 31, 1990, after
October 31, 1990, they were allowed to continue working in the same capacity as
meter readers without the benefit of a new contract or agreement or without the term
of their employment being fixed anew. After October 31, 1990, the employment of
petitioners is no longer on a fixed term basis. The complexion of the employment
relationship of petitioners and private respondent is thereby totally
changed. Petitioners have attained the status of regular employees.
Under Article 280 of the Labor Code, a regular employee is one who is engaged
to perform activities which are necessary or desirable in the usual business or trade
of the employer, or a casual employee who has rendered at least one year of service,
whether continuous or broken, with respect to the activity in which he is employed.
In De Leon vs. NLRC,
[13]
and Abasolo vs. NLRC,
[14]
we laid down the test in
determining regular employment, to wit:
The primary standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to
the usual trade or business of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and
its relation to the scheme of the particular business or trade in its entirety. Also if the
employee has been performing the job for at least a year, even if the performance is
not continuous and merely intermittent, the law deems repeated and continuing need
for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered regular, but only with
respect to such activity and while such activity exists.
[15]

Clearly therefrom, there are two separate instances whereby it can be
determined that an employment is regular: (1) The particular activity performed by the
employee is necessary or desirable in the usual business or trade of the employer; or
(2) if the employee has been performing the job for at least a year.
Herein petitioners fall under the first category. They were engaged to perform
activities that are necessary to the usual business of private respondent. We agree
with the labor arbiters pronouncement that the job of a meter reader is necessary to
the business of private respondent because unless a meter reader records the
electric consumption of the subscribing public, there could not be a valid basis for
billing the customers of private respondent. The fact that the petitioners were allowed
to continue working after the expiration of their employment contract is evidence of
the necessity and desirability of their service to private respondents business. In
addition, during the preliminary hearing of the case on February 4, 1991, private
respondent even offered to enter into another temporary employment contract with
petitioners. This only proves private respondents need for the services of herein
petitioners. With the continuation of their employment beyond the original term,
petitioners have become full-fledged regular employees. The fact alone that
petitioners have rendered service for a period of less than six months does not make
their employment status as probationary.
Since petitioners are already regular employees at the time of their illegal
dismissal from employment, they are entitled to be reinstated to their former position
as regular employees, not merely probationary.
As to the second issue, Article 279 of the Labor Code, as amended by R.A. No.
6715, which took effect on March 21, 1989, provides that an illegally dismissed
employee is entitled to full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. Since petitioners were
employed on October 8, 1990, the amended provisions of Article 279 of the Labor
Code shall apply to the present case. Hence, it was patently erroneous, tantamount
to grave abuse of discretion on the part of the public respondent in limiting to one
year the backwages awarded to petitioners.
With respect to the third issue, an employer becomes liable to pay indemnity to
an employee who has been dismissed if, in effecting such dismissal, the employer
fails to comply with the requirements of due process.
[16]
The indemnity is in the form
of nominal damages intended not to penalize the employer but to vindicate or
recognize the employees right to procedural due process which was violated by the
employer.
[17]
Under Article 2221 of the Civil Code, nominal damages are adjudicated
in order that a right of the plaintiff, which has been violated or invaded by the
defendant, may be vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him.
We do not agree with the ruling of the NLRC that indemnity is incompatible with
the award of backwages. These two awards are based on different
considerations. Backwages are granted on grounds of equity to workers for earnings
lost due to their illegal dismissal from work.
[18]
On the other hand, the award of
indemnity, as we have earlier held, is meant to vindicate or recognize the right of an
employee to due process which has been violated by the employer.
In the present case, the private respondent, in effecting the dismissal of
petitioners from their employment, failed to comply with the provisions of Article 283
of the Labor Code which requires an employer to serve a notice of dismissal upon the
employees sought to be terminated and to the Department of Labor, at least one
month before the intended date of termination. Petitioners were served notice on
January 3, 1991 terminating their services, effective December 29, 1990, or
retroactively, in contravention of Article 283. This renders the private respondent
liable to pay indemnity to petitioners.
Thus, we find that the NLRC committed grave abuse of discretion in deleting the
award of indemnity. In Del Val vs. NLRC,
[19]
we held that the award of indemnity
ranges fromP1,000.00 to P10,000.00 depending on the particular circumstances of
each case. In the present case, the amount of indemnity awarded by the labor arbiter
is P2,590.50, which is equivalent to petitioners one-month salary. We find no cogent
reason to modify said award, for being just and reasonable.
As to the award of attorneys fees, the same is justified by the provisions of
Article 111 of the Labor Code, to wit:
Art. 111. Attorneys fees (a) In cases of unlawful withholding of wages the culpable
party may be assessed attorneys fees equivalent to ten percent of the amount of
wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial or
administrative proceedings for the recovery of the wages, attorneys fees which
exceed ten percent of the amount of wages recovered.
As to the last issue, Article 223 of the Labor Code is plain and clear that the
decision of the NLRC shall be final and executory after ten (10) calendar days from
receipt thereof by the parties. In addition, Section 2(b), Rule VIII of the New Rules of
Procedure of the NLRC provides that should there be a motion for reconsideration
entertained pursuant to Section 14, Rule VII of these Rules, the decision shall be
executory after ten calendar days from receipt of the resolution on such motion.
We find nothing inconsistent or contradictory between Article 223 of the Labor
Code and Section 2(b), Rule VIII, of the NLRC Rules of Procedure. The aforecited
provision of the NLRC Rules of Procedure merely provides for situations where a
motion for reconsideration is filed. Since the Rules allow the filing of a motion for
reconsideration of a decision of the NLRC, it simply follows that the ten-day period
provided under Article 223 of the Labor Code should be reckoned from the date of
receipt by the parties of the resolution on such motion. In the case at bar, petitioners
received the resolution of the NLRC denying their motion for reconsideration on
October 22, 1992. Hence, it is on November 2, 1992 that the questioned decision
became executory.
WHEREFORE, the petition is partially GRANTED. The decision of the National
Labor Relations Commission dated July 2, 1992 is MODIFIED. Private respondent
Benguet Electric Cooperative, Inc. (BENECO) is hereby ordered to reinstate
petitioners to their former or substantially equivalent position as regular employees,
without loss of seniority rights and other privileges appurtenant thereto, with full
backwages from the time of their dismissal until they are actually reinstated. The
amount of P2,590.50 awarded by the labor arbiter as indemnity to petitioners is
REINSTATED. Private respondent is also ordered to pay attorneys fees in the
amount of ten percent (10%) of the total monetary award due to the petitioners. In all
other respects the assailed decision and resolution are AFFIRMED.
Costs against private respondent BENECO.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Callejo, Sr., JJ., concur.



G.R. No. 158693
JENNY M. AGABON and VIRGILIO C. AGABON vs. NATIONAL LABOR
RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. and
VICENTE ANGELES,



YNARES-SANTIAGO, J.:

This petition for review seeks to reverse the decision[1] of the Court of Appeals
dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National
Labor Relations Commission (NLRC) in NLRC-NCR Case No. 023442-00.

Private respondent Riviera Home Improvements, Inc. is engaged in the
business of selling and installing ornamental and construction materials. It employed
petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers
on January 2, 1992[2] until February 23, 1999 when they were dismissed for
abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money claims[3]
and on December 28, 1999, the Labor Arbiter rendered a decision declaring the
dismissals illegal and ordered private respondent to pay the monetary claims. The
dispositive portion of the decision states:

WHEREFORE, premises considered, We find the termination of the
complainants illegal. Accordingly, respondent is hereby ordered to pay them their
backwages up to November 29, 1999 in the sum of:

1. Jenny M. Agabon - P56, 231.93
2. Virgilio C. Agabon - 56, 231.93

and, in lieu of reinstatement to pay them their separation pay of one (1) month for
every year of service from date of hiring up to November 29, 1999.

Respondent is further ordered to pay the complainants their holiday pay and
service incentive leave pay for the years 1996, 1997 and 1998 as well as their
premium pay for holidays and rest days and Virgilio Agabons 13th month pay
differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00)
Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX
HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and
ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT
& 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation of
Julieta C. Nicolas, OIC, Research and Computation Unit, NCR.

SO ORDERED.[4]


On appeal, the NLRC reversed the Labor Arbiter because it found that the
petitioners had abandoned their work, and were not entitled to backwages and
separation pay. The other money claims awarded by the Labor Arbiter were also
denied for lack of evidence.[5]

Upon denial of their motion for reconsideration, petitioners filed a petition for
certiorari with the Court of Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not
illegal because they had abandoned their employment but ordered the payment of
money claims. The dispositive portion of the decision reads:

WHEREFORE, the decision of the National Labor Relations Commission is
REVERSED only insofar as it dismissed petitioners money claims. Private
respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in
1996, 1997, and 1998, as well as their service incentive leave pay for said years, and
to pay the balance of petitioner Virgilio Agabons 13th month pay for 1998 in the
amount of P2,150.00.

SO ORDERED.[6]

Hence, this petition for review on the sole issue of whether petitioners were
illegally dismissed.[7]

Petitioners assert that they were dismissed because the private respondent refused
to give them assignments unless they agreed to work on a pakyaw basis when they
reported for duty on February 23, 1999. They did not agree on this arrangement
because it would mean losing benefits as Social Security System (SSS) members.
Petitioners also claim that private respondent did not comply with the twin
requirements of notice and hearing.[8]

Private respondent, on the other hand, maintained that petitioners were not
dismissed but had abandoned their work.[9] In fact, private respondent sent two
letters to the last known addresses of the petitioners advising them to report for work.
Private respondents manager even talked to petitioner Virgilio Agabon by telephone
sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers
involving 40,000 square meters of cornice installation work. However, petitioners did
not report for work because they had subcontracted to perform installation work for
another company. Petitioners also demanded for an increase in their wage to
P280.00 per day. When this was not granted, petitioners stopped reporting for work
and filed the illegal dismissal case.[10]

It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are
accorded not only respect but even finality if the findings are supported by substantial
evidence. This is especially so when such findings were affirmed by the Court of
Appeals.[11] However, if the factual findings of the NLRC and the Labor Arbiter are
conflicting, as in this case, the reviewing court may delve into the records and
examine for itself the questioned findings.[12]

Accordingly, the Court of Appeals, after a careful review of the facts, ruled that
petitioners dismissal was for a just cause. They had abandoned their employment
and were already working for another employer.

To dismiss an employee, the law requires not only the existence of a just and
valid cause but also enjoins the employer to give the employee the opportunity to be
heard and to defend himself.[13] Article 282 of the Labor Code enumerates the just
causes for termination by the employer: (a) serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or the latters
representative in connection with the employees 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 his 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.

Abandonment is the deliberate and unjustified refusal of an employee to
resume his employment.[14] It is a form of neglect of duty, hence, a just cause for
termination of employment by the employer.[15] For a valid finding of abandonment,
these two factors should be present: (1) the failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to sever employer-
employee relationship, with the second as the more determinative factor which is
manifested by overt acts from which it may be deduced that the employees has no
more intention to work. The intent to discontinue the employment must be shown by
clear proof that it was deliberate and unjustified.[16]

In February 1999, petitioners were frequently absent having subcontracted for
an installation work for another company. Subcontracting for another company
clearly showed the intention to sever the employer-employee relationship with private
respondent. This was not the first time they did this. In January 1996, they did not
report for work because they were working for another company. Private respondent
at that time warned petitioners that they would be dismissed if this happened again.
Petitioners disregarded the warning and exhibited a clear intention to sever their
employer-employee relationship. The record of an employee is a relevant
consideration in determining the penalty that should be meted out to him.[17]

In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately
absented from work without leave or permission from his employer, for the purpose of
looking for a job elsewhere, is considered to have abandoned his job. We should
apply that rule with more reason here where petitioners were absent because they
were already working in another company.

The law imposes many obligations on the employer such as providing just
compensation to workers, observance of the procedural requirements of notice and
hearing in the termination of employment. On the other hand, the law also recognizes
the right of the employer to expect from its workers not only good performance,
adequate work and diligence, but also good conduct[19] and loyalty. The employer
may not be compelled to continue to employ such persons whose continuance in the
service will patently be inimical to his interests.[20]

After establishing that the terminations were for a just and valid cause, we now
determine if the procedures for dismissal were observed.

The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d)
of the Omnibus Rules Implementing the Labor Code:

Standards of due process: requirements of notice. In all cases of termination of
employment, the following standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282
of the Code:

(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;

(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond to
the charge, present his evidence or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon
due consideration of all the circumstances, grounds have been established to justify
his termination.

In case of termination, the foregoing notices shall be served on the
employees last known address.

Dismissals based on just causes contemplate acts or omissions attributable to the
employee while dismissals based on authorized causes involve grounds under the
Labor Code which allow the employer to terminate employees. A termination for an
authorized cause requires payment of separation pay. When the termination of
employment is declared illegal, reinstatement and full backwages are mandated
under Article 279. If reinstatement is no longer possible where the dismissal was
unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the
employer must give the employee two written notices and a hearing or opportunity to
be heard if requested by the employee before terminating the employment: a notice
specifying the grounds for which dismissal is sought a hearing or an opportunity to be
heard and after hearing or opportunity to be heard, a notice of the decision to dismiss;
and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor and Employment
written notices 30 days prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the
dismissal is for a just cause under Article 282 of the Labor Code, for an authorized
cause under Article 283, or for health reasons under Article 284, and due process
was observed; (2) the dismissal is without just or authorized cause but due process
was observed; (3) the dismissal is without just or authorized cause and there was no
due process; and (4) the dismissal is for just or authorized cause but due process
was not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will not
suffer any liability.

In the second and third situations where the dismissals are illegal, Article 279
mandates that the employee is entitled to reinstatement without loss of seniority rights
and other privileges and full backwages, inclusive of allowances, and other benefits or
their monetary equivalent computed from the time the compensation was not paid up
to the time of actual reinstatement.

In the fourth situation, the dismissal should be upheld. While the procedural
infirmity cannot be cured, it should not invalidate the dismissal. However, the
employer should be held liable for non-compliance with the procedural requirements
of due process.

The present case squarely falls under the fourth situation. The dismissal should
be upheld because it was established that the petitioners abandoned their jobs to
work for another company. Private respondent, however, did not follow the notice
requirements and instead argued that sending notices to the last known addresses
would have been useless because they did not reside there anymore. Unfortunately
for the private respondent, this is not a valid excuse because the law mandates the
twin notice requirements to the employees last known address.[21] Thus, it should
be held liable for non-compliance with the procedural requirements of due process.

A review and re-examination of the relevant legal principles is appropriate and
timely to clarify the various rulings on employment termination in the light of Serrano
v. National Labor Relations Commission.[22]

Prior to 1989, the rule was that a dismissal or termination is illegal if the
employee was not given any notice. In the 1989 case of Wenphil Corp. v. National
Labor Relations Commission,[23] we reversed this long-standing rule and held that
the dismissed employee, although not given any notice and hearing, was not entitled
to reinstatement and backwages because the dismissal was for grave misconduct
and insubordination, a just ground for termination under Article 282. The employee
had a violent temper and caused trouble during office hours, defying superiors who
tried to pacify him. We concluded that reinstating the employee and awarding
backwages may encourage him to do even worse and will render a mockery of the
rules of discipline that employees are required to observe.[24] We further held that:

Under the circumstances, the dismissal of the private respondent for just cause
should be maintained. He has no right to return to his former employment.

However, the petitioner must nevertheless be held to account for failure to extend to
private respondent his right to an investigation before causing his dismissal. The rule
is explicit as above discussed. The dismissal of an employee must be for just or
authorized cause and after due process. Petitioner committed an infraction of the
second requirement. Thus, it must be imposed a sanction for its failure to give a
formal notice and conduct an investigation as required by law before dismissing
petitioner from employment. Considering the circumstances of this case petitioner
must indemnify the private respondent the amount of P1,000.00. The measure of this
award depends on the facts of each case and the gravity of the omission committed
by the employer.[25]

The rule thus evolved: where the employer had a valid reason to dismiss an
employee but did not follow the due process requirement, the dismissal may be
upheld but the employer will be penalized to pay an indemnity to the employee. This
became known as the Wenphil or Belated Due Process Rule.

On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed.
We held that the violation by the employer of the notice requirement in termination for
just or authorized causes was not a denial of due process that will nullify the
termination. However, the dismissal is ineffectual and the employer must pay full
backwages from the time of termination until it is judicially declared that the dismissal
was for a just or authorized cause.

The rationale for the re-examination of the Wenphil doctrine in Serrano was the
significant number of cases involving dismissals without requisite notices. We
concluded that the imposition of penalty by way of damages for violation of the notice
requirement was not serving as a deterrent. Hence, we now required payment of full
backwages from the time of dismissal until the time the Court finds the dismissal was
for a just or authorized cause.

Serrano was confronting the practice of employers to dismiss now and pay later by
imposing full backwages.

We believe, however, that the ruling in Serrano did not consider the full meaning of
Article 279 of the Labor Code which states:

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


This means that the termination is illegal only if it is not for any of the justified or
authorized causes provided by law. Payment of backwages and other benefits,
including reinstatement, is justified only if the employee was unjustly dismissed.

The fact that the Serrano ruling can cause unfairness and injustice which elicited
strong dissent has prompted us to revisit the doctrine.

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution
embodies a system of rights based on moral principles so deeply imbedded in the
traditions and feelings of our people as to be deemed fundamental to a civilized
society as conceived by our entire history. Due process is that which comports with
the deepest notions of what is fair and right and just.[26] It is a constitutional restraint
on the legislative as well as on the executive and judicial powers of the government
provided by the Bill of Rights.

Due process under the Labor Code, like Constitutional due process, has two aspects:
substantive, i.e., the valid and authorized causes of employment termination under
the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due
process requirements for dismissal are found in the Implementing Rules of P.D. 442,
as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule
I, Sec. 2, as amended by Department Order Nos. 9 and 10.[27] Breaches of these
due process requirements violate the Labor Code. Therefore statutory due process
should be differentiated from failure to comply with constitutional due process.

Constitutional due process protects the individual from the government and assures
him of his rights in criminal, civil or administrative proceedings; while statutory due
process found in the Labor Code and Implementing Rules protects employees from
being unjustly terminated without just cause after notice and hearing.

In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for a
just and valid cause but the employee was not accorded due process. The dismissal
was upheld by the Court but the employer was sanctioned. The sanction should be in
the nature of indemnification or penalty, and depends on the facts of each case and
the gravity of the omission committed by the employer.

In Nath v. National Labor Relations Commission,[29] it was ruled that even if the
employee was not given due process, the failure did not operate to eradicate the just
causes for dismissal. The dismissal being for just cause, albeit without due process,
did not entitle the employee to reinstatement, backwages, damages and attorneys
fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v.
National Labor Relations Commission,[30] which opinion he reiterated in Serrano,
stated:

C. Where there is just cause for dismissal but due process has not been properly
observed by an employer, it would not be right to order either the reinstatement of the
dismissed employee or the payment of backwages to him. In failing, however, to
comply with the procedure prescribed by law in terminating the services of the
employee, the employer must be deemed to have opted or, in any case, should be
made liable, for the payment of separation pay. It might be pointed out that the notice
to be given and the hearing to be conducted generally constitute the two-part due
process requirement of law to be accorded to the employee by the employer.
Nevertheless, peculiar circumstances might obtain in certain situations where to
undertake the above steps would be no more than a useless formality and where,
accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in
lieu of separation pay, nominal damages to the employee. x x x.[31]

After carefully analyzing the consequences of the divergent doctrines in the law on
employment termination, we believe that in cases involving dismissals for cause but
without observance of the twin requirements of notice and hearing, the better rule is
to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal
was for just cause but imposing sanctions on the employer. Such sanctions,
however, must be stiffer than that imposed in Wenphil. By doing so, this Court would
be able to achieve a fair result by dispensing justice not just to employees, but to
employers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid or
authorized causes but not complying with statutory due process may have far-
reaching consequences.

This would encourage frivolous suits, where even the most notorious violators
of company policy are rewarded by invoking due process. This also creates absurd
situations where there is a just or authorized cause for dismissal but a procedural
infirmity invalidates the termination. Let us take for example a case where the
employee is caught stealing or threatens the lives of his co-employees or has become
a criminal, who has fled and cannot be found, or where serious business losses
demand that operations be ceased in less than a month. Invalidating the dismissal
would not serve public interest. It could also discourage investments that can
generate employment in the local economy.

The constitutional policy to provide full protection to labor is not meant to be a sword
to oppress employers. The commitment of this Court to the cause of labor does not
prevent us from sustaining the employer when it is in the right, as in this case.[32]
Certainly, an employer should not be compelled to pay employees for work not
actually performed and in fact abandoned.

The employer should not be compelled to continue employing a person who is
admittedly guilty of misfeasance or malfeasance and whose continued employment is
patently inimical to the employer. The law protecting the rights of the laborer
authorizes neither oppression nor self-destruction of the employer.[33]

It must be stressed that in the present case, the petitioners committed a grave
offense, i.e., abandonment, which, if the requirements of due process were complied
with, would undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should
not be protected by the Social Justice Clause of the Constitution. Social justice, as
the term suggests, should be used only to correct an injustice. As the eminent Justice
Jose P. Laurel observed, social justice must be founded on the recognition of the
necessity of interdependence among diverse units of a society and of the protection
that should be equally and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and paramount objective of
the state of promoting the health, comfort, and quiet of all persons, and of bringing
about the greatest good to the greatest number.[34]

This is not to say that the Court was wrong when it ruled the way it did in
Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set
in stone. It has to allow for changing times and circumstances.

Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-
management relations and dispense justice with an even hand in every case:

We have repeatedly stressed that social justice or any justice for that matter
is for the deserving, whether he be a millionaire in his mansion or a pauper in his
hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of
the poor to whom the Constitution fittingly extends its sympathy and compassion. But
never is it justified to give preference to the poor simply because they are poor, or
reject the rich simply because they are rich, for justice must always be served for the
poor and the rich alike, according to the mandate of the law.[35]

Justice in every case should only be for the deserving party. It should not be
presumed that every case of illegal dismissal would automatically be decided in favor
of labor, as management has rights that should be fully respected and enforced by
this Court. As interdependent and indispensable partners in nation-building, labor
and management need each other to foster productivity and economic growth; hence,
the need to weigh and balance the rights and welfare of both the employee and
employer.

Where the dismissal is for a just cause, as in the instant case, the lack of statutory
due process should not nullify the dismissal, or render it illegal, or ineffectual.
However, the employer should indemnify the employee for the violation of his
statutory rights, as ruled in Reta v. National Labor Relations Commission.[36] The
indemnity to be imposed should be stiffer to discourage the abhorrent practice of
dismiss now, pay later, which we sought to deter in the Serrano ruling. The sanction
should be in the nature of indemnification or penalty and should depend on the facts
of each case, taking into special consideration the gravity of the due process violation
of the employer.

Under the Civil Code, nominal damages is adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the defendant, may be vindicated
or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.[37]

As enunciated by this Court in Viernes v. National Labor Relations
Commissions,[38] an employer is liable to pay indemnity in the form of nominal
damages to an employee who has been dismissed if, in effecting such dismissal, the
employer fails to comply with the requirements of due process. The Court, after
considering the circumstances therein, fixed the indemnity at P2,590.50, which was
equivalent to the employees one month salary. This indemnity is intended not to
penalize the employer but to vindicate or recognize the employees right to statutory
due process which was violated by the employer.[39]

The violation of the petitioners right to statutory due process by the private
respondent warrants the payment of indemnity in the form of nominal damages. The
amount of such damages is addressed to the sound discretion of the court, taking into
account the relevant circumstances.[40] Considering the prevailing circumstances in
the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of
damages would serve to deter employers from future violations of the statutory due
process rights of employees. At the very least, it provides a vindication or recognition
of this fundamental right granted to the latter under the Labor Code and its
Implementing Rules.

Private respondent claims that the Court of Appeals erred in holding that it
failed to pay petitioners holiday pay, service incentive leave pay and 13th month pay.

We are not persuaded.

We affirm the ruling of the appellate court on petitioners money claims. Private
respondent is liable for petitioners holiday pay, service incentive leave pay and 13th
month pay without deductions.

As a general rule, one who pleads payment has the burden of proving it. Even
where the employee must allege non-payment, the general rule is that the burden
rests on the employer to prove payment, rather than on the employee to prove non-
payment. The reason for the rule is that the pertinent personnel files, payrolls,
records, remittances and other similar documents which will show that overtime,
differentials, service incentive leave and other claims of workers have been paid are
not in the possession of the worker but in the custody and absolute control of the
employer.[41]

In the case at bar, if private respondent indeed paid petitioners holiday pay and
service incentive leave pay, it could have easily presented documentary proofs of
such monetary benefits to disprove the claims of the petitioners. But it did not, except
with respect to the 13th month pay wherein it presented cash vouchers showing
payments of the benefit in the years disputed.[42] Allegations by private respondent
that it does not operate during holidays and that it allows its employees 10 days leave
with pay, other than being self-serving, do not constitute proof of payment.
Consequently, it failed to discharge the onus probandi thereby making it liable for
such claims to the petitioners.

Anent the deduction of SSS loan and the value of the shoes from petitioner
Virgilio Agabons 13th month pay, we find the same to be unauthorized. The evident
intention of Presidential Decree No. 851 is to grant an additional income in the form of
the 13th month pay to employees not already receiving the same[43] so as to further
protect the level of real wages from the ravages of world-wide inflation.[44] Clearly,
as additional income, the 13th month pay is included in the definition of wage under
Article 97(f) of the Labor Code, to wit:

(f) Wage paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece , or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee

from which an employer is prohibited under Article 113[45] of the same Code from
making any deductions without the employees knowledge and consent. In the
instant case, private respondent failed to show that the deduction of the SSS loan and
the value of the shoes from petitioner Virgilio Agabons 13th month pay was
authorized by the latter. The lack of authority to deduct is further bolstered by the fact
that petitioner Virgilio Agabon included the same as one of his money claims against
private respondent.

The Court of Appeals properly reinstated the monetary claims awarded by the Labor
Arbiter ordering the private respondent to pay each of the petitioners holiday pay for
four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive
leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio
Agabons thirteenth month pay for 1998 in the amount of P2,150.00.

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of
the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that
petitioners Jenny and Virgilio Agabon abandoned their work, and ordering private
respondent to pay each of the petitioners holiday pay for four regular holidays from
1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same
period in the amount of P3,255.00 and the balance of Virgilio Agabons thirteenth
month pay for 1998 in the amount of P2,150.00 is AFFIRMED with the
MODIFICATION that private respondent Riviera Home Improvements, Inc. is further
ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal
damages for non-compliance with statutory due process.

SECOND DIVISION

[G.R. No. 93070. August 9, 1991.]

NORMAN DE VERA, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION
and BANK OF THE PHILIPPINE ISLANDS, INC., Respondents.

Limqueco & Macaraeg Law Office for Petitioner.

Angara, Abello, Concepcion, Regala & Cruz for Private Respondent.


SYLLABUS


1. LABOR LAW; TERMINATION OF EMPLOYMENT; DISMISSAL; REQUIRES
NOTICE AND HEARING. We have laid down in Ruffy v. NLRC, G.R. No. 84193,
February 15, 1990, 182 SCRA 365, and in Tingson v. NLRC, G.R. No. 84702, May
18, 1990, 185 SCRA 498, the procedure to be observed by an employer who seeks to
dismiss an employee. Once more, we quote the Labor Code: . . . HOWEVER, THE
EMPLOYER SHALL FURNISH THE WORKER WHOSE EMPLOYMENT IS SOUGHT
TO BE TERMINATED A WRITTEN NOTICE CONTAINING A STATEMENT OF THE
CAUSES FOR TERMINATION AND SHALL AFFORD THE LATTER AMPLE
OPPORTUNITY TO BE HEARD AND 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 MINISTRY OF LABOR AND EMPLOYMENT. . . .

2. ID.; ID.; ID.; ID.; NOTICE OF PREVENTIVE SUSPENSION; NOT
CONSIDERED AN ADEQUATE NOTICE. The requirements of notice and hearing
are recited anew in Sec. 13 of Batas Pambansa Bilang 130, an act amending certain
provisions of the Labor Code, as correctly pointed out by the petitioner. Definitely, the
Notice of Preventive Suspension can not be considered adequate notice since the
objectives of the petitioners preventive suspension, as stated in the notice, were
merely to ascertain the extent of the loss to the bank, and to pinpoint responsibility of
the parties involved, and not to apprise the petitioner of the causes of his desired
dismissal.

3. ID.; ID.; ID.; ID.; INTERVIEW CONDUCTED FOR THE PURPOSE OF
FILING CRIMINAL CASE AGAINST ANOTHER PERSON; NOT AN AMPLE
OPPORTUNITY TO BE HEARD CONTEMPLATED BY LAW. The subsequent
interview is not the "ample opportunity to be heard" contemplated by law. Ample
opportunity to be heard is especially accorded to the employee sought to be
dismissed after he is informed of the charges against him in order to give him an
opportunity to refute the accusations levelled against him, and it certainly does not
consist of an inquiry conducted merely for the purpose of filing a criminal case against
another person. Similarly, the respondents position that the petitioner, with his
education and position, should have realized, after going through some rigorous
interrogations, that he himself was being suspected and investigated for possible
complicity in the anomalies is unacceptable. The petitioner as an assistant cashier is
not expected to be proficient with the intricacies of law and procedure. He should not
be faulted if he relied on the statement of the private respondent that the investigation
was being conducted in connection with the criminal case filed against Martinez, and
consequently failed to realize that he himself was being suspected for possible
involvement in the fraud. In fact, the private respondent should be admonished for
provoking self-incriminating statements from the petitioner under the guise of
conducting an investigation for some other reason.

4. ID.; ID.; ID.; ID.; TWO KINDS OF NOTICE REQUIRED. This Court has
repeatedly held that the employer is mandated to furnish the employee sought to be
dismissed two notices, the written charge, and the notice of dismissal, if, after
hearing, dismissal is indeed warranted.

5. ID.; ID.; ID.; ID.; EMPLOYEES PRESENTATION OF THIS CASE AND
ARGUMENT BEFORE NATIONAL LABOR RELATIONS COMMISSION; DOES NOT
CURE THE DEFECTS IN DUE PROCESS. The respondents then claim that the
alleged defects in due process were cured when the petitioner presented his case
and arguments before the NLRC. This is untenable. The case before the NLRC is the
petitioners complaint for illegal dismissal. At that time, he had already been
terminated. What the Labor Code sets forth is the procedure prior to dismissal. "Fire
the employee, and let him explain later" is not in accord with the due process under
the law.

6. ID.; ID.; ID.; ID.; MANAGEMENTS DISCRETION TO DISCIPLINE
EMPLOYEES; MUST BE SUBJECT TO THE REQUIREMENT OF DUE PROCESS.
We can not accept claims of "a wider latitude of discretion" of management in the
discipline of managerial employees. First, managements discretion is subject to the
requirements of due process. Due process, as we held, is applicable to managerial
employees. In the absence thereof, any dismissal becomes unlawful and
reinstatement plus backwages are warranted.

7. ID.; ID.; ID.; ID.; LOSS OF CONFIDENCE AS A GROUND; MUST BE
ESTABLISHED CLEARLY AND CONVINCINGLY. As we held, "loss of
confidence," as a ground for dismissal, must rest on "some basis." Here, none has
been established, for the plain reason that the petitioner was never investigated or
heard in his defense. It can not be said therefore that he is guilty to justify
managements claim of loss of trust. To that extent, this case must be distinguished
from PLDT v. NLRC, G.R. No. 80609, August 23, 1988, 164 SCRA 671, where "theft"
was established clearly and convincingly and no question of due process was
involved.


D E C I S I O N


SARMIENTO, J.:


The twin requirements of notice and hearing are essential elements of due process in
cases of employee dismissal. Failure to satisfy these requisites has been recognized
to be fatal. This orthodoxy is not about to be abandoned yet.

The paramount question is whether or not the requirements of due process were
substantially complied with in dismissing an employee, after an inquiry conducted for
the purpose of filing a criminal case against another employee. The respondents
contend that it is sufficient. The petitioner holds otherwise.

The decision in question pertains to the National Labor Relations Commission
(NLRC, for brevity), 1 promulgated on March 8, 1990, deleting the award of
separation pay granted by the labor arbiter to the herein petitioner.

The material facts, as culled from the records of the case, are as follows:chanrob1es
virtual 1aw library

Petitioner Norman de Vera was an Assistant Cashier at the Taft Avenue Branch of
the respondent Bank of the Philippine Islands (BPI, for brevity), when he was placed
under preventive suspension then subsequently dismissed. By then, he had served
the respondent bank for a total of twenty five (25) years, more or less.

The petitioners predicament started on May 28, 1987, when the representatives of
ASB Realty Corporation (ASB, for brevity) presented to the BPI Taft Avenue Branch a
P10-million RCBC Managers Check payable to BPI for the time deposit account of
ASB. The branch manager, Rebecca Dizon, asked the petitioner to present the check
to the drawee bank for special clearing, which the latter did. RCBC cleared the P10-
million check and a Special Clearing Receipt was subsequently issued to the
petitioner, which receipt was in turn given to Branch Manager Dizon.

Meanwhile, Dizon and teller Myrna Apostol presented to the petitioner for the latters
initials three (3) personal checks with a total amount of P1,650,000.00, all drawn
against the account of one Daniel Martinez. The petitioner claims that since he is one
of the validating officers for the encashment of checks, as per bank procedure
requiring two (2) officers to approve transactions of P50,000.00 and above, and since
the said checks had already been encashed under the orders of Dizon, his superior,
he endorsed them. In short, the "transaction" was already fait accompli when the
petitioner entered the picture.

Afterwards, Dizon apparently made a mistake (or slipped) and handed to the
petitioner for his signature Time Certificate of Deposit (TCD, for brevity) No. 119762
with a face value of P10 million. The petitioner asserts that "he got the shock of his
life, became tongue-tied and refused to affix his signature" after realizing that the said
TCD contained his forged signature.

Later that day, Dizon entered ASBs check in the computer at the BPI Roxas
Boulevard Branch (since the computers at the Taft Avenue Branch were out of order),
not in ASBs account, but instead, in the account of Daniel Martinez.

On the following day, May 29, at around 10:00 oclock a.m., ASBs representative
informed BPI Vice President Rogelio Nera that ASB had placed a P10-million time
deposit with BPIs Taft Avenue Branch. Vice-President Nera then called the Branch to
verify the transaction. He talked to the petitioner who said that it was Dizon who had
full knowledge of the transaction, but that Dizon had not yet reported for work at that
time. Vice-President Nera then requested for a return call from Dizon. The petitioner
later relayed the Vice-Presidents request to Dizon who allegedly ignored the same.

After office hours, petitioner de Vera, together with BPI Asst. Manager Virgilio
Ventura, informed BPI Asst. Vice President Gregorio Santayana of the forged
signature on the TCD and its apparent irregular issuance.

On the 30th of May 1987, a non-working Saturday, a group composed of the
petitioner, Asst. Managers Virgilio Ventura and Abelardo Ortiz, and Ret. General
Bueno, head of BPI Security, proceeded to the BPI Taft Avenue Branch and
examined its books. They discovered that the P10-million time deposit of ASB was
diverted to the personal account of Martinez.

Several personal and cashiers checks drawn against the account of Martinez were
then intercepted and retrieved, and the remaining balance in his checking account
was frozen. However, by then, around P3-million had already been withdrawn,
although this was refuted by the petitioner who argued that since some three (3)
checks amounting to P1.4-million had been "stopped payment", the actual amount
withdrawn was only P1,650,000.00, and not P3-million as claimed by the respondent
bank.

Pending further investigation, allegedly to ascertain the extent of the loss to the bank,
and to pinpoint responsibility of the parties involved, the petitioner, on June 4, 1987,
received a Notice of Preventive Suspension dated June 2, 1987.

On the following day, June 5, 1987, the petitioner was queried regarding the incident.
This was followed by an interview with the Criminal Investigation Service (CIS, for
brevity) on June 8, 1987, when the petitioner was summoned by Ret. General Bueno
to give a statement in connection with the estafa case filed by the respondent bank
against Daniel Martinez.

The bank, in the course of its investigation, also uncovered a similar pattern of
operation which had transpired earlier. On May 5, 1987, the NAFP Retirements and
Separation Benefit System (NAFP-RSBS, for brevity) issued a P4.7-million check in
favor of the respondent bank in consideration of a P5-million TCD placement with the
Taft Avenue Branch. The P4.7-million was the net of the front end discount of six per
centum (6%) of the face value of the TCD granted by Dizon to NAFP-RSBS as an
incentive for placing the money with the bank. However, it turned out that this was
neither deposited nor credited in the account of NAFP-RSBS, but instead in the
account of a certain Russel, Crame and Co., Inc. (Russel, for brevity) whose
authorized signer is the same Daniel Martinez.

By the time the irregularity was discovered, four (4) checks, all payable to cash and
drawn against the account of Russel, had already been encashed at the Taft Avenue
Branch, three of which were jointly approved by Dizon and the petitioner. Thereafter,
eleven (11) other checks drawn against the account of Russel, four of which had an
aggregate amount of P2,578,480.00, were discovered to have been approved for
encashment by Dizon, together with the petitioner. It must, however, be noted that
nowhere in the records was there an indication that the petitioner was questioned
regarding this anomaly involving the account of the NAFP-RSBS.

On August 3, 1987, the petitioner received a Notice of Termination dated July 10,
1987, terminating his services on the ground of fraud or willful breach of trust and
setting forth therein the transgressions he had allegedly committed.

Aggrieved, the petitioner, on August 6,1987, commenced this proceeding of filing a
case with the NLRC. On December 7, 1988, Labor Arbiter Evangeline Lubaton
rendered a decision on the sole basis of the pleadings presented and the evidence
attached thereto, the dispositive portion of which is quoted hereunder, a
savoir:chanrob1es virtual 1aw library

WHEREFORE, premises considered, judgment is hereby rendered ordering the Bank
of the Philippine Islands to pay Norman M. de Vera separation pay according to bank
policy, or in the absence thereof, equivalent to one-half month pay for every year of
service plus all other benefits, privileges and emoluments he may have been entitled
to at the time of his termination from his employment.

The claims for moral and exemplary damages, attorneys fees and costs of suit are
hereby dismissed for lack of merit.

SO ORDERED. 2

The respondent bank, not satisfied with the labor arbiters decision, interposed an
appeal with the NLRC. The Second Division of the NLRC then promulgated a
resolution on March 8, 1990; holding that the requirements of due process were
substantially complied with and accordingly, deleted the award of separation pay. The
petitioners subsequent motion for reconsideration was later denied by another
resolution. 3 These resolutions are now assailed in this special civil action for
certiorari.

The petitioner basically contends that the respondent NLRC committed a grave abuse
of discretion in holding that his dismissal had indicia of due process. He also claims
that he is entitled to reinstatement or separation pay, plus full backwages and all
other benefits, in either case. He stresses that while it is true that he was interviewed
and later summoned by the CIS to give sworn statements in connection with the
anomalous transaction, he was not aware that he was already being indicted and
tried for an offense of which he was never informed. To support his contentions on
due process, the petitioner cited Sections 1 to 6 of Rule XIV, Book V of the Omnibus
Rules Implementing the Labor Code, 4 which lay down the procedure taken in cases
of termination of employment.

On the other hand, the respondent bank posits that the Notice of Preventive
Suspension received by the petitioner was sufficient notice since the tenor of the
letter itself should have already alerted the latter that the investigation then being
conducted was partly being done to determine the extent of the latters involvement in
the anomalies. Furthermore, it would have been unlikely for a person not suspected
of involvement in the anomalies to be suspended pending investigation. Precisely, the
petitioner was suspected of complicity in the swindle. And if the Notice of Preventive
Suspension was not sufficient notice, certainly the subsequent interview should have
placed the petitioner on notice that he was suspected of possible involvement in the
swindle. 5

The respondent NLRC likewise contends that it is "hard to believe that a person with
the education and position as that of the complainant (herein petitioner) after having
gone through rigorous interrogations would still fail to convince himself of being
suspected and investigated for possible complicity in the respondent banks swindle.
In fact, his answers to the questions then propounded or his explanation given thereto
were all in defense or designed to show his innocence or non-connection with the
culprits." 6

The respondents also submit that the petitioner was given ample opportunity to be
heard. The petitioner was allowed to explain his side when he was questioned on
June 5, 1987 regarding the incident. Three days later, he was given another
opportunity when he was summoned by the CIS.

The private respondent further claims that "what the due process clause of the
Constitution proscribes is the total absence of the chance to be heard. If a party was
not initially given a chance to be heard (i.e., at the level of a school panel of
investigators) but later was given full opportunity to present his case and arguments
(i.e., before the arbitration branch of the NLRC), this defect is cured." 7

Consequently, the respondents submit that the petitioner is not deserving of the
reinstatement prayed for nor of any award for separation pay. They contend that the
petitioner "had deliberately shied away from performing the legal and moral duty of
reporting peremptorily [sic] the anomaly to his employer, an act of indiscretion of the
highest order, or, better still, a deliberate omission or prevarication which undoubtedly
makes him unworthy of being awarded the bonanza of separation pay. A contrary
ruling would have the net effect of regarding the complainant for betraying the interest
of his employer." 8

The Court rules that the petitioner, Norman de Vera, was denied due process of law.
Accordingly, his dismissal is hereby declared illegal.

The respondents submissions that the Notice of Preventive Suspension is adequate
notice and the subsequent interviews ample opportunities to be heard are devoid of
merit. We have laid down in Ruffy v. NLRC 9 and in Tingson v. NLRC 10 the
procedure to be observed by an employer who seeks to dismiss an employee. Once
more, we quote the Labor Code:chanrob1es virtual 1aw library

. . . HOWEVER, THE EMPLOYER SHALL FURNISH THE WORKER WHOSE
EMPLOYMENT IS SOUGHT TO BE TERMINATED A WRITTEN NOTICE
CONTAINING A STATEMENT OF THE CAUSES FOR TERMINATION AND SHALL
AFFORD THE LATTER AMPLE OPPORTUNITY TO BE HEARD AND 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 MINISTRY OF
LABOR AND EMPLOYMENT . . . 11

These requirements of notice and hearing are recited anew in the rules implementing
the above-cited provision, supra, as correctly pointed out by the petitioner. Definitely,
the Notice of Preventive Suspension can not be considered adequate notice since the
objectives of the petitioners preventive suspension, as stated in the notice, were
merely to ascertain the extent of the loss to the bank, and to pinpoint responsibility of
the parties involved, and not to apprise the petitioner of the causes of his desired
dismissal. Likewise, the subsequent interview is not the "ample opportunity to be
heard" contemplated by law. Ample opportunity to be heard is especially accorded to
the employee sought to be dismissed after he is informed of the charges against him
in order to give him an opportunity to refute the accusations levelled against him, and
it certainly does not consist of an inquiry conducted merely for the purpose of filing a
criminal case against another person.

Similarly, the respondents position that the petitioner, with his education and position,
should have realized, after going through some rigorous interrogations, that he
himself was being suspected and investigated for possible complicity in the anomalies
is unacceptable. The petitioner as an assistant cashier is not expected to be proficient
with the intricacies of law and procedure. He should not be faulted if he relied on the
statement of the private respondent that the investigation was being conducted in
connection with the criminal case filed against Martinez, and consequently failed to
realize that he himself was being suspected for possible involvement in the fraud. In
fact, the private respondent should be admonished for provoking self-incriminating
statements from the petitioner under the guise of conducting an investigation for
some other reason.

Furthermore, this Court has repeatedly held that the employer is mandated to furnish
the employee sought to be dismissed two notices, the written charge, and the notice
of dismissal, if, after hearing, dismissal is indeed warranted. 12 No written charge was
ever furnished the petitioner in this case.

The respondents then claim that the alleged defects in due process were cured when
the petitioner presented his case and arguments before the NLRC. This is untenable.
The case before the NLRC is the petitioners complaint for illegal dismissal. At that
time, he had already been terminated. What the Labor Code sets forth is the
procedure prior to dismissal. 13 "Fire the employee, and let him explain later" is not in
accord with the due process under the law. 14

We can not accept claims of "a wider latitude of discretion" 15 of management in the
discipline of managerial employees. First, managements discretion is subject to the
requirements of due process.

As we held, "loss of confidence", as a ground for dismissal, must rest on "some
basis." 16 Here, none has been established, for the plain reason that the petitioner
was never investigated or heard in his defense. It can not be said therefore that he is
guilty to justify managements claim of loss of trust. To that extent, this case must
be distinguished from PLDT v. NLRC , 17 where "theft" was established clearly and
convincingly and no question of due process was involved.

Due process, as we also held, 18 is applicable to managerial employees. In the
absence thereof, any dismissal becomes unlawful and reinstatement plus backwages
are warranted.

WHEREFORE, the petition is GRANTED. The RESOLUTION of the public
respondent is hereby ANNULLED and SET ASIDE. The private respondent is
ORDERED to REINSTATE petitioner NORMAN DE VERA to his former or equivalent
position without loss of seniority rights and other benefits with BACKWAGES
equivalent to three years, without qualifications and deductions.

SO ORDERED.

Melencio-Herrera and Regalado, JJ., concur.


EN BANC

[G.R. No. 82511. March 3, 1992.]

GLOBE-MACKAY CABLE AND RADIO CORPORATION, Petitioner, v. NATIONAL
LABOR RELATIONS COMISSION and IMELDA SALAZAR, Respondents.

Castillo, Laman, Tan & Pantaleon for Petitioner.

Gerardo S. Mansalon for Private Respondent.


SYLLABUS


1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT;
PREVENTIVE SUSPENSION, REMEDIAL RECOURSE OF EMPLOYER PENDING
INVESTIGATION OF ALLEGED MISCONDUCT OF EMPLOYEE. The
investigative findings of Mr. Maramara, which pointed to Delfin Saldivars acts in
conflict with his position as technical operations manager, necessitated immediate
and decisive action on any employee closely associated with Saldivar. The
suspension of Salazar was further impelled by the discovery of the missing Fedders
airconditioning unit inside the apartment private respondent shared with Saldivar.
Under such circumstances, preventive suspension was the proper remedial recourse
available to the company pending Salazars investigation. By itself, preventive
suspension does not signify that the company has adjudged the employee guilty of
the charges she was asked to answer and explain. Such disciplinary measure is
resorted to for the protection of the companys property pending investigation of any
alleged malfeasance or misfeasance committed by the employee.

2. ID.; ID.; ID.; EMPLOYEE ILLEGALLY DISMISSED ENTITLED TO
REINSTATEMENT AND SEPARATION. To go back to the instant case, there
being no evidence to show an authorized, much less a legal, cause for the dismissal
of private respondent, she had every right, not only to be entitled to reinstatement, but
as well, to full backwages.

3. ID.; ID.; ID.; ID.; PURPOSES. The intendment of the law in prescribing
the twin remedies of reinstatement and payment of backwages is, in the former, to
restore the dismissed employee to her status before she lost her job, for the
dictionary meaning of the word "reinstate" is "to restore to a state, condition, position,
etc. from which one had been removed" and in the latter, to give her back the income
lost during the period of unemployment. Both remedies, looking to the past, would
perforce make her "whole."cralaw virtua1aw library

4. ID.; ID.; ID.; ILLEGAL DISMISSAL; REINSTATEMENT; GROUNDS FOR
DENIAL. Over time, the following reasons have been advanced by the Court for
denying reinstatement under the facts of the case and the law applicable thereto; that
reinstatement can no longer be effected in view of the long passage of time (22 years
of litigation) or because of the realities of the situation; or that it would be "inimical to
the employers interest;" or that reinstatement may no longer be feasible; or, that it will
not serve the best interests of the parties involved; or that the company would be
prejudiced by the workers continued employment; or that it will not serve any prudent
purpose as when supervening facts have transpired which make execution on that
score unjust or inequitable or, to an increasing extent, due to the resultant
atmosphere of "antipathy and antagonism" or "strained relations" or "irretrievable
estrangement" between the employer and the employee.

5. ID.; ID.; ID.; BACKWAGES AND SEPARATION PAY AWARDED WHERE
REINSTATEMENT CAN NOT BE EFFECTED. In lieu of reinstatement, the Court
has variously ordered the payment of backwages and separation pay or solely
separation pay.

6. STATUTORY CONSTRUCTION AND INTERPRETATION; WHERE THE
STATUTE IS CLEAR AND FREE FROM AMBIGUITY, IT MUST BE GIVEN ITS
LITERAL MEANING. The wording of the Labor Code is clear and unambiguous:
"An employee who is unjustly dismissed from work shall be entitled to reinstatement .
. . and to his full backwages . . ." Under the principles of statutory construction, if a
statute is clear, plain and free from ambiguity, it must be given its literal meaning and
applied without attempted interpretation. This plain-meaning rule or verba legis
derived from the maxim index animi sermo est (speech is the index of intention) rests
on the valid presumption that the words employed by the legislature in a statute
correctly express its intent or will and preclude the court from construing it differently.
The legislature is presumed to know the meaning of the words, to have used words
advisedly, and to have expressed its intent by the use of such words as are found in
the statute. Verba legis non est recedendum, or from the words of a statute there
should be no departure. Neither does the provision admit of any qualification.

7. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT;
REINSTATEMENT; NOT APPROPRIATE IN THE PRESENCE OF STRAINED
RELATIONS BETWEEN EMPLOYER AND EMPLOYEE; QUALIFICATION. If in
the wisdom of the Court, there may be a ground or grounds for non-application of
Article 279 of the Labor Code, this should be by way of exception, such as when the
reinstatement may be inadmissible due to ensuing strained relations between the
employer and the employee. In such cases, it should be proved that the employee
concerned occupies a position where he enjoys the trust and confidence of his
employer; and that it is likely that if reinstated, an atmosphere of antipathy and
antagonism may be generated as to adversely affect the efficiency and productivity of
the employee concerned.

8. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. The principle of "strained
relations" cannot be applied indiscriminately. Otherwise, reinstatement can never be
possible simply because some hostility is invariably engendered between the parties
as a result of litigation. That is human nature. Besides, no strained relations should
arise from a valid and legal act of asserting ones right; otherwise an employee who
shall assert his right could be easily separated from the service, by merely paying his
separation pay on the pretext that his relationship with his employer had already
become strained. Here, it has not been proved that the position of private respondent
as systems analyst is one that may be characterized as a position of trust and
confidence such that if reinstated, it may well lead to strained relations between
employer and employee. Hence, this does not constitute an exception to the general
rule mandating reinstatement for an employee who has been unlawfully dismissed. In
the instant case, petitioner has predicated its dismissal of Salazar on loss of
confidence. As we have held countless times, while loss of confidence or breach of
trust is a valid ground for termination, it must rest on some basis which must be
convincingly established. An employee may not be dismissed on mere presumptions
and suppositions.

9. ID.; ID.; ID.; WITHOUT LEGAL GROUND, ILLEGAL; EMPLOYEE
ENTITLED TO REINSTATEMENT AND BACKWAGES. It is also worth
emphasizing that the Maramara report came out after Saldivar had already resigned
from GMCR on May 31, 1984. Since Saldivar did not have the opportunity to refute
managements findings, the report remained obviously one-sided. Since the main
evidence obtained by petitioner dealt principally on the alleged culpability of Saldivar,
without his having bad a chance to voice his side in view of his prior resignation,
stringent examination should have been carried out to ascertain whether or not there
existed independent legal grounds to hold Salazar answerable as well and, thereby,
justify her dismissal. Finding none, from the records, we find her to have been
unlawfully dismissed. Petitioner GMRC is ordered to REINSTATE private respondent
Imelda Salazar and to pay her backwages equivalent to her salary for a period of two
(2) years only.


D E C I S I O N


ROMERO, J.:


For private respondent Imelda L. Salazar, it would seem that her close association
with Delfin Saldivar would mean the loss of her job. In May 1982, private respondent
was employed by Globe-Mackay Cable and Radio Corporation (GMCR) as general
systems analyst. Also employed by petitioner as manager for technical operations
support was Delfin Saldivar with whom private respondent was allegedly very close.

Sometime in 1984, petitioner GMCR, prompted by reports that company equipment
and spare parts worth thousands of dollars under the custody of Saldivar were
missing, caused the investigation of the latters activities. The report dated September
25, 1984 prepared by the companys internal auditor, Mr. Agustin Maramara,
indicated that Saldivar had entered into a partnership styled Concave Commercial
and Industrial Company with Richard A. Yambao, owner and manager of Elecon
Engineering Services (Elecon), a supplier of petitioner often recommended by
Saldivar. The report also disclosed that Saldivar had taken petitioners missing
Fedders airconditioning unit for his own personal use without authorization and also
connived with Yambao to defraud petitioner of its property. The airconditioner was
recovered only after petitioner GMCR filed an action for replevin against Saldivar. 1

It likewise appeared in the course of Maramaras investigation that Imelda Salazar
violated company regulations by involving herself in transactions conflicting with the
companys interests. Evidence showed that she signed as a witness to the articles of
partnership between Yambao and Saldivar. It also appeared that she had full
knowledge of the loss and whereabouts of the Fedders airconditioner but failed to
inform her employer.

Consequently, in a letter dated October 8, 1984, petitioner company placed private
respondent Salazar under preventive suspension for one (1) month, effective October
9, 1984, thus giving her thirty (30) days within which to explain her side. But instead
of submitting an explanation, three (3) days later or on October 12, 1984, private
respondent filed a complaint against petitioner for illegal suspension, which she
subsequently amended to include illegal dismissal, vacation and sick leave benefits,
13th month pay and damages, after petitioner notified her in writing that effective
November 8,1984, she was considered dismissed "in view of (her) inability to refute
and disprove these findings." 2

After due hearing, the Labor Arbiter in a decision dated July 16, 1985, ordered
petitioner company to reinstate private respondent to her former or equivalent position
and to pay her full backwages and other benefits she would have received were it not
for the illegal dismissal. Petitioner was also ordered to pay private respondent moral
damages of P50,000.00. 3

On appeal, public respondent National Labor Relations Commission in the questioned
resolution dated December 29, 1987 affirmed the aforesaid decision with respect to
the reinstatement of private respondent but limited the backwages to a period of two
(2) years and deleted the award for moral damages. 4

Hence, this petition assailing the Labor Tribunal for having committed grave abuse of
discretion in holding that the suspension and subsequent dismissal of private
respondent were illegal and in ordering her reinstatement with two (2) years
backwages.chanroblesvirtualawlibrary

On the matter of preventive suspension, we find for petitioner GMCR.

The investigative findings of Mr. Maramara, which pointed to Delfin Saldivars acts in
conflict with his position as technical operations manager, necessitated immediate
and decisive action on any employee closely associated with Saldivar. The
suspension of Salazar was further impelled by the discovery of the missing Fedders
airconditioning unit inside the apartment private respondent shared with Saldivar.
Under such circumstances, preventive suspension was the proper remedial recourse
available to the company pending Salazars investigation. By itself, preventive
suspension does not signify that the company has adjudged the employee guilty of
the charges she was asked to answer and explain. Such disciplinary measure is
resorted to for the protection of the companys property pending investigation of any
alleged malfeasance or misfeasance committed by the employee. 5

Thus, it is not correct to conclude that petitioner GMCR had violated Salazars right to
due process when she was promptly suspended. If at all, the fault lay with private
respondent when she ignored petitioners memorandum of October 8, 1984 "giving
her ample opportunity to present (her) side to the Management." Instead, she went
directly to the Labor Department and filed her complaint for illegal suspension without
giving her employer a chance to evaluate her side of the controversy.

But while we agree with the propriety of Salazars preventive suspension, we hold
that her eventual separation from employment was not for cause.

What is the remedy in law to rectify an unlawful dismissal so as to "make whole" the
victim who has not merely lost her job which, under settled jurisprudence, is a
property right of which a person is not to be deprived without due process, but also
the compensation that should have accrued to her during the period when she was
unemployed?chanrobles.com.ph : virtual law library

Art. 279 of the Labor Code, as amended, provides:jgc:chanrobles.com.ph

"Security of Tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement" 6 (Emphasis supplied).

Corollary thereto are the following provisions of the Implementing Rules and
Regulations of the Labor Code:jgc:chanrobles.com.ph

"Sec. 2. Security of Tenure. In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause as provided in the
Labor Code or when authorized by existing laws.

Sec. 3. Reinstatement. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and to backwages." 7
(Emphasis supplied)

Before proceeding any further, it must be recalled that the present Constitution has
gone further than the 1973 Charter in guaranteeing vital social and economic rights to
marginalized groups of society, including labor. Given the pro-poor orientation of
several articulate Commissioners of the Constitutional Commission of 1986, it was
not surprising that a whole new Article emerged on Social Justice and Human Rights
designed, among other things, to "protect and enhance the right of all the people to
human dignity, reduce social, economic and political inequalities, and remove cultural
inequities by equitably diffusing wealth and political power for the common good." 8

Proof of the priority accorded to labor is that it leads the other areas of concern in the
Article on Social Justice, viz., Labor ranks ahead of such topics as Agrarian and
Natural Resources Reform, Urban Land Reform and Housing, Health, Women, Role
and Rights of Peoples Organizations and Human

Rights. 9

The opening paragraphs on Labor state:jgc:chanrobles.com.ph

"The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities
for all. It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right to
strike in accordance with law. They shall be entitled to security of tenure, humane
conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by
law." 10 (Emphasis mine)

Compare this with the sole provision on Labor in the 1973 Constitution under the
Article on Declaration of principles and State Policies that
provides:jgc:chanrobles.com.ph

"Sec. 9. The State shall afford protection to labor, promote full employment and
equality in employment, ensure equal work opportunities regardless of sex, race, or
creed, and regulate the relations between workers and employers. The State shall
ensure the rights of workers to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work. The State may provide for
compulsory arbitration." 11

To be sure, both Charters recognize "security of tenure" as one of the rights of labor
which the State is mandated to protect. But there is no gainsaying the fact that the
intent of the framers of the present Constitution was to give primacy to the rights of
labor and afford the sector "full protection," at least greater protection than heretofore
accorded them, regardless of the geographical location of the workers and whether
they are organized or not.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph

It was then CONCOM Commissioner, now Justice Hilario G. Davide, Jr., who
substantially contributed to the present formulation of the protection to labor provision
and proposed that the same be incorporated in the Article on Social Justice and not
just in the Article on Declaration of Principles and State Policies "in the light of the
special importance that we are giving now to social justice and the necessity of
emphasizing the scope and role of social justice in national development." 12

If we have taken pains to delve into the background of the labor provisions in our
Constitution and the Labor Code, it is but to stress that the right of an employee not to
be dismissed from his job except for a just or authorized cause provided by law has
assumed greater importance under the 1987 Constitution with the singular
prominence labor enjoys under the article on Social Justice. And this transcendent
policy has been translated into law in the Labor Code. Under its terms, where a case
of unlawful or unauthorized dismissal has been proved by the aggrieved employee, or
on the other hand, the employer whose duty it is to prove the lawfulness or justness
of his act of dismissal has failed to do so, then the remedies provided in Article 279
should find application. Consonant with this liberalized stance vis-a-vis labor, the
legislature even went further by enacting Republic Act No. 6715 which took effect on
March 2, 1989 that amended said Article to remove any possible ambiguity that
jurisprudence may have generated which watered down the constitutional intent to
grant to labor "full protection." 13

To go back to the instant case, there being no evidence to show an authorized, much
less a legal, cause for the dismissal of private respondent, she had every right, not
only to be entitled to reinstatement, but as well, to full backwages. 14

The intendment of the law in prescribing the twin remedies of reinstatement and
payment of backwages is, in the former, to restore the dismissed employee to her
status before she lost her job, for the dictionary meaning of the word "reinstate" is "to
restore to a state, condition, position, etc. from which one had been removed" 15 and
in the latter, to give her back the income lost during the period of unemployment. Both
remedies, looking to the past, would perforce make her "whole."cralaw virtua1aw
library

Sadly, the avowed intent of the law has at times been thwarted when reinstatement
has not been forthcoming and the hapless dismissed employee finds himself on the
outside looking in.chanrobles law library

Over time, the following reasons have been advanced by the Court for denying
reinstatement under the facts of the case and the law applicable thereto; that
reinstatement can no longer be effected in view of the long passage of time (22 years
of litigation) or because of the realities of the situation; 16 or that it would be "inimical
to the employers interest;" 17 or that reinstatement may no longer be feasible; 18 or,
that it will not serve the best interests of the parties involved; 19 or that the company
would be prejudiced by the workers continued employment; 20 or that it will not serve
any prudent purpose as when supervening facts have transpired which make
execution on that score unjust or inequitable 21 or, to an increasing extent, due to the
resultant atmosphere of "antipathy and antagonism" or "strained relations" or
"irretrievable estrangement" between the employer and the employee. 22 In lieu of
reinstatement, the Court has variously ordered the payment of backwages and
separation pay 23 or solely separation pay. 24

In the case at bar, the law is on the side of private Respondent. In the first place, the
wording of the Labor Code is clear and unambiguous: "An employee who is unjustly
dismissed from work shall be entitled to reinstatement . . . and to his full backwages .
. ." 25 Under the principles of statutory construction, if a statute is clear, plain and free
from ambiguity, it must be given its literal meaning and applied without attempted
interpretation. This plain-meaning rule or verba legis derived from the maxim index
animi sermo est (speech is the index of intention) rests on the valid presumption that
the words employed by the legislature in a statute correctly express its intent or will
and preclude the court from construing it differently. 26 The legislature is presumed to
know the meaning of the words, to have used words advisedly, and to have
expressed its intent by the use of such words as are found in the statute. 27 Verba
legis non est recedendum, or from the words of a statute there should be no
departure. Neither does the provision admit of any qualification. If in the wisdom of
the Court, there may be a ground or grounds for non- application of the above-cited
provision, this should be by way of exception, such as when the reinstatement may
be inadmissible due to ensuing strained relations between the employer and the
employee.

In such cases, it should be proved that the employee concerned occupies a position
where he enjoys the trust and confidence of his employer; and that it is likely that if
reinstated, an atmosphere of antipathy and antagonism may be generated as to
adversely affect the efficiency and productivity of the employee concerned.

A few examples will suffice to illustrate the Courts application of the above principle:
where the employee is a Vice-President for Marketing and as such, enjoys the full
trust and confidence of top management; 28 or is the Officer-In-Charge of the
extension office of the bank where he works; 29 or is an organizer of a union who was
in a position to sabotage the unions efforts to organize the workers in commercial
and industrial establishments; 30 or is a warehouseman of a non-profit organization
whose primary purpose is to facilitate and maximize voluntary gifts by foreign
individuals and organizations to the Philippines; 31 or is a manager of its Energy
Equipment Sales. 32

Obviously, the principle of "strained relations" cannot be applied indiscriminately.
Otherwise, reinstatement can never be possible simply because some hostility is
invariably engendered between the parties as a result of litigation. That is human
nature. 33

Besides, no strained relations should arise from a valid and legal act of asserting
ones right; otherwise an employee who shall assert his right could be easily
separated from the service, by merely paying his separation pay on the pretext that
his relationship with his employer had already become strained. 34

Here, it has not been proved that the position of private respondent as systems
analyst is one that may be characterized as a position of trust and confidence such
that if reinstated, it may well lead to strained relations between employer and
employee. Hence, this does not constitute an exception to the general rule mandating
reinstatement for an employee who has been unlawfully
dismissed.chanroblesvirtualawlibrary

On the other hand, has she betrayed any confidence reposed in her by engaging in
transactions that may have created conflict of interest situations? Petitioner GMCR
points out that as a matter of company policy, it prohibits its employees from involving
themselves with any company that has business dealings with GMCR. Consequently,
when private respondent Salazar signed as a witness to the partnership papers of
Concave (a supplier of Ultra which in turn is also a supplier of GMCR), she was
deemed to have placed herself in an untenable position as far as petitioner was
concerned.

However, on close scrutiny, we agree with public respondent that such a
circumstance did not create a conflict of interests situation. As a system analyst,
Salazar was very far removed from operations involving the procurement of supplies.
Salazars duties revolved around the development of systems and analysis of designs
on a continuing basis. In other words, Salazar did not occupy a position of trust
relative to the approval and purchase of supplies and company assets.

In the instant case, petitioner has predicated its dismissal of Salazar on loss of
confidence. As we have held countless times, while loss of confidence or breach of
trust is a valid ground for termination, it must rest on some basis which must be
convincingly established. 35 An employee may not be dismissed on mere
presumptions and suppositions. Petitioners allegation that since Salazar and Saldivar
lived together in the same apartment, it "presumed reasonably that complainants
sympathy would be with Saldivar" and its averment that Saldivars investigation
although unverified, was probably true, do not pass this Courts test. 36 While we
should not condone the acts of disloyalty of an employee, neither should we dismiss
him on the basis of suspicion derived from speculative inferences.

To rely on the Maramara report as a basis for Salazars dismissal would be most
iniquitous because the bulk of the findings centered principally on her friends alleged
thievery and anomalous transactions as technical operations support manager. Said
report merely insinuated that in view of Salazars special relationship with Saldivar,
Salazar might have had direct knowledge of Saldivars questionable activities. Direct
evidence implicating private respondent is wanting from the records.

It is also worth emphasizing that the Maramara report came out after Saldivar had
already resigned from GMCR on May 31, 1984. Since Saldivar did not have the
opportunity to refute managements findings, the report remained obviously one-
sided. Since the main evidence obtained by petitioner dealt principally on the alleged
culpability of Saldivar, without his having bad a chance to voice his side in view of his
prior resignation, stringent examination should have been carried out to ascertain
whether or not there existed independent legal grounds to hold Salazar answerable
as well and, thereby, justify her dismissal. Finding none, from the records, we find her
to have been unlawfully dismissed.chanroblesvirtualawlibrary

WHEREFORE, the assailed resolution of public respondent National Labor Relations
Commission dated December 29, 1987 is hereby AFFIRMED. Petitioner GMCR is
ordered to REINSTATE private respondent Imelda Salazar and to pay her backwages
equivalent to her salary for a period of two (2) years only.This decision is immediately
executory.

SO ORDERED.

EN BANC

[G.R. No. L-80609. August 23, 1988.]

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Petitioner, v. THE
NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY,
Respondents.

Nicanor G. Nuevas for Petitioner.


SYLLABUS


1. LABOR LAWS; LABOR CODE; DISMISSAL; GRANT OF SEPARATION
PAY TO LAWFULLY DISMISSED EMPLOYEES; BASED ON EQUITY. The rule
embodied in the Labor Code is that a person dismissed for cause as defined therein
is not entitled to separation pay. The cases above cited constitute the exception,
based upon considerations of equity.

2. ID.; ID.; ID.; ID.; ID.; ID.; EQUITY DEFINED. Equity has been defined as
justice outside law, being ethical rather than jural and belonging to the sphere of
morals than of law. It is grounded on the precepts of conscience and not on any
sanction of positive law. Hence, it cannot prevail against the expressed provision of
the labor laws allowing dismissal of employees for cause and without any provision
for separation pay.

3. ID.; ID.; ID.; ID.; CONSTITUTIONAL BASIS. Strictly speaking, however, it
is not correct to say that there is no express justification for the grant of separation
pay to lawfully dismissed employees other than the abstract consideration of equity.
The reason is that our Constitution is replete with positive commands for the
promotion of social justice, and particularly the protection of the rights of the workers.
The enhancement of their welfare is one of the primary concerns of the present
charter. In fact, instead of confining itself to the general commitment to the cause of
labor in Article II on the Declaration of Principles of State Policies, the new
Constitution contains a separate article devoted to the promotion of social justice and
human rights with a separate sub-topic for labor. Article XIII expressly recognizes the
vital role of labor, hand in hand with management, in the advancement of the national
economy and the welfare of the people in general. The categorical mandates in the
Constitution for the improvement of the lot of the workers are more than sufficient
basis to justify the award of separation pay in proper cases even if the dismissal be
for cause.

4. ID.; ID.; ID.; ID.; SHOULD BE APPLIED ONLY WHERE THE DISMISSAL IS
FOR CAUSES OTHER THAN SERIOUS MISCONDUCT. We hold that henceforth
separation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character. Where the reason for the valid dismissal is,
for example, habitual intoxication or an offense involving moral turpitude, like theft or
illicit sexual relations with a fellow worker, the employer may not be required to give
the dismissed employee separation pay, or financial assistance, or whatever other
name it-is called, on the ground of social justice.

5. ID.; ID.; ID.; ID.; ID.; RATIONALE. A contrary rule would, as the petitioner
correctly argues, have the effect, of rewarding rather than punishing the erring
employee for his offense. And we do not agree that the punishment is his dismissal
only and that the separation pay has nothing to do with the wrong he has committed.
Of course it has. Indeed, if the employee who steals from the company is granted
separation pay even as he is validly dismissed, it is not unlikely that he will commit a
similar offense in his next employment because he thinks he can expect a like
leniency if he is again found out. This kind of misplaced compassion is not going to do
labor in general any good as it will encourage the infiltration of its ranks by those who
do not deserve the protection and concern of the Constitution.

6. ID.; ID.; ID.; ID.; ID.; CONCEPT OF SOCIAL JUSTICE. The policy of
social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it certainly
will not condone the offense. Compassion for the poor is an imperative of every
humane society but only when the recipient is not a rascal claiming an undeserved
privilege. Social justice cannot be permitted to be refuge of scoundrels any more than
can equity be an impediment to the punishment of the guilty. Those who invoke social
justice may do so only if their hands are clean and their motives blameless and not
simply because they happen to be poor. This great policy of our Constitution is not
meant for the protection of those who have proved they are not worthy of it, like the
workers who have tainted the cause of labor with the blemishes of their own
character.

7. ID.; ID.; ID.; ID.; ID.; SEPARATION PAY; COMPUTED AT THE RATE OF
ONE MONTH SALARY FOR EVERY YEAR OF SERVICE. The Court also rules
that the separation pay, if found due under the circumstances of each case, should be
computed at the rate of one month salary for every year of service, assuming the
length of such service is deemed material. This is without prejudice to the application
of special agreements between the employer and the employee stipulating a higher
rate of computation and providing for more benefits to the discharged employee.


D E C I S I O N


CRUZ, J.:


The only issue presented in the case at bar is the legality of the award of financial
assistance to an employee who had been dismissed for cause as found by the public
Respondent.chanrobles virtual lawlibrary

Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone
Company, was accused by two complainants of having demanded and received from
them the total amount of P3,800.00 in consideration of her promise to facilitate
approval of their applications for telephone installation. 1 Investigated and heard, she
was found guilty as charged and accordingly separated from the service. 2 She went
to the Ministry of Labor and Employment claiming she had been illegally removed.
After consideration of the evidence and arguments of the parties, the company was
sustained and the complaint was dismissed for lack of merit. Nevertheless, the
dispositive portion of labor arbiters decision declared:jgc:chanrobles.com.ph

"WHEREFORE, the instant complaint is dismissed for lack of merit.

"Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally
blameless in the light of the fact that the deal happened outside the premises of
respondent company and that their act of giving P3,800.00 without any receipt is
tantamount to corruption of public officers, complainant must be given one month pay
for every year of service as financial assistance." 3

Both the petitioner and the private respondent appealed to the National Labor
Relations Board, which upheld the said decision in toto and dismissed the appeals. 4
The private respondent took no further action, thereby impliedly accepting the validity
of her dismissal. The petitioner, however, is now before us to question the affirmance
of the above-quoted award as having been made with grave abuse of
discretion.chanroblesvirtualawlibrary

In its challenged resolution of September 22, 1987, the NLRC
said:jgc:chanrobles.com.ph

". . . Anent the award of separation pay as financial assistance in complainants favor,
We find the same to be equitable, taking into consideration her long years of service
to the company whereby she had undoubtedly contributed to the success of
Respondent. While we do not in any way approve of complainants (private
respondent) malfeasance, for which she is to suffer the penalty of dismissal, it is for
reasons of equity and compassion that we resolve to uphold the award of financial
assistance in her favor." 5

The position of the petitioner is simply stated: It is conceded that an employee illegally
dismissed is entitled to reinstatement and backwages as required by the labor laws.
However, an employee dismissed for cause is entitled to neither reinstatement nor
backwages and is not allowed any relief at all because his dismissal is in accordance
with law. In the case of the private respondent, she has been awarded financial
assistance equivalent to ten months pay corresponding to her 10-year service in the
company despite her removal for cause. She is, therefore, in effect rewarded rather
than punished for her dishonesty, and without any legal authorization or justification.
The award is made on the ground of equity and compassion, which cannot be a
substitute for law. Moreover, such award puts a premium on dishonesty and
encourages instead of deterring corruption.chanrobles virtual lawlibrary

For its part, the public respondent claims that the employee is sufficiently punished
with her dismissal. The grant of financial assistance is not intended as a reward for
her offense but merely to help her for the loss of her employment after working
faithfully with the company for ten years. In support of this position, the Solicitor
General cites the cases of Firestone Tire and Rubber Company of the Philippines v.
Lariosa 6 and Soco v. Mercantile Corporation of Davao, 7 where the employees were
dismissed for cause but were nevertheless allowed separation pay on grounds of
social and compassionate justice. As the Court put it in the Firestone
case:jgc:chanrobles.com.ph

"In view of the foregoing, We rule that Firestone had valid grounds to dispense with
the services of Lariosa and that the NLRC acted with grave abuse of discretion in
ordering his reinstatement. However, considering that Lariosa had worked with the
company for eleven years with no known previous bad record, the ends of social and
compassionate justice would be served if he is paid full separation pay but not
reinstatement without backwages by the NLRC."cralaw virtua1aw library

In the said case, the employee was validly dismissed for theft but the NLRC
nevertheless awarded him full separation pay for his 11 years of service with the
company. In Soco, the employee was also legally separated for unauthorized use of a
company vehicle and refusal to attend the grievance proceedings but he was just the
same granted one-half month separation pay for every year of his 18-year service.

Similar action was taken in Filipino, Inc. v. NLRC, 8 where the employee was validly
dismissed for preferring certain dealers in violation of company policy but was allowed
separation pay for his 2 years of service. In Metro Drug Corporation v. NLRC, 9 the
employee was validly removed for loss of confidence because of her failure to
account for certain funds but she was awarded separation pay equivalent to one-half
months salary for every year of her service of 15 years. In Engineering Equipment,
Inc. v. NLRC, 10 the dismissal of the employee was justified because he had
instigated labor unrest among the workers and had serious differences with them,
among other grounds, but he was still granted three months separation pay
corresponding to his 3-year service. In New Frontier Mines Inc. v. NLRC, 11 the
employees 3-year service was held validly terminated for lack of confidence and
abandonment of work but he was nonetheless granted three months separation pay.
And in San Miguel Corporation v. Deputy Minister of Labor and Employment, Et Al.,
12 full separation pay for 6, 10, and 16 years service, respectively, was also allowed
three employees who had been dismissed after they were found guilty of
misappropriating company funds.chanroblesvirtualawlibrary

The rule embodied in the Labor Code is that a person dismissed for cause as defined
therein is not entitled to separation pay. 13 The cases above cited constitute the
exception, based upon considerations of equity. Equity has been defined as justice
outside law, 14 being ethical rather than jural and belonging to the sphere of morals
than of law. 15 It is grounded on the precepts of conscience and not on any sanction
of positive law. 16 Hence, it cannot prevail against the expressed provision of the
labor laws allowing dismissal of employees for cause and without any provision for
separation pay.

Strictly speaking, however, it is not correct to say that there is no express justification
for the grant of separation pay to lawfully dismissed employees other than the
abstract consideration of equity. The reason is that our Constitution is replete with
positive commands for the promotion of social justice, and particularly the protection
of the rights of the workers. The enhancement of their welfare is one of the primary
concerns of the present charter. In fact, instead of confining itself to the general
commitment to the cause of labor in Article II on the Declaration of Principles of State
Policies, the new Constitution contains a separate article devoted to the promotion of
social justice and human rights with a separate sub-topic for labor. Article XIII
expressly recognizes the vital role of labor, hand in hand with management, in the
advancement of the national economy and the welfare of the people in general. The
categorical mandates in the Constitution for the improvement of the lot of the workers
are more than sufficient basis to justify the award of separation pay in proper cases
even if the dismissal be for cause.

The Court notes, however, that where the exception has been applied, the decisions
have not been consistent as to the justification for the grant of separation pay and the
amount or rate of such award. Thus, the employees dismissed for theft in the
Firestone case and for animosities with fellow workers in the Engineering Equipment
case were both awarded separation pay notwithstanding that the first cause was
certainly more serious than the second. No less curiously, the employee in the Soco
case was allowed only one-half month pay for every year of his 18 years of service,
but in Filipino the award was two months separation pay for 2 years service. In
Firestone, the employee was allowed full separation pay corresponding to his 11
years of service, but in Metro, the employee was granted only one-half month
separation pay for every year of her 15-year service. It would seem then that length of
service is not necessarily a criterion for the grant of separation pay and neither
apparently is the reason for the dismissal.chanrobles law library : red

The Court feels that distinctions are in order. We note that heretofore the separation
pay, when it was considered warranted, was required regardless of the nature or
degree of the ground proved, be it mere inefficiency or something graver like
immorality or dishonesty. The benediction of compassion was made to cover a
multitude of sins, as it were, and to justify the helping hand to the validly dismissed
employee whatever the reason for his dismissal. This policy should be re-examined. It
is time we rationalized the exception, to make it fair to both labor and management,
especially to labor.

There should be no question that where it comes to such valid but not iniquitous
causes as failure to comply with work standards, the grant of separation pay to the
dismissed employee may be both just and compassionate, particularly if he has
worked for some time with the company. For example, a subordinate who has
irreconcilable policy or personal differences with his employer may be validly
dismissed for demonstrated loss of confidence, which is an allowable ground. A
working mother who has to be frequently absent because she has also to take care of
her child may also be removed because of her poor attendance, this being another
authorized ground. It is not the employees fault if he does not have the necessary
aptitude for his work but on the other hand the company cannot be required to
maintain him just the same at the expense of the efficiency of its operations. He too
may be validly replaced. Under these and similar circumstances, however, the award
to the employee of separation pay would be sustainable under the social justice policy
even if the separation is for cause.

But where the cause of the separation is more serious than mere inefficiency, the
generosity of the law must be more discerning. There is no doubt it is compassionate
to give separation pay to a salesman if he is dismissed for his inability to fill his quota
but surely he does not deserve such generosity if his offense is misappropriation of
the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A
security guard found sleeping on the job is doubtless subject to dismissal but may be
allowed separation pay since his conduct, while inept, is not depraved. But if he was
in fact not really sleeping but sleeping with a prostitute during his tour of duty and in
the company premises, the situation is changed completely. This is not only
inefficiency but immorality and the grant of separation pay would be entirely
unjustified.

We hold that henceforth separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral character. Where the
reason for the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the
employer may not be required to give the dismissed employee separation pay, or
financial assistance, or whatever other name it-is called, on the ground of social
justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his offense. And we do not agree that
the punishment is his dismissal only and that the separation pay has nothing to do
with the wrong he has committed. Of course it has. Indeed, if the employee who
steals from the company is granted separation pay even as he is validly dismissed, it
is not unlikely that he will commit a similar offense in his next employment because
he thinks he can expect a like leniency if he is again found out. This kind of misplaced
compassion is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and concern of the
Constitution.chanrobles virtual lawlibrary

The policy of social justice is not intended to countenance wrongdoing simply
because it is committed by the underprivileged. At best it may mitigate the penalty but
it certainly will not condone the offense. Compassion for the poor is an imperative of
every humane society but only when the recipient is not a rascal claiming an
undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels
any more than can equity be an impediment to the punishment of the guilty. Those
who invoke social justice may do so only if their hands are clean and their motives
blameless and not simply because they happen to be poor. This great policy of our
Constitution is not meant for the protection of those who have proved they are not
worthy of it, like the workers who have tainted the cause of labor with the blemishes
of their own character.

Applying the above considerations, we hold that the grant of separation pay in the
case at bar is unjustified. The private respondent has been dismissed for dishonesty,
as found by the labor arbiter and affirmed by the NLRC and as she herself has
impliedly admitted. The fact that she has worked with the PLDT for more than a
decade, if it is to be considered at all, should be taken against her as it reflects a
regrettable lack of loyalty that she should have strengthened instead of betraying
during all of her 10 years of service with the company. If regarded as a justification for
moderating the penalty of dismissal, it will actually become a prize for disloyalty,
perverting the meaning of social justice and undermining the efforts of labor to
cleanse its ranks of all undesirables.

The Court also rules that the separation pay, if found due under the circumstances of
each case, should be computed at the rate of one month salary for every year of
service, assuming the length of such service is deemed material. This is without
prejudice to the application of special agreements between the employer and the
employee stipulating a higher rate of computation and providing for more benefits to
the discharged employee. 17

WHEREFORE, the petition is GRANTED. The challenged resolution of September
22, 1987, is AFFIRMED in toto except for the grant of separation pay in the form of
financial assistance, which is hereby DISALLOWED. The temporary restraining order
dated March 23, 1988, is LIFTED. It is so ordered.

Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin,
Sarmiento, Cortes and Medialdea, JJ., concur.

Separate Opinions


PADILLA, J., concurring:chanrob1es virtual 1aw library

I concur in the decision penned by Mr. Justice Cruz when it disallows separation pay,
as financial assistance, to the private respondent, since the ground for termination of
employment is dishonesty in the performance of her duties.

I do not, however, subscribe to the view that "the separation pay, if found due under
the circumstances of each case, should be computed at the rate of one month salary
for every year of service, assuming the length of such service is deemed material." (p.
11, Decision). It is my considered view that, except for terminations based on
dishonesty and serious misconduct involving moral turpitude where no separation
pay should be allowed in other cases, the grant of separation pay, i.e. the amount
thereof, as financial assistance to the terminated employee, should be left to the
judgment of the administrative agency concerned which is the NLRC. It is in such
cases where the termination of employment is for a valid cause without, however,
involving dishonesty or serious misconduct involving moral turpitude that the
Constitutional policy of affording protection to labor should be allowed full play; and
this is achieved by leaving to the NLRC the primary jurisdiction and judgment to
determine the amount of separation pay that should be awarded to the terminated
employee in accordance with the "environmental facts" of each case.

It is further my view that the Court should not, as a rule, disturb or alter the amount of
separation pay awarded by the NLRC in such cases of valid termination of
employment but with the financial assistance, in the absence of a demonstrated grave
abuse of discretion on the part of the NLRC.

FERNAN, C.J., dissenting:chanrob1es virtual 1aw library

The majority opinion itself declares that the reason for granting separation pay to
lawfully dismissed employees is that "our Constitution is replete with positive
commands for the promotion of social justice, and particularly the protection of the
rights of the workers." 1

It is my firm belief that providing a rigid mathematical formula for determining the
amounts of such separation pay will not be in keeping with these constitutional
directives. By computing the allowable financial assistance on the formula suggested,
we shall be closing our eyes to the spirit underlying these constitutional mandates
that "those who have less in life should have more in law." It cannot be denied that a
low-salaried employee who is separated from work would suffer more hardship than a
well-compensated one. Yet, if we follow the formula suggested, we would in effect be
favoring the latter instead of the former, as it would be the low-salaried employee who
would encounter difficulty finding another job.cralawnad

I am in accord with the opinion of Justice Sarmiento that we should not rationalize
compassion and that of Justice Padilla that the awards of financial assistance should
be left to the discretion of the National Labor Relations Commission as may be
warranted by the "environmental facts" of the case.

GRIO-AQUINO, J., dissenting:chanrob1es virtual 1aw library

I dissent. We should not rationalize compassion. I vote to affirm the grant of financial
assistance.

EN BANC

[G.R. No. 111651. November 28, 1996.]

OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L.
BUSTAMANTE, MARIO D. SUMONOD and SABU J. LAMARAN, Petitioner, v.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, and
EVERGREEN FARMS, INC., Respondents.


R E S O L U T I O N


PADILLA, J .:


On 15 March 1996, the Court (First Division) promulgated a decision in this case, the
dispositive part of which states:jgc:chanrobles.com.ph

"WHEREFORE, the Resolution of the National Labor Relations Commission dated 3
May 1993 is modified in that its deletion of the award for backwages in favor of
petitioners, is SET ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is
AFFIRMED with the modification that backwages shall be paid to petitioners from the
time of their illegal dismissal on 25 June 1990 up to the date of their reinstatement. If
reinstatement is no longer feasible, a one-month salary shall be paid the petitioners
as ordered in the labor arbiters decision, in addition to the adjudged
backwages."cralaw virtua1aw library

Private respondent now moves to reconsider the decision on grounds that (a)
petitioners are not entitled to recover backwages because they were not actually
dismissed but their probationary employment was not converted to permanent
employment; and (b) assuming that petitioners are entitled to backwages,
computation thereof should not start from cessation of work up to actual
reinstatement, and that salary earned elsewhere (during the period of illegal
dismissal) should be deducted from the award of such backwages.

There is no compelling reason to reconsider the decision of the Court (First Division)
dated 15 March 1996. However, we here clarify the computation of backwages due
an employee on account of his illegal dismissal from employment.

This Court has, over the years, applied different methods in the computation of
backwages. The first labor relations law governing the award of backwages was
Republic Act No. 875, the Industrial Peace Act, approved on 17 June 1953. Sections
5 and 15 thereof provided thus:jgc:chanrobles.com.ph

"Sec. 5. Unfair Labor Practice Cases.

(c) . . . If, after investigation, the Court shall be of the opinion that any person named
in the complaint has engaged in or is engaging in any unfair labor practice, then the
Court shall state its findings of fact and shall issue and cause to be served on such
person an order requiring such person to cease and desist from such unfair labor
practice and take such affirmative action as will effectuate the policies of this Act,
including (but not limited to) reinstatement of employees with or without back-pay and
including rights of the employees prior to dismissal including seniority . . . (Emphasis
supplied)

Sec. 15. Violation of Duty to Bargain Collectively. . . . Any employee whose work
has stopped as a consequence of such lockout shall be entitled to back-pay.
(Emphasis supplied)"

In accordance with these provisions, backpay (the same as backwages) could be
awarded where, in the opinion of the Court of Industrial Relations (CIR), such was
necessary to effectuate the policies of the Industrial Peace Act. 1 Only in one case
was backpay a matter of right, and that was, when an employer had declared a
lockout without having first bargained collectively with his employees in accordance
with the provisions of the Act.

As the CIR was given wide discretion to grant or disallow payment of backpay
(backwages) to an employee, it also had the implied power of mitigating (reducing)
the backpay where backpay was allowed. 2 Thus, in the exercise of its jurisdiction,
the CIR increased or diminished the award of backpay, depending on several
circumstances, among them, the good faith of the employer, 3 the employees
employment in other establishments during the period of illegal dismissal, or the
probability that the employee could have realized net earnings from outside
employment if he had exercised due diligence to search for outside employment. 4 In
labor cases decided during the effectivity of R.A. No. 875, this Court acknowledged
and upheld the CIRs authority to deduct any amount from the employees backwages
5 including the discretion to reduce such award of backwages by whatever earnings
were obtained by the employee elsewhere during the period of his illegal dismissal. 6
In the case of Itogon-Suyoc Mines, Inc. v. Sagilo-Itogon Workers Union, 7 this Court
restated the guidelines for determination of total backwages,
thus:jgc:chanrobles.com.ph

"First. To be deducted from the backwages accruing to each of the laborers to be
reinstated is the total amount of earnings obtained by him from other employment(s)
from the date of dismissal to the date of reinstatement. Should the laborer decide that
it is preferable not to return to work, the deduction should be made up to the time
judgment becomes final. And these, for the reason that employees should not be
permitted to enrich themselves at the expense of their employer. Besides, there is the
laws abhorrence for double compensation.

Second. Likewise, in mitigation of the damages that the dismissed respondents are
entitled to, account should be taken of whether in the exercise of due diligence
respondents might have obtained income from suitable remunerative employment.
We are prompted to give out this last reminder because it is really unjust that a
discharged employee should, with folded arms, remain inactive in the expectation that
a windfall would come to him. A contrary view would breed idleness; it is conducive to
lack of initiative on the part of a laborer. Both bear the stamp of undesirability."cralaw
virtua1aw library

From this ruling came the burden of disposing of an illegal dismissal case on its
merits and of determining whether or not the computation of the award of backwages
is correct. In order not to unduly delay the disposition of illegal dismissal cases, this
Court found occasion in the case of Mercury Drug Co., Inc., Et. Al. v. CIR, Et. Al. 8 to
rule that a fixed amount of backwages without further qualifications should be
awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). This
ruling was grounded upon considerations of expediency in the execution of the
decision. Former Justice Claudio Teehankee approved of this formula expressing that
such method of computation is a "realistic, reasonable and mutually beneficial
solution" and "thus obviates the twin evils of idleness on the part of the employees
and attrition and undue delay in satisfying the award on the part of the employer." 9
However, Justice Teehankee dissented from the majority view that the employee in
said case should be awarded backwages only for a period of 1 year, 11 months and
15 days which represented the remainder of the prescriptive period after deducting
the period corresponding to the delay incurred by the employee in filing the complaint
for unfair labor practice and reinstatement. Justice Teehankee opined
that:jgc:chanrobles.com.ph

". . . an award of back wages equivalent to three years (where the case is not
terminated sooner) should serve as the base figure for such awards without
deduction, subject to deduction where there are mitigating circumstances in favor of
the employer but subject to increase by way of exemplary damages where there are
aggravating circumstances (e.g. oppression or dilatory appeals) on the employers
part." 10

The proposal on the three-year backwages was subsequently adopted in later cases,
among them, Feati University Faculty Club (PAFLU) v. Feati University (No. L-31503,
15 August 1974, 58 SCRA 395), Luzon Stevedoring Corporation v. CIR (No. L-34300,
22 November 1974, 61 SCRA 154), Danao Development Corporation v. NLRC (Nos.
L-40706 and L-40707, 16 February 1978, 81 SCRA 487), Associated Anglo-American
Tobacco Corporation v. Lazaro (No. 63779, 27 October 1983, 125 SCRA 463),
Philippine National Oil Company Energy Development Corporation v. Leogardo
(G.R. No. 58494, 5 July 1989, 175 SCRA 26).

Then came Presidential Decree No. 442 (the Labor Code of the Philippines) which
was signed into law on 1 May 1974 and which took effect on 1 November 1974. Its
posture on the award of backwages, as amended, was expressed as
follows:chanrob1es virtual 1aw library

ART. 279. Security of Tenure. In case of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and to his backwages computed from the
time his compensation was withheld from him up to the time of his reinstatement.
(Emphasis supplied)."cralaw virtua1aw library

Under the abovequoted provision, it became mandatory to award backwages to
illegally dismissed regular employees. The law specifically declared that the award of
backwages was to be computed from the time compensation was withheld from the
employee up to the time of his reinstatement. This notwithstanding, the rule generally
applied by the Court after the promulgation of the Mercury Drug case, 11 and during
the effectivity of P.D. No. 442 was still the Mercury Drug rule. A survey of cases from
1974 until 1989, when the amendatory law to P.D. No. 442, namely, R.A No. 6715
took effect, supports this conclusion.

In the case of New Manila Candy Workers Union (Naconwa-Paflu) v. CIR (1978), 12
or after the Labor Code (P.D. No. 442) had taken effect, the Court still followed the
Mercury Drug rule to avoid the necessity of a hearing on earnings obtained elsewhere
by the employee during the period of illegal dismissal In an even later case (1987) 13
the Court declared that the general principle is that an employee is entitled to receive
as backwages all the amounts he may have received from the date of his dismissal
up to the time of his reinstatement. However, in compliance with the jurisprudential
policy of fixing the amount of backwages to a just and reasonable level, the award of
backwages equivalent to three (3) years, without qualification or deduction, was
nonetheless followed in said case.

In a more direct approach to the rule on the award of backwages this Court declared
in the 1990 case of Medado v. Court of Appeals 14 that "any decision or order
granting backwages in excess of three (3) years is null and void as to the
excess."cralaw virtua1aw library

In sum, during the effectivity of P.D. 442, the Court enforced the Mercury Drug rule
and, in effect, qualified the provision under P.D. No. 442 by limiting the award of
backwages to three (3) years.

On 21 March 1989, Republic Act No. 6715 took effect, amending the Labor Code.
Article 279 thereof states in part:chanrob1es virtual 1aw library

ART. 279. Security of Tenure. . . . An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits
or their monetary equivalent computed from the time his compensation is withheld
from him up to the time of his actual reinstatement." (Emphasis supplied)

In accordance with the above provision, an illegally dismissed employee is entitled to
his full backwages from the time his compensation was withheld from him (which as a
rule is from the time of his illegal dismissal) up to the time of his actual reinstatement.
It is true that this Court had ruled in the case of Pines City Educational Center v.
NLRC (G.R. No. 96779, 10 November 1993, 227 SCRA 655) that "in ascertaining the
total amount of backwages payable to them (employees), we go back to the rule prior
to the Mercury Drug rule that the total amount derived from employment elsewhere by
the employee from the date of dismissal up to the date of reinstatement, if any, should
be deducted therefrom." 15 The rationale for such ruling was that, the earnings
derived elsewhere by the dismissed employee while litigating the legality of his
dismissal, should be deducted from the full amount of backwages which the law
grants him upon reinstatement, so as not to unduly or unjustly enrich the employee at
the expense of the employer.

The Court deems it appropriate, however, to reconsider such earlier ruling on the
computation of backwages as enunciated in said Pines City Educational Center case,
by now holding that comfortably with the evident legislative intent as expressed in
Rep. Act No. 6715, above-quoted, backwages to be awarded to an illegally dismissed
employee, should not, as a general rule, be diminished or reduced by the earnings
derived by him elsewhere during the period of his illegal dismissal. The underlying
reason for this ruling is that the employee, while litigating the legality (illegality) of his
dismissal, must still earn a living to support himself and family, while full backwages
have to be paid by the employer as part of the price or penalty he has to pay for
illegally dismissing his employee. The clear legislative intent of the amendment in
Rep. Act No. 6715 is to give more benefits to workers than was previously given them
under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a
closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full
backwages" as meaning exactly that, i.e., without deducting from backwages the
earnings derived elsewhere by the concerned employee during the period of his
illegal dismissal. 16 In other words, the provision calling for "full backwages" to
illegally dismissed employees is clear, plain and free from ambiguity and, therefore,
must be applied without attempted or strained interpretation. Index animi sermo est.
17

Therefore, in accordance with R.A. No. 6715, petitioners are entitled to their full
backwages, inclusive of allowances and other benefits or their monetary equivalent,
from the time their actual compensation was withheld from them up to the time of their
actual reinstatement.

As to reinstatement of petitioners, this Court has already ruled that since
reinstatement is no longer feasible, because the company would be unjustly
prejudiced by the continued employment of petitioners who at present are overage, a
separation pay equal to one-month salary granted to them in the Labor Arbiters
decision was in order and, therefore, affirmed in the Courts decision of 15 March
1996. Furthermore, since reinstatement in this case is no longer feasible, the amount
of backwages shall be computed from the time of their illegal termination on 25 June
1990 up to the time of finality of this decision. 18

ACCORDINGLY, private respondents Motion for Reconsideration, dated 10 April
1996, is DENIED.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug,
Kapunan, Mendoza, Francisco, Hermosisima, Jr., Panganiban, and Torres, Jr., JJ.,
concur.