1

G.R. No. 178909

October 10, 2012
SUPERIOR PACKAGING CORPORATION, Petitioner,
vs.
ARNEL BALAGSA Y, ZALDY ALFORGNE, JAIME ANGELES, REY APURA, GERALD CABALAN,
JONALD CALENTENG, RAMIL CROIJERO, JUNREY CABALGUINTO, OSCAR DAYTO, RUFO
DIONOLA, DIONILO ESMERALDA, BOOTS LADRILLO, ELIEZER MAGHAMOY, LEO FLORES,
RENATOPAGADORA,REYNALDO PLAZA, H.OGER SJBNEAO, EDWIN TONALBA, .JOHN
ACHARON, RODERICK RAMAS, SALVADOR ACURATO, JULUIS BASUL, CARLOS RAYTA,
LITO BELANO, ROGER CASIMIRO, RENE CURADA, NESTRO ESTE, ROMMEL IMPELIOO,
ZOILO ISLA, JHONIE OGARDO, EDWIN POSADAS, ALEXANDER REGPALA, CHRISTOPHER
SAMPIANO, RITCHIE SANCHES, ROLANDO SORIANO, ROWELL ANCHETA, RICKY
BORDAS, ANTONIO BEHEN, RONALD DOMINGO, JERRY MORENO, ROLLY ROSALES,
RENATO RESTANO and ISIDRO SARIGNE, Respondents.
RESOLUTION
REYES, J.:
The main issue in this case is whether Superior Packaging Corporation (petitioner) may be held
solidarily liable with Lancer Staffing & Services Network, Inc. (Lancer) for respondents unpaid
money claims.
The facts are undisputed.
The petitioner engaged the services of Lancer to provide reliever services to its business, which
involves the manufacture and sale of commercial and industrial corrugated boxes. According to
petitioner, the respondents were engaged for four (4) months from February to June 1998 and
their tasks included loading, unloading and segregation of corrugated boxes.
Pursuant to a complaint filed by the respondents against the petitioner and its President, Cesar
Luz (Luz), for underpayment of wages, non-payment of premium pay for worked rest, overtime
pay and non-payment of salary, the Department of Labor and Employment (DOLE) conducted an
inspection of the petitioners premises and found several violations, to wit: (1) non-presentation
of payrolls and daily time records; (2) non-submission of annual report of safety organization; (3)
medical and accident/illness reports; (4) non-registration of establishment under Rule 1020 of
Occupational and Health Standards; and (5) no trained first aide 1 Due to the petitioners failure to
appear in the summary investigations conducted by the DOLE, an Order 2 was issued on June 18,
2003 finding in favor of the respondents and adopting the computation of the claims submitted.
Petitioner and Luz were ordered, among others, to pay respondents their total claims in the
amount of Eight Hundred Forty Thousand Four Hundred Sixty-Three Pesos and 38/100 (P
840,463.38).3
They filed a motion for reconsideration on the ground that respondents are not its employees but
of Lancer and that they pay Lancer in lump sum for the services rendered. The DOLE, however,
denied its motion in its Resolution4 dated February 16, 2004, ruling that the petitioner failed to
support its claim that the respondents are not its employees, and even assuming that they were
employed by Lancer, the petitioner still cannot escape liability as Section 13 of the Department
Order No. 10, Series of 1997, makes a principal jointly and severally liable with the contractor to
contractual employees to the extent of the work performed when the contractor fails to pay its
employees wages.
Their appeal to the Secretary of DOLE was dismissed per Order 5 dated July 30, 2004 and the
Order dated June 18, 2003 and Resolution dated February 16, 2004 were affirmed. 6 Their motion
for reconsideration likewise having been dismissed by the Secretary of DOLE in an Order dated
January 21, 2005,7 petitioner and Luz filed a petition for certiorari with the Court of Appeals (CA).
On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the modification in
that Luz was absolved of any personal liability under the award. 8 The petitioner filed a partial
motion for reconsideration insofar as the finding of solidary liability with Lancer is concerned but
it was denied by the CA in a Resolution 9 dated July 10, 2007.
The petitioner is now before the Court on petition for review under Rule 45 of the Rules of Court,
alleging that:
I

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THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN AFFIRMING
THE RULING OF THE SECRETARY OF LABOR AND EMPLOYMENT THAT THE COMPANY IS SOLIDARILY
LIABLE WITH THE CONTRACTOR NOTWITHSTANDING THE FACT THAT:
A. THE COMPANY CANNOT BE HELD SOLIDARILY LIABLE WITH THE
CONTRACTOR FOR THE PENALTY OR SANCTION IMPOSED BY WAY OF "DOUBLE
INDEMNITY" UNDER REPUBLIC ACT NO. 6727.
B. THERE IS NO EVIDENCE TO SHOW THAT PRIVATE RESPONDENTS
RENDERED OVERTIME WORK AND ACTUALLY WORKED ON THEIR RESTDAYS
FOR THE COMPANY FOR THE PERIOD IN QUESTION.
II
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN AFFIRMING
THE FINDINGS OF THE SECRETARY OF LABOR AND EMPLOYMENT THAT THE CONTRACTOR IS
ENGAGED IN LABOR-ONLY CONTRACTING.10
On the first ground, the petitioner argues that the DOLE erred in doubling respondents
underpayment of wages and regular holiday pay under Republic Act No. 6727 (Wage
Rationalization Act) inasmuch as the solidary liability of a principal does not extend to a punitive
award against a contractor.11 The petitioner also contends that there is no evidence showing that
the respondents rendered overtime work and that they actually worked on their rest days for
them to be entitled to such pay. 12
On the second ground, the petitioner objects to the finding that it is engaged in labor-only
contracting and is consequently an indirect employer, considering that it is beyond the visitorial
and enforcement power of the DOLE to make such conclusion. According to the petitioner, such
conclusion may be made only upon consideration of evidentiary matters and cannot be
determined solely through a labor inspection. 13 The petitioner also refutes respondents alleged
belated argument that the latter are its employees. 14
The petition is bereft of merit.
To begin with, the Court will not resolve or dwell on the petitioners argument on the doubling of
respondents underpayment of wages and regular holiday pay by the DOLE for the simple reason
that this is the first time that the petitioner raised such contention. From its pleadings filed in the
DOLE and all the way up to the CA, the petitioner never questioned nor discussed such issue. It is
only now before the Court that the petitioner belatedly presented such argument. It is wellsettled that points of law, theories, issues and arguments not brought to the attention of the
lower court, administrative agency or quasi-judicial body need not be considered by a reviewing
court, as they cannot be raised for the first time at that late stage. 15 To consider the alleged facts
and arguments raised belatedly would amount to trampling on the basic principles of fair play,
justice and due process.16
With regard to the contention that there is no evidence to support the finding that the
respondents rendered overtime work and that they worked on their rest day, the resolution of
this argument requires a review of the factual findings and the evidence presented, which this
Court will not do. This Court is not a trier of facts and this applies with greater force in labor
cases.17 Hence, where the factual findings of the labor tribunals or agencies conform to, and are
affirmed by, the CA, the same are accorded respect and finality, and are binding upon this
Court.18
Petitioner also questions the authority of the DOLE to make a finding of an employer-employee
relationship concomitant to its visitorial and enforcement power. The Court notes at this juncture
that the petitioner, again, did not raise this question in the proceedings before the DOLE. At best,
what the petitioner raised was the sufficiency of evidence proving the existence of an employeremployee relationship and it was only in its petition for certiorari with the CA that the petitioner
sought to have this matter addressed. The CA should have refrained from resolving said matter
as the petitioner was deemed to have waived such argument and was estopped from raising the
same.19
At any rate, such argument lacks merit. The DOLE clearly acted within its authority when it
determined the existence of an employer-employee relationship between the petitioner and
respondents as it falls within the purview of its visitorial and enforcement power under Article
128(b) of the Labor Code, which provides:

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Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of Labor and Employment
or his duly authorized representatives shall have the power to issue compliance orders to give
effect to the labor standards provisions of this Code and other labor legislation based on the
findings of labor employment and enforcement officers or industrial safety engineers made in the
course of inspection. The Secretary or his duly authorized representative shall issue writs of
execution to the appropriate authority for the enforcement of their orders, except in cases where
the employer contests the findings of the labor employment and enforcement officer and raises
issues supported by documentary proofs which were not considered in the course of inspection.
In Peoples Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and
Employment,20 the Court stated that it can be assumed that the DOLE in the exercise of its
visitorial and enforcement power somehow has to make a determination of the existence of an
employer-employee relationship. Such determination, however, is merely preliminary, incidental
and collateral to the DOLEs primary function of enforcing labor standards provisions. Such power
was further explained recently by the Court in its Resolution 21 dated March 6, 2012 issued in
Peoples Broadcasting, viz:
The determination of the existence of an employer-employee relationship by the DOLE must be
respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730
would be rendered nugatory if the alleged employer could, by the simple expedient of disputing
the employer-employee relationship, force the referral of the matter to the NLRC. The Court
issued the declaration that at least a prima facie showing of the absence of an employeremployee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that
will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does
successfully refute the existence of an employer-employee relationship.
xxxx
x x x The power of the DOLE to determine the existence of an employer-employee relationship
need not necessarily result in an affirmative finding.1wphi1 The DOLE may well make the
determination that no employer-employee relationship exists, thus divesting itself of jurisdiction
over the case. It must not be precluded from being able to reach its own conclusions, not by the
parties, and certainly not by this Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to
make a determination as to the existence of an employer-employee relationship in the exercise
of its visitorial and enforcement power, subject to judicial review, not review by the NLRC. 22
Also, the existence of an employer-employee relationship is ultimately a question of fact. 23 The
determination made in this case by the DOLE, albeit provisional, and as affirmed by the
Secretary of DOLE and the CA is beyond the ambit of a petition for review on certiorari. 24
The Court now comes to the issue regarding the nature of the relationship between the petitioner
and respondents, and the consequent liability of the petitioner to the respondents under the
latters claim.
It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent
contractor but was engaged in "labor-only contracting"; hence, the petitioner was considered an
indirect employer of respondents and liable to the latter for their unpaid money claims.
At the time of the respondents employment in 1998, the applicable regulation was DOLE
Department Order No. 10, Series of 1997.25 Under said Department Order, labor-only contracting
was defined as follows:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an
employer shall be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which are directly
related to the principal business or operations of the employer in which workers are habitually
employed.
Labor-only contracting is prohibited and the person acting as contractor shall be considered
merely as an agent or intermediary of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by him. 26

4
According to the CA, the totality of the facts and surrounding circumstances of this case point to
such conclusion. The Court agrees.
The ratio of Lancers authorized capital stock of P 400,000.00 as against its subscribed and paidup capital stock of P 25,000.00 shows the inadequacy of its capital investment necessary to
maintain its day-to-day operations. And while the Court does not set an absolute figure for what
it considers substantial capital for an independent job contractor, it measures the same against
the type of work which the contractor is obligated to perform for the principal. 27 Moreover, the
nature of respondents work was directly related to the petitioners business. The marked
disparity between the petitioners actual capitalization (P 25,000.00) and the resources needed
to maintain its business, i.e., "to establish, operate and manage a personnel service company
which will conduct and undertake services for the use of offices, stores, commercial and
industrial services of all kinds," supports the finding that Lancer was, indeed, a labor-only
contractor. Aside from these is the undisputed fact that the petitioner failed to produce any
written service contract that might serve as proof of its alleged agreement with Lancer. 28
Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there
is an employer-employee relationship between the principal and the employees of the supposed
contractor, and the "labor only" contractor is considered as a mere agent of the principal, the
real employer.29 The former becomes solidarily liable for all the rightful claims of the employees. 30
The petitioner therefore, being the principal employer and Lancer, being the labor-only
contractor, are solidarily liable for respondents unpaid money claims.
WHEREFORE, the petition for review is DENIED.

5
G.R. No. 162419
July 10, 2007
PAUL V. SANTIAGO, petitioner,
vs.
CF SHARP CREW MANAGEMENT, INC., respondent.
DECISION
TINGA, J.:
At the heart of this case involving a contract between a seafarer, on one hand, and the manning
agent and the foreign principal, on the other, is this erstwhile unsettled legal quandary: whether
the seafarer, who was prevented from leaving the port of Manila and refused deployment without
valid reason but whose POEA-approved employment contract provides that the employeremployee relationship shall commence only upon the seafarers actual departure from the port in
the point of hire, is entitled to relief?
This treats of the petition for review filed by Paul V. Santiago (petitioner) assailing the Decision
and Resolution of the Court of Appeals dated 16 October 2003 and 19 February 2004,
respectively, in CA-G.R. SP No. 68404.1
Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about
five (5) years.2 On 3 February 1998, petitioner signed a new contract of employment with
respondent, with the duration of nine (9) months. He was assured of a monthly salary of
US$515.00, overtime pay and other benefits. The following day or on 4 February 1998, the
contract was approved by the Philippine Overseas Employment Administration (POEA). Petitioner
was to be deployed on board the "MSV Seaspread" which was scheduled to leave the port of
Manila for Canada on 13 February 1998.
A week before the scheduled date of departure, Capt. Pacifico Fernandez, respondents Vice
President, sent a facsimile message to the captain of "MSV Seaspread," which reads:
I received a phone call today from the wife of Paul Santiago in Masbate asking me
not to send her husband to MSV Seaspread anymore. Other callers who did not
reveal their identity gave me some feedbacks that Paul Santiago this time if allowed
to depart will jump ship in Canada like his brother Christopher Santiago, O/S who
jumped ship from the C.S. Nexus in Kita-kyushu, Japan last December, 1997.
We do not want this to happen again and have the vessel penalized like the C.S.
Nexus in Japan.
Forewarned is forearmed like his brother when his brother when he was applying he
behaved like a Saint but in his heart he was a serpent. If you agree with me then we
will send his replacement.
Kindly advise.3
To this message the captain of "MSV Seaspread" replied:
Many thanks for your advice concerning P. Santiago, A/B. Please cancel plans for
him to return to Seaspread.4
On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore,
but he was reassured that he might be considered for deployment at some future date.
Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent
and its foreign principal, Cable and Wireless (Marine) Ltd. 5 The case was raffled to Labor Arbiter
Teresita Castillon-Lora, who ruled that the employment contract remained valid but had not
commenced since petitioner was not deployed. According to her, respondent violated the rules
and regulations governing overseas employment when it did not deploy petitioner, causing
petitioner to suffer actual damages representing lost salary income for nine (9) months and fixed
overtime fee, all amounting to US$7, 209.00.
The labor arbiter held respondent liable. The dispositive portion of her Decision dated 29 January
1999 reads:
WHEREFORE, premises considered, respondent is hereby Ordered to pay
complainant actual damages in the amount of US$7,209.00 plus 10% attorney's
fees, payable in Philippine peso at the rate of exchange prevailing at the time of
payment.
All the other claims are hereby DISMISSED for lack of merit.
SO ORDERED.6

6
On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that there is no
employer-employee relationship between petitioner and respondent because under the Standard
Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going
Vessels (POEA Standard Contract), the employment contract shall commence upon actual
departure of the seafarer from the airport or seaport at the point of hire and with a POEAapproved contract. In the absence of an employer-employee relationship between the parties,
the claims for illegal dismissal, actual damages, and attorneys fees should be dismissed. 7 On the
other hand, the NLRC found respondents decision not to deploy petitioner to be a valid exercise
of its management prerogative.8 The NLRC disposed of the appeal in this wise:
WHEREFORE, in the light of the foregoing, the assailed Decision dated January 29,
1999 is hereby AFFIRMED in so far as other claims are concerned and with
MODIFICATION by VACATING the award of actual damages and attorneys fees as
well as excluding Pacifico Fernandez as party respondent.
SO ORDERED.9
Petitioner moved for the reconsideration of the NLRCs Decision but his motion was denied for
lack of merit.10 He elevated the case to the Court of Appeals through a petition for certiorari.
In its Decision11 dated 16 October 2003, the Court of Appeals noted that there is an ambiguity in
the NLRCs Decision when it affirmed with modification the labor arbiters Decision, because by
the very modification introduced by the Commission (vacating the award of actual damages and
attorneys fees), there is nothing more left in the labor arbiters Decision to affirm. 12
According to the appellate court, petitioner is not entitled to actual damages because damages
are not recoverable by a worker who was not deployed by his agency within the period
prescribed in
the POEA Rules.13 It agreed with the NLRCs finding that petitioners non-deployment was a valid
exercise of respondents management prerogative. 14 It added that since petitioner had not
departed from the Port of Manila, no employer-employee relationship between the parties arose
and any claim for damages against the so-called employer could have no leg to stand on. 15
Petitioners subsequent motion for reconsideration was denied on 19 February 2004. 16
The present petition is anchored on two grounds, to wit:
A. The Honorable Court of Appeals committed a serious error of law when it ignored
[S]ection 10 of Republic Act [R.A.] No. 8042 otherwise known as the Migrant
Workers Act of 1995 as well as Section 29 of the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels
(which is deemed incorporated under the petitioners POEA approved Employment
Contract) that the claims or disputes of the Overseas Filipino Worker by virtue of a
contract fall within the jurisdiction of the Labor Arbiter of the NLRC.
B. The Honorable Court of Appeals committed a serious error when it disregarded
the required quantum of proof in labor cases, which is substantial evidence, thus a
total departure from established jurisprudence on the matter. 17
Petitioner maintains that respondent violated the Migrant Workers Act and the POEA Rules when
it failed to deploy him within thirty (30) calendar days without a valid reason. In doing so, it had
unilaterally and arbitrarily prevented the consummation of the POEA- approved contract. Since it
prevented his deployment without valid basis, said deployment being a condition to the
consummation of the POEA contract, the contract is deemed consummated, and therefore he
should be awarded actual damages, consisting of the stipulated salary and fixed overtime pay. 18
Petitioner adds that since the contract is deemed consummated, he should be considered an
employee for all intents and purposes, and thus the labor arbiter and/or the NLRC has jurisdiction
to take cognizance of his claims.19
Petitioner additionally claims that he should be considered a regular employee, having worked
for five (5) years on board the same vessel owned by the same principal and manned by the
same local agent. He argues that respondents act of not deploying him was a scheme designed
to prevent him from attaining the status of a regular employee. 20
Petitioner submits that respondent had no valid and sufficient cause to abandon the employment
contract, as it merely relied upon alleged phone calls from his wife and other unnamed callers in
arriving at the conclusion that he would jump ship like his brother. He points out that his wife had

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executed an affidavit21 strongly denying having called respondent, and that the other alleged
callers did not even disclose their identities to respondent. 22 Thus, it was error for the Court of
Appeals to adopt the unfounded conclusion of the NLRC, as the same was not based on
substantial evidence.23
On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award
petitioners monetary claims. His employment with respondent did not commence because his
deployment was withheld for a valid reason. Consequently, the labor arbiter and/or the NLRC
cannot entertain adjudication of petitioners case much less award damages to him. The
controversy involves a breach of contractual obligations and as such is cognizable by civil
courts.24 On another matter, respondent claims that the second issue posed by petitioner
involves a recalibration of facts which is outside the jurisdiction of this Court. 25
There is some merit in the petition.
There is no question that the parties entered into an employment contract on 3 February 1998,
whereby petitioner was contracted by respondent to render services on board "MSV Seaspread"
for the consideration of US$515.00 per month for nine (9) months, plus overtime pay. However,
respondent failed to deploy petitioner from the port of Manila to Canada. Considering that
petitioner was not able to depart from the airport or seaport in the point of hire, the employment
contract did not commence, and no employer-employee relationship was created between the
parties.26
However, a distinction must be made between the perfection of the employment contract and
the commencement of the employer-employee relationship. The perfection of the contract, which
in this case coincided with the date of execution thereof, occurred when petitioner and
respondent agreed on the object and the cause, as well as the rest of the terms and conditions
therein. The commencement of the employer-employee relationship, as earlier discussed, would
have taken place had petitioner been actually deployed from the point of hire. Thus, even before
the start of any employer-employee relationship, contemporaneous with the perfection of the
employment contract was the birth of certain rights and obligations, the breach of which may
give rise to a cause of action against the erring party. Thus, if the reverse had happened, that is
the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.
Moreover, while the POEA Standard Contract must be recognized and respected, neither the
manning agent nor the employer can simply prevent a seafarer from being deployed without a
valid reason.
Respondents act of preventing petitioner from departing the port of Manila and boarding "MSV
Seaspread" constitutes a breach of contract, giving rise to petitioners cause of action.
Respondent unilaterally and unreasonably reneged on its obligation to deploy petitioner and
must therefore answer for the actual damages he suffered.
We take exception to the Court of Appeals conclusion that damages are not recoverable by a
worker who was not deployed by his agency. The fact that the POEA Rules 27 are silent as to the
payment of damages to the affected seafarer does not mean that the seafarer is precluded from
claiming the same. The sanctions provided for non-deployment do not end with the suspension
or cancellation of license or fine and the return of all documents at no cost to the worker. They do
not forfend a seafarer from instituting an action for damages against the employer or agency
which has failed to deploy him.
The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does
not provide for damages and money claims recoverable by aggrieved employees because it is
not the POEA, but the NLRC, which has jurisdiction over such matters.
Despite the absence of an employer-employee relationship between petitioner and respondent,
the Court rules that the NLRC has jurisdiction over petitioners complaint. The jurisdiction of labor
arbiters is not limited to claims arising from employer-employee relationships. Section 10 of R.A.
No. 8042 (Migrant Workers Act), provides that:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar
days after the filing of the complaint, the claims arising out of an employeremployee relationship or by virtue of any law or contract involving Filipino workers

8
for overseas deployment including claims for actual, moral, exemplary and other
forms of damages. x x x [Emphasis supplied]
Since the present petition involves the employment contract entered into by petitioner for
overseas employment, his claims are cognizable by the labor arbiters of the NLRC.
Article 2199 of the Civil Code provides that one is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has duly proved. Respondent is thus liable to pay
petitioner actual damages in the form of the loss of nine (9) months worth of salary as provided
in the contract. He is not, however, entitled to overtime pay. While the contract indicated a fixed
overtime pay, it is not a guarantee that he would receive said amount regardless of whether or
not he rendered overtime work. Even though petitioner was "prevented without valid reason from
rendering regular much less overtime service," 28 the fact remains that there is no certainty that
petitioner will perform overtime work had he been allowed to board the vessel. The amount of
US$286.00 stipulated in the contract will be paid only if and when the employee rendered
overtime work. This has been the tenor of our rulings in the case of Stolt-Nielsen Marine Services
(Phils.), Inc. v. National Labor Relations Commission 29 where we discussed the matter in this light:
The contract provision means that the fixed overtime pay of 30% would be the basis
for computing the overtime pay if and when overtime work would be rendered.
Simply stated, the rendition of overtime work and the submission of sufficient proof
that said work was actually performed are conditions to be satisfied before a
seaman could be entitled to overtime pay which should be computed on the basis of
30% of the basic monthly salary. In short, the contract provision guarantees the
right to overtime pay but the entitlement to such benefit must first be established.
Realistically speaking, a seaman, by the very nature of his job, stays on board a ship
or vessel beyond the regular eight-hour work schedule. For the employer to give
him overtime pay for the extra hours when he might be sleeping or attending to his
personal chores or even just lulling away his time would be extremely unfair and
unreasonable.30
The Court also holds that petitioner is entitled to attorneys fees in the concept of damages and
expenses of litigation. Attorney's fees are recoverable when the defendant's act or omission has
compelled the plaintiff to incur expenses to protect his interest. 31 We note that respondents
basis for not deploying petitioner is the belief that he will jump ship just like his brother, a mere
suspicion that is based on alleged phone calls of several persons whose identities were not even
confirmed. Time and again, this Court has upheld management prerogatives so long as they are
exercised in good faith for the advancement of the employers interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid
agreements.32 Respondents failure to deploy petitioner is unfounded and unreasonable, forcing
petitioner to institute the suit below. The award of attorneys fees is thus warranted.
However, moral damages cannot be awarded in this case. While respondents failure to deploy
petitioner seems baseless and unreasonable, we cannot qualify such action as being tainted with
bad faith, or done deliberately to defeat petitioners rights, as to justify the award of moral
damages. At most, respondent was being overzealous in protecting its interest when it became
too hasty in making its conclusion that petitioner will jump ship like his brother.
We likewise do not see respondents failure to deploy petitioner as an act designed to prevent
the latter from attaining the status of a regular employee. Even if petitioner was able to depart
the port of Manila, he still cannot be considered a regular employee, regardless of his previous
contracts of employment with respondent. In Millares v. National Labor Relations Commission,33
the Court ruled that seafarers are considered contractual employees and cannot be considered
as regular employees under the Labor Code. Their employment is governed by the contracts they
sign every time they are rehired and their employment is terminated when the contract expires.
The exigencies of their work necessitates that they be employed on a contractual basis. 34
WHEREFORE, petition is GRANTED IN PART. The Decision dated 16 October 2003 and the
Resolution dated 19 February 2004 of the Court of Appeals are REVERSED and SET ASIDE. The
Decision of Labor Arbiter Teresita D. Castillon-Lora dated 29 January 1999 is REINSTATED with the
MODIFICATION that respondent CF Sharp Crew Management, Inc. is ordered to pay actual or
compensatory damages in the amount of US$4,635.00

9
representing salary for nine (9) months as stated in the contract, and attorneys fees at the
reasonable rate of 10% of the recoverable amount.
SO ORDERED.

10
G.R. No. 124013 June 5, 1998
ROSARIO MANEJA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MANILA MIDTOWN HOTEL, respondents.
MARTINEZ, J.:
Assailed in this petition for certiorari under Rule 65 of the Revised Rules of Court are the
Resolution 1 dated June 3, 1994 of the respondent National Labor Relations Commission in NLRC
NCR-00-10-05297-90, entitled "Rosario Maneja, Complainant, vs. Manila Midtown Hotel,
Respondent," which dismissed the illegal dismissal case filed by petitioner against private
respondent company for lack of jurisdiction of the Labor Arbiter over the case; and its Resolution
2
dated October 20, 1995 denying petitioner's motion for reconsideration.
Petitioner Rosario Maneja worked with private respondent Manila Midtown Hotel beginning
January, 1985 as a telephone operator. She was a member of the National Union of Workers in
Hotels, Restaurants and Allied Industries (NUWHRAIN) with an existing Collective Bargaining
Agreement (CBA) with private respondent.
In the afternoon of February 13, 1990, a fellow telephone operator, Rowena Loleng received a
Request for Long Distance Call (RLDC) form and a deposit of P500.00 from a page boy of the
hotel for a call by a Japanese guest named Hirota Ieda. The call was unanswered. The P500.00
deposit was forwarded to the cashier. In the evening, Ieda again made an RLDC and the page
boy collected another P500.00 which was also given to the operator Loleng. The second call was
also unanswered. Loleng passed on the RLDC to petitioner for follow-up. Petitioner monitored the
call.
On February 15, 1990, a hotel cashier inquired about the P1,000.00 deposit made by Ieda. After a
search, Loleng found the first deposit of P500.00 inserted in the guest folio while the second
deposit was eventually discovered inside the folder for cancelled calls with deposit and official
receipts.
When petitioner saw that the second RLDC form was not time-stamped, she immediately placed
it inside the machine which stamped the date "February 15, 1990." Realizing that the RLDC was
filed 2 days earlier, she wrote and changed the date to February 13, 1990. Loleng then delivered
the RLDC and the money to the cashier. The second deposit of P500.00 by Ieda was later
returned to him.
On March 7, 1990, the chief telephone operator issued a memorandum 3 to petitioner and Loleng
directing the two to explain the February 15 incident. Petitioner and Loleng thereafter submitted
their written explanation. 4
On March 20, 1990, a written report 5 was submitted by the chief telephone operator, with the
recommendation that the offenses committed by the operators concerned covered violations of
the Offenses Subject to Disciplinary Actions (OSDA): (1) OSDA 2.01: forging, falsifying official
document(s), and (2) OSDA 1.11: culpable carelessness negligence or failure to follow specific
instruction(s) or established procedure(s).
On March 23, 1990, petitioner was served a notice of dismissal 6 effective April 1, 1990.
Petitioner refused to sign the notice and wrote therein "under protest."
Meanwhile, a criminal case 7 for Falsification of Private Documents and Qualified Theft was filed
before the Office of the City Prosecutor of Manila by private respondent againts Loleng and
petitioner. However, the resolution recommending the filing of a case for estafa was reversed by
2nd Asst. City Prosecutor Virgilio M. Patag.
On October 2, 1990, petitioner filed a complaint for illegal dismissal against private respondent
before the Labor Arbiter. The complaint was later amended to include a claim for unpaid wages,
unpaid vacation leave conversion and moral damages.
Position papers were filed by the parties. Thereafter, the motion to set the case for hearing filed
by private respondent was granted by the Labor Arbiter and trial on the merits ensued.
In his decision 8 dated May 29, 1992, Labor Arbiter Oswald Lorenzo found that the petitioner was
illegally dismiised. However, in the decision, the Labor Arbiter stated that:
Preliminary, we hereby state that on the face of the instant complaint, it is
one that revolves on the matter of the implementation and interpretation of

11
existing company policies, which per the last par. of Art. 217 of the Labor
Code, as amended, is one within the jurisdictional ambit of the grievance
procedure under the CBA and thereafter, if unresolved, one proper for
voluntary arbitration. This observation is re-entrenched by the fact, that
complainant claims she is a member of NUWRAIN with an existing CBA with
respondent hotel.
On this score alone, this case should have dismissed outright. 9
Despite the aforequoted preliminary statement, the Labor Arbiter still assumed jurisdiction "since
Labor Arbiters under Article 217 of the same Labor Code, are conferred original and exclusive
jurisdiction of all termination case(sic.)." The dispositive portion of the decision states that:
WHEREFORE, premises considered, judgment is hereby renrdered as follows:
(1) Declaring complainant's dismissal by respondent hotel as illegally
effected;
(2) Ordering respondent to immediately reinstate complainant to her previous
position without loss of seniority rights;
(3) Ordering further respondent to pay complainant the full backwages due
her, which is computed as follows:
3/23/90 - 10/31/90 = 7.26/mos.
P2.540 x 7.26/mos. P18,440.40
11/1/90 - 1/7/91 = 2.23/mos.
P3,224.16 x 2.23/mos. 7,189.87
1/8/91 - 4/29/92 = 15.7/mos.
P3,589.16 x 15.7/mos. 56,349.89
P81,980.08
(4) Moreover, respondent is ordered to pay the 13th month pay due the
complainant in the amount of P6,831.67 including moral and exemplary
damages of P15,000.00 and P10,000.00 respectively, as well as attorney's
fees equivalent to ten (10) percent of the total award herein in the amount of
P11,381.17;
(5) Finally, all other claims are hereby dismissed for lack of merit.
SO ORDERED.
Private respondent appealed the decision to the respondent commission on the ground inter alia
that the Laber Arbiter erred in "assuming jurisdiction over the illegal dismissal case after finding
that the case falls within the jurisdictional ambit of the grievance procedure under the CBA, and
if unresolved, proper for voluntary arbitration." 10 An Opposition 11 was filed by petitioner.
In the assailed Resolution 12 dated June 3, 1994, respondent NLRC dismissed the illegal dismissal
case for lack of Jurisdiction of the Labor Arbiter because the same should have instead been
subjected to voluntary arbitration.
Petitioner's motion for reconsideration 13 was denied by respondent NLRC for lack of merit.
In this petition for certiorari, petitioner ascribes to respondent NLRC grave abuse of discretion in

1. Ruling that the Labor Arbiter was without jurisdiction over the illegal
dismissal case;
2. Not ruling that private respondent is estopped by laches from questioning
the jurisdiction of the illegal dismissal case;
3. Reversing the decision of the Labor Arbiter based on a technicality
notwithstanding the merits of the case.
Petitioner contents that Article 217(a)(2) and (c) relied upon by respondent NLRC in divesting the
labor arbiter of jurisdiction over the illegal dismissal case, should be read in conjunction with
Article 261 14 of the Labor Code. It is the view of petitioner that termination cases arising from
the interpretation or enforcement policies pertaining to violations of Offenses Subject to
Disciplinary Actions (OSDA), are under the jurisdiction of the voluntary arbitrator only if these are
unresolved in the plant-level grievance machinery. Petitioner insists that her termination is not an
unresolved grievance as there has been no grievance meeting between the NUWHRAIN union

12
and the management. The reason for this, petitioner adds, is that it has been a company practice
that termination cases are not anymore referred to the grievance machinery but directly to the
labor arbiter.
In its comment, private respondent argues that the Labor Arbiter should have dismissed the
illegal dismissal case outright after finding that it is within the jurisdictional ambit of the
grievance procedure. Moreover, private respondent states that the issue of jurisdiction may be
raised at any time and at any stage of the proceedings even on appeal, and is not in estoppel by
laches as contended by the petitioner.
For its part, public respondent, through the Office of the Solicitor General, cited the ruling of this
Court in Sanyo Philippines Workers Union- PSSLU vs. Caizares 15 in dismissing the case for lack
of jurisdiction of the Labor Arbiter.
The legal issue in this case is whether or not the Labor Arbiter has jurisdiction over the illegal
dismissal case.
The respondent Commission, in holding that the Labor Arbiter lacks jurisdiction to hear the illegal
dismissal case, cited as basis therefor Article 217 of the Labor Code, as amended by Republic Act
No. 6715. It said:
White it is conceded that under Article 217(a), Labor Arbiters shall have
original and exclusive jurisdiction over cases involving "termination disputes,"
the Supreme Court, in a fairy recent case ruled:
The procedure introduced in RA 6715 of referring certain grievances originally
and exclusively to the grievance machinery, and when not settled at this
level, to a panel of voluntary arbitrators outlined in CBAs does not only
include grievances arising from the interpretation or implementation of the
CBA but applies as well to those arising from the implementation of company
personnel policies. No other body shall take cognizance of these cases. . . .
(Sanyo vs. Caizares, 211 SCRA 361,
372) 16
We Find that the respondent Commission has erroneously interpreted the aforequoted portion of
our ruling in the case of Sanyo, as divesting the Labor Arbiter of jurisdiction in a termination
dispute.
Art. 217 of the Labor Code gives us the clue as to the jurisdiction of the Labor Arbiter, to wit:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as
otherwise provided under this Code the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decided within thirty (30) calendar days
after the submission of the case by the parties for decision without extension
even in the absence of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement,
those cases that workers may file involving wages,
rates of pay, hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary and other
forms of damages arising from the employeremployee relations;
5. Cases arising from any violation of Article 264 of
this Code, including questions involving the legality
of strikes and lockouts;
6. Except claims for Employees Compensation,
Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee
relations, including those of persons in domestic or
household service, involving an amount exceeding
five thousand pesos (P5,000.00) regardless of

13
whether accompanied with a claim for
reinstatement.
b) The commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters.
c) Cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation or
enforcement of company personel policies shall be disposed of by the Labor
Arbiter by referring the same to the grievance machinery and voluntary
arbitration as may be provided in said agreements.
As can be seen from the aforequoted Article, termination cases fall under the original and
exclusive jurisdiction of the Labor Arbiter. It should be noted, however, that in the opening there
appears the phrase: "Except as otherwise provided under this Code . . . ." It is paragraph (c) of
the same Article which respondent Commission has erroneously interpreted as giving the
voluntary arbitrator jurisdiction over the illegal dismissal case.
However, Article 217 (c) should be read in conjunction with Article 261 of the Labor Code which
grants to voluntary arbitrators original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation of the collective
bargaining agreement and those arising from the interpretation or enforcement of company
personel policies. Note the phrase "unresolved grievances." In the case at bar, the termination of
petitioner is not an unresolved grievance.
The stance of the Solicitor General in the Sanyo case is totally the reverse of its posture in the
case at bar. In Sanyo, the Solicitor General was of the view that a distinction should be made
between a case involving "interpretation or implementation of Collective Bargaining Agreement"
or interpretation or "enforcement" of company personel policies, on the one hand and a case
involving termination, on the other hand. It argued that the dismissal of the private respondents
does not involve an "interpretation or implementation" of a Collective Bargaining Agreement or
"interpretation or enforcement" of company personel policies but involves "termination." The
Solicitor General further said that where the dispute is just in the interpretation, implementation
or enforcement stage, it may be referred to the grievance machinery set up the Collective
Bargaining Agreement or by voluntary arbitration. Where there was already actual termination,
i.e., violation of rights, it is already cognizable by the Labor Arbiter. 17 We fully agree with the
theory of the Solicitor General in the Sanyo case, which is radically apposite to its position in this
case.
Moreover, the dismissal of petitioner does not fall within the phrase "grievance arising from the
interpretation or implementation of collective bargaining agreement and those arising from the
interpretation or enforcement of company personel policies," the jurisdiction of which pertains to
the grievance machinery or thereafter, to a voluntary arbitrator or panel of voluntary arbitrators.
It is to be stressed that under Article 260 of the Labor Code, which explains the function of the
grievance machinery and voluntary arbitrator. "(T)he parties to a Collective Bargaining
Agreement shall include therein provisions that will ensure the mutual observance of its terms
and conditions. They shall establish a machinery for the adjustment and resolution of grievances
arising from the interpretation or implementation of their Collective Bargaining Agreement and
those arising from the interpretation or enforcement of company personel policies." Article 260
further provides that the parties to a CBA shall name or designate their respective representative
to the grievance machinery and if the grievance is unsettled in that level, it shall automatically
be refered to the voluntary arbitrators designated in advance by the parties to a CBA of the
union and the company. It can thus be deduced that only disputes involving the union and the
company shall be referred to the grievance machinery or voluntary arbitrators. 18
In the case at bar, the union does not come into the picture, not having objected or voiced any
dissent to the dismissal of the herein petitioner. The reason for this, according to petitioner is
that "the practice in said Hotel in cases of termination is that the latter cases are not referred
anymore to the grievance committee;" and that "the terminated employee who wishes to
question the legality of his termination usually goes to the Labor Arbiter for arbitration, whether
the termination arose from the interpretation or enforcement of the company personnel policies
or otherwise." 19

14
As we ruled in Sanyo, "Since there has been an actual termination, the matter falls within the
jurisdiction of the labor Arbiter." The aforequoted doctrine is applicable foursquare in petitioner's
case. The dismissal of the petitioner does not call for the interpretation or enforcement of
company personnel policies but is a termination dispute which comes under the jurisdiction of
the Labor Arbiter.
It should be explained that "company personel policies" are guiding priciples stated in broad,
long-range terms that express the philosophy or beliefs of an organization's top authority
regarding personnel matters. They deal with matters affecting efficiency and well-being of
employees and include, among others, the procedure in the administration of wages, benefits,
promotions, transfer and other personnel movements which are usually not spelled out in the
collective agreement. The usual source of grievances, however, are the rules and regulations
governing disciplinary actions. 20
The case of Pantranco North Express, Inc. vs. NLRC 21 sheds further light on the issue of
jurisdiction where the Court cited the Sanyo case and quoted the decision of therein Labor
Arbiter Olairez in this manner:
In our honest opinion we have jurisdiction over the complaint on the following
grounds:
First, this is a complaint of illegal dismissal of which original and exclusive
jurisdiction under Article 217 has been conferred to the labor Arbiters. The
interpretation of the CBA or enforcement of the company policy is only
corollary to the complaint of illegal dismissal. Otherwise, an employee who
was on AWOL, or who committed offenses contrary to the personnel
policies(sic) can no longer file a case of illegal discharge is premised on the
interpretation or enforcement of the company policies(sic).
Second. Respondent voluntarily submitted tha case to the jurisdiction of this
labor tribunal. It adduced arguments to the legality of its act, whether such
act may be retirement and/or dismissal, and prayed for reliefs on the merits
of the case. A litigant cannot pray for reliefs on the merits and at the same
time attacks(sic) the jurisdiction of the tribunal. A person cannot have one's
cake and eat it too. . . . .
As to the second ground, petitioner correctly points out that respondent NLRC should have ruled
that private respondent is estopped by laches in questioning the jurisdiction of the Labor Arbiter.
Clearly, estoppel lies. The issue of jurisdiction was mooted by herein private respondent's active
participation in the proceedings below. In Marquez vs. Secretary of Labor, 22 the Court said:
. . . . The active participation of the against whom the action was brought,
coupled with his failure to object to the jurisdiction of the court or quasijudicial body where the action is pending, is tantamount to an invocation of
that jurisdiction and a willingness to abide the resolution of the case and will
bar said party from later on impugning the court or body's jurisdiction.
In the assailed Resolution, 23 respondent NLRC cited La Naval Drug Corporation vs. Court of
Appeals 24 in holding that private respondent is not in estopel. Thus,
The operation of the principle of estoppel on the question of jurisdiction
seemingly depends upon whether the lower court actually had jurisdiction or
not. If it had no jurisdiction, but the case was tried and decided upon the
theory that it had jurisdiction, the parties are not barred, on appeal, from
assailing such jurisdiction, for the same "must exist as a matter of law, and
may not be conferred by consent of the parties or by estoppel" (5 C.J.S., 861863). However, if the lower court had jurisdiction, and the case was heard
and decided upon a given theory, such, for instance, as that the court had no
jurisdiction, the party who induced it to adopt such theory will not be
permitted, on appeal, to assume an inconsistent position that the lower
court had jurisdiction. Here, the principle of estoppel applies. The rule that
jurisdiction is conferred by law, and does not depend upon the will of the
parties, has no bearing thereon. (Emphasis ours)

15
Again, the respondent NLRC has erroneously interpreted our ruling in the La Naval case. Under
the said ruling, estoppel lies in this case. Private respondent is stopped from questioning the
jurisdiction of the Labor Arbiter before the respondent NLRC having actively participated in the
proceedings before the former. At no time before or during the trial on the merits did private
respondent assail the jurisdiction of the Labor Arbiter. Private respondent took the cue only from
the preliminary statement in the decision of the Labor Arbiter, which was a mere obiter, and
raised the issue of jurisdiction before the Commission. It was then too late. Estoppel had set in.
Turning now to the merits of the case, We uphold the ruling of the Labor Arbiter that petitioner
was illegally dismissed.
The requisites of a valid dismissal are (1) the dismissal must be for any of the causes expressed
in the Article 282 of the Labor Code, 25 and (2) the employee must be given an opportunity to be
heard and to defend himself. 26 The substantive and procedural laws must be strictly complied
with before a worker can be dismissed from his employment because what is at stake is not only
the employee's position but his livelihood. 27
Petitioner's dismissal was grounded on culpade carelessness, negligence and failure to follow
specific instruction(s) or established procedure(s) under OSDA 1.11; and, having forged or
falsified official document(s) under OSDA 2.01.
Private respondent blames petitioner for failure to follow established procedure in the hotel on a
guest's request for long distance calls. Petitioner, however, explained that the usual or
established procedures are not followed by the operators and hotel employees when
circumstances warrant. For instance, the RLDC forms and the deposits are brought by the page
boy directly to the operators instead of the cashiers if the latter are busy and cannot attend to
the same. Furthermore, she avers that the telephone operators are not concious of the serial
numbers in the RLDCs and at times, the used RLDCs are recycled. Even the page boys do not
actually check the serial numbers of all RLDCs in one batch, except for the first and the last.
On the charge of taking of the money by petitioner, it is to be noted that the second P500.00
deposit made by the Japanese guest Ieda was later discovered to be inserted in the folder for
cancelled calls with deposit and official receipts. Thus, there exists no basis for personal
appropriation by the petitioner of the money involved. Another reason is the alleged tampering
of RLDC No. 862406. 28 While petitioner and her co-operator Loleng admitted that they indeed
altered the date appearing therein from February 15, 1990 to February 13, the same was
purposely made to reflect the true date of the transaction without any malice whatsoever on
their part.
As pointed out by Labor Arbiter Oswald b. Lorenzo, thus:
The specifics of the grounds relied by respondent hotel's dismissal of
complainant are those stated in Annex "F" of the latter's POSITION PAPER,
which is the Notice of Dismissal, notably:
1. OSDA 2.01 Forging, falsifying official documents(s)
2. OSDA 1.11 Culpable negligence or failure to follow specific instruction(s)
or established procedure(s)
On this score, we are persuated by the complainant's arguments that under
OSDA 1.11, infractions of this sort is not without qualifications, which is, that
the alleged culpable carelessness, negligence or failure to follow
instruction(s) or established procedure(s), RESULTING IN LOSS OR DAMAGE
TO COMPANY PROPERTY. From the facts obtaining in this case, there is no
quantum of proof whatsoever, except the general allegations in respondent's
POSITION PAPER and other pleadings that loss or damage to company
property resulted from the charged infraction. To our mind, this is where labor
tribunals should come in and help correct interpretation of company policies
which in the enforcement thereof wreaks havoc to the constitutional
guarantee of security of tenure. Apparently, the exercise of little flexibility by
complainant and co-employees which is predicated on good faith should not
be taken against them and more particularly against the complainant herein.
In this case, to sustain the generalized charge of respondent hotel under

16
OSDA 1.11 would unduly be sanctioning the imposition of too harsh a penalty
which is dismissal.
In the same tenor, the respondent's charge under OSDA 1.11 on the alleged
falsification of private document is also with a qualification, in that the
alleged act of falsification must have been done "IN SUCH A WAY AS TO
MISLEAD THE USER(S) THEREOF." Again, based on the facts of the complained
act, there appeared no one to have been misled on the change of date from
RLDC #862406 FROM 15 TO 13 February 1990.
As a matter of fact, we are in agreement with the jurisprudence cited by
VIRGILIO M. PATAG, the 2nd Asst. City Prosecutor of the City of Manila, who
exculpated complainant MANEJA from the charges of falsification of private
documents and qualified theft under IS No. 90-11083 and marked Annex. "H"
of complainant's POSITION PAPER, when he ruled that an altercation which
makes the document speak the truth cannot be the foundation of a criminal
action. As to the charge of qualified theft, we too are of the finding, like the
city prosecutor above-mentioned that there was no evidence on the part of
MANEJA to have unlawfully taken the P500.00 either from the hotel or from
guest IEDA on 13 February 1990 and moreover, we too, find no evidence that
complainant MANEJA had intention to profit thereby nor had misappropriated
the P500.00 in question. 29
Given the factual circumstances of the case, we cannot deduce dishonesty from the act and
omission of petitioner. Our norms of social justice demand that we credit employees with the
presumption of good faith in the performance of their duties, 30 especially petitioner who has
served private respondent since 1985 up to 1990 without any tinge of dishonesty and was even
named "Model Employee" for the month of April, 1989. 31
Petitioner has been charged with a very serious offense dishonesty. This can irreparably wreck
her life as an employee for no employer will take to its bosom a dishonest employee. Dismissal is
the supreme penalty that can be meted to an employee and its imposition cannot be justified
where the evidence is ambivalent. 32 It must, therefore, be based on a clear and not on an
ambiguous or ambivalent ground. Any ambiguity or ambivalence on the ground relied upon by an
employer in terminating the services of an employee denies the latter his full right to contest its
legality. Fairness cannot countenance such ambiguity or ambivalence. 33
An employer can terminate the services of an employee only for valid and just causes which
must be supported by clear and convincing evidence. The employer has the burden of proving
that the dismissal was indeed for a valid and just cause. 34 Failure to do so result in a finding that
the dismissal was
unjustified. 35
Finding that there was no just cause for dismissal of petitioner, we now determine if the
rudiments of due process have duly accorded to her.
Well-settled is the dictum that the twin requirements of notice and hearing constitute the
essential elements of due process in the dismissal of employees. It is a cardinal rule in our
jurisdiction that the employer must furnish the employee with two written notice before the
termination of employment can be effected: (a) the first apprises the employee of the particular
acts or omissions for which his dismissal is sought; and, (b) the second informs the employee of
the employer's decision to dismiss him. The requirement of a hearing, on the other hand, is
complied with as long as there was an opportunity to be heard, and not necessarily that an
actual hearing was conducted. 36
In the case at bar, petitioner and her co-operator Loleng were issued a memorandum on March
7, 1990. On March 11, 1990, they submitted their written explanation thereto. On March 20,
1990, a written report was made with a recommendation that the offences committed by them
were covered by OSDA 1.11 and 2.01. Thereafter, on March 23, 1990, petitioner was served with
a notice of dismissal for said violations effective April 1, 1990.
An examination of the record reveals that no hearing was ever conducted by private respondent
before petitioner was dismissed. While it may be true that petitioner submitted a written

17
explanation, no hearing was actually conducted before her employment was terminated. She
was not accorded the opportunity to fully defend herself.
Consultations or conferences may not be a substitute for the actual holding of a hearing. Every
opportunity and assistance must be accorded to the employee by the management to enable
hom to prepare adequately for his defense, including legal representation. 37 Considering that
petitioner denied having allegedly taken the second P500.00 deposit of the Japanese guest which
was eventually found; and, having made the alteration of the date on the second RLDC merely to
reflect the true date of the transaction, these circumstances should have at least warranted a
separate hearing to enable petitioner to fully ventilate her side. Absent such hearing, petitioner's
right to due process was clearly violated. 38
It bears stressing that a worker's employment is properly in the constitutional sense. He cannot
be deprived of his work without due process of law. Substantive due process mandates that an
employee can only be dismissed based on just or authorized causes. Procedural due process
requires further that he can only be dismissed after he has been given an opportunity to be
heard. The import of due process necessitates the compliance of these two aspects.
Accordingly, we hold that the labor arbiter did not err in awarding full backwages in view of this
finding that petitioner was dismissed without just cause and without due process.
We ruled in the case of Bustamante vs. NLRC 39 that the amount of backwages to be awarded to
an illegally dismissed employee must be computed from the time he was dismissed to the time
he is actually reinstated, without deducting the earnings he derived elsewhere pending the
resolution of the case.
Petitioner is likewise entitled to the thirteenth-month pay. Presidential Decree No.851, as
amended by Memorandum Order No. 28, provides that employees are entitled to the thirteenthmonth pay benefit regardless of their designation and irrespective of the method by which their
wages are paid. 40
The award of moral and exemplary damages to petitioner is also warranted where there is lack of
due process in effecting the dismissal.
Where the termination of the services of an employee is attended by fraud or bad faith on the
part of the employer, as when the latter knowingly made false allegations of a supposed valid
cause when none existed, moral and exemplary damages may be awarded in favor of the former.
41

The anti-social and oppressive abuse of its right to investigate and dismiss its employees
constitute a violation of Article 1701 of the New Civil Code which prohibits acts of oppression by
either capital or labor against the other, and Article 21 on human relations. The grant of moral
damages to the employees by reason of such conduct on the part of the company is sanctioned
by Article 2219, No. 10 of the Civil Code, which allows recovery of such damages in actions
reffered to in Article 21. 42
The award of attorney's fees amounting to ten percent (10%) of the total award by the labor
arbiter is justified under Article 111 of the Labor Code.
WHEREFORE, premises considered, the petition is GRANTED and the assailed resolutions of the
respondent National Labor Relations Commission dated June 3, 1994 and October 20, 1995 are
hereby REVERSED AND SET ASIDE. The decision dated May 29, 1992 of the Labor Arbiter is
therefore REINSTATED.
SO ORDERED.

18
G.R. No. 122791
February 19, 2003
PLACIDO O. URBANES, JR., doing business under the name & style of CATALINA
SECURITY AGENCY, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT and SOCIAL SECURITY
SYSTEM, respondents.
DECISION
CARPIO-MORALES, J.:
Before this Court is a Petition for Certiorari under Rule 65 of the Revised Rules of Court assailing
the June 22, 1995 Order of the Department of Labor and Employment (DOLE) Secretary which set
aside the September 16, 1994 Order of the Regional Director, National Capital Region (NCR).
The antecedent facts of the case are as follows:
Petitioner Placido O. Urbanes, Jr., doing business under the name and style of Catalina Security
Agency, entered into an agreement1 to provide security services to respondent Social Security
System (SSS).
During the effectivity of the agreement, petitioner, by letter of May 16, 1994, 2 requested the SSS
for the upward adjustment of their contract rate in view of Wage Order No. NCR-03 which was
issued by the Regional Tripartite Wages and Productivity Board-NCR pursuant to Republic Act
6727 otherwise known as the Wage Rationalization Act, the pertinent provision of which wage
order reads:
Section 9. In the case of contracts for construction projects and for security, janitorial and
similar services, the prescribed amount set forth herein for covered workers shall be
borne by the principals or the clients of the construction/service contractors and the
contract shall be deemed amended accordingly. In the event, however, that the
principal or client failed to pay the prescribed increase, the construction/service
contractors shall be jointly and severally liable with the principal or client . (Emphasis
and underscoring supplied.)
As his May 16, 1994 letter to the SSS remained unheeded, petitioner sent another letter, 3 dated
June 7, 1994, reiterating the request, which was followed by still another letter, 4 dated June 8,
1994.
On June 24, 1994, petitioner pulled out his agencys services from the premises of the SSS and
another security agency, Jaguar, took over. 5
On June 29, 1994, petitioner filed a complaint 6 with the DOLE-NCR against the SSS seeking the
implementation of Wage Order No. NCR-03.
In its position paper,7 the SSS prayed for the dismissal of the complaint on the ground that
petitioner is not the real party in interest and has no legal capacity to file the same. In any event,
it argued that if it had any obligation, it was to the security guards.
On the other hand, petitioner in his position paper, 8 citing Eagle Security Agency, Inc. v. NLRC,9
contended that the security guards assigned to the SSS do not have any legal basis to file a
complaint against it for lack of contractual privity.
Finding for petitioner, the Regional Director of the DOLE-NCR issued an Order 10 of September 16,
1994, the dispositive portion of which reads, quoted verbatim:
WHEREFORE, premises considered, the respondent Social Security System (SSS) is hereby
Ordered to pay Complainant the total sum of ONE MILLION SIX HUNDRED THOUSAND EIGHT
HUNDRED FIFTY EIGHT AND 46/100 (P 1,600,858.46) representing the wage differentials under
Wage Order No. NCR-03 of the ONE HUNDRED SIXTY EIGHT (168) Security Guards of Catalina
Security Agency covering the period from December 16, 1993 to June 24, 1994, inclusive within
ten (10) days from receipt hereof, otherwise a writ of execution shall be issued to enforce this
Order.
The claims for the payment of interest and Attorneys fees are hereby ordered dismissed for want
of jurisdiction.
SO ORDERED.
The SSS moved to reconsider the September 16, 1994 Order of the Regional Director, praying
that the computation be revised.11

19
By Order12 of December 9, 1994, the Regional Director modified his September 16, 1994 Order by
reducing the amount payable by the SSS to petitioner. The dispositive portion of the Regional
Directors Order of December 9, 1994 reads:
WHEREFORE, premises considered, the Order of this Office dated September 16, 1994 is hereby
modified. Respondent Social Security System is hereby ordered to pay complainant the amount
of ONE MILLION TWO HUNDRED THIRTY SEVEN THOUSAND SEVEN HUNDRED FORTY PESOS (P
1,237,740.00) representing the wage differentials under Wage Order No. NCR-03 of the one
hundred sixty-eight (168) security guards of Catalina Security Agency covering the period from
December 16, 1993 to June 20, 1994, inclusive, within ten (10) days from receipt of this Order,
otherwise, execution shall issue.
The SSS appealed13 to the Secretary of Labor upon the following assigned errors, quoted
verbatim:
A. THE REGIONAL DIRECTOR HAS NO JURISDICTION OF THE CASE AT BAR.
B. THE HONORABLE REGIONAL DIRECTOR ERRED IN FINDING THAT COMPLAINANT IS
THE REAL PARTY IN INTEREST AND HAS LEGAL CAPACITY TO FILE THE CASE.
C. THE HONORABLE REGIONAL DIRECTOR ERRED IN ADOPTING COMPLAINANTS
COMPUTATION FOR WAGE ADJUSTMENT UNDER WAGE ORDER NO. NCR-03 AS BASIS
OF RESPONDENTS LIABILITY.14
The Secretary of Labor, by Order15 of June 22, 1995, set aside the order of the Regional Director
and remanded the records of the case "for recomputation of the wage differentials using P
5,281.00 as the basis of the wage adjustment." And the Secretary held petitioners security
agency "JOINTLY AND SEVERALLY liable for wage differentials, the amount of which should be
paid DIRECTLY to the security guards concerned."
Petitioners Motion for Reconsideration of the DOLE Secretarys Order of June 22, 1995 having
been denied by Order16 of October 10, 1995, the present petition was filed, petitioner contending
that the DOLE Secretary committed grave abuse of discretion when he:
1. . . . TOTALLY IGNORED THE PROVISION OF ARTICLE 129 OF THE LABOR CODE FOR PERFECTING
AN APPEAL FROM THE DECISION OF THE REGIONAL DIRECTOR UNDER ARTICLE 129 INVOKED BY
RESPONDENT SSS;
2. . . . DISREGARDED THE PROVISION ON APPEALS FROM THE DECISIONS OR RESOLUTIONS OF
THE REGIONAL DIRECTOR, DOLE, UNDER ARTICLE 129 OF THE LABOR CODE, AS AMENDED BY
REPUBLIC ACT NO. 6715;
3. . . . TOTALLY OVERLOOKED THE LAW AND PREVAILING JURISPRUDENCE WHEN IT ACTED ON
THE APPEAL OF RESPONDENT SSS.17
Petitioner asserts that the Secretary of Labor does not have jurisdiction to review appeals from
decisions of the Regional Directors in complaints filed under Article 129 of the Labor Code 18
which provides:
ART. 129. RECOVERY OF WAGES, SIMPLE MONEY CLAIMS AND OTHER BENEFITS. Upon complaint
of any interested party, the regional director of the Department of Labor and Employment or any
duly authorized hearing officers of the Department is empowered, through summary proceeding
and after due notice, to hear and decide any matter involving the recovery of wages and other
monetary claims and benefits, including legal interest, owing to an employee or person
employed in domestic or household service or househelper under this Code, arising from
employer-employee relations: Provided, That such complaint does not include a claim for
reinstatement; Provided, further, That the aggregate money claim of each employee or
househelper does not exceed Five Thousand pesos (P5,000.00). The regional director or hearing
officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the
filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant
to this Article shall be held in a special deposit account by, and shall be paid on order of, the
Secretary of Labor and Employment or the regional director directly to the employee or
househelper concerned. Any such sum not paid to the employee or househelper, because he
cannot be located after diligent and reasonable effort to locate him within a period of three (3)
years, shall be held as a special fund of the Department of Labor and Employment to be used
exclusively for the amelioration and benefit of workers.

20
Any decision or resolution of the regional director or officer pursuant to this provision may be
appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days
from receipt of a copy of said decision or resolution, to the National Labor Relations Commission
which shall resolve the appeal within ten (10) calendar days from submission of the last pleading
required or allowed under its rules.
x x x (Emphasis supplied).
Petitioner thus contends that as the appeal of SSS was filed with the wrong forum, it should have
been dismissed.19
The SSS, on the other hand, contends that Article 128, not Article 129, is applicable to the case.
Article 128 provides:
ART. 128. VISITORIAL AND ENFORCEMENT POWERS
xxx
(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in
cases where the relationship of employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the power to issue compliance
orders to give effect to labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of inspection.
xxx
An order issued by the duly authorized representative of the Secretary of Labor and Employment
under this article may be appealed to the latter.
x x x (Emphasis supplied).
Neither the petitioners contention nor the SSSs is impressed with merit. Lapanday Agricultural
Development Corporation v. Court of Appeals20 instructs so. In that case, the security agency filed a
complaint before the Regional Trial Court (RTC) against the principal or client Lapanday for the
upward adjustment of the contract rate in accordance with Wage Order Nos. 5 and 6. Lapanday
argued that it is the National Labor Relations Commission, not the civil courts, which has
jurisdiction to resolve the issue in the case, it involving the enforcement of wage adjustment and
other benefits due the agencys security guards as mandated by several wage orders. Holding
that the RTC has jurisdiction over the controversy, this Court ruled:
We agree with the respondent that the RTC has jurisdiction over the subject matter of the present
case. It is well settled in law and jurisprudence that where no employer-employee
relationship exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any collective
bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its
complaint, private respondent is not seeking any relief under the Labor Code but
seeks payment of a sum of money and damages on account of petitioner's alleged
breach of its obligation under their Guard Service Contract. The action is within the
realm of civil law hence jurisdiction over the case belongs to the regular courts. While
the resolution of the issue involves the application of labor laws, reference to the
labor code was only for the determination of the solidary liability of the petitioner to
the respondent where no employer-employee relation exists. 21
x x x (Emphasis and underscoring supplied).
In the case at bar, even if petitioner filed the complaint on his and also on behalf of the security
guards,22 the relief sought has to do with the enforcement of the contract between him and the
SSS which was deemed amended by virtue of Wage Order No. NCR-03. The controversy subject
of the case at bar is thus a civil dispute, the proper forum for the resolution of which is the civil
courts.
But even assuming arguendo that petitioners complaint were filed with the proper forum, for
lack of cause of action it must be dismissed.1awphi1.nt
Articles 106, 107 and 109 of the Labor Code provide:
ART. 106. CONTRACTOR OR SUBCONTRACTOR. Whenever an employer enters into contract with
another person for the performance of the formers work, the employees of the contractor and of
the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wage of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor

21
or subcontractor to such employees to the extent of the work performed under the contract, in
the same manner and extent that he is liable to employees directly employed by him.
xxx (Emphasis and underscoring supplied)
ART. 107 INDIRECT EMPLOYER. The provisions of the immediately preceding Article shall
likewise apply to any person, partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the performance of any work, task, job or
project.
ART. 109. SOLIDARY LIABILTY. The provisions of existing laws to the contrary notwithstanding,
every employer or indirect employer shall be held responsible with his contractor or
subcontractor for any violation of any provision of this Code. For purposes of determining the
extent of their civil liability under this Chapter, they shall be considered as direct employers.
(Emphasis supplied.)
In the case of Eagle Security Agency, Inc. v. NLRC, 23 this Court held:
The Wage Orders are explicit that payment of the increases are "to be borne" by the principal or
client. "To be borne", however, does not mean that the principal, PTSI in this case, would directly
pay the security guards the wage and allowance increases because there is no privity of contract
between them. The security guards' contractual relationship is with their immediate employer,
EAGLE. As an employer, EAGLE is tasked, among others, with the payment of their wages [See
Article VII Sec. 3 of the Contract for Security Services, supra and Bautista v. Inciong, G.R. No.
52824, March 16, 1988, 158 SCRA 665].
On the other hand, there existed a contractual agreement between PTSI and EAGLE wherein the
former availed of the security services provided by the latter. In return, the security agency
collects from its client payment for its security services. This payment covers the wages for the
security guards and also expenses for their supervision and training, the guards' bonds, firearms
with ammunitions, uniforms and other equipments, accessories, tools, materials and supplies
necessary for the maintenance of a security force.
Premises considered, the security guards' immediate recourse for the payment of the increases
is with their direct employer, EAGLE. However, in order for the security agency to comply with
the new wage and allowance rates it has to pay the security guards, the Wage Orders made
specific provision to amend existing contracts for security services by allowing the adjustment of
the consideration paid by the principal to the security agency concerned. What the Wage Orders
require, therefore, is the amendment of the contract as to the consideration to cover the service
contractor's payment of the increases mandated. In the end, therefore, ultimate liability for the
payment of the increases rests with the principal.
In view of the foregoing, the security guards should claim the amount of the increases from
EAGLE. Under the Labor Code, in case the agency fails to pay them the amounts claimed, PTSI
should be held solidarily liable with EAGLE [Articles 106, 107 and 109]. Should EAGLE pay, it can
claim an adjustment from PTSI for an increase in consideration to cover the increases payable to
the security guards.
x x x (Emphasis and underscoring supplied).
Passing on the foregoing disquisition in Eagle, this Court, in Lapanday, 24 held:
It is clear also from the foregoing that it is only when [the] contractor pays the increases
mandated that it can claim an adjustment from the principal to cover the increases payable to
the security guards. The conclusion that the right of the contractor (as principal debtor)
to recover from the principal (as solidary co-debtor) arises only if he has paid the
amounts for which both of them are jointly and severally liable is in line with Article
1217 of the Civil Code which provides:
"Art. 1217. Payment made by one the solidary debtors extinguishes the obligation. If two or more
solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made payment make claim from his co-debtors only the share which corresponds to
each, with interest for the payment already made. If the payment is made before the debt is due,
no interest for the intervening period may be demanded. x x x" 25 (Emphasis and underscoring
supplied).
In fine, the liability of the SSS to reimburse petitioner arises only if and when petitioner pays his
employee-security guards "the increases" mandated by Wage Order No. NCR-03.1awphi1.nt

22
The records do not show that petitioner has paid the mandated increases to the security guards.
The security guards in fact have filed a complaint 26 with the NLRC against petitioner relative to,
among other things, underpayment of wages.
WHEREFORE, the present petition is hereby DISMISSED, and petitioners complaint before the
Regional Director is dismissed for lack of jurisdiction and cause of action.
SO ORDERED.

23
G.R. No. 159482. August 30, 2005
NICASIO P. RODRIGUEZ JR., ANTONIO P. EREETA, JUANITO A. MAGNO, VICTOR C.
PINEDA, BITUIN V. SALCEDO, CESAR R. SAN DIEGO, VICTOR V. TANTOCO and AMADOR
C. DE LA MERCED, Petitioners,
vs.
ANTONIO L. AGUILAR SR., Respondent.
DECISION
PANGANIBAN, J.:
Claims for moral and exemplary damages arising from employer-employee relations fall within
the original and exclusive jurisdiction of the National Labor Relations Commission, not the regular
courts. Hence, in the present case, the trial court should not have entertained the Complaint filed
by respondent for damages arising from the alleged oppressive manner of his dismissal by
petitioners.
The Case
Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse
and set aside the March 31, 2003 Decision 2 of the Court of Appeals (CA) in CA-GR SP No. 74278
and its August 5, 2003 Resolution3 denying petitioners Motion for Reconsideration. The assailed
CA Decision disposed as follows:
"WHEREFORE, for lack of merit, the petition is DISMISSED."4
The Facts
The antecedents were summarized by the CA as follows:
"Petitioners are members of the Board of Directors of Philippine Postal Savings Bank, Inc. (PPSBI)
at Liwasang Bonifacio, Manila; private respondent Antonio L. Aguilar was employed as Vice
President of its Finance and Administrative Group from February 14, 2000 to January 31, 2001,
and thereafter as Compliance Officer until September 26, 2001 when his services were
terminated.
"On October 25, 2001, private respondent filed a complaint against petitioners with the Regional
Trial Court, Branch 49, City of Manila alleging that he was illegally dismissed by the petitioners in
an oppressive way; that the cause of his dismissal was his principled act of exposing anomalies
in the bank; that considering the seriousness of the violations of internal control and bank
policies, there is a need to prohibit petitioners from performing their functions as members of the
Board in their own personal capacity. He prayed for the award of damages, the issuance of a
temporary restraining order enjoining the petitioners from dismissing him or in the alternative, to
immediately reinstate him, and the prohibition of the petitioners from performing their personal
and official acts in the bank.
"On October 29, 2001, public respondent Judge motu proprio dismissed the complaint for lack
of jurisdiction stating that jurisdiction over the case lies with the Labor Arbiter of the National
Labor Relations Commission.
"Unaware of the dismissal[,] petitioners, on November 9, 2001, filed a Motion to Dismiss private
respondents complaint on the ground of the RTCs lack of jurisdiction over the subject matter of
the complaint.
"On November 12, 2001, private respondent filed a Motion for Reconsideration of the Order
dated 29 October 2001. However, on November 26, 2001, he filed an Ex-Parte Motion to
Withdraw Motion For Reconsideration of the Dismissal Order and In Lieu Thereof to Submit
Amended Complaint, which was attached thereto. In his Amended Complaint, he emphasized
that his dismissal (constructive and actual) was done in a very oppressive manner. His prayer for
reinstatement was deleted.
"In an Order dated January 4, 2002, public respondent Judge admitted the Amended Complaint
reasoning that amendment was a matter of right before defendants filed a responsive pleading,
the motion to dismiss not being a responsive pleading. Petitioners were ordered to file their
Answer within fifteen (15) days from receipt thereof.
"On January 30, 2002, without filing a Motion for Reconsideration of the above Order, petitioners
again filed a Motion to Dismiss, this time of the Amended Complaint, on the ground of lack of
jurisdiction over the persons of the petitioners and over the subject matter of the claim.

24
"In an Order dated February 8, 2002, public respondent Judge ruled that petitioners filing of the
above Motion to Dismiss was tantamount to a voluntary appearance through a pleading that
vested the court with jurisdiction over their persons. Petitioners were given an additional ten (10)
days within which to submit an Answer, otherwise, said defendants (herein petitioners), may be
declared in default.
"Petitioners then filed a Motion for Reconsideration dated February 15, 2002, reiterating their
prayer for the dismissal of the Amended Complaint. This was denied in the Order dated March 1,
2002.
"On April 4, 2002, respondent filed a Motion to Declare Defendants As in Default and For
Judgment On the Pleadings grounded on petitioners failure to file their Answer within the
additional ten (10)-day period granted by the court. Citing Ortigas & Co. Ltd. v. Velasco (254
SCRA 234), public respondent noted that defendants were heedless and unyielding to the Orders
of the Court particularly its directive to file an Answer to the Amended Complaint and that the
defendants continually ignored and refused to submit to the Orders of the Court, and inasmuch
as no responsive pleading has been filed by them within the period fixed by the Court in its
Order dated June 7, 2002 which granted respondents motion and declared defendantspetitioners in default.
"On the 15th day from receipt thereof on June 19, 2002, petitioners filed on July 1, 2002 an
ordinary Motion for Reconsideration on the above Order, (not a Motion to Set Aside the Order of
Default under Rule 9 Sec. 3(b), Rules of Civil Procedure) which was denied in an Order dated July
19, 2002.
"On the same date of July 19, 2002, public respondent issued the assailed decision (Judgment by
Default) in favor of the private respondent ratiocinating as follows:
The Court shall not delve into the legality of Mr. Aguilars demotion and, later on, dismissal by
the PPSB Board of Directors for to do so would intrude into the jurisdiction of the Labor Arbiters of
the National Labor Relations Commission. Rather, this Court shall concern itself with the manner
in which the said demotion and dismissal were carried out and the consequent effects thereof,
which, as jurisprudence teaches us, are well within this Courts jurisdiction to inquire into.
From the foregoing, confluence of events, which stand unrebutted the defendants having been
declared in default, there can be no question that Mr. Aguilars demotion and dismissal from
service was pursued in a highly abusive, oppressive and clearly anti-social manner.
"On August 7, 2002, petitioners filed an Omnibus Motion contending that the Order of Default did
not deprive them of their right to notice, which public respondent violated when private
respondents evidence was received without notifying them; that the presentation of evidence ex
parte was premature considering that they were still entitled to question the propriety of the
Order of Default and that, in fact, they filed a motion for reconsideration of the Order of default.
Petitioners reiterated that the Amended Complaint was filed out of time considering that the
Order of Dismissal dated 29 October 2001 had already became final. On August 16, 2002, the
public respondent issued the assailed Order denying the Omnibus Motion." 5
Petitioners filed before the CA a Petition for Certiorari under Rule 65, challenging the July 19,
2002 Decision and the August 16, 2002 Order of the Regional Trial Court (RTC), alleging that it
had gravely abused its discretion in the following ways:
"1. Holding that Mr. Aguilars ex parte withdrawal of his Motion for Reconsideration of the Order
of Dismissal did not cause it to become final and executory.
"2. Taking cognizance of the Amended Complaint because [private respondent] had deleted his
prayers for the other reliefs that fall within the jurisdiction of the labor court.
"3. Declaring [petitioners] in default and in allowing the presentation of and receiving [private
respondents] evidence ex parte in violation of the Rules."6
Petitioners prayed that "the lower courts judgment by default, as well as said courts all other
orders and findings after its Order of dismissal of the original Complaint[,] be reversed and set
aside, and that the case in question be dismissed for lack of jurisdiction and for having been
decided in violation of the Rules." 7
Ruling of the Court of Appeals
Agreeing with the RTC, the CA held that the withdrawal of the Motion for Reconsideration filed by
respondent had not resulted in the finality of the Dismissal Order dated October 29, 2001, since

25
he had simultaneously amended his Complaint. This he had every right to do, said the CA,
because no responsive pleading had yet been filed by petitioners. It opined that the Amended
Complaint superseded his original Complaint and mooted the issue raised in his Motion for
Reconsideration. It further said that the rules on the amendment of pleadings may be liberally
construed to avoid a multiplicity of suits; and to ensure that the real controversies between the
parties would be presented, their rights determined, and the case decided on the merits without
unnecessary delay.
The CA likewise ruled that the RTC had jurisdiction over the case, because of the civil nature of
the cause of action; that is, the alleged oppressive manner of respondents dismissal that had
resulted in damages.
Lastly, the CA found no grave abuse of discretion on the part of the RTC in declaring petitioners
in default, then afterwards receiving ex parte the evidence presented by respondent, and
rendering a judgment of default. The appellate court stressed that as early as the January 4,
2002 Order, the RTC had directed petitioners to answer the Amended Complaint. The trial court
reiterated the directive in the February 8, 2002 Order, with a warning that if they failed to answer
within ten days, they would be declared in default.
The two Orders, which petitioners had not challenged either by a motion for reconsideration or
by a petition for certiorari, thus attained finality. According to the CA, their prayer for the
dismissal of the Amended Complaint was reiterated in both their Omnibus Motion filed after the
denial on January 30, 2002, of their Motion to Dismiss the Amended Complaint, as well as in their
subsequent Motions for Reconsideration. These amounted to multiple motions for
reconsideration, which are proscribed under Section 5 of Rule 37 of the Rules of Civil Procedure.
As to the ex parte reception of respondents evidence, the CA pointed out that under Section 3 of
Rule 9, the court may proceed to render judgment based entirely on the plaintiffs Complaint
without need of receiving evidence. If so, the appellate court said, it would be reasonable to
conclude that petitioners did not have any demandable right to be given notice of the ex parte
reception of respondents evidence.
Hence, this Petition.8
Issues
Petitioners raise the following issues for our consideration:
"I.
The Honorable Court of Appeals erred in sustaining the finding of the trial court that Mr. Aguilars
ex parte withdrawal of his Motion for Reconsideration of the Order of dismissal of the original
Complaint did not cause said Order to become final and executory.
"II.
The Honorable Court of Appeals erred in sustaining the trial court that it could allow the
amendment of the original Complaint purely as a matter of right before a responsive pleading is
filed, despite prevailing jurisprudence to the contrary.
"III.
The Honorable Court of Appeals erred in sustaining that the trial court could take cognizance of
Mr. Aguilars Amended Complaint because it had deleted the prayers for other reliefs that fall
within the jurisdiction of the National Labor Relations Commission.
"IV.
The Honorable Court of Appeals erred in sustaining the trial court that it could receive Mr.
Aguilars evidence ex parte without notice to petitioners despite pertinent rules and
jurisprudence to the contrary."9
In brief, the issues are as follows: (1) What are the effects of the withdrawal of the Motion for
Reconsideration of the RTCs dismissal of the Complaint? (2) Did the RTC have jurisdiction over
the Amended Complaint?
The Courts Ruling
The Petition is meritorious.
First Issue:
Withdrawal of the Motion for Reconsideration
It is settled that an amendment of a complaint may be allowed even if an order for its dismissal
has been issued, as long as the motion to amend is filed before the dismissal order becomes

26
final.10 The reason for allowing the amendment on this condition is that, upon finality of the
dismissal, the court loses jurisdiction and control over the complaint. Thus, it can no longer make
any disposition on the complaint in a manner inconsistent with the dismissal. 11 After the order of
dismissal without prejudice becomes final, and therefore falls outside the courts power to
modify, a party who wishes to reinstate the case has no remedy other than to file a new
complaint.12
The instant case deals with a Motion for Reconsideration 13 of the trial courts Order dismissing the
case for lack of jurisdiction. The Motion was filed on November 13, 2001, within the 15-day
reglementary period for appeal,14 and later withdrawn and substituted with a Motion to Admit
Amended Complaint. Petitioners contention is that the withdrawal of the Motion for
Reconsideration would have a retroactive effect, such that it would be as if no motion had been
filed at all; and, hence, the Motion for Admission of the Amended Complaint -- filed beyond the
15-day reglementary period, after the dismissal had become final -- should no longer be
entertained, much less admitted.
The trial court accepted the Amended Complaint and held that the dismissal Order had not
attained finality, because the 15-day reglementary period under the Rules had tolled upon the
filing of the Motion for Reconsideration; and would begin to run again only after the party
concerned would have received the courts Resolution on the Motion. 15 As it had not yet ruled on
the Motion for Reconsideration when respondent filed his Amended Complaint, the trial court
opined that the Amended Complaint may be deemed to have been filed within the prescribed
time.
We rule otherwise. The trial court erroneously admitted the Amended Complaint. Upon the
withdrawal by respondent of his Motion for Reconsideration, it was as if no motion had been filed.
Hence, the Order of the trial court under question became final and executory 15 days from
notice by the party concerned.
In the same manner that the withdrawal of an appeal has the effect of rendering the appealed
decision16 final and executory, the withdrawal of the Motion for Reconsideration in the present
case had the effect of rendering the dismissal Order final and executory. By then, there was no
more complaint that could be amended, even for the first time as a matter of right.
Notably, respondent does not refute petitioners argument that his Motion for Admission of his
Amended Complaint was filed after the lapse of the 15-day reglementary period to reconsider or
set aside the dismissal. What he insists upon is his contention that the Order of dismissal did not
become final and executory, because the Motion for Reconsideration had not yet been resolved
at the time he filed his Amended Complaint.
By way of analogy, petitioners cite Olympia International v. Court of Appeals,17 in which the
plaintiffs two civil actions were dismissed by the trial court on a joint Motion to Dismiss filed by
the plaintiff and the defendant:
"It is equally important to note that the right to file a new action in this case has long prescribed,
for while the commencement of a civil action stops the running of the statute of prescription or
limitations, its dismissal or voluntary abandonment by the plaintiff leaves the parties in exactly
the same position as though no action had been commenced at all. The commencement of an
action, by reason of its dismissal or abandonment, takes no time out of the period of
prescription."18
In like manner, while the filing of the Motion for Reconsideration interrupted the running of the
15-day reglementary period, its withdrawal left respondent in exactly the same position as
though no motion had been filed at all. The withdrawal of the Motion for Reconsideration
effectively erased the tolling of the reglementary period to amend the Complaint.
Second Issue:
Jurisdiction
Under Article 217(a) of the Labor Code, as amended by Republic Act No. 6715 which took effect
on March 21, 1989, labor arbiters shall have "original and exclusive jurisdiction to hear and
decide: [c]laims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations x x x."
Clearly, in the case before us, respondents claim for damages against petitioners arose from a
prior employer-employee relationship. The averments in the Complaint indisputably show that his

27
claim for damages was anchored on and was a consequence of the termination of his
employment with PPSBI.
Indeed, the trial court initially made this observation when it dismissed motu proprio
respondents Complaint.19 It ruled "that the manner in which the dismissal was implemented was
anti-social, oppressive and in disregard of procedural due process x x x is but an incident part
and parcel of the main issue which is the alleged illegal dismissal of [respondent]." The trial court
likewise opined that the plea of respondent for reinstatement made his case one of illegal
dismissal per se.
Later, however, it reversed its dismissal Order after he subsequently amended his Complaint by
deleting his prayer for reinstatement and by stressing that his claim for damages had resulted
from the alleged oppressive manner of his dismissal.
The trial court should have dismissed the Amended Complaint. With regard to claims for
damages under paragraph 4 of Article 217, quoted above, jurisprudence has applied the
"reasonable connection rule": if there is a reasonable causal connection between the claim
asserted and the employer-employee relations, then the case falls within the jurisdiction of the
labor arbiter.20 We do not agree with the trial court that the case became a civil dispute simply
because respondent had not asked for reinstatement in his Amended Complaint. An employee
need not seek reinstatement in order to have a complaint heard by the labor arbiter. 21
A comparison of the original22 and the Amended Complaint23 reveals that the allegations and the
prayers in both are almost identical, except that the prayer for reinstatement and the claim for
salary increases and allowances are no longer included in the Amended Complaint. These are
telltale signs that the claim of respondent for damages is intertwined with his separation from his
employment, allegedly without a just cause. Consequently, his claim has a reasonable causal
connection with his employer-employee relations with the bank.
The Court is aware that the Civil Code provisions on human relations and damages may be used
as bases for justifying his claim. But, the fact remains: the present action primarily involves an
employer-employee relationship. The damages he incurred are mere consequences of the
alleged injury brought about by his perceived illegal dismissal. The civil ramifications of his actual
claim cannot alter the reality that it is primordially a labor matter cognizable by the labor
tribunals.
Under Article 217 (a) of the Labor Code, the labor arbiter has the jurisdiction to award to a
dismissed employee not only the reliefs provided by the Labor Code, but also moral and other
forms of damages governed by the Civil Code. 24 Although a dismissal from employment may be a
violation not only of the Labor but also of the Civil Code, 25 an illegally dismissed employee has
only a single cause of action.
Moral damages are recoverable when, for example, the dismissal was effected without an
authorized cause and/or due process -- for which relief is granted by the Labor Code -- and also
when the dismissal (1) was attended by bad faith or fraud; (2) constituted an act oppressive to
labor; or (3) was done in a manner contrary to morals, good customs or public policy. For any of
these, the obtainable relief is determined by the Civil Code. 26
This Court expounded on this matter in the earlier case Primero v. Intermediate Appellate
Court,27 which we quote:
"It is clear that the question of the legality of the act of dismissal is intimately related to the issue
of the legality of the manner by which that act of dismissal was performed. But while the Labor
Code treats of the nature of, and the remedy available as regards the first the employees
separation from employment it does not at all deal with the second the manner of that
separation which is governed exclusively by the Civil Code. In addressing the first issue, the
Labor Arbiter applies the Labor Code; in addressing the second, the Civil Code. And this appears
to be the plain and patent intendment of the law. For apart from the reliefs expressly set out in
the Labor Code flowing from illegal dismissal from employment, no other damages may be
awarded to an illegally dismissed employee other than those specified by the Civil Code. Hence,
the fact that the issue of whether or not moral or other damages were suffered by an employee
and in the affirmative, the amount that should properly be awarded to him in the circumstances
is determined under the provisions of the Civil Code and not the Labor Code, obviously was not

28
meant to create a cause of action independent of that for illegal dismissal and thus place the
matter beyond the Labor Arbiters jurisdiction."
Hence, for a single cause of action, the dismissed employee cannot be allowed to sue in two
forums: one, before the labor arbiter for reinstatement and recovery of back wages or for
separation pay, upon the theory that the dismissal was illegal; and two, before a court of justice
for recovery of moral and other damages, upon the theory that the manner of dismissal was
unduly injurious or tortious. Suing in the manner described is known as "splitting a cause of
action," a practice engendering a multiplicity of actions. It is considered procedurally unsound
and obnoxious to the orderly administration of justice.
Splitting a cause of action was precisely what private respondent did in filing the Amended
Complaint. He split his cause of action, then made one of the split parts the subject of his
Amended Complaint before a court of justice.
Precisely, such duplicity prodded the lawmakers to amend the Labor Code by restoring to the
labor arbiters the jurisdiction over claims for damages of this nature. From 1979 to 1980,
jurisdiction over employment-predicated actions for damages vacillated from labor tribunals to
regular courts, and back to labor tribunals.
On May 1, 1979, Presidential Decree No. 1367 amended the then existing Article 217 28 of the
Labor Code to the effect that "[r]egional Directors shall not indorse and Labor Arbiters shall not
entertain claims for moral or other forms of damages." 29 But this limitation of jurisdiction did not
last long, because on May 1, 1980, PD 1691 30 nullified PD 1367 and restored Article 217 of the
Labor Code almost to its original form. PD 1691 once again vested in the labor arbiters and the
NLRC the jurisdiction over all money claims of workers and all other claims arising from
employer-employee relations, including moral and exemplary damages. 31 In Ebon v. De
Guzman,32 this Court explained:
"The lawmaker in divesting the Labor Arbiters and the NLRC of jurisdiction to award moral and
other forms of damages in labor cases could have assumed that the Labor Arbiters positionpaper procedure of ascertaining the facts in dispute might not be an adequate tool for arriving at
a just and accurate assessment of damages, as distinguished from backwages and separation
pay, and that the trial procedure in the Court of First Instance [now Regional Trial Court] would be
a more effective means of determining such damages. x x x
"Evidently, the lawmaking authority had second thoughts about depriving the Labor Arbiters and
the NLRC of the jurisdiction to award damages in labor cases because that set up would mean
duplicity of suits, splitting the cause of action and possible conflicting findings and conclusions by
two tribunals on one and the same claim."
Presently, as amended by RA 6715, the jurisdiction of the NLRC under Article 217 of the Labor
Code is comprehensive enough to include claims for all forms of damages arising from the
employer-employee relations.
WHEREFORE, the Petition is GRANTED, and the assailed Decision REVERSED and SET ASIDE.
The Amended Complaint in Civil Case No. 01102147, filed with the Regional Trial Court (Branch
49) of the City of Manila, is hereby DISMISSED. No pronouncement as to costs.
SO ORDERED.

29
FIRST DIVISION
G.R. No. 144767
March 21, 2002
DILY DANY NACPIL, petitioner,
vs.
INTERNATIONAL BROADCASTING CORPORATION, respondent.
KAPUNAN, J.:
This is a petition for review on certiorari under Rule 45, assailing the Decision of the Court of
Appeals dated November 23, 1999 in CA-G.R. SP No. 52755 1 and the Resolution dated August 31,
2000 denying petitioner Dily Dany Nacpil's motion for reconsideration. The Court of Appeals
reversed the decisions promulgated by the Labor Arbiter and the National Labor Relations
Commission (NLRC), which consistently ruled in favor of petitioner.
Petitioner states that he was Assistant General Manager for Finance/Administration and
Comptroller of private respondent Intercontinental Broadcasting Corporation (IBC) from 1996
until April 1997. According to petitioner, when Emiliano Templo was appointed to replace IBC
President Tomas Gomez III sometime in March 1997, the former told the Board of Directors that
as soon as he assumes the IBC presidency, he would terminate the services of petitioner.
Apparently, Templo blamed petitioner, along with a certain Mr. Basilio and Mr. Gomez, for the
prior mismanagement of IBC. Upon his assumption of the IBC presidency, Templo allegedly
harassed, insulted, humiliated and pressured petitioner into resigning until the latter was forced
to retire. However, Templo refused to pay him his retirement benefits, allegedly because he had
not yet secured the clearances from the Presidential Commission on Good Government and the
Commission on Audit. Furthermore, Templo allegedly refused to recognize petitioner's
employment, claiming that petitioner was not the Assistant General Manager/Comptroller of IBC
but merely usurped the powers of the Comptroller. Hence, in 1997, petitioner filed with the Labor
Arbiter a complaint for illegal dismissal and non-payment of benefits.1wphi1.nt
Instead of filing its position paper, IBC filed a motion to dismiss alleging that the Labor Arbiter
had no jurisdiction over the case. IBC contended that petitioner was a corporate officer who was
duly elected by the Board of Directors of IBC; hence, the case qualifies as an intra-corporate
dispute falling within the jurisdiction of the Securities and Exchange Commission (SEC). However,
the motion was denied by the Labor Arbiter in an Order dated April 22, 1998. 2
On August 21, 1998, the Labor Arbiter rendered a Decision stating that petitioner had been
illegally dismissed. The dispositive portion thereof reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of
the complainant and against all the respondents, jointly and severally, ordering the
latter:
1. To reinstate complainant to his former position without diminution of salary
or loss of seniority rights, and with full backwages computed from the time of
his illegal dismissal on May 16, 1997 up to the time of his actual
reinstatement which is tentatively computed as of the date of this decision on
August 21, 1998 in the amount of P1,231,750.00 (i.e., P75,000.00 a month x
15.16 months = P1,137,000.00 plus 13th month pay equivalent to 1/12 of P
1,137,000.00 = P94,750.00 or the total amount of P 1,231,750.00). Should
complainant be not reinstated within ten (10) days from receipt of this
decision, he shall be entitled to additional backwages until actually
reinstated.
2. Likewise, to pay complainant the following:
a) P 2 Million as and for moral damages;
b) P500,000.00 as and for exemplary damages; plus and (sic)
c) Ten (10%) percent thereof as and for attorney's fees.
SO ORDERED.3
IBC appealed to the NLRC, but the same was dismissed in a Resolution dated March 2, 1999, for
its failure to file the required appeal bond in accordance with Article 223 of the Labor Code. 4 IBC
then filed a motion for reconsideration that was likewise denied in a Resolution dated April 26,
1999.5

30
IBC then filed with the Court of Appeals a petition for certiorari under Rule 65, which petition was
granted by the appellate court in its Decision dated November 23, 1999. The dispositive portion
of said decision states:
WHEREFORE, premises considered, the petition for Certiorari is GRANTED. The
assailed decisions of the Labor Arbiter and the NLRC are REVERSED and SET ASIDE
and the complaint is DISMISSED without prejudice.
SO ORDERED.6
Petitioner then filed a motion for reconsideration, which was denied by the appellate court in a
Resolution dated August 31, 2000.
Hence, this petition.
Petitioner Nacpil submits that:
I.
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER WAS APPOINTED BY
RESPONDENT'S BOARD OF DIRECTORS AS COMPTROLLER. THIS FINDING IS
CONTRARY TO THE COMMON, CONSISTENT POSITION AND ADMISSION OF BOTH
PARTIES. FURTHER, RESPONDENT'S BY-LAWS DOES NOT INCLUDE COMPTROLLER AS
ONE OF ITS CORPORATE OFFICERS.
II.
THE COURT OF APPEALS WENT BEYOND THE ISSUE OF THE CASE WHEN IT
SUBSTITUTED THE NATIONAL LABOR RELATIONS COMMISSION'S DECISION TO APPLY
THE APPEAL BOND REQUIREMENT STRICTLY IN THE INSTANT CASE. THE ONLY ISSUE
FOR ITS DETERMINATION IS WHETHER NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN DOING THE SAME.7
The issue to be resolved is whether the Labor Arbiter had jurisdiction over the case for illegal
dismissal and non-payment of benefits filed by petitioner. The Court finds that the Labor Arbiter
had no jurisdiction over the same.
Under Presidential Decree No. 902-A (the Revised Securities Act), the law in force when the
complaint for illegal dismissal was instituted by petitioner in 1997, the following cases fall under
the exclusive of the SEC:
a) Devices or schemes employed by or any acts of the board of directors, business
associates, its officers or partners, amounting to fraud and misrepresentation which
may be detrimental to the interest of the public and/or of the stockholders,
partners, members of associations or organizations registered with the Commission;
b) Controversies arising out of intra-corporate or partnership relations, between and
among stockholders, members or associates; between any or all of them and the
corporation, partnership or association of which they are stockholders, members or
associates, respectively; and between such corporation, partnership or association
and the State insofar as it concerns their individual franchise or right to exist as
such entity;
c) Controversies in the election or appointment of directors, trustees,
officers, or managers of such corporations, partnerships or associations;
d) Petitions of corporations, partnerships, or associations to be declared in the state
of suspension of payments in cases where the corporation, partnership or
association possesses property to cover all of its debts but foresees the impossibility
of meeting them when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to cover its liabilities, but is under
the Management Committee created pursuant to this decree. (Emphasis supplied.)
The Court has consistently held that there are two elements to be considered in determining
whether the SEC has jurisdiction over the controversy, to wit: (1) the status or relationship of the
parties; and (2) the nature of the question that is the subject of their controversy. 8
Petitioner argues that he is not a corporate officer of the IBC but an employee thereof since he
had not been elected nor appointed as Comptroller and Assistant Manager by the IBC's Board of
Directors. He points out that he had actually been appointed as such on January 11, 1995 by the
IBC's General Manager, Ceferino Basilio. In support of his argument, petitioner underscores the
fact that the IBC's By-Laws does not even include the position of comptroller in its roster of

31
corporate officers.9 He therefore contends that his dismissal is a controversy falling within the
jurisdiction of the labor courts. 10
Petitioner's argument is untenable. Even assuming that he was in fact appointed by the General
Manager, such appointment was subsequently approved by the Board of Directors of the IBC. 11
That the position of Comptroller is not expressly mentioned among the officers of the IBC in the
By-Laws is of no moment, because the IBC's Board of Directors is empowered under Section 25 of
the Corporation Code12 and under the corporation's By-Laws to appoint such other officers as it
may deem necessary. The By-Laws of the IBC categorically provides:
XII. OFFICERS
The officers of the corporation shall consist of a President, a Vice-President, a
Secretary-Treasurer, a General Manager, and such other officers as the Board of
Directors may from time to time does fit to provide for. Said officers shall
be elected by majority vote of the Board of Directors and shall have such
powers and duties as shall hereinafter provide (Emphasis supplied). 13
The Court has held that in most cases the "by-laws may and usually do provide for such other
officers,"14 and that where a corporate office is not specifically indicated in the roster of corporate
offices in the by-laws of a corporation, the board of directors may also be empowered under the
by-laws to create additional officers as may be necessary. 15
An "office" has been defined as a creation of the charter of a corporation, while an "officer" as a
person elected by the directors or stockholders. On the other hand, an "employee" occupies no
office and is generally employed not by action of the directors and stockholders but by the
managing officer of the corporation who also determines the compensation to be paid to such
employee.16
As petitioner's appointment as comptroller required the approval and formal action of the IBC's
Board of Directors to become valid,17 it is clear therefore holds that petitioner is a corporate
officer whose dismissal may be the subject of a controversy cognizable by the SEC under Section
5(c) of P.D. 902-A which includes controversies involving both election and appointment of
corporate directors, trustees, officers, and managers. 18 Had petitioner been an ordinary
employee, such board action would not have been required.
Thus, the Court of Appeals correctly held that:
Since complainant's appointment was approved unanimously by the Board of
Directors of the corporation, he is therefore considered a corporate officer and his
claim of illegal dismissal is a controversy that falls under the jurisdiction of the SEC
as contemplated by Section 5 of P.D. 902-A. The rule is that dismissal or nonappointment of a corporate officer is clearly an intra-corporate matter and
jurisdiction over the case properly belongs to the SEC, not to the NLRC. 19
As to petitioner's argument that the nature of his functions is recommendatory thereby making
him a mere managerial officer, the Court has previously held that the relationship of a person to
a corporation, whether as officer or agent or employee is not determined by the nature of the
services performed, but instead by the incidents of the relationship as they actually exist. 20
It is likewise of no consequence that petitioner's complaint for illegal dismissal includes money
claims, for such claims are actually part of the perquisites of his position in, and therefore linked
with his relations with, the corporation. The inclusion of such money claims does not convert the
issue into a simple labor problem. Clearly, the issues raised by petitioner against the IBC are
matters that come within the area of corporate affairs and management, and constitute a
corporate controversy in contemplation of the Corporation Code. 21
Petitioner further argues that the IBC failed to perfect its appeal from the Labor Arbiter's Decision
for its non-payment of the appeal bond as required under Article 223 of the Labor Code, since
compliance with the requirement of posting of a cash or surety bond in an amount equivalent to
the monetary award in the judgment appealed from has been held to be both mandatory and
jurisdictional.22 Hence, the Decision of the Labor Arbiter had long become final and executory and
thus, the Court of Appeals acted with grave abuse of discretion amounting to lack or excess of
jurisdiction in giving due course to the IBC's petition for certiorari, and in deciding the case on
the merits.

32
The IBC's failure to post an appeal bond within the period mandated under Article 223 of the
Labor Code has been rendered immaterial by the fact that the Labor Arbiter did not have
jurisdiction over the case since as stated earlier, the same is in the nature of an intra-corporate
controversy. The Court has consistently held that where there is a finding that any decision was
rendered without jurisdiction, the action shall be dismissed. Such defense can be interposed at
any time, during appeal or even after final judgment. 23 It is a well-settled rule that jurisdiction is
conferred only by the Constitution or by law. It cannot be fixed by the will of the parties; it cannot
be acquired through, enlarged or diminished by, any act or omission of the parties. 24
Considering the foregoing, the Court holds that no error was committed by the Court of Appeals
in dismissing the case filed before the Labor Arbiter, without prejudice to the filing of an
appropriate action in the proper court. 1wphi1.nt
It must be noted that under Section 5.2 of the Securities Regulation Code (Republic Act No. 8799)
which was signed into law by then President Joseph Ejercito Estrada on July 19, 2000, the SEC's
jurisdiction over all cases enumerated in Section 5 of P.D. 902-A has been transferred to the
Regional Trial Courts.25
WHEREFORE, the petition is hereby DISMISSED and the Decision of the Court of Appeals in CAG.R. SP No. 52755 is AFFIRMED.
SO ORDERED.

33
G.R. Nos. 109095-109107 February 23, 1995
ELDEPIO LASCO, RODOLFO ELISAN, URBANO BERADOR, FLORENTINO ESTOBIO,
MARCELINO MATURAN, FRAEN BALIBAG, CARMELITO GAJOL, DEMOSTHENES MANTO,
SATURNINO BACOL, SATURNINO LASCO, RAMON LOYOLA, JOSENIANO B. ESPINA, all
represented by MARIANO R. ESPINA, petitioner,
vs.
UNITED NATIONS REVOLVING FUND FOR NATURAL RESOURCES EXPLORATION
(UNRFNRE) represented by its operations manager, DR. KYRIACOS LOUCA, OSCAR N.
ABELLA, LEON G. GONZAGA, JR., MUSIB M. BUAT, Commissioners of National Labor
Relations Commission (NLRC), Fifth Division, Cagayan de Oro City and IRVING
PETILLA, Labor Arbiter of Butuan City, respondents.
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to set aside the
Resolution dated January 25, 1993 of the National Labor Relations Commission (NLRC), Fifth
Division, Cagayan de Oro City.
We dismiss the petition.
I
Petitioners were dismissed from their employment with private respondent, the United Nations
Revolving Fund for Natural Resources Exploration (UNRFNRE), which is a special fund and
subsidiary organ of the United Nations. The UNRFNRE is involved in a joint project of the
Philippine Government and the United Nations for exploration work in Dinagat Island.
Petitioners are the complainants in NLRC Cases Nos. SRAB 10-03-00067-91 to 10-03-00078-91
and SRAB 10-07-00159-91 for illegal dismissal and damages.
In its Motion to Dismiss, private respondent alleged that respondent Labor Arbiter had no
jurisdiction over its personality since it enjoyed diplomatic immunity pursuant to the 1946
Convention on the Privileges and Immunities of the United Nations. In support thereof, private
respondent attached a letter from the Department of Foreign Affairs dated August 26, 1991,
which acknowledged its immunity from suit. The letter confirmed that private respondent, being
a special fund administered by the United Nations, was covered by the 1946 Convention on the
Privileges and Immunities of the United Nations of which the Philippine Government was an
original signatory (Rollo, p. 21).
On November 25, 1991, respondent Labor Arbiter issued an order dismissing the complaints on
the ground that private respondent was protected by diplomatic immunity. The dismissal was
based on the letter of the Foreign Office dated September 10, 1991.
Petitioners' motion for reconsideration was denied. Thus, an appeal was filed with the NLRC,
which affirmed the dismissal of the complaints in its Resolution dated January 25, 1993.
Petitioners filed the instant petition for certiorari without first seeking a reconsideration of the
NLRC resolution.
II
Article 223 of the Labor Code of the Philippines, as amended, provides that decisions of the NLRC
are final and executory. Thus, they may only be questioned through certiorari as a special civil
action under Rule 65 of the Revised Rules of Court.
Ordinarily, certiorari as a special civil action will not lie unless a motion for reconsideration is first
filed before the respondent tribunal, to allow it an opportunity to correct its assigned errors
(Liberty Insurance Corporation v. Court of Appeals, 222 SCRA 37 [1993]).
In the case at bench, petitioners' failure to file a motion for reconsideration is fatal to the instant
petition. Moreover, the petition lacks any explanation for such omission, which may merit its
being considered as falling under the recognized exceptions to the necessity of filing such
motion.
Notwithstanding, we deem it wise to give due course to the petition because of the implications
of the issue in our international relations.
Petitioners argued that the acts of mining exploration and exploitation are outside the official
functions of an international agency protected by diplomatic immunity. Even assuming that
private respondent was entitled to diplomatic immunity, petitioners insisted that private

34
respondent waived it when it engaged in exploration work and entered into a contract of
employment with petitioners.
Petitioners, likewise, invoked the constitutional mandate that the State shall afford full protection
to labor and promote full employment and equality of employment opportunities for all (1987
Constitution, Art. XIII, Sec. 3).
The Office of the Solicitor General is of the view that private respondent is covered by the mantle
of diplomatic immunity. Private respondent is a specialized agency of the United Nations. Under
Article 105 of the Charter of the United Nations:
1. The Organization shall enjoy in the territory of its Members such privileges
and immunities as are necessary for the fulfillment of its purposes.
2. Representatives of the Members of the United Nations and officials of the
Organization shall similarly enjoy such privileges and immunities as are
necessary for the independent exercise of their functions in connection with
the organization.
Corollary to the cited article is the Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations, to which the Philippines was a signatory (Vol. 1,
Philippine Treaty Series, p. 621). We quote Sections 4 and 5 of Article III thereof:
Sec. 4. The specialized agencies, their property and assets, wherever located
and by whomsoever held shall enjoy immunity from every form of legal
process except insofar as in any particular case they have expressly waived
their immunity. It is, however, understood that no waiver of immunity shall
extend to any measure of execution (Emphasis supplied).
Sec. 5. The premises of the specialized agencies shall be inviolable. The
property and assets of the specialized agencies, wherever located and by
whomsoever held, shall be immune from search, requisition, confiscation,
expropriation and any other form of interference, whether by executive,
administrative, judicial or legislative action (Emphasis supplied).
As a matter of state policy as expressed in the Constitution, the Philippine Government adopts
the generally accepted principles of international law (1987 Constitution, Art. II, Sec. 2). Being a
member of the United Nations and a party to the Convention on the Privileges and Immunities of
the Specialized Agencies of the United Nations, the Philippine Government adheres to the
doctrine of immunity granted to the United Nations and its specialized agencies. Both treaties
have the force and effect of law.
In World Health Organization v. Aquino, 48 SCRA 242, (1972), we had occasion to rule that:
It is a recognized principle of international law and under our system of
separation of powers that diplomatic immunity is essentially a political
question and courts should refuse to look beyond a determination by the
executive branch of the government, and where the plea of diplomatic
immunity is recognized and affirmed by the executive branch of the
government as in the case at bar, it is then the duty of the courts to accept
the claim of immunity upon appropriate suggestion by the principal law
officer of the government, the Solicitor General or other officer acting under
his direction. Hence, in adherence to the settled principle that courts may not
so exercise their jurisdiction by seizure and detention of property, as to
embarrass the executive arm of the government in conducting foreign
relations, it is accepted doctrine that "in such cases the judicial department
of (this) government follows the action of the political branch and will not
embarrass the latter by assuming an antagonistic jurisdiction (Emphasis
supplied).
We recognize the growth of international organizations dedicated to specific universal endeavors,
such as health, agriculture, science and technology and environment. It is not surprising that
their existence has evolved into the concept of international immunities. The reason behind the
grant of privileges and immunities to international organizations, its officials and functionaries is
to secure them legal and practical independence in fulfilling their duties (Jenks, International
Immunities 17 [1961]).

35
Immunity is necessary to assure unimpeded performance of their functions. The purpose is "to
shield the affairs of international organizations, in accordance with international practice, from
political pressure or control by the host country to the prejudice of member States of the
organization, and to ensure the unhampered performance of their functions" (International
Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]).
In the International Catholic Migration Commission case, we held that there is no conflict
between the constitutional duty of the State to protect the rights of workers and to promote their
welfare, and the grant of immunity to international organizations. Clauses on jurisdictional
immunity are now standard in the charters of the international organizations to guarantee the
smooth discharge of their functions.
The diplomatic immunity of private respondent was sufficiently established by the letter of the
Department of Foreign Affairs, recognizing and confirming the immunity of UNRFNRE in
accordance with the 1946 Convention on Privileges and Immunities of the United Nations where
the Philippine Government was a party. The issue whether an international organization is
entitled to diplomatic immunity is a "political question" and such determination by the executive
branch is conclusive on the courts and quasi-judicial agencies (The Holy See v. Hon. Eriberto U.
Rosario, Jr., G.R. No. 101949, Dec. 1, 1994; International Catholic Migration Commission v.
Calleja, supra).
Our courts can only assume jurisdiction over private respondent if it expressly waived its
immunity, which is not so in the case at bench (Convention on the Privileges and Immunities of
the Specialized Agencies of the United Nations, Art. III, Sec. 4).
Private respondent is not engaged in a commercial venture in the Philippines. Its presence here is
by virtue of a joint project entered into by the Philippine Government and the United Nations for
mineral exploration in Dinagat Island. Its mission is not to exploit our natural resources and gain
pecuniarily thereby but to help improve the quality of life of the people, including that of
petitioners.
This is not to say that petitioner have no recourse. Section 31 of the Convention on the Privileges
and Immunities of the Specialized Agencies of the United Nations states that "each specialized
agency shall make a provision for appropriate modes of settlement of: (a) disputes arising out of
contracts or other disputes of private character to which the specialized agency is a party."
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

36
FIRST DIVISION
G.R. No. 120077
October 13, 2000
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND
MARCELO G. SANTOS, respondents.
PARDO, J.:
The case before the Court is a petition for certiorari 1 to annul the following orders of the National
Labor Relations Commission (hereinafter referred to as "NLRC") for having been issued without or
with excess jurisdiction and with grave abuse of discretion: 2
(1) Order of May 31, 1993.3 Reversing and setting aside its earlier resolution of
August 28, 1992.4 The questioned order declared that the NLRC, not the Philippine
Overseas Employment Administration (hereinafter referred to as "POEA"), had
jurisdiction over private respondent's complaint;
(2) Decision of December 15, 1994.5 Directing petitioners to jointly and severally
pay private respondent twelve thousand and six hundred dollars (US$ 12,600.00)
representing salaries for the unexpired portion of his contract; three thousand six
hundred dollars (US$3,600.00) as extra four months salary for the two (2) year
period of his contract, three thousand six hundred dollars (US$3,600.00) as "14th
month pay" or a total of nineteen thousand and eight hundred dollars
(US$19,800.00) or its peso equivalent and attorney's fees amounting to ten percent
(10%) of the total award; and
(3) Order of March 30, 1995.6 Denying the motion for reconsideration of the
petitioners.
In May, 1988, private respondent Marcelo Santos (hereinafter referred to as "Santos") was an
overseas worker employed as a printer at the Mazoon Printing Press, Sultanate of Oman.
Subsequently, in June 1988, he was directly hired by the Palace Hotel, Beijing, People's Republic
of China and later terminated due to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred to as "MHC") and the Manila
Hotel International Company, Limited (hereinafter referred to as "MHICL").
When the case was filed in 1990, MHC was still a government-owned and controlled corporation
duly organized and existing under the laws of the Philippines.
MHICL is a corporation duly organized and existing under the laws of Hong Kong. 7 MHC is an
"incorporator" of MHICL, owning 50% of its capital stock. 8
By virtue of a "management agreement"9 with the Palace Hotel (Wang Fu Company Limited),
MHICL10 trained the personnel and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate of Oman, respondent
Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace
Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that he was recommended by one
Nestor Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but with a higher monthly
salary and increased benefits. The position was slated to open on October 1, 1988. 11
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment
contract to respondent Santos. Mr. Henk advised respondent Santos that if the contract was
acceptable, to return the same to Mr. Henk in Manila, together with his passport and two
additional pictures for his visa to China.
On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective June 30,
1988, under the pretext that he was needed at home to help with the family's piggery and
poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henk's letter.
Respondent Santos enclosed four (4) signed copies of the employment contract (dated June 4,
1988) and notified them that he was going to arrive in Manila during the first week of July 1988.

37
The employment contract of June 4, 1988 stated that his employment would commence
September 1, 1988 for a period of two years. 12 It provided for a monthly salary of nine hundred
dollars (US$900.00) net of taxes, payable fourteen (14) times a year. 13
On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the Palace
Hotel.14
Subsequently, respondent Santos signed an amended "employment agreement" with the Palace
Hotel, effective November 5, 1988. In the contract, Mr. Shmidt represented the Palace Hotel. The
Vice President (Operations and Development) of petitioner MHICL Miguel D. Cergueda signed the
employment agreement under the word "noted".
From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He returned
to China and reassumed his post on July 17, 1989.
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a handwritten
note that respondent Santos be given one (1) month notice of his release from employment.
On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr. Shmidt
that his employment at the Palace Hotel print shop would be terminated due to business
reverses brought about by the political upheaval in China. 15 We quote the letter:16
"After the unfortunate happenings in China and especially Beijing (referring to
Tiannamen Square incidents), our business has been severely affected. To reduce
expenses, we will not open/operate printshop for the time being.
"We sincerely regret that a decision like this has to be made, but rest assured this
does in no way reflect your past performance which we found up to our
expectations."
"Should a turnaround in the business happen, we will contact you directly and give
you priority on future assignment."
On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos and
paid all benefits due him, including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr. Shmidt,
demanding full compensation pursuant to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit: 17
His service with the Palace Hotel, Beijing was not abruptly terminated but we
followed the one-month notice clause and Mr. Santos received all benefits due him.
"For your information the Print Shop at the Palace Hotel is still not operational and
with a low business outlook, retrenchment in various departments of the hotel is
going on which is a normal management practice to control costs.
"When going through the latest performance ratings, please also be advised that his
performance was below average and a Chinese National who is doing his job now
shows a better approach.
"In closing, when Mr. Santos received the letter of notice, he hardly showed up for
work but still enjoyed free accommodation/laundry/meals up to the day of his
departure."
On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the
Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC). He
prayed for an award of nineteen thousand nine hundred and twenty three dollars (US$19,923.00)
as actual damages, forty thousand pesos (P40,000.00) as exemplary damages and attorney's
fees equivalent to 20% of the damages prayed for. The complaint named MHC, MHICL, the Palace
Hotel and Mr. Shmidt as respondents.
The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the
proceedings before the Labor Arbiter.18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners, thus: 19
"WHEREFORE, judgment is hereby rendered:
"1. directing all the respondents to pay complainant jointly and severally;

38
"a) $20,820 US dollars or its equivalent in Philippine currency as unearned
salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had
jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating: 20
"WHEREFORE, let the appealed Decision be, as it is hereby, declared null and void
for want of jurisdiction. Complainant is hereby enjoined to file his complaint with the
POEA.
"SO ORDERED."
On September 18, 1992, respondent Santos moved for reconsideration of the afore-quoted
resolution. He argued that the case was not cognizable by the POEA as he was not an "overseas
contract worker."21
On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed Labor
Arbiter Emerson Tumanon to hear the case on the question of whether private respondent was
retrenched or dismissed.22
On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the
testimonial and documentary evidence presented to and heard by him. 23
Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National Capital
Region, Arbitration Branch, and the case was transferred to Labor Arbiter Jose G. de Vera. 24
On November 25, 1994, Labor Arbiter de Vera submitted his report. 25 He found that respondent
Santos was illegally dismissed from employment and recommended that he be paid actual
damages equivalent to his salaries for the unexpired portion of his contract. 26
On December 15, 1994, the NLRC ruled in favor of private respondent, to wit: 27
"WHEREFORE, finding that the report and recommendations of Arbiter de Vera are
supported by substantial evidence, judgment is hereby rendered, directing the
respondents to jointly and severally pay complainant the following computed
contractual benefits: (1) US$12,600.00 as salaries for the unexpired portion of the
parties' contract; (2) US$3,600.00 as extra four (4) months salary for the two (2)
years period (sic) of the parties' contract; (3) US$3,600.00 as "14th month pay" for
the aforesaid two (2) years contract stipulated by the parties or a total of
US$19,800.00 or its peso equivalent, plus (4) attorney's fees of 10% of
complainant's total award.
"SO ORDERED."
On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor Arbiter de
Vera's recommendation had no basis in law and in fact. 28
On March 30, 1995, the NLRC denied the motion for reconsideration. 29
Hence, this petition.30
On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of a
temporary restraining order and/or writ of preliminary injunction and a motion for the annulment
of the entry of judgment of the NLRC dated July 31, 1995. 31
On November 20, 1995, the Court denied petitioner's urgent motion. The Court required
respondents to file their respective comments, without giving due course to the petition. 32
On March 8, 1996, the Solicitor General filed a manifestation stating that after going over the
petition and its annexes, they can not defend and sustain the position taken by the NLRC in its
assailed decision and orders. The Solicitor General prayed that he be excused from filing a
comment on behalf of the NLRC33
On April 30,1996, private respondent Santos filed his comment. 34
On June 26, 1996, the Court granted the manifestation of the Solicitor General and required the
NLRC to file its own comment to the petition.35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.

39
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign jurisdictions and the case
involves purely foreign elements. The only link that the Philippines has with the case is that
respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign corporations. Not
all cases involving our citizens can be tried here.
The employment contract. Respondent Santos was hired directly by the Palace Hotel, a foreign
employer, through correspondence sent to the Sultanate of Oman, where respondent Santos was
then employed. He was hired without the intervention of the POEA or any authorized recruitment
agency of the government.36
Under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction
over the case if it chooses to do so provided: (1) that the Philippine court is one to which the
parties may conveniently resort to; (2) that the Philippine court is in a position to make an
intelligent decision as to the law and the facts; and (3) that the Philippine court has or is likely to
have power to enforce its decision.37 The conditions are unavailing in the case at bar.
Not Convenient. We fail to see how the NLRC is a convenient forum given that all the incidents
of the case from the time of recruitment, to employment to dismissal occurred outside the
Philippines. The inconvenience is compounded by the fact that the proper defendants, the Palace
Hotel and MHICL are not nationals of the Philippines. Neither .are they "doing business in the
Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are non-residents of the
Philippines.
No power to determine applicable law. Neither can an intelligent decision be made as to the
law governing the employment contract as such was perfected in foreign soil. This calls to fore
the application of the principle of lex loci contractus (the law of the place where the contract was
made).38
The employment contract was not perfected in the Philippines. Respondent Santos signified his
acceptance by writing a letter while he was in the Republic of Oman. This letter was sent to the
Palace Hotel in the People's Republic of China.
No power to determine the facts. Neither can the NLRC determine the facts surrounding the
alleged illegal dismissal as all acts complained of took place in Beijing, People's Republic of
China. The NLRC was not in a position to determine whether the Tiannamen Square incident truly
adversely affected operations of the Palace Hotel as to justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. Even assuming that a proper decision
could be reached by the NLRC, such would not have any binding effect against the employer, the
Palace Hotel. The Palace Hotel is a corporation incorporated under the laws of China and was not
even served with summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to solve controversies
involving foreign employers. Neither are we saying that we do not have power over an
employment contract executed in a foreign country. If Santos were an "overseas contract
worker", a Philippine forum, specifically the POEA, not the NLRC, would protect him.39 He is not
an "overseas contract worker" a fact which he admits with conviction. 40
Even assuming that the NLRC was the proper forum, even on the merits, the NLRC's decision
cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2) that
MHICL was liable for Santos' retrenchment, still MHC, as a separate and distinct juridical entity
cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock. However,
this is not enough to pierce the veil of corporate fiction between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate
fiction is used to defeat public convenience, justify wrong, protect fraud or defend a crime. 41 It
is done only when a corporation is a mere alter ego or business conduit of a person or another
corporation.

40
In Traders Royal Bank v. Court of Appeals,42 we held that "the mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is
not of itself a sufficient reason for disregarding the fiction of separate corporate personalities."
The tests in determining whether the corporate veil may be pierced are: First, the defendant
must have control or complete domination of the other corporation's finances, policy and
business practices with regard to the transaction attacked. There must be proof that the other
corporation had no separate mind, will or existence with respect the act complained of. Second,
control must be used by the defendant to commit fraud or wrong. Third, the aforesaid control or
breach of duty must be the proximate cause of the injury or loss complained of. The absence of
any of the elements prevents the piercing of the corporate veil. 43
It is basic that a corporation has a personality separate and distinct from those composing it as
well as from that of any other legal entity to which it may be related. 44 Clear and convincing
evidence is needed to pierce the veil of corporate fiction. 45 In this case, we find no evidence to
show that MHICL and MHC are one and the same entity.
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his employment
contract with the Palace Hotel. This fact fails to persuade us.
First, we note that the Vice President (Operations and Development) of MHICL, Miguel D.
Cergueda signed the employment contract as a mere witness. He merely signed under the word
"noted".
When one "notes" a contract, one is not expressing his agreement or approval, as a party
would.46 In Sichangco v. Board of Commissioners of Immigration,47 the Court recognized that the
term "noted" means that the person so noting has merely taken cognizance of the existence of
an act or declaration, without exercising a judicious deliberation or rendering a decision on the
matter.
Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part" of the
document is that which, "in a deed or other formal instrument is that part which comes after the
recitals, or where there are no recitals, after the parties (emphasis ours)."48 As opposed to a party
to a contract, a witness is simply one who, "being present, personally sees or perceives a thing; a
beholder, a spectator, or eyewitness." 49 One who "notes" something just makes a "brief written
statement"50 a memorandum or observation.
Second, and more importantly, there was no existing employer-employee relationship between
Santos and MHICL. In determining the existence of an employer-employee relationship, the
following elements are considered:51
"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and
"(4) the power to control employee's conduct."
MHICL did not have and did not exercise any of the aforementioned powers. It did not select
respondent Santos as an employee for the Palace Hotel. He was referred to the Palace Hotel by
his friend, Nestor Buenio. MHICL did not engage respondent Santos to work. The terms of
employment were negotiated and finalized through correspondence between respondent Santos,
Mr. Schmidt and Mr. Henk, who were officers and representatives of the Palace Hotel and not
MHICL. Neither did respondent Santos adduce any proof that MHICL had the power to control his
conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and not MHICL that terminated
respondent Santos' services.
Neither is there evidence to suggest that MHICL was a "labor-only contractor." 52 There is no proof
that MHICL "supplied" respondent Santos or even referred him for employment to the Palace
Hotel.
Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the same
entity. The fact that the Palace Hotel is a member of the "Manila Hotel Group" is not enough to
pierce the corporate veil between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and considering further that no employeremployee relationship existed between MHICL, MHC and respondent Santos, Labor Arbiter

41
Ceferina J. Diosana clearly had no jurisdiction over respondent's claim in NLRC NCR Case No. 0002-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over the following: 53
"1. Unfair labor practice cases;
"2. Termination disputes;
"3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
"4. Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;
"5. Cases arising from any violation of Article 264 of this Code, including questions
involving legality of strikes and lockouts; and
"6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
a claim for reinstatement."
In all these cases, an employer-employee relationship is an indispensable jurisdictional
requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to
disputes arising from an employer-employee relationship which can be resolved by reference to
the Labor Code, or other labor statutes, or their collective bargaining agreements. 54
"To determine which body has jurisdiction over the present controversy, we rely on the sound
judicial principle that jurisdiction over the subject matter is conferred by law and is determined
by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some
of the claims asserted therein."55
The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the complaint. His
failure to dismiss the case amounts to grave abuse of discretion. 56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the orders and
resolutions of the National Labor Relations Commission dated May 31, 1993, December 15, 1994
and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-01058-90).
No costs.
SO ORDERED.

42
G.R. No. 164267
November 23, 2007
PHILIPPINE AIRLINES, INC., Petitioner,
vs.
HEIRS OF BERNARDIN J. ZAMORA,* Respondents.
RESOLUTION
QUISUMBING, J.:
Before us is a petition for review of the Decision 1 dated April 27, 2004, as well as the Resolution 2
dated June 29, 2004 of the Court of Appeals in CA-G.R. SP No. 56428 dismissing petitioners
appeal from the Decision3 dated July 26, 1999, of the National Labor Relations Commission
(NLRC) which ordered Bernardin J. Zamoras immediate reinstatement to his former position as
cargo representative and the payment of his backwages and allowances.
Zamora was a cargo representative assigned at the International Cargo Operations - Import
Operations Division (ICO-IOD) of petitioner Philippine Airlines, Inc. He alleged that sometime in
December 1993, his immediate supervisor, Ricardo D. Abuyuan, instructed him to alter some
entries in the Customs Boatnote and Inbound Handling Report to conceal Abuyuans smuggling
and pilferage activities. When he refused to follow this order, Abuyuan concocted charges of
insubordination and neglect of customers against him.
On November 6, 1995, Zamora received a Memorandum informing him of his temporary transfer
to the Domestic Cargo Operations (DCO) effective November 13, 1995. Zamora refused to follow
the directive because: first, there was no valid and legal reason for his transfer; second, the
transfer violated the collective bargaining agreement between the management and the
employees union that no employee shall be transferred without just and proper cause; and third,
the transfer did not comply with the 15-day prior notice rule.
Meantime, Zamora wrote to the management requesting that an investigation be conducted on
the smuggling and pilferage activities. He disclosed that he has a telex from Honolulu addressed
to Abuyuan to prove Abuyuans illegal activities. 4 As a result, the management invited Zamora to
several conferences to substantiate his allegations. Zamora claimed that during these
conferences, he was instructed to continue reporting to the ICO-IOD to observe the activities
therein. Even so, his salaries were withheld starting December 15, 1995.
For its part, petitioner Philippine Airlines, Inc. claimed that sometime in October 1995, Zamora
had an altercation with Abuyuan to the point of a fistfight. The management requested Zamora
to explain in writing the incident. It found his explanation unsatisfactory. 5
To diffuse the tension between the parties, the management decided to temporarily transfer
Zamora to the DCO. It issued several directives informing Zamora of his transfer. However,
Zamora refused to receive these and continued reporting to the ICO-IOD. Consequently, he was
reported absent at the DCO since November 13, 1995. His salaries were subsequently withheld.
He also ignored the managements directive requiring him to explain in writing his continued
absence.
Meanwhile, the management acted on Zamoras letter exposing the smuggling and pilferage
activities. Despite several notices, however, Zamora failed to appear during the conferences.
On February 22, 1996, the management served Zamora a Notice of Administrative Charge for
Absence Without Official Leave (AWOL). Then on January 30, 1998, he was informed of his
termination due to Insubordination/Neglect of Customer, Disrespect to Authority, and AWOL.
On March 12, 1996, Zamora filed an action for illegal dismissal, unfair labor practice, nonpayment of wages, and damages.6
On September 28, 1998, the Labor Arbiter dismissed the complaint for lack of merit. 7 He ruled
that Zamoras transfer was temporary and intended only to diffuse the tension between Zamora
and Abuyuan. He also said that the 15-day prior notice did not apply to Zamora since it is
required only in transfers involving change of domicile. He further ruled that Zamoras refusal to
report to the DCO was a clear case of insubordination and utter disregard of the managements
directive. Thus, the Labor Arbiter ordered Zamora to report to his new assignment at the DCO. 8
On July 26, 1999, the NLRC reversed the Labor Arbiters decision and declared Zamoras transfer
illegal.9 It ruled that there was no valid and legal reason for the transfer other than Zamoras
report of the smuggling and pilferage activities. The NLRC disposed as follows:

43
WHEREFORE, in the light of the foregoing, the instant appeal is hereby GRANTED. The assailed
Decision dated September 28, 1998 is hereby ordered SET ASIDE and a new one is hereby
entered declaring complainants transfer at the Domestic Cargo Operations on November 13,
1996 illegal.
Moreover, respondents are hereby ordered to immediately reinstate complainant Bernardin J.
Zamora to his former position as Cargo Representative at the Import Operations Division of
respondent PAL without loss of seniority rights and other privileges and to pay him salaries and
backwages beginning December 15, 1995 until his actual reinstatement, inclusive of allowances
and other benefits and increases thereto.
All other reliefs herein sought and prayed for are hereby DENIED for lack of merit.
SO ORDERED.10
On appeal, the Court of Appeals affirmed the decision of the NLRC. In the instant petition,
petitioner Philippine Airlines, Inc. raises the following issues:
THE PROCEDURAL ISSUES:
I.
Whether or not the Court of Appeals seriously erred in holding that the 26 July 1999
NLRC decision became final and executory based solely on the certifications issued
by the Deputy Executive Clerk of the NLRC.
II.
Whether or not the NLRC may take cognizance of a seasonably filed motion for
reconsideration from a decision a copy of which was previously stamped "moved"
and "return to sender" but was thereafter officially served and officially received by
the party seeking reconsideration.
III.
MAY a counsel for justifiable reason defer the filing of a notice of change of address.
THE SUBSTANTIVE ISSUES[:]
I.
may an employer be required to state in writing the reason for transferring an
employee despite the absence of such requirement in the CBA.
II.
may an employer be required to observe a 15-day prior notice before effecting an
employee transfer notwithstanding the fact that under the CBA said notice is
required only in case the transfer involves a change in domicile.
III.
MAY an employer seeking to transfer an employee for the purpose of diffusing
escalating hostility between an employee and his supervisor be required to wait for
fifteen (15) days before effecting the employee transfer.
IV.
may a court validly order the reinstatement of an employee as well as grant
monetary award notwithstanding the absence of factual finding as to the legality or
illegality of the dismissal in the decision itself. 11
Simply, the issues are: (1) whether the decision of the NLRC had become final and executory;
and (2) whether Zamoras transfer was legal.
Incidentally, the Courts Third Division rendered a Resolution dated February 6, 2007 in G.R. No.
166996 entitled Philippine Airlines, Inc., et al. v. Bernardin J. Zamora. The petition stemmed from
the same set of facts between substantially the same parties and raised the following issues: (1)
whether the Court of Appeals erred in declaring respondents dismissal illegal and the NLRC
decision final and executory; (2) whether the Court of Appeals erred in ordering petitioner to pay
respondent separation pay in lieu of reinstatement due to respondents incarceration; and (3)
whether the Court of Appeals erred in ordering respondent to present his monetary claim to
petitioners rehabilitation receiver.12
In resolving the petition, the Court noted that petitioner had been placed by the Securities and
Exchange Commission (SEC) under a Permanent Rehabilitation Receiver. Such being the case, a
suspension of all actions for claims against petitioner pending before any court, tribunal or board

44
was, ipso jure, in order. The Court likewise took note of the fact that such suspension of actions
was observed in some other cases against petitioner. 13
We shall defer to these determinations. To reiterate, the suspension of all actions for claims
against a corporation embraces all phases of the suit, be it before the trial court or any tribunal
or before this Court.14 No other action may be taken, including the rendition of judgment during
the state of suspension. It must be stressed that what are automatically stayed or suspended are
the proceedings of a suit and not just the payment of claims during the execution stage after the
case had become final and executory. 15 Once the process of rehabilitation, however, is
completed, this Court will proceed to complete the proceedings on the suspended
actions.1wphi1
Furthermore, the actions that are suspended cover all claims against the corporation whether for
damages founded on a breach of contract of carriage, labor cases, collection suits or any other
claims of a pecuniary nature.16 No exception in favor of labor claims is mentioned in the law. 17
More importantly, as the instant case involves essentially the same facts, parties, and issues as
G.R. No. 166996 entitled Philippine Airlines, Inc., et al. v. Bernardin J. Zamora, we find it
unnecessary to make further pronouncements which might otherwise conflict with the disposition
made by the Courts Third Division therein.
WHEREFORE, the herein proceedings are SUSPENDED until further notice from this Court.
Meanwhile, petitioner is urgently DIRECTED to update the Court as to the status of the
completion of its rehabilitation within a period of fifteen (15) days from notice hereof. No costs.
SO ORDERED.

45
G.R. No. 168424
June 8, 2007
CONSOLIDATED BROADCASTING SYSTEM, INC., petitioner,
vs.
DANNY OBERIO, ELNA DE PEDRO, LUISITO VILLAMOR, WILMA SUGATON, RUFO DEITA,
JR., EMILY DE GUZMAN, CAROLINE LADRILLO, JOSE ROBERTO REGALADO, ROSEBEL
NARCISO & ANANITA TANGETE, respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review is the July 30, 2004 Decision 1 of the Court of Appeals in CAG.R. SP No. 77098, which affirmed the December 5, 2001 Decision 2 of the National Labor
Relations Commission (NLRC) holding that respondents were regular employees of petitioner and
that they were illegally dismissed.
Respondents alleged that they were employed as drama talents by DYWB-Bombo Radyo, a radio
station owned and operated by petitioner Consolidated Broadcasting System, Inc. They reported
for work daily for six days in a week and were required to record their drama production in
advance. Some of them were employed by petitioner since 1974, while the latest one was hired
in 1997.3 Their drama programs were aired not only in Bacolod City but also in the sister stations
of DYWB in the Visayas and Mindanao areas. 4
Sometime in August 1998, petitioner reduced the number of its drama productions from 14 to
11, but was opposed by respondents. After the negotiations failed, the latter sought the
intervention of the Department of Labor and Employment (DOLE), which on November 12, 1998,
conducted through its Regional Office, an inspection of DWYB station. The results thereof
revealed that petitioner is guilty of violation of labor standard laws, such as underpayment of
wages, 13th month pay, non-payment of service incentive leave pay, and non-coverage of
respondents under the Social Security System.
Petitioner contended that respondents are not its employees and refused to submit the payroll
and daily time records despite the subpoena duces tecum issued by the DOLE Regional Director.
Petitioner further argued that the case should be referred to the NLRC because the Regional
Director has no jurisdiction over the determination of the existence of employer-employee
relationship which involves evidentiary matters that are not verifiable in the normal course of
inspection.
Vexed by the respondents complaint, petitioner allegedly pressured and intimidated
respondents. Respondents Oberio and Delta were suspended for minor lapses and the payment
of their salaries were purportedly delayed. Eventually, on February 3, 1999, pending the outcome
of the inspection case with the Regional Director, respondents were barred by petitioner from
reporting for work; thus, the former claimed constructive dismissal. 5
On April 8, 1999, the DOLE Regional Director issued an order directing petitioner to pay
respondents a total of P318,986.74 representing non-payment/underpayment of the salary and
benefits due them.6 However, on July 8, 1999, the Regional Director reconsidered the April 8,
1999 order and certified the records of the case to the NLRC, Regional Arbitration Branch VI, for
determination of employer-employee relationship.7 Respondents appealed said order to the
Secretary of Labor.
On October 12, 1999, respondents filed a case for illegal dismissal, underpayment/non-payment
of wages and benefits plus damages against petitioner. On April 10, 2000, the Labor Arbiter
dismissed the case without prejudice while waiting for the decision of the Secretary of Labor on
the same issue of the existence of an employer-employee relationship between petitioner and
respondents.
On appeal to the NLRC, respondents raised the issue of employer-employee relationship and
submitted the following to prove the existence of such relationship, to wit: time cards,
identification cards, payroll, a show cause order of the station manager to respondent Danny
Oberio and memoranda either noted or issued by said manager. Petitioner, on the other hand,
did not present any documentary evidence in its behalf and merely denied the allegations of
respondents. It claimed that the radio station pays for the drama recorded by piece and that it
has no control over the conduct of respondents.

46
On December 5, 2001, the NLRC rendered a decision holding that respondents were regular
employees of petitioner who were illegally dismissed by the latter. It further held that
respondents complied with the requirements of the rule on forum shopping. The decretal portion
thereof, provides:
WHEREFORE, premises considered, the decision of Labor Arbiter Ray Alan T. Drilon dated 10 April
2000 is SET ASIDE and VACATED and a new one entered.
Ordering respondent Consolidated Broadcasting System, Inc. (Bombo Radyo Philippines), DYWB
to reinstate the complainants without loss of seniority rights wi[th] full back wages computed
from February 1999 up to the time of actual reinstatement.
SO ORDERED.8
Hence, petitioner filed the instant recourse.
The issues for resolution are as follows: (1) Did respondents violate the rule on forum shopping;
(2) whether the NLRC correctly ruled on the merits of the case instead of remanding the case to
the Labor Arbiter; (3) whether respondents were employees of petitioner; and (4) whether their
dismissal was illegal.
Respondents complaint in the inspection case before the DOLE Regional Director alleged that
they were under the employ of petitioner at the time of the filing of said complaint. Pending the
resolution thereof, they claimed to have been dismissed; hence, the filing of the present illegal
dismissal case before the Labor Arbiter. The causes of action in these two complaints are
different, i.e., one for violation of labor standard laws, and the other, for illegal dismissal, but the
entitlement of respondents to the reliefs prayed for hinges on the same issue of the existence of
an employer-employee relationship. While the decision on the said issue by one tribunal may
operate as res judicata on the other, dismissal of the present illegal dismissal case on the ground
of forum shopping, would work injustice to respondents because it is the law itself which provides
for two separate remedies for their distinct causes of action.
Under Article 2179 of the Labor Code, termination cases fall under the jurisdiction of Labor
Arbiters. Whereas, Article 12810 of the same Code vests the Secretary of Labor or his duly
authorized representatives with the power to inspect the employers records to determine and
compel compliance with labor standard laws. The exercise of the said power by the Secretary or
his duly authorized representatives is exclusive to cases where employer-employee relationship
still exists. Thus, in cases where the complaint for violation of labor standard laws preceded the
termination of the employee and the filing of the illegal dismissal case, it would not be in
consonance with justice to charge the complainants with engaging in forum shopping when the
remedy available to them at the time their causes of action arose was to file separate cases
before different fora. Besides, in the instant case, respondent Danny Oberio disclosed in the
verification the pendency of the case regarding wage differential. 11 In addition, said case was
discussed in detail in the position paper, 12 evincing the absence of any intention on the part of
respondents to mislead the Labor Arbiter.
Similarly, in Benguet Management Corporation v. Court of Appeals,13 petitioner filed separate
actions to enjoin the foreclosure of real estate mortgages before the Regional Trial Courts of San
Pablo City and Zambales which has jurisdiction over the place where the properties were located.
In both cases, petitioner contended, among others, that the loan secured by said mortgages
imposed unauthorized penalties, interest and charges. The Court did not find the mortgagors
guilty of forum shopping considering that since injunction is enforceable only within the territorial
limits of the trial court, the mortgagor is left without remedy as to the properties located outside
the jurisdiction of the issuing court, unless an application for injunction is made with another
court which has jurisdiction over the latter properties.
By parity of reasoning, it would be unfair to hold respondents in the instant case guilty of forum
shopping because the recourse available to them after their termination, but pending resolution
of the inspection case before the DOLE, was to file a case for illegal dismissal before the Labor
Arbiter who has jurisdiction over termination disputes.
More importantly, substantial justice dictates that this case be resolved on the merits considering
that the NLRC and the Court of Appeals correctly found that there existed an employer-employee
relationship between petitioner and respondents and that the latters dismissal was illegal, as will
be discussed hereunder.

47
In the same vein, the NLRC correctly ruled on the merits instead of remanding the case to the
Labor Arbiter. Respondents specifically raised the issue of the existence of employer-employee
relationship but petitioner refused to submit evidence to disprove such relationship on the
erroneous contention that to do so would constitute a waiver of the right to question the
jurisdiction of the NLRC to resolve the case on the merits. 14 This is rather odd because it was the
stand of petitioner in the inspection case before the DOLE that the case should be certified to the
NLRC for the resolution of the issue of employer-employee relationship. But when the same issue
was proffered before the NLRC, it refused to present evidence and instead sought the dismissal
of the case invoking the pendency of the inspection case before the DOLE. Petitioner refused to
meet head on the substantial aspect of this controversy and resorted to technicalities to delay its
disposition. It must be stressed that labor tribunals are not bound by technical rules and the
Court would sustain the expedient disposition of cases so long as the parties are not denied due
process.15 The rule is that, due process is not violated where a person is given the opportunity to
be heard, but chooses not to give his or her side of the case. 16 Significantly, petitioner never
claimed that it was denied due process. Indeed, no such denial exists because it had all the
opportunities to present evidence before the labor tribunals below, the Court of Appeals, and
even before this Court, but chose not to do so for reasons which will not warrant the sacrifice of
substantial justice over technicalities.
On the third issue, respondents employment with petitioner passed the "four-fold test" on
employer-employee relations, namely: (1) the selection and engagement of the employee, or the
power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control
the employee.
Petitioner failed to controvert with substantial evidence the allegation of respondents that they
were hired by the former on various dates from 1974 to 1997. If petitioner did not hire
respondents and if it was the director alone who chose the talents, petitioner could have easily
shown, being in possession of the records, a contract to such effect. However, petitioner merely
relied on its contention that respondents were piece rate contractors who were paid by results. 17
Note that under Policy Instruction No. 40, petitioner is obliged to execute the necessary contract
specifying the nature of the work to be performed, rates of pay, and the programs in which they
will work. Moreover, project or contractual employees are required to be apprised of the project
they will undertake under a written contract. This was not complied with by the petitioner,
justifying the reasonable conclusion that no such contracts exist and that respondents were in
fact regular employees.
In ABS-CBN v. Marquez,18 the Court held that the failure of the employer to produce the contract
mandated by Policy Instruction No. 40 is indicative that the so called talents or project workers
are in reality, regular employees. Thus
Policy Instruction No. 40 pertinently provides:
Program employees are those whose skills, talents or services are engaged by the station for a
particular or specific program or undertaking and who are not required to observe normal
working hours such that on some days they work for less than eight (8) hours and on other days
beyond the normal work hours observed by station employees and are allowed to enter into
employment contracts with other persons, stations, advertising agencies or sponsoring
companies. The engagement of program employees, including those hired by advertising or
sponsoring companies, shall be under a written contract specifying, among other things, the
nature of the work to be performed, rates of pay, and the programs in which they will
work. The contract shall be duly registered by the station with the Broadcast Media
Council within three days from its consummation. (Emphasis supplied)
Ironically, however, petitioner failed to adduce an iota proof that the requirements for program
employment were even complied with by it. It is basic that project or contractual employees are
appraised of the project they will work under a written contract, specifying, inter alia, the nature
of work to be performed and the rates of pay and the program in which they will work. Sadly,
however, no such written contract was ever presented by the petitioner. Petitioner is in the best
of position to present these documents. And because none was presented, we have every reason
to surmise that no such written contract was ever accomplished by the parties, thereby belying
petitioners posture.

48
Worse, there was no showing of compliance with the requirement that after every engagement or
production of a particular television series, the required reports were filed with the proper
government agency, as provided no less under the very Policy Instruction invoked by the
petitioner, nor under the Omnibus Implementing Rules of the Labor Code for project employees.
This alone bolsters respondents contention that they were indeed petitioners regular employees
since their employment was not only for a particular program.
Moreover, the engagement of respondents for a period ranging from 2 to 25 years and the fact
that their drama programs were aired not only in Bacolod City but also in the sister stations of
DYWB in the Visayas and Mindanao areas, undoubtedly show that their work is necessary and
indispensable to the usual business or trade of petitioner. The test to determine whether
employment is regular or not is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer. Also, if the
employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not indispensability of that activity to the
business. Thus, even assuming that respondents were initially hired as project/contractual
employees who were paid per drama or per project/contract, the engagement of their services
for 2 to 25 years justify their classification as regular employees, their services being deemed
indispensable to the business of petitioner. 19
As to the payment of wages, it was petitioner who paid the same as shown by the payroll bearing
the name of petitioner company in the heading with the respective salaries of respondents
opposite their names. Anent the power of control, dismissal, and imposition of disciplinary
measures, which are indicative of an employer-employee relationship, 20 the same were duly
proven by the following: (1) memorandum21 duly noted by Wilfredo Alejaga, petitioners station
manager, calling the attention of the "Drama Department" to the late submission of scripts by
writers and the tardiness and absences of directors and talents, as well as the imposable fines of
P100 to P200 for future infractions; (2) the memorandum22 of the station manager directing
respondent Oberio to explain why no disciplinary action should be taken against him for
punching the time card of a certain Mrs. Fe Oberio who was not physically present in their office;
and (3) the station managers memorandum23 suspending respondent Oberio for six days for the
said infraction which constituted violation of petitioners network policy. All these, taken together,
unmistakably show the existence of an employer-employee relationship. Not only did petitioner
possess the power of control over their work but also the power to discipline them through the
imposition of fines and suspension for violation of company rules and policies.
Finally, we find that respondents were illegally dismissed. In labor cases, the employer has the
burden of proving that the dismissal was for a just cause; failure to show this would necessarily
mean that the dismissal was unjustified and, therefore, illegal. To allow an employer to dismiss
an employee based on mere allegations and generalities would place the employee at the mercy
of his employer; and the right to security of tenure, which this Court is bound to protect, would
be unduly emasculated.24 In this case, petitioner merely contended that it was respondents who
ceased to report to work, and never presented any substantial evidence to support said
allegation. Petitioner therefore failed to discharge its burden, hence, respondents were correctly
declared to have been illegally dismissed.
Furthermore, if doubts exist between the evidence presented by the employer and the employee,
the scales of justice must be tilted in favor of the latter the employer must affirmatively show
rationally adequate evidence that the dismissal was for a justifiable cause. It is a time-honored
rule that in controversies between a laborer and his master, doubts reasonably arising from the
evidence should be resolved in the formers favor. The policy is to extend the doctrine to a
greater number of employees who can avail of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and protection of labor. 25
When a person is illegally dismissed, he is entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages. In the event, however, that reinstatement is
no longer feasible, or if the employee decides not to be reinstated, the employer shall pay him
separation pay in lieu of reinstatement. Such a rule is likewise observed in the case of a strained
employer-employee relationship or when the work or position formerly held by the dismissed

49
employee no longer exists. In sum, an illegally dismissed employee is entitled to: (1) either
reinstatement if viable or separation pay if reinstatement is no longer viable, and (2) backwages.
In the instant controversy, reinstatement is no longer viable considering the strained relations
between petitioner and respondents. As admitted by the latter, the complaint filed before the
DOLE strained their relations with petitioner who eventually dismissed them from service.
Payment of separation pay instead of reinstatement would thus better promote the interest of
both parties.
Respondents separation pay should be computed based on their respective one (1) month pay,
or one-half (1/2) month pay for every year of service, whichever is higher, reckoned from their
first day of employment up to finality of this decision. Full backwages, on the other hand, should
be computed from the date of their dismissal until the finality of this decision. 26
WHEREFORE, the petition is DENIED. The July 30, 2004 Decision of the Court of Appeals in CAG.R. SP No. 77098, finding respondents to be regular employees of petitioner and holding them
to be illegally dismissed and directing petitioner to pay full backwages, is AFFIRMED with the
MODIFICATION that petitioner is ordered to pay respondents their separation pay instead of
effecting their reinstatement.
SO ORDERED.

50
G.R. No. 118463 December 15, 1997
PHILIPPINE AIRLINES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE AIRLINES EMPLOYEES
ASSOCIATION (PALEA), respondents.
NARVASA, C.J.:
This case goes back to February 23, 1979, when the Philippine Airlines, Inc. (PAL) and the union
representing its ground employees, the PAL Employees Association (PALEA), agreed in writing
that their current collective bargaining agreement (CBA) expiring on September 30, 1979
would be extended for another year, or until September 30, 1980. It was PAL which proposed the
extension, on the plea that it was in no position to enter into a new CBA because it had suffered
severe financial losses from devaluation, the fuel price increase, doubling of travel tax, etc.; 1
and PALEA consented to the extension apparently because PAL then undertook to conduct a Job
Evaluation Program (JEP) which would be the basis of a new pay scale to replace that negotiated
in 1977 2 and retroact to November 1, 1978. 3 The parties also agreed that a negotiating panel
consisting of six members (three from PAL and three from PALEA) would "see to it that in the
implementation of the . . program, internal equity in realignment of positions and responsibility
shall be achieved," and thresh out such problems as might arise in course of implementation. 4
PAL then drew up a pay scale which, being acceptable to PALEA, was immediately implemented.
Under it the employees were categorized as supervisory and non-supervisory. In turn, the nonsupervisory employees were classified into:
(1) Administrative Clerical;
(2) Marketing and Services; and
(3) Technical.
The supervisory employees were sub-classified into:
(1) Administrative and Clerical, and
(2) Technical.
The sub-classes were further divided into job grades each with a minimum and a maximum
salary rate.
Thereafter, a series of enactments increasing the minimum wage (and the mandatory emergency
living allowance) came into effect, 5 viz.:
1) PD 1614, promulgated on March 14, 1979, which increased the minimum
wage by P2;
2) PD 1713, promulgated on August 18, 1980, which increased the minimum
wage by P1.00;
3) PD 1751, promulgated on January 1, 1981, which integrated the
mandatory emergency living allowance into the basic monthly wage and
increased the minimum wage by P4; and
4) Wage Order No. 1, promulgated on March 26, 1981, which increased the
mandatory emergency living allowance of those having a monthly salary of
not more than P1,800, by P2.00 a day.
On May 14, 1981, the parties concluded negotiations for a new CBA covering the period from
October 1, 1980 to September 30, 1983. They agreed that: (1) there would be across-the-board
pay increases of P120 per month for the first year (effective October 1, 1980), none for the
second year, and P105 per month for the third year (effective October 1, 1982); and (2) "PAL
shall revise the present payscale to be effective 1 Oct 1982 and its implementation shall be
made after consultation with the union." 6 These terms were set out in the Minutes of the CBA
negotiations of May 14, 1981. The CBA was signed on May 18, 1981.
On October 18, 1982, PALEA president Mario Santos addressed a letter to PAL (through Ismael
Khan, PAL Vice-President on Human Resources) remonstrating that "after almost a month of its
supposed implementation and consultation with PALEA, PAL management has not made any
move or any action to inform the union of its position on the provisions of the PAL-PALEA CBA."
Khan replied that PAL was "now in the final process of pre-determining the cross section of
employees to be benefited by the revised payscale and the various salary administration policies

51
which need to be established in order to minimize if not totally eliminate possible pay
distortions." 7
On July 6, 1983, another Wage Order (No. 2) was issued increasing the minimum daily wage by
P1.00, and the daily living allowance of those with a monthly salary of less than P1,800.00. by
P1.50 a day. Khan then wrote to PALEA on August 8, 1983, advising that said Wage Order No. 2
was being implemented retroactive to July 1, 1983, that all employees were already properly
slotted under the new payscale, and that the updated pay scale would be sent under separate
cover. 8 And two days later, a copy of the implementing guidelines of the new pay scale was sent
to PALEA. 9
By letter dated August 29, 1983, PALEA sent its "Counter-Payscale" to PAL with the request that
the negotiating panel be convened. PALEA's position was that
. . (p)ursuant to the PAL-PALEA CBA, a new payscale should be effected on
October 1, 1982, the spirit and intent of which is to maintain the P135.00
difference between the minimum rate of the new Payscale and the minimum
rate as provided by law. The maintenance of the difference of the P135.00
between the minimum rates necessarily effect wage distortions in the new
Payscale, Necessarily, constants for step grades 1 to 10 and job grades 1 to
10 for non-supervisory personnel should likewise be maintained. The same
thing holds true for step grades 1 to 10 and job grades 1 to 5 for supervisory
level. 10
On November 7, 1983, still another Wage Order (No. 3) was issued, again increasing the
minimum daily wage by P1.00 and the daily living allowance under Wage Order No. 2 by P1.50
daily.
Having received no word from PAL regarding its "Counter Payscale" and request for immediate
convening of the negotiation panel to discuss the matter, PALEA filed a complaint with the NLRC,
dated December 29, 1983, 11 in which it accused PAL and VP Khan:
1) of unfair labor practice (ULP), in reneging on the obligation assumed on May 14, 1981 to
consult the union regarding implementation of the pay scale; and
2) of violating Wage Orders Nos. 2 and 3, in failing to cure the wage distortions as therein
mandated. 12
The case was, however, held in abeyance by agreement of the parties, for the reason that
negotiations were then going on for a new CBA to cover the period from 1983 to 1986.
At about this time, yet other Wage Orders were issued, Numbered 4 and 5. Wage Order No. 4,
released on May 1, 1984, increased the minimum daily wage of non-agricultural workers (like
PALEA members) by P11.00 a day, and integrated into their basic wage the mandatory
emergency living allowances under PDs 1614, 1634, 1678 and 1713. 13 The daily living
allowances thus integrated, amounted to P210 a month plus P2.00 a day under PD 1678. Wage
Order No. 5, issued on June 5, 1984, raised the minimum daily wage by P3.00 and the daily living
allowance, by P5.00 a day for those receiving a salary of P1,800 a month.
On September 14, 1984 PAL and PALEA executed a new CBA. 14 By it, PAL granted:
(1) across-the-board increases of P250 per month, effective October 1, 1983; P150 per month,
effective October 1, 1984; and P200 per month, effective October 1, 1985; as well as
(2) "seniority pay" in various amounts fixed according to length of service ranging from a
minimum of P25.00 for service of 5 years to P175,00 for service of 20 years and above
avowedly "to preserve the wage gap among its employees."
On November 1, 1984, another Wage Order, No. 6, came into effect, raising the minimum daily
wage in the non-agricultural sector by P2.00.
On April 15, 1985, the ULP case against PAL abated by the parties' agreement was resumed
on motion of PALEA. 15 which presented a supplemental complaint alleging additionally that PAL
had also violated Wage Orders Nos. 1, 4, 5 and 6, failed to furnish PALEA with information relative
to the new payscale, and "compounded the wage distortions which had accumulated." 16
In its position paper, PAL (1) denied violating its undertaking to consult the union, arguing that
the letters of VP Ismael Khan to the union clearly evinced efforts to comply therewith; (2) averred
that "there is no disparity or distortion in the wage structure or payscale:" and (3) stressed that
the salary increases in the new CBA between it and PALEA, covering 1983-1986, "effectively

52
removed and cured whatever wage distortions existed in the previous salary scale." 17 In a
supplemental pleading, PAL also adverted to the fact that the new CBA, "overwhelmingly ratified
by the rank and file employees," contained a reciprocal waiver proviso rendering moot the wage
distortion issue.
PAL further alleged that it granted PALEA "substantial benefits" consisting of:
(1) wage increases in line with the series of wage hikes imposed by law during the period of
negotiations, and
(2) seniority pay in various amounts fixed according to length of service, ranging from a
minimum of P25.00 for service of 5 years to P175.00 for 20 years and above; this, in order to
preserve the wage structure and "the wage gaps between the different job grades."
It drew attention, too, to the mutual waiver clause in the CBA of September 14, 1984, viz.:
The parties acknowledge that during the negotiations which resulted in this
Agreement, each had unlimited right and opportunity to make demands and
proposals with respect to any subject or matter not removed by the law from
the area of collective bargaining and that the understanding and agreements
arrived at by the parties after the exercise of that right and opportunity are
set forth in this Agreement, each voluntarily and unqualifiedly waives their
right and each agrees that the other shall not be obligated to bargain
collectively with respect to any subject or matter referred to or covered in
this Agreement, or with respect to any subject or matter not specifically
referred to or covered in this Agreement, even though such object or matter
may not have been within the knowledge or contemplation of either or both
parties at the time they negotiated or signed this Agreement.
In its reply dated September 24, 1985, PALEA controverted PAL's claims and arguments.
Labor Arbiter Teodorico Ruiz thereafter rendered an Order dated April 28, 1986, in which the
following conclusions were set forth, among others:
We do not agree to respondent's (PAL's) contention that the latest CBA cured
or corrected the matter of wage distortions . . . A perusal of the CBA reveals
that while Article V thereof was entitled "Pay Scale", the pay increases given
are of "normal" nature and retroacts to October 1, 1983 only. Respondents'
contention could have afforded us an iota of truth had the pay increase for
the first year been made retroactive to October 1, 1982. The provisions of the
13th month pay is but a restatement of the respondents' revised guidelines
presented to PALEA President, Mario Santos. Neither could it be said that the
minor change in the seniority pay increase can correct the wage distortions
claimed.
xxx xxx xxx
On the matter of waiver, this Office strongly believes that the attendant facts
of the case and the attendant circumstances of the CBA point to the fact that
the waiver does not include the instant case on wage distortion. Otherwise, it
should have been mentioned in the CBA owing to the fact that the CBA
negotiations was precisely the ground for which the proceedings of the
instant case had been held in abeyance. Equity also demands that when
there exists doubt the same should be resolved in favor of labor.
The Order closed with a dispositive portion reading:
WHEREFORE AND IN VIEW OF THE ABOVE FINDINGS, this office declares that
there exist a wage distortion and since the parties have evinced the desire to
seek a solution to this problem, they are hereby directed to seek a solution to
this problem, they are hereby directed to sit, within 5 days from receipt of
this Order and discuss the wage distortions brought about by Presidential
Decrees 1614, 1713, 1751, and 1123 and the Wage Order Nos. 1 to 6 as
claimed for in the complaint with the end in view of updating the payscale so
as to cure or correct distortions in the wages of the covered employees and
to apply the same effective October 1, 1982, pursuant to the respondent's
commitment during the CBA negotiations on May 14, 1981. Respondents are

53
further ordered to pay Attorney's fee to the complainant's counsel equivalent
to 10% of the amount involved. The office of the Socio Economic Analyst of
this office is also directed to proceed to the office of the respondent and
compute the wage distortion and the amount due to the members of the
complainant union.
On appeal, the National Labor Relations Commission affirmed the Labor Arbiter's decision in an
En Banc resolution promulgated on November 2, 1988. Noting, however, that "the dispositive
portion of the appealed order would likely cause some degree of uncertainty . . because the
dispositive portion is unclear as to which shall take precedence between the order to the parties
to 'sit down' and update the payscale in order to correct the wage distortions, vis-a-vis the order
to the Socio Economic Analyst of this Commission to 'proceed' to appellant's Office and compute
the amount due to each member of appellee union . . ," the NLRC revised said dispositive portion
to read:
WHEREFORE AND IN VIEW OF THE ABOVE FINDINGS, this Office
1. declares that there exists a wage distortion and since the parties have
evinced the desire to seek a solution to this problem, they are hereby
directed to sit, within five (5) days from the receipt of this Order, and discuss
the wage distortions brought about by Presidential Decrees 1614, 1713,
1751, and 1123 and the Wage Order Nos. 1 to 6 as claimed for in the
complaint with the end in view of updating the payscale so as to cure or
correct the distortions in the wages of the covered employees and apply the
same effective October 1, 1982, pursuant to respondent's commitment
during the CBA negotiations on May 14, 1981;
2. And thereafter, the Office of the Socio Economic Analyst of this
Commission is directed to proceed to the Office of the respondent and
compute the wage distortion and the amount due the members of the
complainant union.
3. Respondents are further ordered to pay attorney's fees to complainants'
counsel equivalent to ten percent (10%) of the amount involved.
PAL filed a motion for reconsideration dated November 21, 1988, in which it prayed that a new
order be issued to the effect
1. That PAL and PALEA be required to sit, within five (5) days from receipt of
the order, and to discuss:
a. The implementation of the revised payscale, to be made
effective October 1, 1982 to September 30, 1983;
b. The effect of Wage Order Nos. 2, 3, 5 and 6 on the
salary/wage structure of PAL vis-a-vis the employees within the
bargaining unit represented by PALEA;
and
2) That PAL shall cure or correct any wage distortion which may still exist
despite the 1983-86 CBA and the May 1, 1984 payscale by adopting a new
payscale effective January 1, 1989, without cost.
The motion was opposed by PALEA; and it was denied by the NLRC on September
30, 1994. Hence this petition for certiorari, dated January 16, 1995, through which
PAL prays for:
(1) nullification of the (a) NLRC resolution dated November 2, 1988, affirming the Labor Arbiter's
resolution of April 28, 1986, and (b) the Order dated September 30, 1994 just mentioned,
denying its motion for reconsideration; and
(2) dismissal of PALEA's complaint "for lack of merit."
By Resolution dated January 17, 1996, the Court gave due course to the petition and required the
parties to file memoranda, considering "that the relevant facts appear to have received an
incomplete and inadequate treatment in the parties' pleadings: . . their versions of the facts are
not entirely consistent with one another: . . (and there) also appears an inadequate discussion of
the question of how wage distortions should properly be corrected, in light of the procedures laid
down in the Wage Orders in question and such other legal provisions as are pertinent." PAL's

54
memorandum was filed on March 25, 1996; 18 that of PALEA, on May 2, 1996; 19 and that of the
Solicitor General in behalf of the NLRC, on May 7, 1996. 20
PAL rests its case in the special civil action of certiorari at bar on two propositions:
(1) The Labor Arbiter and the NLRC acted their jurisdiction in taking cognizance of an action for
correction of wage distortion.
(2) Even assuming their competence, they gravely abused their discretion in declaring the
existence of a wage distortion "when no such distortion exists."
Invoking the familiar doctrine that the nature of an action is determined not by its designation
but its allegations, PAL points out that while the complaint purports to charge PAL with unfair
labor practice, it actually prays for correction of wage distortions. This being so, the exclusive
mode prescribed by law for such correction in unionized establishments, is either (1) the
prescribed grievance machinery or negotiation between employer and union, and (2) voluntary
arbitration, in case the requisite correction cannot thereby be accomplished. This proposition, it
says, is clear from the implementing rules of the various relevant decrees and wage orders,
particularly Section 5, Chapter IV of the Rules Implementing Wage Order No. 2, which reads: 21
Sec. 5. Effects on Existing Wage Structures. Where the application of the
new minimum wage or allowance rates prescribed herein results in distortions
of the wage structures of an establishment, the employer and the union shall
negotiate to correct the distortions.
Any dispute arising from wage distortions shall be resolved through the
grievance procedure or by the voluntary arbitrator named by the parties in
their collective bargaining agreement, if the dispute is not settled in the
grievance machinery. . . .
PALEA disagrees. It contends that its complaint essentially accuses PAL of violating its duty to
bargain collectively because it implemented the new payscale without consulting it, and
refused to convene the negotiation panel to resolve their differences thereon and is thus really
one for unfair labor practice under Article 248 (g) of the Labor Code falling within the original and
exclusive jurisdiction of Labor Arbiters in accordance with Article 217 of the same Code. It also
theorizes that PAL is in estoppel to challenge the jurisdiction of the Labor Arbiter and the NLRC
since it "never questioned their jurisdiction in both the original and appellate proceedings . .
(and) even attended conciliation conferences with the end in view of amicably settling the case,"
it having "by its actions, . . willingly agreed to the arbitration by the NLRC."
The Solicitor General's Office also disagrees. In its comment dated June 28, 1995 it opines that
PAL is barred from raising the issue of jurisdiction of the subject matter "on ground of estoppel
when . . (it) affirmed and invoked . . (said jurisdiction) to secure an affirmative relief (Ocheda v.
CA., 214 SCRA 629; Pilipinas Shell Petroleum Corp. v. Dumlao, 206 SCRA 42);" and that, in any
case, PALEA's complaint "is basically a money claim" over which "the NLRC has validly acquired
jurisdiction." And in its Memorandum dated April 23, 1996, it argues that there are indeed wage
distortions since, taking account of the several increases in minimum wage imposed by law in
relation to the salary scales corresponding to the period of the wage increases, "if the increases
in the minimum daily wage are added to the minimum daily wage which was prevailing at the
time the increases were granted, the minimum daily wage would exceed the minimum pay in the
payscale attached . . as Annexes 'C' and 'D.'" It points out that the remedies to correct the wage
distortion are set out in Presidential Decrees Nos. 1614, 1713 and 1751, and Wage Orders Nos. 16, and closes with the recommendation that: "a) the resolution of the case be held in abeyance;
(b) in the meantime, the directive of the NLRC for the correction of the wage distortions be
implemented; (c) the NLRC be required to submit to the Court its report on the corrections of the
wage distortions; (d) and, thereafter, the private parties may ventilate their objections if any to
the NLRC report."
It is true that under said Article 217, the Labor Arbiters possess "original and exclusive
jurisdiction to hear and decide" inter alia: unfair labor practice cases, and money claims such as
those "involving wages, rates of pay, hours of work." However, important changes in the law
were effected by Republic Act No. 6715, which was published in the Official Gazette on March 6,
1989 and took effect fifteen (15) days thereafter, or on March 21, 1989. That Act explicitly
excepted from the Arbiters' competence, "(c)ases arising from the interpretation or

55
implementation of collective bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies (which) shall be disposed of by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as may be provided in
said agreements." This exclusionary proviso is reflected in Article 261 of the Labor Code, as
amended by said R.A. 6715, which treats of the original and exclusive "Jurisdiction of Voluntary
Arbitrators or panel of Voluntary Arbitrators," viz.:
Art. 261. . . The Voluntary Arbitrator shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining Agreement and
those arising from the interpretation or enforcement of company personnel
policies referred to in the immediately preceding article. Accordingly,
violations of a Collective Bargaining Agreement, except those which are gross
in character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining Agreement
shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive jurisdiction of the Voluntary
Arbitrators or panel of Voluntary Arbitrators and shall immediately dispose
and refer the same to the Grievance Machinery or Voluntary Arbitration
provided in the Collective Bargaining Agreement.
Thus, as of March 21, 1989, 23 violations of collective bargaining agreements were no longer
deemed unfair labor practices except those gross in character and were considered mere
grievances resolvable through the appropriate grievance machinery, or voluntary arbitration
provided in the CBA. Jurisdiction over such violations was withdrawn from the Labor Arbiters and
vested in the voluntary arbitrator, the former (including the Commission itself, its Regional
Offices, and the Regional Directors of the Department of Labor and Employment) being in fact
enjoined not to "entertain disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrators or panel of Voluntary Arbitrators and . . (instead)
immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration
provided in the Collective Bargaining Agreement."
PAL may not be regarded as precluded from impugning the jurisdiction of the Arbiter and the
Commission because, at the time that the proceedings were initiated before the former,
adjudged by him, and thereafter appealed to and resolved by the latter adversely to PAL, the law
amending their jurisdiction (R.A. 6715) had not come into effect. As already observed, 24 it was
only after PAL's motion for reconsideration of November 21, 1988 had been filed and was
awaiting resolution before the NLRC that said law became effective, on March 21, 1989. Under
the circumstances, no estoppel of the right to question jurisdiction can be ascribed to PAL.
Nor may the claim of breach of agreement on PAL'S part, assuming the claim to be valid, an
issue that the Court does not regard as needful of resolution, be considered as being of so gross
a character as to constitute an exception to the rule: i.e., that it should remain for adjudication
before the Labor Arbiter and not referred to a voluntary arbitration for determination.
This notwithstanding, and in view of the peculiar circumstances just mentioned, the Court is not
disposed to dismiss the proceeding at bar on the ground of want of jurisdiction of the subject
matter. The parties have extensively, even exhaustively, ventilated the issue of wage distortion
before the Labor Arbiter and respondent Commission: and so much time has already elapsed
since the initiation of the case before the Labor Arbiter. It would serve no useful purpose to have
the same evidence and arguments adduced anew before another arbitrator, this time a voluntary
one, considering particularly that the proceedings a quo were had for the most part before the
effectivity of R.A. 6715, and considering specially that there is agreement from virtually all sides
that PAL and PALEA meet and confer on the wage distortions in order to have them corrected
(with the intervention of the Socio-Economic Analyst of the NLRC), as well as a perceived
willingness on PAL's part to correct any wage distortions found to exist, 25 This appears to the

56
Court to be the most expedient option, as it is obvious that upon the relevant facts herein
narrated, PAL's insistence that the complaint against it be dismissed cannot be granted, and the
determination of the precise mode and configuration of wage distortions and the most feasible
process of their correction are factual matters requiring the expertise and experience of the NLRC
officials. 26
WHEREFORE, the instant petition for certiorari is DISMISSED and the questioned resolution of the
NLRC is hereby affirmed.
SO ORDERED.

57
G.R. No. 121948
October 8, 2001
PERPETUAL HELP CREDIT COOPERATIVE, INC., petitioner,
vs.
BENEDICTO FABURADA, SISINITA VILLAR, IMELDA TAMAYO, HAROLD CATIPAY, and the
NATIONAL LABOR RELATIONS COMMISSION, Fourth Division, Cebu City, respondents.
SANDOVAL-GUTIERREZ, J.:
On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda Tamayo and Harold Catipay,
private respondents, filed a complaint against the Perpetual Help Credit Cooperative, Inc.
(PHCCI), petitioner, with the Arbitration Branch, Department of Labor and Employment (DOLE),
Dumaguete City, for illegal dismissal, premium pay on holidays and rest days, separation pay,
wage differential, moral damages, and attorney's fees.
Forthwith, petitioner PHCCI filed a motion to dismiss the complaint on the ground that there is no
employer-employee relationship between them as private respondents are all members and coowners of the cooperative. Furthermore, private respondents have not exhausted the remedies
provided in the cooperative by-laws.
On September 3, 1990, petitioner filed a supplemental motion to dismiss alleging that Article 121
of R.A. No. 6939, otherwise known as the Cooperative Development Authority Law which took
effect on March 26, 1990, requires conciliation or mediation within the cooperative before a
resort to judicial proceeding.
On the same date, the Labor Arbiter denied petitioner's motion to dismiss, holding that the case
is impressed with employer-employee relationship and that the law on cooperatives is
subservient to the Labor Code.
On November 23, 1993, the Labor Arbiter rendered a decision, the dispositive portion of which
reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring
complainants illegally dismissed, thus respondent is directed to pay Complainants
backwages computed from the time they were illegally dismissed up to the actual
reinstatement but subject to the three year backwages rule, separation pay for one
month for every year of service since reinstatement is evidently not feasible
anymore, to pay complainants 13th month pay, wage differentials and Ten Percent
(10%) attorney's fees from the aggregate monetary award. However, complainant
Benedicto Faburada shall only be awarded what are due him in proportion to the
nine and a half months that he had served the respondent, he being a part-time
employee. All other claims are hereby dismissed for lack of merit.
The computation of the foregoing awards is hereto attached and forms an integral
part of this decision."
On appeal,1 the NLRC affirmed the Labor Arbiter's decision.
Hence, this petition by the PHCCI.
The issue for our resolution is whether or not respondent judge committed grave abuse of
discretion in ruling that there is an employer-employee relationship between the parties and that
private respondents were illegally dismissed.
Petitioner PHCCI contends that private respondents are its members and are working for it as
volunteers. Not being regular employees, they cannot sue petitioner.
In determining the existence of an employer-employee relationship, the following elements are
considered: (1 ) the selection and engagement of the worker or the power to hire; (2) the power
to dismiss; (3) the payment of wages by whatever means; and (4) the power to control the
worker's conduct, with the latter assuming primacy in the overall consideration. No particular
form of proof is required to prove the existence of an employer-employee relationship. Any
competent and relevant evidence may show the relationship. 2
The above elements are present here. Petitioner PHCCI, through Mr. Edilberto Lantaca, Jr., its
Manager, hired private respondents to work for it. They worked regularly on regular working
hours, were assigned specific duties, were paid regular wages and made to accomplish daily time
records just like any other regular employee. They worked under the supervision of the
cooperative manager. But unfortunately, they were dismissed.

58
That an employer-employee exists between the parties is shown by the averments of private
respondents in their respective affidavits, carefully considered by respondent NLRC in affirming
the Labor Arbiter's decision, thus:
Benedicto Faburada Regular part-time Computer programmer/ operator. Worked
with the Cooperative since June 1, 1988 up to December 29, 1989. Work schedule:
Tuesdays and Thursdays, from 1:00 p.m. to 5:30 p.m. and every Saturday from 8:00
to 11:30 a.m. and 1:00 to 4:00 p.m. and for at least three (3) hours during Sundays.
Monthly salary: P1,000.00 from June to December 1988; P1,350.00 - from January
to June 1989; and P1,500.00 from July to December 1989. Duties: Among others,
Enter data into the computer; compute interests on savings deposits, effect
mortuary deductions and dividends on fixed deposits; maintain the masterlist of the
cooperative members; perform various forms for mimeographing; and perform such
other duties as may be assigned from time to time.
Sisinita Vilar Clerk. Worked with the Cooperative since December 1, 1987 up to
December 29, 1989. Work schedule: Regular working hours. Monthly salary:
P500.00 from December 1, 1987 to December 31, 1988; P1,000.00 from
January 1, 1989 to June 30, 1989; and P1,150.00 from July 1, 1989 to December
31, 1989. Duties: Among others, Prepare summary of salary advances, journal
vouchers, daily summary of disbursements to respective classifications; schedule
loans; prepare checks and cash vouchers for regular and emergency loans;
reconcile bank statements to the daily summary of disbursements; post the monthly
balance of fixed and savings deposits in preparation for the computation of
interests, dividends, mortuary and patronage funds; disburse checks during regular
and emergency loans; and perform such other bookkeeping and accounting duties
as may be assigned to her from time to time.
Imelda C. Tamayo Clerk. Worked with the Cooperative since October 19, 1987 up
to December 29, 1989. Work schedule: Monday to Friday - 8:00 to 11:30 a.m and
2:00 to 5:30 p.m.; every Saturday 8:00 to 11:30 a.m and 1:00 to 4:00 p.m; and
for one Sunday each month - for at least three (3) hours. Monthly salary: P60.00
from October to November 1987; P250.00 for December 1987; P500.00 from
January to December 1988; P950 from January to June 1989; and P1,000.00 from
July to December 1989. Duties: Among others, pick up balances for the computation
of interests on savings deposit, mortuary, dividends and patronage funds; prepare
cash vouchers; check petty cash vouchers; take charge of the preparation of new
passbooks and ledgers for new applicants; fill up members logbook of regular
depositors, junior depositors and special accounts; take charge of loan releases
every Monday morning; assist in the posting and preparation of deposit slips;
receive deposits from members; and perform such other bookkeeping and
accounting duties as may be assigned her from time to time.
Harold D. Catipay Clerk. Worked with the Cooperative since March 3 to December
29, 1989. Work schedule: Monday to Friday 8:00 to 11:30 a.m. and 2:00 to
5:30 p.m.; Saturday 8:00 to 11:30 a.m. and 1:00 to 4:00 p.m.; and one Sunday
each month for at least three (3) hours. Monthly salary: P900.00 from March to
June 1989; P1,050.00 - from July to December 1989. Duties: Among others,
Bookkeeping, accounting and collecting duties, such as, post daily collections from
the two (2) collectors in the market; reconcile passbooks and ledgers of members in
the market; and assist the other clerks in their duties.
All of them were given a memorandum of termination on January 2, 1990, effective
December 29, 1989.
We are not prepared to disregard the findings of both the Labor Arbiter and respondent NLRC, the
same being supported by substantial evidence, that quantum of evidence required in quasi
judicial proceedings, like this one.
Necessarily, this leads us to the issue of whether or not private respondents are regular
employees. Article 280 of the Labor Code provides for three kinds of employees: (1) regular
employees or those who have been engaged to perform activities which are usually necessary or

59
desirable in the usual business or trade of the employer; (2) project employees or those whose
employment has been fixed for a specific project or undertaking, the completion or termination
of which has been determined at the time of the engagement of the employee or where the work
or service to be performed is seasonal in nature and the employment is for the duration of the
season; and (3) casual employees or those who are neither regular nor project employees. 3 The
employees who are deemed regular are: (a) those who have been engaged to perform activities
which are usually necessary or desirable in the usual trade or business of the employer; and (b)
those casual employees who have rendered at least one (1 ) year of service, whether such
service is continuous or broken, with respect to the activity in which they are employed. 4
Undeniably, private respondents were rendering services necessary to the day-to-day operations
of petitioner PHCCI. This fact alone qualified them as regular employees.
All of them, except Harold D. Catipay, worked with petitioner for more than one (1) year:
Benedicto Faburada, for one and a half (1 1/2) years; Sisinita Vilar, for two (2) years; and Imelda
C. Tamayo, for two (2) years and two (2) months. That Benedicto Faburada worked only on a
part-time basis, does not mean that he is not a regular employee. One's regularity of
employment is not determined by the number of hours one works but by the nature and by the
length of time one has been in that particular job. 5 Petitioner's contention that private
respondents are mere volunteer workers, not regular employees, must necessarily fail. Its
invocation of San Jose City Electric Cooperative vs. Ministry of Labor and Employment (173 SCRA
697, 703 (1989) is misplaced. The issue in this case is whether or not the employees-members of
a cooperative can organize themselves for purposes of collective bargaining, not whether or not
the members can be employees. Petitioner missed the point
As regular employees or workers, private respondents are entitled to security of tenure. Thus,
their services may be terminated only for a valid cause, with observance of due process.
The valid causes are categorized into two groups: the just causes under Articles 282 of the Labor
Code and the authorized causes under Articles 283 and 284 of the same Code. The just causes
are: (1) serious misconduct or willful disobedience of lawful orders in connection with the
employee's work; (2) gross or habitual neglect of duties; (3) fraud or willful breach of trust; (4)
commission of a crime or an offense against the person of the employer or his immediate family
member or representative; and, analogous cases. The authorized causes are: (1) the installation
of labor-saving devices; (2) redundancy; (3) retrenchment to prevent losses; and (4) closing or
cessation of operations of the establishment or undertaking, unless the closing is for the purpose
of circumventing the provisions of law. Article 284 provides that an employer would be
authorized to terminate the services of an employee found to be suffering from any disease if the
employee's continued employment is prohibited by law or is prejudicial to his health or to the
health of his fellow employees6
Private respondents were dismissed not for any of the above causes. They were dismissed
because petitioner considered them to be mere voluntary workers, being its members, and as
such work at its pleasure. Petitioner thus vehemently insists that their dismissal is not against
the law.
Procedural due process requires that the employer serve the employees to be dismissed two (2)
written notices before the termination of their employment is effected: (a) the first, to apprise
them of the particular acts or omissions for which their dismissal is sought and (b) the second, to
inform them of the decision of the employer that they are being dismissed. 7 In this case, only one
notice was served upon private respondents by petitioner. It was in the form of a Memorandum
signed by the Manager of the Cooperative dated January 2, 1990 terminating their services
effective December 29, 1989. Clearly, petitioner failed to comply with the twin requisites of a
valid notice.
We hold that private respondents have been illegally dismissed.
Petitioner contends that the labor arbiter has no jurisdiction to take cognizance of the complaint
of private respondents considering that they failed to submit their dispute to the grievance
machinery as required by P.D. 175 (strengthening the Cooperative Movement) 8 and its
implementing rules and regulations under LOI 23. Likewise, the Cooperative Development
Authority did not issue a Certificate of Non-Resolution pursuant to Section 8 of R.A. 6939 or the
Cooperative Development Authority Law.

60
As aptly stated by the Solicitor General in his comment, P.D. 175 does not provide for a grievance
machinery where a dispute or claim may first be submitted. LOI 23 refers to instructions to the
Secretary of Public Works and Communications to implement immediately the recommendation
of the Postmaster General for the dismissal of some employees of the Bureau of Post. Obviously,
this LOI has no relevance to the instant case.
Article 121 of Republic Act No. 6938 (Cooperative Code of the Philippines) provides the procedure
how cooperative disputes are to be resolved, thus:
ART. 121. Settlement of Disputes. Disputes among members, officers, directors,
and committee members, and intra-cooperative disputes shall, as far as practicable,
be settled amicably in accordance with the conciliation or mediation mechanisms
embodied in the by-laws of the cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the matter shall be settled in a
court of competent jurisdiction."
Complementing this Article is Section8 of R.A. No. 6939 (Cooperative Development Authority Law)
which reads:
SEC. 8 Mediation and Conciliation. Upon request of either or both parties, the
Authority shall mediate and conciliate disputes within a cooperative or between
cooperatives: Provided, That if no mediation or conciliation succeeds within three
(3) months from request thereof, a certificate of non-resolution shall be issued by
the Commission prior to the filing of appropriate action before the proper courts.
The above provisions apply to members, officers and directors of the cooperative involved in
disputes within a cooperative or between cooperatives.
There is no evidence that private respondents are members of petitioner PHCCI and even if they
are, the dispute is about payment of wages, overtime pay, rest day and termination of
employment. Under Art. 217 of the Labor Code, these disputes are within the original and
exclusive jurisdiction of the Labor Arbiter.
As illegally dismissed employees, private respondents are therefore entitled to reinstatement
without loss of seniority rights and other privileges and to full backwages, inclusive of
allowances, plus other benefits or their monetary equivalent computed from the time their
compensation was withheld from them up to the time of their actual reinstatement. 9 Since they
were dismissed after March 21, 1989, the effectivity date of R.A. 6715 10 they are granted full
backwages, meaning, without deducting from their backwages the earnings derived by them
elsewhere during the period of their illegal dismissal. 11 If reinstatement is no longer feasible, as
when the relationship between petitioner and private respondents has become strained,
payment of their separation pay in lieu of reinstatement is in order. 12
WHEREFORE, the petition is hereby DENIED. The decision of respondent NLRC is AFFIRMED, with
modification in the sense that the backwages due private respondents shall be paid in full,
computed from the time they were illegally dismissed up to the time of the finality of this
Decision.13
SO ORDERED.

61
G.R. No. 154376 September 30, 2005
ROBERTO T. DOMONDON, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, VAN MELLE PHILS., INC. and NIELS H.B.
HAVE, Respondent.
DECISION
PUNO, J.:
This is a petition for review on certiorari seeking the reversal of the February 28, 2002 Decision 1
of the Court of Appeals in CA-G.R. SP No. 65130 and its July 17, 2002 Resolution, 2 denying
petitioners motion for reconsideration. The assailed Decision affirmed the rulings of the National
Labor Relations Commission (NLRC) and the Labor Arbiter, which held that petitioner was not
illegally dismissed but voluntarily resigned.
On November 20, 1998, petitioner Roberto T. Domondon filed a complaint before the Regional
Arbitration Branch of the NLRC, Quezon City, against private respondent Van Melle Phils., Inc.
(VMPI) and its President and General Manager, private respondent Niels H.B. Have. He claimed
illegal dismissal and prayed for reinstatement, payment of full backwages inclusive of
allowances, 14th month pay, sick and vacation leaves, share in the profits, moral and exemplary
damages and attorneys fees.3
Petitioner alleged that on January 8, 1997, private respondent VMPI, a manufacturing company
engaged in the production and distribution of confectionaries and related products, hired him as
Materials Manager through its then President and General Manager Victor M. Endaya. He was
tasked to supervise the Inventory Control, Purchasing, and Warehouse and Distribution Sections
of the company. He was given a guaranteed monthly salary of ninety-eight thousand
(P98,000.00) pesos for fourteen (14) months with annual merit adjustment, profit sharing bonus
from 0-2 months based on individual, company and corporate performance, 4 and a brand new
1600cc Honda VTEC5 with 300 liters monthly gas allowance. 6
Petitioner claimed that things worked out well for him in the beginning until Endaya was
transferred to China in August 1997 and was replaced by private respondent Have, a Dutch
national. According to petitioner, private respondent Have immediately set a one-on-one meeting
with him and requested his courtesy resignation. Alleging that the decision came from the Asia
Regional Office, private respondent Have wanted to reorganize and put his people in
management. Petitioner refused to resign and life got difficult for him. His decisions were always
questioned by private respondent Have. He was subjected to verbal abuse. His competence was
undermined by baseless and derogatory memos, which lay the bases for his removal from the
company. He also did not receive his 14th month pay. 7
Petitioner further stated that the final straw came on June 10, 1998, in another one-on-one
meeting with private respondent Have. Private respondent Have informed petitioner that things
would get more difficult for him if he does not resign. Private respondent Have threw a veiled
threat at petitioner to the effect that "a dignified resignation would be infinitely better than being
fired for a fabricated lawful cause." Private respondent Have offered financial assistance if
petitioner would leave peacefully but the offer must be accepted immediately or it would be
withdrawn. Thus, petitioner signed a "ready-made" resignation letter without deliberation and
evaluation of the consequences. His main concern then was to prevent the "end of his
professional career."8
Petitioner stated that on the same day that he handed in his resignation letter, private
respondent VMPI posted a memorandum with information of his replacement. He claimed that to
lend a semblance of credibility to his forced resignation, private respondents released to him a
portion of the offered financial package.9
On their part, private respondents admitted hiring petitioner under the circumstances set forth
by him but denied illegally dismissing him. They maintained that with his educational and
professional background, petitioner could not have been coerced and intimidated into resigning
from the company. Instead, they claimed that he voluntarily resigned "to embark on
management consultancy in the field of strategic planning and import/export." 10 They stated that
petitioner informed them about his intention to resign and requested a "soft landing" financial
support in the amount of three hundred thousand (P300,000.00) pesos on top of accrued

62
benefits due him upon resignation. Private respondents granted the request. Subsequently,
however, petitioner proposed the transfer of ownership of the car assigned to him in lieu of the
financial assistance from the company. Since company policy prohibits disposition of assets
without valuable consideration, the parties agreed that petitioner shall pay for the car with the
P300,000.00 "soft landing" financial assistance from private respondent VMPI.
Private respondents averred that petitioner, who was then in charge of the disposition of the
assets of the company, effected the registration of the car in his name. 11 Joannes Cornelis Kuiten,
then Vice-President for Finance, signed for the company. 12 On July 30, 1998, P300,000.00 was
credited to petitioners payroll account13 but he did not use it to pay for the car as agreed upon.
Repeated demands for payment were unheeded. In its letter of demand dated October 28, 1998,
private respondent VMPI gave petitioner an option to apply the P169,368.32 total cash
conversion of his sick and vacation leave credits, 13th and 14th months pay less taxes as partial
payment for the car and pay the balance of P130,631.68, or return the car to the company.14
Petitioner did not exercise either option. Instead, on November 20, 1998, he filed a complaint for
illegal dismissal against private respondents.
On June 14, 1999, the Labor Arbiter15 ruled for private respondents, viz:
WHEREFORE, premises considered, the complaint for illegal dismissal is hereby dismissed for
lack of merit, and the claim for damages and attorneys fees denied.
The complainant has the option to reconvey to respondents the car sold to him and thus retain
full credit of the P300,000.00 "soft landing" assistance, or retain ownership of the car by paying
respondents the purchase price of P300,000.00 minus any amount due him corresponding to his
accrued benefits that has been applied by respondents as partial payment for the car.
The NLRC affirmed the Decision of the Labor Arbiter 16 on January 26, 2001 and denied
petitioners motion for reconsideration on March 5, 2001. Petitioner went to the Court of Appeals
on a special civil action for certiorari but failed for the third time. The appellate court dismissed
the petition on February 28, 2002 and denied petitioners motion for reconsideration on July 17,
2002; hence, this petition for review on certiorari.
Petitioner raises as error the failure of the appellate court to apply the rule in termination of
employment that the burden rests upon the employer to prove by substantial evidence that the
employee was removed for lawful or authorized cause. He also questions the jurisdiction of the
Labor Arbiter to resolve the issue of the transfer of car-ownership by private respondents.
I.
The first issue raises factual matters which may not be reviewed by the Court. Our jurisdiction is
limited to reviewing errors of law. Not being a trier of facts, the Court cannot re-examine and reevaluate the probative value of evidence presented to the Labor Arbiter, the NLRC and the Court
of Appeals, which formed the basis of the questioned decision and resolution. 17 Indeed, their
findings when in absolute agreement are accorded not only respect but even finality as long as
they are supported by substantial evidence. 18
In any event, we combed the records of the case at bar and found no compelling reason to
disturb the uniform findings and conclusions of the Court of Appeals, the NLRC and the Labor
Arbiter. There was no arbitrary disregard or misapprehension of evidence of such nature as to
compel a contrary conclusion if properly appreciated. Petitioners letter of
resignation, his educational attainment, and the circumstances antecedent and
contemporaneous to the filing of the complaint for illegal dismissal are substantial
proof of petitioners voluntary resignation.
Petitioners letter of resignation was categorical that he was resigning "to embark on
management consultancy in the field of strategic planning and import/export." 19 Petitioner was
holding a managerial position at private respondent VMPI and he was previously Vice-President
for strategic planning at LG Collins Electronics. Thus, "management consultancy in the field of
strategic planning" was a logical reason for the resignation, which either petitioner or private
respondents may provide.
"Import/export," whether inclusive or exclusive of the clause "managerial consultancy," on the
other hand, could neither be inferred from petitioners nature of work with private respondent
VMPI nor from his past work experiences. Thus, even if petitioner was correct in arguing that he

63
could not have considered it given the state of the countrys economy, anyone may provide it as
reason for the resignation, including him and private respondents.
But assuming that private respondents prepared the letter of resignation for petitioner to sign as
claimed, the Court is not convinced that petitioner was coerced and intimidated into signing it.
Petitioner is no ordinary employee with limited education. He has a Bachelor of Arts Degree in
Economics from the University of Santo Tomas, has completed academic requirements for
Masters of Business Economics from the University of Asia and the Pacific, and studied law for
two (2) years at Adamson University. He also has a good professional record, which highlights his
marketability. Thus, his reliance on the case of Molave Tours Corporation v. NLRC,20 where the
employee found to have been forced to resign was a mere garage custodian, is clearly
misplaced.
In termination cases, the employer decides for the employee. It is different in resignation cases
for resignation is a formal pronouncement of relinquishment of an office. It is made with the
intention of relinquishing the office accompanied by an act of relinquishment. 21 In the instant
case, petitioner relinquished his position when he submitted his letter of resignation. His
subsequent act of receiving and keeping his requested "soft landing" financial assistance of
P300,000.00, and his retention and use of the car subject of his arrangement with private
respondents showed his resolve to relinquish his post.
Thus, we affirm the findings of the Labor Arbiter, the NLRC and the Court of Appeals that private
respondents were able to prove through substantial evidence that petitioner was not illegally
dismissed.22
II.
The next issue involves the jurisdiction of the Labor Arbiter to hear and decide the question on
the transfer of ownership of the car assigned to petitioner. He contends that it is the regular
courts that have jurisdiction over the question and not the Labor Arbiter.
This is not an issue of first impression. The jurisdiction of Labor Arbiters is provided under Article
217(a) of the Labor Code, as amended, viz:
(a) Except as otherwise provided under this Code the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employeremployee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits,
all other claims, arising from employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for reinstatement.
In all these instances, the matrix is the existence of an employer-employee relationship. In the
case at bar, there is no dispute that petitioner is an employee of the respondents. In Baez v.
Valdevilla,23 we held:
x x x Presently, and as amended by R.A. 6715, the jurisdiction of Labor Arbiters and the NLRC in
Article 217 is comprehensive enough to include claims for all forms of damages "arising from the
employer-employee relations."
Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article
217 to claims of damages filed by employees,24 we hold that by the designating clause "arising
from the employer-employee relations" Article 217 should apply with equal force to the claim of
an employer for actual damages against its dismissed employee, where the basis for the claim
arises from or is necessarily connected with the fact of termination, and should be entered
as a counterclaim in the illegal dismissal case.

64
Baez is in accord with paragraph 6 of Article 217(a), which covers "all other claims, arising from
employer-employee relations," viz:
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits,
all other claims, arising from employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for reinstatement.
In the case at bar, petitioner claims illegal dismissal and prays for reinstatement, payment of full
backwages inclusive of allowances, 14th month pay, sick and vacation leaves, share in the
profits, moral and exemplary damages and attorneys fees. 25 These causes of action clearly fall
within the jurisdiction of the Labor Arbiter, specifically under paragraphs 2,
3 and 4 of Article 217(a). On the other hand, private respondents made a counterclaim involving
the transfer of ownership of a company car to petitioner. They maintain that he failed to pay for
the car in accordance with their agreement. The issue is whether this claim of private
respondents arose from the employer-employee relationship of the parties pursuant to paragraph
6 of Article 217(a) under the general clause as quoted above.
The records show that the initial agreement of the parties was that petitioner would be extended
a "soft-landing" financial assistance in the amount of P300,000.00 on top of his accrued benefits
at the time of the effectivity of his resignation. However, petitioner later changed his mind. He
requested that he be allowed to keep the car assigned to him in lieu of the financial assistance.
However, company policy prohibits transfer of ownership of property without valuable
consideration. Thus, the parties agreed that petitioner shall still be extended the P300,000.00
financial support, which he shall use to pay for the subject car. On July 30, 1998, private
respondent VMPI deposited the agreed amount in petitioners account. 26 Despite having
registered the car in his name and repeated demands from private respondents, petitioner failed
to pay for it as agreed upon. Petitioner did not also return the car. Without doubt, the transfer of
the ownership of the company car to petitioner is connected with his resignation and arose out of
the parties employer-employee relations. Accordingly, private respondents claim for damages
falls within the jurisdiction of the Labor Arbiter.
III.
Petitioner was not illegally dismissed but voluntarily resigned. His claims for reinstatement,
payment of full backwages inclusive of allowances, moral and exemplary damages and
attorneys fees must necessarily fail. However, he is entitled to his 14th month pay, cash
conversion of accrued sick and vacation leaves and profit share in the aggregate amount of
P169,368.32, the total of which is not disputed. The amount shall be applied to his obligation to
pay P300,000.00 for the company car, which ownership was transferred to him. The return of the
company car to private respondents, given the period that has lapsed from the offer, ceased to
be an option open to petitioner.
IN VIEW WHEREOF, the decision of the Court of Appeals is AFFIRMED with MODIFICATION.
Petitioner Roberto T. Domondon is ORDERED to pay private respondent Van Melle Phils., Inc. the
amount of P130,631.68, representing the balance of the purchase price of the car in his custody
after deducting his entitlement to 14th month pay, cash conversion of accrued sick and vacation
leaves and profit share in the total amount of P169,368.32 from the P300,000.00 "soft-landing"
financial assistance he received from private respondent.
SO ORDERED.

65
G.R. No. 198357
December 10, 2012
BUILDING CARE CORPORATION / LEOPARD SECURITY & INVESTIGATION AGENCY and/or
RUPERTO PROTACIO, Petitioners,
vs.
MYRNA MACARAEG, Respondent.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying
that the Decision1 of the Court of Appeals (CA) promulgated on March 24, 2011, and its
Resolution2 dated August 19, 2011, denying petitioner's Motion for Reconsideration be reversed
and set aside.
Petitioners are in the business of providing security services to their clients. They hired
respondent as a security guard beginning August 25, 1996, assigning her at Genato Building in
Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She was reassigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she was allegedly
no longer given any assignment. Thus, on September 9, 2008, respondent filed a complaint
against petitioners for illegal dismissal, underpayment of salaries, non-payment of separation
pay and refund of cash bond. Conciliation and mediation proceedings failed, so the parties were
ordered to submit their respective position papers. 3
Respondent claimed that petitioners failed to give her an assignment for more than nine months,
amounting to constructive dismissal, and this compelled her to file the complaint for illegal
dismissal.4
On the other hand, petitioners alleged in their position paper that respondent was relieved from
her post as requested by the client because of her habitual tardiness, persistent borrowing of
money from employees and tenants of the client, and sleeping on the job. Petitioners allegedly
directed respondent to explain why she committed such infractions, but respondent failed to
heed such order. Respondent was nevertheless temporarily assigned to Bayview Park Hotel from
March 9-13, 2008, but she also failed to meet said client's standards and her posting thereat was
not extended.5
Respondent then filed an administrative complaint for illegal dismissal with the PNP-Security
Agencies and Guard Supervision Division on June 18, 2008, but she did not attend the conference
hearings for said case. Petitioners brought to the conference hearings a new assignment order
detailing respondent at the Ateneo de Manila University but, due to her absence, petitioners
failed to personally serve respondent said assignment order. Petitioners then sent respondent a
letter ordering her to report to headquarters for work assignment, but respondent did not comply
with said order. Instead, respondent filed a complaint for illegal dismissal with the Labor Arbiter. 6
On May 13, 2009, the Labor Arbiter rendered a Decision, the dispositive portion of which reads as
follows:
WHEREFORE, judgment is hereby made dismissing the charge of illegal dismissal as wanting in
merit but, as explained above, ordering the Respondents Leopard Security and Investigation
Agency and Rupert Protacio to pay complainant a financial assistance in the amount of
P5,000.00.
Other claims are DISMISSED for lack of merit.
SO ORDERED.7
Respondent then filed a Notice of Appeal with the National Labor Relations Commission (NLRC),
but in a Decision dated October 23, 2009, the NLRC dismissed the appeal for having been filed
out of time, thereby declaring that the Labor Arbiter's Decision had become final and executory
on June 16, 2009.8
Respondent elevated the case to the CA via a petition for certiorari, and on March 24, 2011, the
CA promulgated its Decision, the dispositive portion of which reads as follows:
WHEREFORE, the petition for certiorari is GRANTED. The Decision dated October 23, 2009 and
Resolution dated March 2, 2010 rendered by public respondent in NLRC LAC No. 07-001892-09
(NLRC Case No. NCR-09-12628-08) are REVERSED and SET ASIDE, and in lieu thereof, a new
judgment is ENTERED declaring petitioner to have been illegally dismissed and DIRECTING
private respondents to reinstate petitioner without loss of seniority rights, benefits and

66
privileges; and to pay her backwages and other monetary benefits during the period of her illegal
dismissal up to actual reinstatement.
Public respondent NLRC is DIRECTED to conduct further proceedings, for the sole purpose of
determining the amount of private respondent's monetary liabilities in accordance with this
decision.
SO ORDERED.9
Petitioners' motion for reconsideration of the aforequoted Decision was denied per Resolution
dated August 19, 2011. Hence, the present petition, where the main issue for resolution is
whether the CA erred in liberally applying the rules of procedure and ruling that respondent's
appeal should be allowed and resolved on the merits despite having been filed out of time.
The Court cannot sustain the CA's Decision.
It should be emphasized that the resort to a liberal application, or suspension of the application
of procedural rules, must remain as the exception to the well-settled principle that rules must be
complied with for the orderly administration of justice. In Marohomsalic v. Cole, 10 the Court
stated:
While procedural rules may be relaxed in the interest of justice, it is well-settled that these are
tools designed to facilitate the adjudication of cases. The relaxation of procedural rules in the
interest of justice was never intended to be a license for erring litigants to violate the rules with
impunity. Liberality in the interpretation and application of the rules can be invoked only in
proper cases and under justifiable causes and circumstances. While litigation is not a game of
technicalities, every case must be prosecuted in accordance with the prescribed procedure to
ensure an orderly and speedy administration of justice. 11
The later case of Daikoku Electronics Phils., Inc. v. Raza, 12 further explained that:
To be sure, the relaxation of procedural rules cannot be made without any valid reasons proffered
for or underpinning it. To merit liberality, petitioner must show reasonable cause justifying its
non-compliance with the rules and must convince the Court that the outright dismissal of the
petition would defeat the administration of substantial justice. x x x The desired leniency cannot
be accorded absent valid and compelling reasons for such a procedural lapse. x x x
We must stress that the bare invocation of "the interest of substantial justice" line is not some
magic want that will automatically compel this Court to suspend procedural rules. Procedural
rules are not to be belittled, let alone dismissed simply because their non-observance may have
resulted in prejudice to a party's substantial rights. Utter disregard of the rules cannot be justly
rationalized by harping on the policy of liberal construction. 13
In this case, the justifications given by the CA for its liberality by choosing to overlook the
belated filing of the appeal are, the importance of the issue raised, i.e., whether respondent was
illegally dismissed; and the belief that respondent should be "afforded the amplest opportunity
for the proper and just determination of his cause, free from the constraints of technicalities," 14
considering that the belated filing of respondent's appeal before the NLRC was the fault of
respondent's former counsel. Note, however, that neither respondent nor her former counsel
gave any explanation or reason citing extraordinary circumstances for her lawyer's failure to
abide by the rules for filing an appeal. Respondent merely insisted that she had not been remiss
in following up her case with said lawyer.
It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the client.
A departure from this rule would bring about never-ending suits, so long as lawyers could allege
their own fault or negligence to support the clients case and obtain remedies and reliefs already
lost by the operation of law.15 The only exception would be, where the lawyer's gross negligence
would result in the grave injustice of depriving his client of the due process of law. 16 In this case,
there was no such deprivation of due process. Respondent was able to fully present and argue
her case before the Labor Arbiter. She was accorded the opportunity to be heard. Her failure to
appeal the Labor Arbiter's Decision cannot, therefore, be deemed as a deprivation of her right to
due process. In Heirs of Teofilo Gaudiano v. Benemerito, 17 the Court ruled, thus:
The perfection of an appeal within the period and in the manner prescribed by law is
jurisdictional and non-compliance with such legal requirements is fatal and has the effect of
rendering the judgment final and executory. The limitation on the period of appeal is not without
reason. They must be strictly followed as they are considered indispensable to forestall or avoid

67
unreasonable delays in the administration of justice, to ensure an orderly discharge of judicial
business, and to put an end to controversies. x x x
xxxx
The right to appeal is not a natural right or part of due process; it is merely a statutory privilege
and may be exercised only in the manner and in accordance with the provisions of law. Thus, one
who seeks to avail of the right to appeal must strictly comply with the requirements of the rules,
and failure to do so leads to the loss of the right to appeal." 18
In Ocampo v. Court of Appeals (Former Second Division), 19 the Court declared that:
x x x we cannot condone the practice of parties who, either by their own or their counsel's
inadvertence, have allowed a judgment to become final and executory and, after the same has
become immutable, seek iniquitous ways to assail it. The finality of a decision is a jurisdictional
event which cannot be made to depend on the convenience of the parties. 20
Clearly, allowing an appeal, even if belatedly filed, should never be taken lightly.1wphi1 The
judgment attains finality by the lapse of the period for taking an appeal without such appeal or
motion for reconsideration being filed.21 In Ocampo v. Court of Appeals (Former Second
Division),22 the Court reiterated the basic rule that "when a party to an original action fails to
question an adverse judgment or decision by not filing the proper remedy within the period
prescribed by law, he loses the right to do so, and the judgment or decision, as to him, becomes
final and binding."23 The Decision of the Labor Arbiter, therefore, became final and executory as
to respondent when she failed to file a timely appeal therefrom. The importance of the concept
of finality of judgment cannot be gainsaid. As elucidated in Pasiona, Jr. v. Court of Appeals, 24 to
wit:
The Court re-emphasizes the doctrine of finality of judgment. In Alcantara v. Ponce, the Court,
citing its much earlier ruling in Arnedo v. Llorente, stressed the importance of said doctrine, to
wit:
x x x controlling and irresistible reasons of public policy and of sound practice in the courts
demand that at the risk of occasional error, judgments of courts determining controversies
submitted to them should become final at some definite time fixed by law, or by a rule of
practice recognized by law, so as to be thereafter beyond the control even of the court which
rendered them for the purpose of correcting errors of fact or of law, into which, in the opinion of
the court it may have fallen. The very purpose for which the courts are organized is to put an end
to controversy, to decide the questions submitted to the litigants, and to determine the
respective rights of the parties. With the full knowledge that courts are not infallible, the litigants
submit their respective claims for judgment, and they have a right at some time or other to have
final judgment on which they can rely as a final disposition of the issue submitted, and to know
that there is an end to the litigation.
xxxx
It should also be borne in mind that the right of the winning party to enjoy the finality of the
resolution of the case is also an essential part of public policy and the orderly administration of
justice. Hence, such right is just as weighty or equally important as the right of the losing party
to appeal or seek reconsideration within the prescribed period. 25
When the Labor Arbiter's Decision became final, petitioners attained a vested right to said
judgment. They had the right to fully rely on the immutability of said Decision. In Sofio v.
Valenzuela,26 it was amply stressed that:
The Court will not override the finality and immutability of a judgment based only on the
negligence of a partys counsel in timely taking all the proper recourses from the judgment. To
justify an override, the counsels negligence must not only be gross but must also be shown to
have deprived the party the right to due process.
In sum, the Court cannot countenance relaxation of the rules absent the showing of
extraordinary circumstances to justify the same. In this case, no compelling reasons can be
found to convince this Court that the CA acted correctly by according respondent such liberality.
IN VIEW OF THE FOREGOING, the Petition is GRANTED. The Decision of the Court of Appeals
dated March 24, 2011, and its Resolution dated August 19, 2011 in CA-G.R. SP No. 114822 are
hereby SET ASIDE, and the Decision of the National Labor Relations Commission in NLRC-LAC No.

68
07-001892-09 (NLRC Case No. NCR-09-12628-08), ruling that the Decision of the Labor Arbiter
has become final and executory, is REINSTATED.
SO ORDERED.

69
G.R. No. 152550

June 8, 2005

BORJA ESTATE AND/OR THE HEIRS OF MANUEL AND PAULA BORJA and ATTY. MILA LAUIGAN IN
HER CAPACITY AS THE ESTATE ADMINISTRATOR, petitioners,
vs.
SPOUSES ROTILLO BALLAD and ROSITA BALLAD, respondents.
DECISION
TINGA, J.:
In this petition for review1 under Rule 45 of the Rules of Court, petitioners Borja Estate and/or
the Heirs of Manuel and Paula Borja and Atty. Mila Lauigan, in her capacity as the estate
administrator (the Borjas) assail the Resolution 2 of the Court of Appeals Thirteenth Division
denying their motion for reconsideration and the D E C I S I O N 3 of the same division in CA-G.R.
SP No. 60700, the dispositive portion of which states:
WHEREFORE, foregoing considered, the assailed Resolutions dated April 14, 2000 and May 31,
2000 are hereby AFFIRMED in toto. The present petition is hereby DISMISSED for lack of merit.
SO ORDERED.4
The above ruling of the Court of Appeals affirmed the Resolution 5 of the National Labor
Relations Commission (NLRC), the decretal portion of which reads:
WHEREFORE, premises considered, respondents Motion for Reduction of Bond is hereby
DISMISSED for lack of merit.
The instant Appeal is hereby DISMISSED for failure to post a cash or surety bond within the
reglementary period.
SO ORDERED.6
The Borjass motion for reconsideration of the above-quoted NLRC Resolution was likewise
dismissed in another Resolution. 7
As the Borjass appeal was not given due course, the Labor Arbiters D E C I S I O N 8 was in
effect affirmed, the dispositive portion of which states:
WHEREFORE, with all the foregoing considerations, judgment is hereby rendered declaring the
Spouses Rotillo and Rosita Ballad as illegally and unjustly dismissed in a whimsical and
capricious manner which is oppressive to labor and respondents are jointly and severally
ordered to reinstate complainants to their position as overseers without loss of seniority rights
with full backwages, allowances and other benefits, computed as of the promulgation of this
decision, as follows:
1.

P25,245.00

- Backwages, June to October 30, 1999

x2

(P166 x 365 over 12 x 5 months)

Backwages for both complainants

P50,490.00
2.

P 5,0490.00

13th month pay x 3 years

70
P15,147.00
x2

P30,294.00

- 13th month pay for both complainants

3.

P100,000.00

- Moral damages, for both complainants

4.

P50,000.00

Exemplary damages, for both complainants

P230,784.00
5.

P272,646.00

- Separation pay, in case reinstatement is no

longer feasible(P5049 x 27 years x 2 for both
complainants)

6.

Money equivalent of 12 cavans of shelled corn per harvest, transportations

expenses, allowances and other benefits being enjoyed as overseers from the
time these were withheld from them until actual payment, to be computed in
the pre-execution hearing.

7.

Plus one percent interest per month and ten percent attorneys fees. All other
claims are hereby dismissed.

SO ORDERED.9
The case arose out of the complaint filed by private respondents Spouses Rotillo and Rosita
Ballad (Ballad spouses) against the Borjas for illegal dismissal, non payment of 13th month pay,
separation pay, incentive pay, holiday and premiums pay plus differential pay, and moral and
exemplary damages with the Regional Arbitration Branch No. II of the NLRC in Tuguegarao,
Cagayan, on 8 June 1999.10
The Ballad spouses had been employed as overseers of the Borja Estate by its owners, the
spouses Manuel Borja and Paula Borja, since 1972. Their appointment as such was later made in
writing per the certification of appointment issued by Paula Borja. 11
The Borja Estate comprises around two hundred (200) hectares of agricultural lands located in
the towns of Iguig, Amulung, Enrile, Solana and Baggao, Cagayan Province. It includes two
apartment buildings consisting of eleven doors for rent, both located at Caritan, Tuguegarao,
Cagayan.12
As overseers, the Ballad spouses duties included the collection of owners share of the harvest
from the tenants and the delivery of such share to the estate administrator, as well as to
account for it. They also collected monthly rentals from the lessees of the apartment and
tendered the same to the administrator. They were tasked to oversee the lands and buildings
entrusted to them and were instructed to report any untoward incident or incidents affecting
said properties to the administrator. They were allegedly required to work all day and night each
week including Saturdays, Sundays and holidays. 13
For their compensation, the Ballad spouses received a monthly salary of P1,000.00 for both of

71
them, or P500.00 each. They were provided residential quarters plus food and traveling
allowances equivalent to twelve (12) cavans of shelled corn every crop harvest. 14 In the year
1980, said salary was increased to P2,500.00 for each of them by Paula Borja when she came
from abroad. Until the time before their dismissal, the Ballad spouses received the same
amount.15
The Ballad spouses further alleged that they were appointed as the attorney-in-fact of the
owners to represent the latter in courts and/or government offices in cases affecting the titling
of the Borjas unregistered lands, and to institute and prosecute recovery of possession thereof,
as well as in ejectment cases.16
They narrated that when the spouses Manuel and Paula Borja went to the United States of
America, their children Lumen, Leonora and Amelia succeeded to the ownership and
management of the Borja Estate. On 16 October 1986, the Ballad spouses claimed that Amelia
or Mely, then residing in Rochester, New York, wrote then administrator Mrs. Lim informing her
that the heirs had extended the services of the Ballad spouses and ordered Mrs. Lim to pay the
hospitalization expenses of Rotillo Ballad which accrued to Ten Thousand Pesos (P10,000.00). It
is also alleged that Mely had instructed Mrs. Lim to cause the registration of the Ballad spouses
as Social Security System (SSS) members so that in case any of the latter gets sick, SSS will
shoulder their medical expenses and not the Borjas. 17
On 10 November 1996, according to the Ballad spouses, when Francisco Borja, brother of the
late Manuel Borja, was appointed the new administrator, he issued immediately a memorandum
to all the tenants and lessees of the Borja Estate to transact directly with him and to pay their
monthly rentals to him or to his overseers, the Ballad spouses. 18
Upon his appointment, Francisco Borja allegedly promised to give the Ballad spouses their food
and traveling allowances aforestated but not the twelve (12) cavans per harvest which he
reduced to two (2) cavans per harvest. Francisco Borja also stopped giving the Ballad spouses
their allowances. For twenty-seven (27) years that the Ballad spouses were in the employ of the
Borjas they were purportedly not paid holiday pay, overtime pay, incentive leave pay, premiums
and restday pay, 13th month pay, aside from the underpayment of their basic salary. 19
In June 1999, the Ballad spouses alleged that Francisco Borja unceremoniously dismissed them
and caused this dismissal to be broadcast over the radio, which caused the former to suffer
shock and physical and mental injuries such as social humiliation, besmirched reputation,
wounded feelings, moral anxiety, health deterioration and sleepless nights. 20
Thus, the filing of a case against petitioners before the Labor Arbiter. The Borjas interposed the
defense that respondents had no cause of action against them because the latter were not their
employees. The Borjas insisted that the Ballad spouses were allowed to reside within the
premises of the Borja Estate only as a gesture of gratitude for Rosita Ballads assistance in the
registration of a parcel of land; and that they were merely utilized to do some errands from time
to time. As to the money claims, the Borjas claimed the defense of prescription.21
As aforestated, the Labor Arbiter ruled that the Ballad spouses had been illegally dismissed,
after concluding that they had been employees of the Borjas. 22
Aggrieved by the decision, the Borjas filed their appeal on 26 November 1999 before the NLRC
together with a Motion for Reduction of Bond. 23
In a Resolution dated 14 April 2000, the NLRC dismissed the petitioners Motion for Reduction of
Bond. Petitioners appeal was likewise dismissed in the same Resolution for failure to post a
cash or surety bond within the reglementary period. 24 Petitioners Motion for Reconsideration

72
was also denied for lack of merit in another Resolution.25
Petitioners elevated the case to the Court of Appeals by way of a special civil action of certiorari.
On 31 October 2001, the Court of Appeals affirmed the Resolutions of the NLRC holding that the
filing of a cash or surety bond is sine qua non to the perfection of appeal from the labor
monetarys award.
The Court of Appeals noted that the Borjas received a copy of the Labor Arbiters D E C I S I O
N26 on 18 November 1999. They thereafter filed their Notice of Appeal and Appeal on 26
November 1999. On even date, they also filed a Motion for Reduction of Bond. However, no
proof was shown that the Borjas were able to post the required bond during the same period of
time to appeal.27
The Court of Appeals observed that petitioners were able to post a bond only on 17 December
1999 in the amount of Forty Thousand Pesos (P40,000.00) when the same should have been
done during the same period of appeal. As this was not done and as no justifiable reason was
given for the late filing, the Court of Appeals ruled that the decision of the Labor Arbiter had
become final and executory.28
The Court of Appeals likewise relied on the Labor Arbiters finding that the Ballad spouses were
employees of the petitioners.29
Hence, the instant petition.
In this petition, petitioners in essence assert that the Court of Appeals erred in agreeing with the
NLRC that the posting of a cash or surety bond during the period of time to file an appeal is
mandatory and the failure to do so would have the effect of rendering the appealed decision
final and executory. Petitioners further insist that they never hired the Ballad spouses as
employees.30
In a Resolution31 dated 24 April 2002, the Court initially resolved to deny the petition for failure
of the petitioners to show any reversible error in the decisions and resolution of the Labor
Arbiter, the NLRC and the Court of Appeals.
However, the Court in a Resolution32 dated 11 November 2002 decided to reinstate the petition
after considering petitioners arguments contained in their Motion for Reconsideration, 33 in
which the Borjas stressed that the only issue sought to be resolved by their Petition is the
correct interpretation of the rule requiring the posting of a bond for the perfection of an appeal.
They implored the Court to contrive a definitive ruling on the matter which in their estimation
has sowed confusion among practitioners as well as to those exercising quasi-judicial and
judicial functions.34
There is no merit in the petition.
The appeal bond is required under Article 223 of the Labor Code which provides:
ART. 223. Appeal. - Decisions, awards or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. . . .
In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission, in the amount equivalent to the monetary award in the judgment
appealed from.
....

73
Rule VI of the New Rules of Procedure of the NLRC implements this Article with its Sections 1, 3,
5, 6 and 7 providing pertinently as follows:
Section. 1. Periods of Appeal.- Decisions, awards, or orders of the Labor Arbiter and the POEA
Administrator shall be final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such decisions, awards or orders of the
Labor Arbiter or of the Administrator, and in case of a decision of the Regional Director or his
duly authorized Hearing Officer within five (5) calendar days from receipt of such decisions,
awards or orders . . .
Section 3. Requisites for Perfection of Appeal.(a) The appeal shall be filed within the
reglementary period as provided in Sec. 1 of this Rule; shall be under oath with proof of
payment of the required appeal fee and the posting of a cash or surety bond as provided in Sec.
5 of this Rule; shall be accompanied by memorandum of appeal which shall state the grounds
relied upon and the arguments in support thereof; the relief prayed for; and a statement of the
date when the appellant received the appealed decision, order or award and proof of service on
the other party of such appeal.
A mere notice of appeal without complying with the other requisite aforestated shall not stop
the running of the period for perfecting an appeal.
Section 5. Appeal Fee. The appellant shall pay an appeal fee of One hundred (P100.00) pesos
to the Regional Arbitration Branch, Regional Office, or to the Philippine Overseas Employment
Administration and the official receipt of such payment shall be attached to the records of the
case.
Section 6. Bond. In case the decision of the Labor Arbiter, the Regional Director or his duly
authorized Hearing Officer involves a monetary award, an appeal by the employer shall be
perfected only upon the posting of a cash or surety bond, which shall be in effect until final
disposition of the case, issued by a reputable bonding company duly accredited by the
Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of
damages and attorneys fees.
....
The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the amount
of the bond. The filing of the motion to reduce bond shall not stop the running of the period to
perfect appeal.
Section 7. No extension of Period.- No motion or request for extension of the period within which
to perfect an appeal shall be allowed.
Thus, it is clear from the foregoing that the appeal from any decision, award or order of the
Labor Arbiter to the NLRC shall be made within ten (10) calendar days from receipt of such
decision, award or order, and must be under oath, with proof of payment of the required appeal
fee accompanied by a memorandum of appeal. In case the decision of the Labor Arbiter involves
a monetary award, the appeal is deemed perfected only upon the posting of a cash or surety
bond also within ten (10) calendar days from receipt of such decision in an amount equivalent to
the monetary award.351avvphi1
The intention of the lawmakers to make the bond an indispensable requisite for the perfection of
an appeal by the employer is underscored by the provision that an appeal may be perfected
"only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear that
the lawmakers intended the posting of a cash or surety bond by the employer to be the
exclusive means by which an employers appeal may be considered completed. 36 The law

74
however does not require its outright payment, but only the posting of a bond to ensure that the
award will be eventually paid should the appeal fail. What petitioners have to pay is a moderate
and reasonable sum for the premium of such bond. 37
The word "may", on the other hand refers to the perfection of an appeal as optional on the part
of the defeated party, but not to the posting of an appeal bond, if he desires to appeal. 38
Evidently, the posting of a cash or surety bond is mandatory. And the perfection of an appeal in
the manner and within the period prescribed by law is not only mandatory but jurisdictional. 39
To extend the period of the appeal is to delay the case, a circumstance which would give the
employer the chance to wear out the efforts and meager resources of the worker to the point
that the latter is constrained to give up for less than what is due him.40 As ratiocinated in the
case of Viron Garments Mftg. v. NLRC:41
The requirement that the employer post a cash or surety bond to perfect its/his appeal is
apparently intended to assure the workers that if they prevail in the case, they will receive the
money judgment in their favor upon the dismissal of the employers appeal. It was intended to
discourage employers from using an appeal to delay, or even evade, their obligation to satisfy
their employees just and lawful claims. 42
In the case at bar, while the petitioners Appeal Memorandum and Motion for Reduction of Bond,
which was annexed thereto, were both filed on time, 43 the appeal was not perfected by reason
of the late filing and deficiency of the amount of the bond for the monetary award with no
explanation offered for such delay and inadequacy.
As there was no appeal bond filed together with the Appeal Memorandum within the ten (10)day period provided by law for the perfection of appeal, it follows that no appeal from the
decision of the Labor Arbiter had been perfected. 44 Accordingly, the Decision of the Labor
Arbiter became final and executory upon the expiration of the reglementary period.
While it is true that this Court has relaxed the application of the rules on appeal in labor cases, it
has only done so where the failure to comply with the requirements for perfection of appeal was
justified or where there was substantial compliance with the rules. Hence, the Supreme Court
has allowed tardy appeals in judicious cases, e.g., where the presence of any justifying
circumstance recognized by law, such as fraud, accident, mistake or excusable negligence,
properly vested the judge with discretion to approve or admit an appeal filed out of time; where
on equitable grounds, a belated appeal was allowed as the questioned decision was served
directly upon petitioner instead of her counsel of record who at the time was already dead; 45
where the counsel relied on the footnote of the notice of the decision of the labor arbiter that
the aggrieved party may appeal . . . within ten (10) working days; in order to prevent a
miscarriage of justice or unjust enrichment such as where the tardy appeal is from a decision
granting separation pay which was already granted in an earlier final decision; or where there
are special circumstances in the case combined with its legal merits or the amount and the
issue involved.46
Here, no justifiable reason was put forth by the petitioners for the non-filing of the required
bond, or the late filing of the defective bond for that matter as in fact the bond they filed late on
17 December 1999 in the amount of Forty Thousand Pesos (P40,000.00) was not even
equivalent to the reduced amount of bond they prayed for in their Motion for Reduction of
Bond.47 The Court then is not prepared to hold that the petitioners Motion for Reduction of
Bond was substantial compliance with the Labor Code for failure to demonstrate willingness to
abide by their prayer in said Motion.
In addition, no exceptional circumstances obtain in the case at bar which would warrant the

75
relaxation of the bond requirement as a condition for perfecting the appeal.
It bears stressing that the bond is sine qua non to the perfection of appeal from the labor
arbiters monetary award. The requirements for perfecting an appeal must be strictly followed
as they are considered indispensable interdictions against needless delays and for orderly
discharge of judicial business. The failure of the petitioners to comply with the requirements for
perfection of appeal had the effect of rendering the decision of the labor arbiter final and
executory and placing it beyond the power of the NLRC to review or reverse it.1avvphi1 As a
losing party has the right to file an appeal within the prescribed period, so also the winning
party has the correlative right to enjoy the finality of the resolution of his/her case. 48
WHEREFORE, in view of the foregoing considerations, the petition is DENIED for lack of merit.
Costs against petitioners.
SO ORDERED.

76
G.R. No. 200653
June 13, 2012
3RD ALERT SECURITY AND DETECTIVE SERVICES, INC., Petitioner,
vs.
ROMUALDO NAVIA, Respondent.
RESOLUTION
BRION, J.:
This is a petition for review on certiorari 1 under Rule 45 of the Rules of Court, assailing the
decision2 dated September 30, 2011 and the resolution 3 dated February 15, 2012 of the Court of
Appeals (CA) in CA-G.R. SP No. 117361, which dismissed the petition filed by 3 rd Alert Security
and Detective Services, Inc. (3rd Alert).
The Antecedent Facts

This case started from an illegal dismissal complaint filed by Romualdo

Navia against 3rd Alert.
On November 30, 2005, the labor arbiter issued a decision that Navias
dismissal was illegal. 3rd Alert appealed to the National Labor Relations
Commission (NLRC) which affirmed the ruling of the labor arbiter. 3rd Alerts
motion for reconsideration of the NLRC decision was denied in a resolution
dated October 19, 2008.
From this ruling, 3rd Alert filed an appeal with the CA (docketed as CA-G.R.
SP No. 106963) with a prayer for the issuance of a temporary restraining
order. The CA denied the appeal; 3rd Alert moved for a motion for
reconsideration but the motion was also denied.
The writ of execution (CA-G.R. SP No. 117361)
In the meantime, on January 29, 2009, the NLRC issued an Entry of
Judgment certifying that the NLRC resolution dated October 19, 2008 has
become final and executory. Thus, Navia filed with the labor arbiter an exparte motion for recomputation of back wages and an ex-parte motion for
execution based on the recomputed back wages.
On November 10, 2009, the labor arbiter issued a writ of execution to
enforce the recomputed monetary awards.
3rd Alert appealed the recomputed amount stated in the writ of execution to
the NLRC. 3rd Alert also alleged that the writ was issued with grave abuse of
discretion since there was already a notice of reinstatement sent to Navia.
The NLRC dismissed the appeal, ruling that 3rd Alert is guilty of bad faith
since there was no earnest effort to reinstate Navia. The NLRC also ruled
that there was no notice or reinstatement sent to Navias counsel. A motion
for reconsideration was filed, but it was likewise denied.
3rd Alert filed a petition for certiorari with the CA which found the petition
without merit because Navia had not been reinstated either physically or in
the payroll. The CA also denied the motion for reconsideration filed by 3rd
Alert; hence, this petition.
The Issue
In this petition, we resolve the issue of whether the CA erred in ruling that
the NLRC did not commit any grave abuse of discretion.
The Ruling

77

We do not see any grave abuse of discretion after a close examination of

the petition and the attached records where 3rd Alert insists that a copy of
the manifestation on reinstatement had been sent to Navias counsel and
was received by a certain "Biznar."
Time and again, we have held that this Court is not a trier of facts. 4 In the
absence of any attendant grave abuse of discretion, these findings are
entitled not only to respect, but to our final recognition in this appellate
review. Since it was ruled that there had been no notice of reinstatement
sent to Navia or his counsel, as also affirmed by the CA, we cannot rule
otherwise in the absence of any compelling evidence.
Article 223 of the Labor Code provides that in case there is an order of
reinstatement, the employer must admit the dismissed employee under the
same terms and conditions, or merely reinstate the employee in the payroll.
The order shall be immediately executory. Thus, 3rd Alert cannot escape
liability by simply invoking that Navia did not report for work. The law states
that the employer must still reinstate the employee in the payroll. Where
reinstatement is no longer viable as an option, separation pay equivalent to
one (1) month salary for every year of service could be awarded as an
alternative.5
Since the proceedings below indicate that 3rd Alert failed to adduce
additional evidence to show that it tried to reinstate Navia, either physically
or in the payroll, we adopt as correct the finding that there was no earnest
effort to reinstate Navia. The CA was correct in affirming the judgment of
the NLRC in this regard.
We also take note that 3rd Alert resorted to legal tactics to frustrate the
execution of the labor arbiters order; for about four (4) years, it evaded the
obligation to reinstate Navia. By so doing, 3rd Alert has made a mockery of
justice. We thus find it proper, under the circumstances, to impose treble
costs against 3rd Alert for its utter disregard to comply with the writ of
execution. To reiterate, no indication exists showing that 3rd Alert exerted
any efforts to reinstate Navia; worse, 3rd Alerts lame excuse of having sent
a notice of reinstatement to a certain "Biznar" only compounded the intent
to mislead the courts.
Also, the main issue of this case, finding Navia to have been illegally
dismissed, has already attained finality. Litigation must end and terminate
sometime and somewhere, and it is essential for an effective and efficient
administration of justice that, once a judgment has become final, the
winning party be not deprived of the fruits of the verdict. 6 The order is to
reinstate Navia; sadly, the mere execution of this judgment has to even
reach the highest court of the land, thereby frustrating the entire judicial
process. This justifies the treble costs we now impose against 3rd Alert. 7
"It is settled that in actions for recovery of wages or where an employee was
forced to litigate and incur expenses to protect his right and interest, he is

78

entitled to an award of attorney's fees."8 Navia, having been compelled to

litigate due to 3rd Alerts failure to satisfy his valid claim, is also entitled to
attorney's fees of ten percent (10%) of the total award at the time of actual
payment, following prevailing jurisprudence. 9
While we agree that lawyers owe their entire devotion to the interest of their
clients, they should not forget that they are also officers of the court, bound
to exert every effort to assist in the speedy and efficient administration of
justice. They should not, therefore, misuse the rules of procedure to defeat
the ends of justice or unduly delay a case, impede the execution of a
judgment or misuse court processes. 10
WHEREFORE, premises considered, we hereby DENY the petition outright
and AFFIRM the decision dated September 30, 2011 and the resolution
dated February 15, 2012 of the Court of Appeals in CA-G.R. SP No. 117361.
Treble costs and attorney's fees of ten percent (10%) of the total monetary
award at the time of actual payment against 3rd Alert are hereby also
awarded to Romualdo Navia.
SO ORDERED.

79
G.R. No. 198534
July 3, 2013
JENNY F. PECKSON, Petitioner,
vs.
ROBINSONS SUPERMARKET CORPORATION, JODY GADIA, ROENA SARTE, and RUBY
ALEX, Respondents.
DECISION
REYES, J.:
For resolution is the Petition for Review on Certiorari 1 of the Decision2 dated June 8, 2011 of the
Court of Appeals (CA) in CA-G.R. SP No. 109604 affirming the Decision 3 dated February 25, 2009
of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 00-11-09316-06/NLRC
LAC No. 002020-07, which upheld the Dismissal 4 by the Labor Arbiter (LA) on May 30, 2007 of
Jenny F. Peckson's (petitioner) complaint for constructive dismissal.
Antecedent Facts and Proceedings
The petitioner first joined the Robinsons Supermarket Corporation (RSC) as a Sales Clerk on
November 3, 1987. On October 26, 2006, she was holding the position of Category Buyer when
respondent Roena Sarte (Sarte), RSCs Assistant Vice-President for Merchandising, reassigned her
to the position of Provincial Coordinator, effective November 1, 2006. Claiming that her new
assignment was a demotion because it was non-supervisory and clerical in nature, the petitioner
refused to turn over her responsibilities to the new Category Buyer, or to accept her new
responsibilities as Provincial Coordinator. Jody Gadia (Gadia) and Ruby Alex (Alex) were
impleaded because they were corporate officers of the RSC.
In a memorandum to the petitioner dated November 13, 2006, 6 the RSC, through Sarte,
demanded an explanation from her within 48 hours for her refusal to accept her new assignment
despite written and verbal demands. Sarte cited a company rule, Offenses Subject to Disciplinary
Action No. 4.07, which provided that "[d]isobedience, refusal or failure to do assigned task or to
obey superiors/officials orders/instructions, or to follow established procedures or practices
without valid reason" would be meted the penalty of suspension.
The petitioner ignored the 48-hour deadline to explain imposed by Sarte. On November 23, 2006,
Sarte issued her another memorandum, 7 reiterating her demand to explain in writing within 48
hours why she persistently refused to assume her new position, and warning her that this could
be her final chance to present her side or be deemed to have waived her right to be heard.
In her one-paragraph reply submitted on November 27, 2006, 8 the petitioner stated that she
could not accept the position of Provincial Coordinator since she saw it as a demotion. As it
turned out, however, on November 9, 2006, the petitioner had already filed a complaint for
constructive dismissal9 against RSC, Sarte, Gadia and Alex (respondents).
On November 30, 2006, Sarte issued an instruction to the petitioner to report to RSCs Metroeast
Depot to help prepare all shipping manifests for Cagayan de Oro and Bacolod, but as witnessed
by RSC employees Raquel Torrechua and Alex, she did not obey as instructed. 10 Again on
December 8, 2006, Sarte issued a similar instruction, citing the need for certain tasks from the
petitioner in preparation for the coming Christmas holidays, but the petitioner again refused to
heed.11
As culled from the assailed appellate court decision, 12 the petitioner argued before the LA that
the true organizational chart of the RSC showed that the position of Category Buyer was one
level above that of the Provincial Coordinator, and that moreover, the job description of a
Provincial Coordinator was largely clerical and did not require her to analyze stock levels and
order points, or source new local and international suppliers, or monitor stock level per store and
recommend items for replenishment, or negotiate better items and discounts from suppliers,
duties which only a Category Buyer could perform. She also claimed that she was instructed to
file a courtesy resignation in exchange for a separation pay of one-half salary per year of service.
The respondents in their position paper denied the correctness of the organizational chart
presented by the petitioner. They maintained that her transfer was not a demotion since the
Provincial Coordinator occupied a "Level 5" position like the Category Buyer, with the same work
conditions, salary and benefits. But while both positions had no significant disparity in the
required skill, experience and aptitude, the position of Category Buyer demanded the traits of

80
punctuality, diligence and attentiveness because it is a frontline position in the day-to-day
business operations of RSC which the petitioner, unfortunately, did not possess.
The respondents also raised the petitioners record of habitual tardiness as far back as 1999, as
well as poor performance rating in 2005. In addition to her performance rating of "2.8" out of
"4.0" in 2005 equivalent to "below expectation," the petitioner was found to be tardy in June and
July 2005, 13 times, and for the entire 2005, 57 times; that she was suspended twice in 2006 for
20 instances of tardiness and absences from July to September 2006 alone. 13 We also note that
the petitioner was suspended for seven (7) days in September and October 2005 for deliberately
violating a company policy after she was seen having lunch with a company supplier. 14
In her affidavit,15 respondent Sarte denied that the reassignment of the petitioner as Provincial
Coordinator was motivated by a desire to besmirch the name of the latter. She asserted that it
was made in the exercise of management prerogative and sound discretion, in view of the nsitive
position occupied by the Category Buyer in RSCs daily operations, vis--vis the petitioners
"below expectation" performance rating and habitual tardiness.
In dismissing the petitioners complaint, the LA in its Decision 16 dated May 30, 2007 ruled that
job reassignment or classification is a strict prerogative of the employer, and that the petitioner
cannot refuse her transfer from Category Buyer to Provincial Coordinator since both positions
commanded the same salary structure, high degree of responsibility and impeccable honesty
and integrity. Upholding the employers right not to retain an employee in a particular position to
prevent losses or to promote profitability, the LA found no showing of any illegal motive on the
part of the respondents in reassigning the petitioner. The transfer was dictated by the need for
punctuality, diligence and attentiveness in the position of Category Buyer, which the petitioner
clearly lacked. Moreover, the LA ruled that her persistent refusal to accept her new position
amounted to insubordination, entitling the RSC to dismiss her from employment.
A month after the above ruling, or on June 22, 2007, the petitioner tendered her written "forced"
resignation,17 wherein she complained that she was being subjected to ridicule by clients and coemployees alike on account of her floating status since the time she refused to accept her
transfer. She likewise claimed that she was being compelled to accept the position of Provincial
Coordinator without due process.
On appeal, the NLRC in its Decision18 dated February 25, 2009 sustained the findings of the LA. It
agreed that the lateral transfer of the petitioner from Category Buyer to Provincial Coordinator
was not a demotion amounting to constructive dismissal, since both positions belonged to Job
Level 5 and between them there is no significant disparity in terms of the requirements of skill,
experience and aptitude. Contrary to the petitioners assertion, the NLRC found that the position
of Provincial Coordinator is not a rank-and-file position but in fact requires the exercise of
discretion and independent judgment, as well as appropriate recommendations to management
to ensure the faithful implementation of its policies and programs; that it even exercises
influence over the Category Buyer in that it includes performing a recommendatory function to
guide the Category Buyer in making decisions on the right assortment, price and quantity of the
items, articles or merchandise to be sold by the store.
The NLRC then reiterated the settled rule that management may transfer an employee from one
office to another within the business establishment, provided there is no demotion in rank or
diminution of salary, benefits, and other privileges, and the action is not motivated by
discrimination or bad faith or effected as a form of punishment without sufficient cause. It ruled
that the respondents were able to show that the petitioners transfer was not unreasonable,
inconvenient or prejudicial, but was prompted by her failure to meet the demands of punctuality,
diligence, and personal attention of the position of Category Buyer; that management wanted to
give the petitioner a chance to improve her work ethic, but her obstinate refusal to assume her
new position has prejudiced respondent RSC, even while she continued to receive her salaries
and benefits as Provincial Coordinator.
On petition for certiorari to the CA, the petitioner insisted that her transfer from Category Buyer
to Provincial Coordinator was a form of demotion without due process, and that the respondents
unjustifiably depicted her as remiss in her duties, flawed in her character, and unduly obstinate
in her refusal to accept her new post.

81
In its Decision19 dated June 8, 2011, the CA found no basis to deviate from the oft-repeated tenet
that the findings of fact and conclusions of the NLRC when supported by substantial evidence are
generally accorded not only great weight and respect but even finality, and are thus deemed
binding.20
Petition for Review in the Supreme Court
Now on petition for review to this Court, the petitioner maintains that her lateral transfer from
Category Buyer to Provincial Coordinator was a demotion amounting to constructive dismissal
because her reassignment was not a valid exercise of management prerogative, but was done in
bad faith and without due process. She claims that the respondents manipulated the facts to
show that she was tardy; that they even surreptitiously drew up a new organizational chart of the
Merchandising Department of RSC, soon after she filed her complaint for illegal dismissal, to
show that the position of Provincial Coordinator belonged to Job Level 5 as the Category Buyer,
and not one level below; that the company deliberately embarrassed her when it cut off her
email access; that they sent memoranda to her clients that she was no longer a Category Buyer,
and to the various Robinsons branches that she was now a Provincial Coordinator, while Milo
Padilla (Padilla) was taking over her former position as Category Buyer; that for seven (7)
months, they placed her on floating status and subjected her to mockery and ridicule by the
suppliers and her co-employees; that not only was there no justification for her transfer, but the
respondents clearly acted in bad faith and with discrimination, insensibility and disdain to make
her stay with the company intolerable for her.
Our Ruling
We find no merit in the petition.
This Court has consistently refused to interfere with the exercise by management of its
prerogative to regulate the employees work assignments, the working methods and the place
and manner of work.
As we all know, there are various laws imposing all kinds of burdens and obligations upon the
employer in relation to his employees, and yet as a rule this Court has always upheld the
employers prerogative to regulate all aspects of employment relating to the employees work
assignment, the working methods and the place and manner of work. Indeed, labor laws
discourage interference with an employers judgment in the conduct of his business. 21
In Rural Bank of Cantilan, Inc. v. Julve, 22 the Court had occasion to summarize the general
jurisprudential guidelines affecting the right of the employer to regulate employment, including
the transfer of its employees:
Under the doctrine of management prerogative, every employer has the inherent right to
regulate, according to his own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, the time, place and manner of work, work
supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of
employees. The only limitations to the exercise of this prerogative are those imposed by labor
laws and the principles of equity and substantial justice.
While the law imposes many obligations upon the employer, nonetheless, it also protects the
employers right to expect from its employees not only good performance, adequate work, and
diligence, but also good conduct and loyalty. In fact, the Labor Code does not excuse employees
from complying with valid company policies and reasonable regulations for their governance and
guidance.
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a
transfer is a movement from one position to another of equivalent rank, level or salary without
break in the service or a lateral movement from one position to another of equivalent rank or
salary; (b) the employer has the inherent right to transfer or reassign an employee for legitimate
business purposes; (c) a transfer becomes unlawful where it is motivated by discrimination or
bad faith or is effected as a form of punishment or is a demotion without sufficient cause; (d) the
employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial
to the employee.23 (Citations omitted)
In Philippine Japan Active Carbon Corporation v. NLRC, 24 it was held that the exercise of
managements prerogative concerning the employees work assignments is based on its
assessment of the qualifications, aptitudes and competence of its employees, and by moving

82
them around in the various areas of its business operations it can ascertain where they will
function with maximum benefit to the company.1wphi1
It is the employers prerogative, based on its assessment and perception of its employees
qualifications, aptitudes, and competence, to move them around in the various areas of its
business operations in order to ascertain where they will function with maximum benefit to the
company. An employees right to security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogative to change his assignment or transfer
him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor
prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries,
benefits, and other privileges, the employee may not complain that it amounts to a constructive
dismissal.25
As a privilege inherent in the employers right to control and manage its enterprise effectively, its
freedom to conduct its business operations to achieve its purpose cannot be denied. 26 We agree
with the appellate court that the respondents are justified in moving the petitioner to another
equivalent position, which presumably would be less affected by her habitual tardiness or
inconsistent attendance than if she continued as a Category Buyer, a "frontline position" in the
day-to-day business operations of a supermarket such as Robinsons.
If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him, and it
does not involve a demotion in rank or a diminution of his salaries, benefits and other privileges,
the employee may not complain that it amounts to a constructive dismissal.
As we have already noted, the respondents had the burden of proof that the transfer of the
petitioner was not tantamount to constructive dismissal, which as defined in Blue Dairy
Corporation v. NLRC,27 is a quitting because continued employment is rendered impossible,
unreasonable or unlikely, or an offer involving a demotion in rank and diminution of pay:
The managerial prerogative to transfer personnel must be exercised without grave abuse of
discretion, bearing in mind the basic elements of justice and fair play. Having the right should not
be confused with the manner in which that right is exercised. Thus, it cannot be used as a
subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer
must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the
employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and
other benefits. Should the employer fail to overcome this burden of proof, the employees
transfer shall be tantamount to constructive dismissal, which has been defined as a quitting
because continued employment is rendered impossible, unreasonable or unlikely; as an offer
involving a demotion in rank and diminution in pay. Likewise, constructive dismissal exists when
an act of clear discrimination, insensibility or disdain by an employer has become so unbearable
to the employee leaving him with no option but to forego with his continued employment.
Thus, as further held in Philippine Japan Active Carbon Corporation, 28 when the transfer of an
employee is not unreasonable, or inconvenient, or prejudicial to him, and it does not involve a
demotion in rank or a diminution of his salaries, benefits and other privileges, the employee may
not complain that it amounts to a constructive dismissal. 29
But like all other rights, there are limits to the exercise of managerial prerogative to transfer
personnel, and on the employer is laid the burden to show that the same is without grave abuse
of discretion, bearing in mind the basic elements of justice and fair play. 30 Indeed, management
prerogative may not be used as a subterfuge by the employer to rid himself of an undesirable
worker.31
Interestingly, although the petitioner claims that she was constructively dismissed, yet until the
unfavorable decision of the LA on May 30, 2007, for seven (7) months she continued to collect
her salary while also adamantly refusing to heed the order of Sarte to report to the Metroeast
Depot. It was only on June 22, 2007, after the LAs decision, that she filed her "forced"
resignation. Her deliberate and unjustified refusal to assume her new assignment is a form of
neglect of duty, and according to the LA, an act of insubordination. We saw how the company
sought every chance to hear her out on her grievances and how she ignored the memoranda of
Sarte asking her to explain her refusal to accept her transfer. All that the petitioner could say was
that it was a demotion and that her floating status embarrassed her before the suppliers and her
co-employees.

83
The respondents have discharged the burden of proof that the transfer of the petitioner was not
tantamount to constructive dismissal.
In Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, 32 a machinist who had been employed with
the petitioner company for 16 years was reduced to the service job of transporting filling
materials after he failed to report for work for one (1) day on account of an urgent family matter.
This is one instance where the employees demotion was rightly held to be an unlawful
constructive dismissal because the employer failed to show substantial proof that the
employees demotion was for a valid and just cause:
In case of a constructive dismissal, the employer has the burden of proving that the transfer and
demotion of an employee are for valid and legitimate grounds such as genuine business
necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer
must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the
employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and
other benefits. Failure of the employer to overcome this burden of proof, the employees
demotion shall no doubt be tantamount to unlawful constructive dismissal. x x x. 33 (Citation
omitted)
In the case at bar, we agree with the appellate court that there is substantial showing that the
transfer of the petitioner from Category Buyer to Provincial Coordinator was not unreasonable,
inconvenient, or prejudicial to her. The petitioner failed to dispute that the job classifications of
Category Buyer and Provincial Coordinator are similar, or that they command a similar salary
structure and responsibilities. We agree with the NLRC that the Provincial Coordinators position
does not involve mere clerical functions but requires the exercise of discretion from time to time,
as well as independent judgment, since the Provincial Coordinator gives appropriate
recommendations to management and ensures the faithful implementation of policies and
programs of the company. It even has influence over a Category Buyer because of its
recommendatory function that enables the Category Buyer to make right decisions on
assortment, price and quantity of the items to be sold by the store. 34
We also cannot sustain the petitioners claim that she was not accorded due process and that the
respondents acted toward her with discrimination, insensibility, or disdain as to force her to
forego her continued employment. In addition to verbal reminders from Sarte, the petitioner was
asked in writing twice to explain within 48 hours her refusal to accept her transfer. In the first,
she completely remained silent, and in the second, she took four (4) days to file a mere oneparagraph reply, wherein she simply said that she saw the Provincial Coordinator position as a
demotion, hence she could not accept it. Worse, she may even be said to have committed
insubordination when she refused to turn over her responsibilities to the new Category Buyer,
Padilla, and to assume her new responsibilities as Provincial Coordinator and report to the
Metroeast Depot as directed. This was precisely the reason why the petitioner was kept on
floating status. To her discredit, her defiance constituted a neglect of duty, or an act of
insubordination, per the LA.
Neither can we consider tenable the petitioners contention that the respondents deliberately
held her up to mockery and ridicule when they cut off her email access, sent memoranda to her
clients that she was no longer a Category Buyer, and to the various Robinsons branches that she
was now a Provincial Coordinator on floating status and that Padilla was taking over her position
as the new Category Buyer. It suffices to state that these measures are the logical steps to take
for the petitioners unjustified resistance to her transfer, and were not intended to subject her to
public embarrassment.
Judicial review of labor cases does not go beyond the evaluation of the sufficiency of the
evidence upon which labor officials findings rest.
Finally, as reiterated in Acebedo Optical, 35 this Court is not a trier of facts, and only errors of law
are generally reviewed in petitions for review on certiorari criticizing decisions of the CA.
Questions of fact are not entertained, and in labor cases, this doctrine applies with greater force.
Factual questions are for labor tribunals to resolve. 36 Thus:
Judicial Review or labor cases does not go beyond the evaluation of the sufficiency of the
evidence upon which its labor officials' findings rest. As such, the findings of facts and conclusion
of the NLRC are generally accorded not only great weight and respect but even clothed with

84
finality and deemed binding on this Court as long as they are supported by substantial evidence.
This Court finds no basis for deviating from said doctrine without any clear showing that the
findings of the Labor Arbiter, as affirmed by the NLRC, are bereft of substantiation. Particularly
when passed upon and upheld by the Court of Appeals, they are binding and conclusive upon the
Supreme Court and will not normally be disturbed.
xxxx
As earlier stated, we find no basis for deviating from the oft espoused legal tenet that findings of
facts and conclusion of the labor arbiter are generally accorded not only great weight and
respect but even clothed with finality and deemed binding on this Court as long as they are
supported by substantial evidence, without any clear showing that such findings of fact, as
affirmed by the NLRC, are bereft of substantiation. More so, when passed upon and upheld by the
Com1 of Appeals, they are binding and conclusive upon us and will not normally be disturbed; x x
x.37 (Citations omitted)
It is our ruling, that the findings of fact and conclusion of the LA, as affirmed by the NLRC, are
supported by substantial evidence, as found by the CA.
WHEREFORE, the premises considered, the Decision of the Court of Appeals dated June 8, 2011
in CA-G.R. SP No. 109604 is AFFIRMED.
SO ORDERED.

85
G.R. No. 181738
January 30, 2013
GENERAL MILLING CORPORATION, Petitioner,
vs.
VIOLETA L. VIAJAR, Respondent.
DECISION
REYES, J.:
This is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court filed by petitioner
General Milling Corporation (GMC), asking the Court to set aside the Decision 2 dated September
21, 2007 and the Resolution3 dated January 30, 2008 of the Court of Appeals (CA) in CA-G.R. SP No.
01734; and to reinstate the Decision4 dated October 28, 2005 and Resolution5 dated January 31,
2006 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000416-05.
The antecedent facts are as follows:
GMC is a domestic corporation with principal office in Makati City and a manufacturing plant in
Lapu-Lapu City.
In October 2003, GMC terminated the services of thirteen (13) employees for redundancy,
including herein respondent, Violeta Viajar (Viajar). GMC alleged that it has been gradually
downsizing its Vismin (Visayas-Mindanao) Operations in Cebu where a sizeable number of positions
became redundant over a period of time.6
On December 2, 2003, Viajar filed a Complaint 7 for Illegal Dismissal with damages against GMC, its
Human Resource Department (HRD) Manager, Johnny T. Almocera (Almocera), and Purchasing
Manager, Joel Paulino before the Regional Arbitration Branch (RAB) No. VII, NLRC, Cebu City.
In her Position Paper,8 Viajar alleged that she was employed by GMC on August 6, 1979 as
Invoicing Clerk. Through the years, the respondent held various positions in the company until she
became Purchasing Staff.
On October 30, 2003, Viajar received a Letter-Memorandum dated October 27, 2003 from GMC,
through Almocera, informing her that her services were no longer needed, effective November 30,
2003 because her position as Purchasing Staff at the Purchasing Group, Cebu Operations was
deemed redundant. Immediately thereafter, the respondent consulted her immediate superior at
that time, Thaddeus Oyas, who told her that he too was shocked upon learning about it. 9
When Viajar reported for work on October 31, 2003, almost a month before the effectivity of her
severance from the company, the guard on duty barred her from entering GMCs premises. She
was also denied access to her office computer and was restricted from punching her daily time
record in the bundy clock.10
On November 7, 2003, Viajar was invited to the HRD Cebu Office where she was asked to sign
certain documents, which turned out to be an "Application for Retirement and Benefits." The
respondent refused to sign and sought clarification because she did not apply for retirement and
instead asserted that her services were terminated for alleged redundancy. Almocera told her that
her signature on the Application for Retirement and Benefits was needed to process her separation
pay. The respondent also claimed that between the period of July 4, 2003 and October 13, 2003,
GMC hired fifteen (15) new employees which aroused her suspicion that her dismissal was not
necessary.11 At the time of her termination, the respondent was receiving the salary rate of
P19,651.41 per month.12
For its part, the petitioner insisted that Viajars dismissal was due to the redundancy of her
position. GMC reasoned out that it was forced to terminate the services of the respondent because
of the economic setbacks the company was suffering which affected the companys profitability,
and the continuing rise of its operating and interest expenditures. Redundancy was part of the
petitioners concrete and actual cost reduction measures. GMC also presented the required
"Establishment Termination Report" which it filed before the Department of Labor and Employment
(DOLE) on October 28, 2003, involving thirteen (13) of its employees, including Viajar.
Subsequently, GMC issued to the respondent two (2) checks respectively amounting to
P440,253.02 and P21,211.35 as her separation pay.13
On April 18, 2005, the Labor Arbiter (LA) of the NLRC RAB No. VII, Cebu City, rendered a Decision,
the decretal portion of which reads:
WHEREFORE, foregoing considered, judgment is hereby rendered declaring that respondents acted
in good faith in terminating the complainant from the service due to redundancy of works, thus,

86
complainants refusal to accept the payment of her allowed separation pay and other benefits
under the law is NOT JUSTIFIED both in fact and law, and so, therefore complainants case for
illegal dismissal against the herein respondents and so are complainants monetary claims are
hereby ordered DISMISSED for lack of merit.
SO ORDERED.14
The LA found that the respondent was properly notified on October 30, 2003 through a LetterMemorandum dated October 27, 2003, signed by GMCs HRD Manager Almocera, that her position
as Purchasing Staff had been declared redundant. It also found that the petitioner submitted to the
DOLE on October 28, 2003 the "Establishment Termination Report." The LA even faulted the
respondent for not questioning the companys action before the DOLE Regional Office, Region VII,
Cebu City so as to compel the petitioner to prove that Viajars position was indeed redundant. It
ruled that the petitioner complied with the requirements under Article 283 of the Labor Code,
considering that the nation was then experiencing an economic downturn and that GMC must
adopt measures for its survival.15
Viajar appealed the aforesaid decision to the NLRC. On October 28, 2005, the NLRC promulgated its
decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the Decision of the Labor Arbiter declaring the validity of
complainants termination due to redundancy is hereby AFFIRMED. Respondent General Milling
Corporation is hereby ordered to pay complainants separation pay in the amount of P461,464.37.
SO ORDERED.16
The NLRC, however, stated that it did not agree with the LA that Viajar should be faulted for failing
to question the petitioners declaration of redundancy before the DOLE Regional Office, Region VII,
Cebu City. It was not imperative for Viajar to challenge the validity of her termination due to
redundancy.17 Notwithstanding, the NLRC affirmed the findings of the LA that Viajars dismissal was
legal considering that GMC complied with the requirements provided for under Article 283 of the
Labor Code and existing jurisprudence, particularly citing Asian Alcohol Corporation v. NLRC. 18 The
NLRC further stated that Viajar was aware of GMCs "reduction mode," as shown in the GMC Vismin
Manpower Complement, as follows:
No. of Employees
Terminated (Redundancy)

Year

Manpower Profile

2000

795

2001

782

2002

736

41

2003

721

24

2004

697

16

2005
696 (As of June 2005)
0619
The NLRC stated that the characterization of positions as redundant is an exercise of the
employers business judgment and prerogative. It also ruled that the petitioner did not exercise
this prerogative in bad faith and that the payment of separation pay in the amount of P461,464.37
was in compliance with Article 283 of the Labor Code. 20
Respondent Viajar filed a Motion for Reconsideration which was denied by the NLRC in its
Resolution dated January 31, 2006.
Undaunted, Viajar filed a petition for certiorari before the CA. In the now assailed Decision dated
September 21, 2007, the CA granted the petition, reversing the decision of the NLRC in the
following manner:
WHEREFORE, premises considered, this Petition for Certiorari is GRANTED. The Decision, dated 28
October 2005, and Resolution, dated 31 January 2006 respectively, of public respondent National
Labor Relations Commission-Fourth Division, Cebu City, in NLRC Case No. V-000416-05 (RAB VII-122495-03) are SET ASIDE. A new judgment is entered DECLARING the dismissal ILLEGAL and
ordering respondent to reinstate petitioner without loss of seniority rights and other privileges with
full backwages inclusive of allowances and other benefits computed from the time she was

87
dismissed on 30 November 2003 up to the date of actual reinstatement. Further, moral and
exemplary damages, in the amount of Fifty Thousand Pesos ([P]50,000.00) each; and attorneys
fees equivalent to ten percent (10%) of the total monetary award, are awarded.
Costs against respondent.
SO ORDERED.21
Aggrieved by the reversal of the NLRC decision, GMC filed a motion for reconsideration. However,
in its Resolution dated January 30, 2008, the CA denied the same; hence, this petition.
The petitioner raises the following issues, to wit:
I. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY 30, 2008 OF THE
COURT OF APPEALS ARE CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE.
II. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY 30, 2008 OF THE
COURT OF APPEALS VIOLATE THE LAW AND ESTABLISHED JURISPRUDENCE ON THE OBSERVANCE
OF RESPECT AND FINALITY TO FACTUAL FINDINGS OF THE NATIONAL LABOR RELATIONS
COMMISSION.
III. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ITS DECISION OF
SEPTEMBER 21, 2007 AND RESOLUTION OF JANUARY 30, 2008 AS THE SAME ARE CONTRARY TO
THE EVIDENCE ON RECORD.22
The petition is denied.
The petitioner argues that the factual findings of the NLRC, affirming that of the LA must be
accorded respect and finality as it is supported by evidence on record. Both the LA and the NLRC
found the petitioners evidence sufficient to terminate the employment of respondent on the
ground of redundancy. The evidence also shows that GMC has complied with the procedural and
substantive requirements for a valid termination. There was, therefore, no reason for the CA to
disturb the factual findings of the NLRC. 23
The rule is that factual findings of quasi-judicial agencies such as the NLRC are generally accorded
not only respect, but at times, even finality because of the special knowledge and expertise gained
by these agencies from handling matters falling under their specialized jurisdiction. 24 It is also
settled that this Court is not a trier of facts and does not normally embark in the evaluation of
evidence adduced during trial.25 This rule, however, allows for exceptions. One of these exceptions
covers instances when the findings of fact of the trial court, or of the quasi-judicial agencies
concerned, are conflicting or contradictory with those of the CA. When there is a variance in the
factual findings, it is incumbent upon the Court to re-examine the facts once again. 26
Furthermore, another exception to the general rule is when the said findings are not supported by
substantial evidence or if on the basis of the available facts, the inference or conclusion arrived at
is manifestly erroneous.27 Factual findings of administrative agencies are not infallible and will be
set aside when they fail the test of arbitrariness. 28 In the instant case, the Court agrees with the CA
that the conclusions arrived at by the LA and the NLRC are manifestly erroneous.
GMC claims that Viajar was validly dismissed on the ground of redundancy which is one of the
authorized causes for termination of employment. The petitioner asserts that it has observed the
procedure provided by law and that the same was done in good faith. To justify the respondents
dismissal, the petitioner presented: (i) the notification Letter-Memorandum dated October 27, 2003
addressed to the respondent which was received on October 30, 2003; 29 (ii) the "Establishment
Termination Report" as prescribed by the DOLE; 30 (iii) the two (2) checks issued in the respondents
name amounting to P440,253.02 and P21,211.35 as separation pay;31 and (iv) the list of dismissed
employees as of June 6, 2006 to show that GMC was in a "reduction mode." 32 Both the LA and the
NLRC found these sufficient to prove that the dismissal on the ground of redundancy was done in
good faith.
The Court does not agree.
Article 283 of the Labor Code provides that redundancy is one of the authorized causes for
dismissal. It reads:
Article 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installment of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the provisions
of this Title, by serving a written notice on the worker and the Ministry of Labor and Employment at

88
least one (1) month before the intended date thereof. In case of termination due to the installation
of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business losses or
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall
be considered one (1) whole year. (Emphasis supplied)
From the above provision, it is imperative that the employer must comply with the requirements
for a valid implementation of the companys redundancy program, to wit: (a) the employer must
serve a written notice to the affected employees and the DOLE at least one (1) month before the
intended date of retrenchment; (b) the employer must pay the employees a separation pay
equivalent to at least one month pay or at least one month pay for every year of service,
whichever is higher; (c) the employer must abolish the redundant positions in good faith; and (d)
the employer must set fair and reasonable criteria in ascertaining which positions are redundant
and may be abolished.33
In Smart Communications, Inc., v. Astorga, 34 the Court held that:
The nature of redundancy as an authorized cause for dismissal is explained in the leading case of
Wiltshire File Co., Inc. v. National Labor Relations Commission, viz:
"x x x redundancy in an employers personnel force necessarily or even ordinarily refers to
duplication of work. That no other person was holding the same position that private respondent
held prior to termination of his services does not show that his position had not become redundant.
Indeed, in any well organized business enterprise, it would be surprising to find duplication of work
and two (2) or more people doing the work of one person. We believe that redundancy, for
purposes of the Labor Code, exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is
redundant where it is superfluous, and superfluity of a position or positions may be the outcome of
a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the
enterprise."
The characterization of an employees services as superfluous or no longer necessary and,
therefore, properly terminable, is an exercise of business judgment on the part of the employer.
The wisdom and soundness of such characterization or decision is not subject to discretionary
review provided, of course, that a violation of law or arbitrary or malicious action is not shown. 35
(Emphasis supplied and citations omitted)
While it is true that the "characterization of an employees services as superfluous or no longer
necessary and, therefore, properly terminable, is an exercise of business judgment on the part of
the employer,"36 the exercise of such judgment, however, must not be in violation of the law, and
must not be arbitrary or malicious. The Court has always stressed that a company cannot simply
declare redundancy without basis. To exhibit its good faith and that there was a fair and reasonable
criteria in ascertaining redundant positions, a company claiming to be over manned must produce
adequate proof of the same.
We reiterate what was held in Caltex (Phils.), Inc. v. NLRC: 37
In Asufrin, Jr. v. San Miguel Corporation, we ruled that it is not enough for a company to merely
declare that it has become overmanned (sic). It must produce adequate proof of such redundancy
to justify the dismissal of the affected employees.
In Panlilio v. National Labor Relations Commission, we held that evidence must be presented to
substantiate redundancy such as but not limited to the new staffing pattern, feasibility
studies/proposal, on the viability of the newly created positions, job description and the approval
by the management of the restructuring.38 (Emphasis supplied and citations omitted)
In the instant case, the Court agrees with the CA when it held that the petitioner failed to present
substantial proof to support GMCs general allegations of redundancy. As shown from the records,
the petitioner simply presented as its evidence of good faith and compliance with the law the
notification letter to respondent Viajar; 39 the "Establishment Termination Report" it submitted to the
DOLE Office;40 the two (2) checks issued in the respondents name amounting to P440,253.02 and

89
P21,211.35;41 and the list of terminated employees as of June 6, 2006. 42 We agree with the CA that
these are not enough proof for the valid termination of Viajars employment on the ground of
redundancy.
The letter-memorandum which contains general allegations is not enough to convince this Court
that Viajars termination of employment due to redundancy was warranted under the
circumstances. There is no showing that GMC made an evaluation of the existing positions and
their effect to the company. Neither did GMC exert efforts to present tangible proof that it was
experiencing business slow down or over hiring. The "Establishment Termination Report" it
submitted to the DOLE Office did not account for anything to justify declaring the positions
redundant. The Court notes that the list of terminated employees presented by GMC was a list
taken as of June 6, 2006 or almost three years after the respondent was illegally dismissed and
almost a year after the LA promulgated its decision. While the petitioner had been harping that it
was on a "reduction mode" of its employees, it has not presented any evidence (such as new
staffing pattern, feasibility studies or proposal, viability of newly created positions, job description
and the approval of the management of the restructuring, 43 audited financial documents like
balance sheets, annual income tax returns and others) 44 which could readily show that the
companys declaration of redundant positions was justified. Such proofs, if presented, would suffice
to show the good faith on the part of the employer or that this business prerogative was not
whimsically exercised in terminating respondents employment on the ground of redundancy.
Unfortunately, these are wanting in the instant case. The petitioner only advanced a self-serving
general claim that it was experiencing business reverses and that there was a need to reduce its
manpower complement.
On the other hand, the respondent presented proof that the petitioner had been hiring new
employees while it was firing the old ones, 45 negating the claim of redundancy. It must, however,
be pointed out that in termination cases, like the one before us, the burden of proving that the
dismissal of the employees was for a valid and authorized cause rests on the employer. It was
incumbent upon the petitioner to show by substantial evidence that the termination of the
employment of the respondent was validly made and failure to discharge that duty would mean
that the dismissal is not justified and therefore illegal. 46
Furthermore, the Court cannot overlook the fact that Viajar was prohibited from entering the
company premises even before the effectivity date of termination; and was compelled to sign an
"Application for Retirement and Benefits." These acts exhibit the petitioners bad faith since it
cannot be denied that the respondent was still entitled to report for work until November 30, 2003.
The demand for her to sign the "Application for Retirement and Benefits" also contravenes the fact
that she was terminated due to redundancy. Indeed, there is a difference between voluntary
retirement of an employee and forced termination due to authorized causes.
In Quevedo v. Benguet Electric Cooperative, Incorporated, 47 this Court explained the difference
between retirement and termination due to redundancy, to wit:
While termination of employment and retirement from service are common modes of ending
employment, they are mutually exclusive, with varying juridical bases and resulting benefits.
Retirement from service is contractual (i.e. based on the bilateral agreement of the employer and
employee), while termination of employment is statutory (i.e. governed by the Labor Code and
other related laws as to its grounds, benefits and procedure). The benefits resulting from
termination vary, depending on the cause. For retirement, Article 287 of the Labor Code gives
leeway to the parties to stipulate above a floor of benefits.
xxxx
The line between voluntary and involuntary retirement is thin but it is one which this Court has
drawn. Voluntary retirement cuts employment ties leaving no residual employer liability;
involuntary retirement amounts to a discharge, rendering the employer liable for termination
without cause. The employees intent is the focal point of analysis. In determining such intent, the
fairness of the process governing the retirement decision, the payment of stipulated benefits, and
the absence of badges of intimidation or coercion are relevant parameters. 48 (Emphasis supplied
and citations omitted)
Clearly, the instant case is not about retirement since the term has its peculiar meaning and is
governed by Article 287 of the Labor Code. Rather, this is a case of termination due to redundancy

90
under Article 283 of the Labor Code. Thus, the demand of GMC for the respondent to sign an
"Application for Retirement and Benefits" is really suspect.
Finally, the Court agrees with the CA that the award of moral and exemplary damages is
proper.1wphi1 The Court has awarded moral damages in termination cases when bad faith,
malice or fraud attend the employees dismissal or where the act oppresses labor, or where it was
done in a manner contrary to morals, good customs or public policy. 49 We quote with favor the
findings of the CA:
We also award moral and exemplary damages to petitioner. While it is true that good faith is
presumed, the circumstances surrounding the dismissal of petitioner negate its existence. Moral
damages may be recovered only where the dismissal of the employee was tainted by bad faith or
fraud, or where it constituted an act oppressive to labor, and done in a manner contrary to morals,
good customs or public policy while exemplary damages are recoverable only if the dismissal was
done in a wanton, oppressive, or malevolent manner. To reiterate, immediately after receipt of her
termination letter which was effective on 30 November 2003, petitioner was no longer treated as
an employee of respondent as early as the 31st of October 2003; she was already barred from
entering the company premises; she was deprived access to her office computer; and she was
excluded from the bandy [sic] clock. She was also made to sign documents, including an
"APPLICATION FOR RETIREMENT AND BENEFITS" in the guise of payment of her separation pay.
When petitioner confronted her immediate superior regarding her termination, the latters shock
aggravated her confusion and suffering. She also learned about the employment of a number of
new employees, several of whom were even employed in her former department. Petitioner
likewise suffered mental torture brought about by her termination even though its cause was not
clear and substantiated.50 (Citations omitted)
WHEREFORE, the petition is DENIED. The Decision dated September 21, 2007 of the Court of
Appeals, as well as its Resolution dated January 30, 2008 in CA-G.R. SP No. 01734, are hereby
AFFIRMED.
SO ORDERED.

91
G.R. No. 158693
November 17, 2004
JENNY M. AGABON and VIRGILIO C. AGABON, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS,
INC. and VICENTE ANGELES, respondents.
DECISION
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 Agabon's 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 petitioner's 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 Agabon's 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

92
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 respondent's 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 latter's representative in connection with the employee's 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

93
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 employee's 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 employee's last known address. 21
Thus, it should be held liable for non-compliance with the procedural requirements of due
process.

94
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.

95
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 attorney's 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 twopart 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 coemployees 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

96
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 selfdestruction 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 labormanagement 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

97
was equivalent to the employee's one month salary. This indemnity is intended not to penalize
the employer but to vindicate or recognize the employee's 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 Agabon's 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 same43 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 employee's 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 Agabon's 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

98
same period in the amount of P3,255.00 and the balance of Virgilio Agabon's 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 Agabon's 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 noncompliance with statutory due process.
No costs.
SO ORDERED.

99
G.R. No. 207888
June 9, 2014
DIONARTO Q. NOBLEJAS, Petitioner,
vs.
ITALIAN MARITIME ACADEMY PHILS., INC., CAPT. NICOLO S. TERREI, RACELI B. FERREZ
and MA. TERESA R. MENDOZA, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari seeking the reversal of the February 22, 2013 Decision 1
and the June 21, 2013 Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 124146,
concerning an illegal dismissal case.
Petitioner Dionarto Q. Noblejas (Noblejas) filed a complaint for illegal dismissal, tax refund, moral
and exemplary damages, non-payment of 13th month pay, food, gasoline and schooling
allowances, health insurance, monetized leave, and attorney's fees, against Italian Maritime
Academy Phils., Inc. (IMAPI), Capt. Nicolo S. Terrei (Capt. Terrei), Raceli S. Ferrez (Ferrez), and Ma.
Teresa R. Mendoza (Mendoza).
IMAPI was a training center for seamen and an assessment center for determination of the
qualifications and competency of seamen and officers for possible promotion. Capt. Terrei was
the Managing Director of IMAPI while Ferrez was his secretary. Mendoza was the companys
Administrative Manager.
Record shows that Procerfina SA. Terrei, IMAPI President, wrote a Letter 3 to Noblejas informing
him that he had been appointed as training instructor/assessor of the company on a contractual
basis for a period of three (3) months effective May 20,2009, with a monthly salary of 75,000.00
inclusive of tax. After the expiration of the 3-month period, IMAPI hired Noblejas anew as training
instructor/assessor with the same salary rate, but no written contract was drawn for his rehiring. 4
The absence of a written contract to cover the renewal of his employment became Noblejas
major concern. To address all his apprehensions, he wrote Capt. Terrei a letter, dated March 9,
2010, requesting that a new contract be executed to reflect the following provisions that they
had allegedly agreed upon during their conversation on May 19, 2009, to wit: 1] that his monthly
salary would be P75,000.00, tax excluded, and that 50% of his SSS premium would be
shouldered by the company; and 2] that after the completion of his 3-month contract, he would
be given the option to choose either - a) to be regularly employed as an instructor of IMAPI; or b)
to go on board a vessel with the company extending him financial aid for the processing of
pertinent documents, which amount would be later on deducted from his salary. Likewise in the
same letter, Noblejas intimated that he was electing to continue working for the company as its
regular instructor.
Noblejas averred that the company did not act on his letter-request, so he sought an audience
with Capt. Terrei on March 16, 2010. During the meeting, an altercation between them ensued.
He claimed that after that incident, Capt. Terrei instructed Ferrez to dismiss him from
employment. He claimed that when he asked from Ferrez for a copy of his old contract, she
allegedly replied, "No, you better pack up all your things now and go, you are now dismissed and
you are no longer part in this office clearly, you are terminated from this day on." 5
In their position paper,6 respondents submitted that they could not be adjudged guilty of illegal
dismissal because there was no positive and overt act of dismissing Noblejas from employment.
Respondents presented a different version of what took place on March 16, 2010. According to
respondents, Noblejas got angry, hurled invectives against Ferrez and even threatened to file a
case against them after she had relayed to him the response of Capt. Terrei to his March 9, 2010
letter to the effect that there was no previous agreement to grant him tax refund, health
insurance and food, schooling and gasoline allowances and that he had to render at least one
year of service before the company could decide whether to accord him the status of a regular
employee. The following day, March 17, 2010, he did not report for work anymore and filed the
complaint against them.
Respondents theorized that the complaint was filed on the mistaken impression by Noblejas that
the failure to meet his demands, enumerated in his March 9, 2010 letter, was tantamount to his
termination from employment. They, however, insisted that he was not entitled to 13th month
pay because he was hired as a consultant and not as a regular employee. For unused leave

100
credits, they posited that IMAPI could not be held liable in view of their payment to him of his sick
leave pay in the aggregate amount of P21,075.00.
On October 15, 2010, Labor Arbiter Lutricia F. Quitevis-Alconcel (LA) handed down her decision, 7
finding that Noblejas was illegally dismissed from his employment, and awarded him limited
backwages. The LA gave credence to his allegation that Capt. Terrei instructed his secretary,
Ferrez, to terminate his employment after he had sought clarification on matters pertaining to his
employment contract and monetary benefits. The LA concluded that Noblejas was a regular
employee and, as such, was entitled to his proportionate 13th month pay. The other monetary
claims were denied for being unfounded. The LA added that, as reinstatement was no longer
feasible considering the strained relationship between the parties, payment of separation pay
was the more equitable relief. The dispositive portion of the LA decision reads:
WHEREFORE, in light of the foregoing, judgment is hereby rendered declaring respondents guilty
of illegal dismissal.
Respondent Italian Maritime Academy Philippines, Inc. is hereby ordered to pay complainant
Dionarto Q. Noblejas, as follows:
1. Limited backwages computed from March 16, 2010 up to the date of this
decision, in the amount of FOUR HUNDRED EIGHTY EIGHT THOUSAND NINE
HUNDRED THIRTY NINE PESOS and 90/100 (Php488,939.90);
2. Separation pay, in lieu of reinstatement, equivalent to one (1) month salary, in
the amount of SEVENTY FIVE THOUSAND PESOS (Php75,000.00)
3. Proportionate 13th month pay, in the amount of FIFTEEN THOUSAND SIX
HUNDRED TWENTY FIVE PESOS (Php15,625.00).
Other claims herein sought and prayed for are hereby denied for lack of legal and factual bases.
SO ORDERED.8
Dissatisfied, respondents appealed the October 15, 2010 decision of the LA before the National
Labor Relations Commission (NLRC).
On October 27, 2011, the NLRC reversed the LA decision in a Judgment 9 exonerating respondents
from the charge of illegal dismissal. The NLRC explained that there was no showing that
respondents committed any positive and overt act of dismissal and that the claim of Noblejas
that Capt. Terrei ordered Ferrez to terminate his employment was not substantiated. According to
the NLRC, it was Noblejas who severed his employment with IMAPI after it had refused to grant
his numerous demands. Moreover, Noblejas was a contractual employee of IMAPI and, hence,
there was no basis for his monetary award. The decretal portion of the decision reads:
WHEREFORE, premises considered, the appealed Decision is hereby REVERSED AND SET ASIDE
and another one is entered DISMISSING the complaint for lack of merit.
SO ORDERED.10
Noblejas filed a motion for reconsideration, but it was denied by the NLRC in its Resolution, dated
January 27, 2012.
Aggrieved, Noblejas filed a petition for certiorari before the CA ascribing grave abuse of
discretion on the part of the NLRC for ruling that he was a contractual employee and that he was
not illegally dismissed.
On February 22, 2013, the CA rendered the challenged decision finding the petition for certiorari
to be devoid of merit. It upheld the findings of the NLRC that Noblejas was a contractual
employee of IMAPI and that there was no evidence to prove that he was dismissed from
employment. Accordingly, the CA adjudged:
WHEREFORE, in view of the foregoing, the petition is DISMISSED. The decision dated October 27,
2011, and the resolution dated January 27, 2012, both issued by the public respondent National
Labor Relations Commission are AFFIRMED.
SO ORDERED.11
Noblejas filed a motion for reconsideration, but the same was denied by the CA in its Resolution,
dated June 21, 2013.
Unfazed, Noblejas filed the present petition for review on certiorari imputing to the CA the
following
ERRORS:
A.

101
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER IS A CONTRACTUAL
EMPLOYEE.
B.
THE COURT OF APPEALS ERRED IN DECLARING THAT PETITIONER WAS NOT
ILLEGALLY DISMISSED.
C.
THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER WAS NOT ENTITLED
TO HIS MONEY CLAIMS.12
It is the position of petitioner Noblejas that in illegal dismissal cases, the burden of proving that
an employee was not dismissed, or if dismissed, that the dismissal was not illegal, rests on the
employer. He submits that the failure of respondents to discharge this burden shows that his
dismissal from employment was not justified. He avers that his act of immediately filing a
complaint for illegal dismissal praying for reinstatement effectively negated the finding that he
was disinterested in continuing his employment with IMAPI.
Noblejas further points out that the nature of an employment is determined by the nature of
activities being performed by the employee. In his case, he already attained the status of a
regular employee because he was allowed to work beyond the stipulated period of his
employment and he performed functions which were necessary or desirable in the usual business
or trade of IMAPI.
Resolution of the Court
Before the Court tackles the issue of illegal dismissal, there should first be a determination of the
status of his employment. In this regard, the Court finds Noblejas to be a regular employee of
IMAPI.
Pursuant to Article 280 of the Labor Code, there are two kinds of regular employees, namely: (1)
those who are engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer; and (2) those who have rendered at least one year of
service, whether continuous or broken, with respect to the activities in which they are
employed.13
Regular employees are further classified into (1) regular employees - by nature of work and (2)
regular employees - by years of service.14 The former refers to those employees who perform a
particular function which is necessary or desirable in the usual business or trade of the employer,
regardless of their length of service; while the latter refers to those employees who have been
performing the job, regardless of its nature thereof, for at least a year. 15
In the case at bench, Noblejas was employed by IMAPI as a training instructor/assessor for a
period of three (3) months effective May 20, 2009. After the end of the 3-month period, he was
rehired by IMAPI for the same position and continued to work as such until March 16, 2010. There
is no dispute that the work of Noblejas was necessary or desirable in the business or trade of
IMAPI, a training and assessment center for seamen and officers of vessels. Moreover, such
continuing need for his services is sufficient evidence of the necessity and indispensability of his
services to IMAPIs business. Taken in this light, Noblejas had indeed attained the status of a
regular employee at the time he ceased to report for work on March 17, 2010.
There was, however, no illegal dismissal.
Fair evidentiary rule dictates that before employers are burdened to prove that they did not
commit illegal dismissal, it is incumbent upon the employee to first establish by substantial
evidence the fact of his or her dismissal.16 The Court is not unmindful of the rule in labor cases
that the employer has the burden of proving that the termination was for a valid or authorized
cause. It is likewise incumbent upon the employees, however, that they should first establish by
competent evidence the fact of their dismissal from employment. 17 It is an age-old rule that the
one who alleges a fact has the burden of proving it and the proof should be clear, positive and
convincing.18 Mere allegation is not evidence.19
Aside from his mere assertion, no corroborative and competent evidence was adduced by
Noblejas to substantiate his claim that he was dismissed from employment. The record is bereft
of any indication that he was prevented from returning to work or otherwise deprived of any work
assignment. It is also noted that no evidence was submitted to show that respondent Ferrez, the
secretary of Capt. Terrei, was actually authorized by IMAPI to terminate the employment of the

102
companys employees or that Ferrez was indeed instructed by Capt. Terrei to dismiss him from
employment.
The Court finds it odd that, instead of clarifying from Capt. Terrei what he heard from Ferrez,
Noblejas immediately instituted an illegal dismissal case against the respondents the day
following the alleged incident and never reported back for work since then. The Court quotes
with approval the observation of the NLRC on this score:
Complainants allegation that he was dismissed from employment cannot be accorded credence
for it is obvious that being unhappy with not being granted his demands, it was he himself who is
no longer interested to continue his employment with respondent company. The filing of a
complaint for illegal dismissal with numerous money claims on March 17, 2010, against
respondent is obviously intended to compel respondent company to abide with his demands.
Respondents refusal to grant complainants demands does not constitute an overt act of
dismissal. On the contrary, it is rather the apparent disinterest of complainant to continue his
employment with respondent company that may be considered a covert act that severed his
employment when the latter did not grant the litany of his demands. xxx. 20
Let it be underscored that the fact of dismissal must be established by positive and overt acts of
an employer indicating the intention to dismiss. 21 Indeed, a party alleging a critical fact must
support his allegation with substantial evidence, for any decision based on unsubstantiated al
legation cannot stand without offending due process. 22 Here, there is no sufficient proof showing
that Noblejas was actually laid off from work. In any event, his filing of a complaint for illegal
dismissal, irrespective of whether reinstatement or separation pay was prayed for, could not by
itself be the sole consideration in determining whether he has been illegally dismissed.
All circumstances surrounding the alleged termination should also be taken into account.
For the above reasons, the Court sustains the LA in granting Noblejas proportionate 13th month
pay covering the period of January 1, 2010 to March 15, 2010 in the aggregate amount of
P15,625.00.23
Furthermore, the respondents should accept him back and reinstate him to his former position.
There should, however, be no payment of backwages under the principle of "no work, no pay." 24
WHEREFORE, the petition is DENIED. The assailed February 22, 2013 Decision of the Court of
Appeals in CA-G.R. SP No. 124146 is AFFIRMED with MODIFICATION. Accordingly, respondent
Italian Maritime Academy Philippines, Inc. is ordered to pay petitioner Dionarto Q.
Noblejas his proportionate 13th month pay in the amount of P15,625.00; and to reinstate him to
his former position.
SO ORDERED.

103
G.R. No. 192571
April 22, 2014
ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA
OLIVIA T. YABUT-MISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for Reconsideration dated
August 23, 2013 of the Court's Decision dated July 23, 2013 (Decision). 1
At the outset, there appears to be no substantial argument in the said motion sufficient for the
Court to depart from the pronouncements made in the initial ruling. But if only to address
Akaraz's novel assertions, and to so placate any doubt or misconception in the resolution of this
case, the Court proceeds to shed light on the matters indicated below.
A. Manner of review.
Alcaraz contends that the Court should not have conducted a re-weighing of evidence since a
petition for review on certiorari under Rule 45 of the Rules of Court (Rules) is limited to the
review of questions of law. She submits that since what was under review was a ruling of the
Court of Appeals (CA) rendered via a petition for certiorari under Rule 65 of the Rules, the Court
should only determine whether or not the CA properly determined that the National Labor
Relations Commission (NLRC) committed a grave abuse of discretion.
The assertion does not justify the reconsideration of the assailed Decision.
A careful perusal of the questioned Decision will reveal that the Court actually resolved the
controversy under the above-stated framework of analysis. Essentially, the Court found the CA to
have committed an error in holding that no grave abuse of discretion can be ascribed to the
NLRC since the latter arbitrarily disregarded the legal implication of the attendant circumstances
in this case which should have simply resulted in the finding that Alcaraz was apprised of the
performance standards for her regularization and hence, was properly a probationary employee.
As the Court observed, an employees failure to perform the duties and responsibilities which
have been clearly made known to him constitutes a justifiable basis for a probationary
employees non-regularization. As detailed in the Decision, Alcaraz was well-apprised of her
duties and responsibilities as well as the probationary status of her employment:
(a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)] caused the
publication in a major broadsheet newspaper of its need for a Regulatory Affairs
Manager, indicating therein the job description for as well as the duties and
responsibilities attendant to the aforesaid position; this prompted Alcaraz to submit
her application to Abbott on October 4, 2004;
(b) In Abbotts December 7, 2004 offer sheet, it was stated that Alcaraz was to be
employed on a probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract which specifically
stated, inter alia, that she was to be placed on probation for a period of six (6)
months beginning February 15, 2005 to August 14, 2005;
(d) On the day Alcaraz accepted Abbotts employment offer, Bernardo sent her
copies of Abbotts organizational structure and her job description through e-mail;
(e) Alcaraz was made to undergo a pre-employment orientation where [Allan G.
Almazar] informed her that she had to implement Abbotts Code of Conduct and
office policies on human resources and finance and that she would be reporting
directly to [Kelly Walsh];
(f) Alcaraz was also required to undergo a training program as part of her
orientation;
(g) Alcaraz received copies of Abbotts Code of Conduct and Performance Modules
from [Maria Olivia T. Yabut-Misa] who explained to her the procedure for evaluating
the performance of probationary employees; she was further notified that Abbott
had only one evaluation system for all of its employees; and

104
(h) Moreover, Alcaraz had previously worked for another pharmaceutical company
and had admitted to have an "extensive training and background" to acquire the
necessary skills for her job.2
Considering the foregoing incidents which were readily observable from the records, the Court
reached the conclusion that the NLRC committed grave abuse of discretion, viz.:
[I]n holding that Alcaraz was illegally dismissed due to her status as a regular and not a
probationary employee, the Court finds that the NLRC committed a grave abuse of discretion.
To elucidate, records show that the NLRC based its decision on the premise that Alcarazs receipt
of her job description and Abbotts Code of Conduct and Performance Modules was not
equivalent to being actually informed of the performance standards upon which she should have
been evaluated on. It, however, overlooked the legal implication of the other attendant
circumstances as detailed herein which should have warranted a contrary finding that Alcaraz
was indeed a probationary and not a regular employee more particularly the fact that she was
well-aware of her duties and responsibilities and that her failure to adequately perform the same
would lead to her non-regularization and eventually, her termination. 3
Consequently, since the CA found that the NLRC did not commit grave abuse of discretion and
denied the certiorari petition before it, the reversal of its ruling was thus in order.
At this juncture, it bears exposition that while NLRC decisions are, by their nature, final and
executory4 and, hence, not subject to appellate review, 5 the Court is not precluded from
considering other questions of law aside from the CAs finding on the NLRCs grave abuse of
discretion. While the focal point of analysis revolves on this issue, the Court may deal with
ancillary issues such as, in this case, the question of how a probationary employee is deemed
to have been informed of the standards of his regularization if only to determine if the concepts
and principles of labor law were correctly applied or misapplied by the NLRC in its decision. In
other words, the Courts analysis of the NLRCs interpretation of the environmental principles and
concepts of labor law is not completely prohibited in as it is complementary to a Rule 45
review of labor cases.
Finally, if only to put to rest Alcarazs misgivings on the manner in which this case was reviewed,
it bears pointing out that no "factual appellate review" was conducted by the Court in the
Decision. Rather, the Court proceeded to interpret the relevant rules on probationary
employment as applied to settled factual findings. Besides, even on the assumption that a
scrutiny of facts was undertaken, the Court is not altogether barred from conducting the same.
This was explained in the case of Career Philippines Shipmanagement, Inc. v. Serna 6 wherein the
Court held as follows:
Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of witnesses,
or substitute the findings of fact of the NLRC, an administrative body that has expertise in its
specialized field. Nor do we substitute our "own judgment for that of the tribunal in determining
where the weight of evidence lies or what evidence is credible." The factual findings of the NLRC,
when affirmed by the CA, are generally conclusive on this Court.
Nevertheless, there are exceptional cases where we, in the exercise of our discretionary
appellate jurisdiction may be urged to look into factual issues raised in a Rule 45 petition. For
instance, when the petitioner persuasively alleges that there is insufficient or insubstantial
evidence on record to support the factual findings of the tribunal or court a quo, as Section 5,
Rule 133 of the Rules of Court states in express terms that in cases filed before administrative or
quasi-judicial bodies, a fact may be deemed established only if supported by substantial
evidence.7 (Emphasis supplied)
B. Standards for regularization;
conceptual underpinnings.
Alcaraz posits that, contrary to the Courts Decision, ones job description cannot by and of itself
be treated as a standard for regularization as a standard denotes a measure of quantity or
quality. By way of example, Alcaraz cites the case of a probationary salesperson and asks how
does such employee achieve regular status if he does not know how much he needs to sell to
reach the same.
The argument is untenable.

105
First off, the Court must correct Alcarazs mistaken notion: it is not the probationary employees
job description but the adequate performance of his duties and responsibilities which constitutes
the inherent and implied standard for regularization. To echo the fundamental point of the
Decision, if the probationary employee had been fully apprised by his employer of these duties
and responsibilities, then basic knowledge and common sense dictate that he must adequately
perform the same, else he fails to pass the probationary trial and may therefore be subject to
termination.8
The determination of "adequate performance" is not, in all cases, measurable by quantitative
specification, such as that of a sales quota in Alcarazs example. It is also hinged on the
qualitative assessment of the employees work; by its nature, this largely rests on the reasonable
exercise of the employers management prerogative. While in some instances the standards
used in measuring the quality of work may be conveyed such as workers who construct
tangible products which follow particular metrics, not all standards of quality measurement may
be reducible to hard figures or are readily articulable in specific pre-engagement descriptions. A
good example would be the case of probationary employees whose tasks involve the application
of discretion and intellect, such as to name a few lawyers, artists, and journalists. In these
kinds of occupation, the best that the employer can do at the time of engagement is to inform
the probationary employee of his duties and responsibilities and to orient him on how to properly
proceed with the same. The employer cannot bear out in exacting detail at the beginning of the
engagement what he deems as "quality work" especially since the probationary employee has
yet to submit the required output. In the ultimate analysis, the communication of performance
standards should be perceived within the context of the nature of the probationary employees
duties and responsibilities.
The same logic applies to a probationary managerial employee who is tasked to supervise a
particular department, as Alcaraz in this case.1wphi1 It is hardly possible for the employer, at
the time of the employees engagement, to map into technical indicators, or convey in precise
detail the quality standards by which the latter should effectively manage the department.
Factors which gauge the ability of the managerial employee to either deal with his subordinates
(e.g., how to spur their performance, or command respect and obedience from them), or to
organize office policies, are hardly conveyable at the outset of the engagement since the
employee has yet to be immersed into the work itself. Given that a managerial role essentially
connotes an exercise of discretion, the quality of effective management can only be determined
through subsequent assessment. While at the time of engagement, reason dictates that the
employer can only inform the probationary managerial employee of his duties and
responsibilities as such and provide the allowable parameters for the same. Verily, as stated in
the Decision, the adequate performance of such duties and responsibilities is, by and of itself, an
implied standard of regularization.
In this relation, it bears mentioning that the performance standard contemplated by law should
not, in all cases, be contained in a specialized system of feedbacks or evaluation. The Court
takes judicial notice of the fact that not all employers, such as simple businesses or small-scale
enterprises, have a sophisticated form of human resource management, so much so that the
adoption of technical indicators as utilized through "comment cards" or "appraisal" tools should
not be treated as a prerequisite for every case of probationary engagement. In fact, even if a
system of such kind is employed and the procedures for its implementation are not followed,
once an employer determines that the probationary employee fails to meet the standards
required for his regularization, the former is not precluded from dismissing the latter. The rule is
that when a valid cause for termination exists, the procedural infirmity attending the termination
only warrants the payment of nominal damages. This was the principle laid down in the landmark
cases of Agabon v. NLRC9 (Agabon) and Jaka Food Processing Corporation v. Pacot 10 (Jaka). In the
assailed Decision, the Court actually extended the application of the Agabon and Jaka rulings to
breaches of company procedure, notwithstanding the employers compliance with the statutory
requirements under the Labor Code.11 Hence, although Abbott did not comply with its own
termination procedure, its non-compliance thereof would not detract from the finding that there
subsists a valid cause to terminate Alcarazs employment. Abbott, however, was penalized for its
contractual breach and thereby ordered to pay nominal damages.

106
As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano 12 (Aliling) since the same is not
squarely applicable to the case at bar. The employee in Aliling, a sales executive, was belatedly
informed of his quota requirement. Thus, considering the nature of his position, the fact that he
was not informed of his sales quota at the time of his engagement changed the complexion of
his employment. Contrarily, the nature of Alcaraz's duties and responsibilities as Regulatory
Affairs Manager negates the application of the foregoing. Records show that Alcaraz was
terminated because she (a) did not manage her time effectively; (b) failed to gain the trust of her
staff and to build an effective rapport with them; (c) failed to train her staff effectively; and (d)
was not able to obtain the knowledge and ability to make sound judgments on case processing
and article review which were necessary for the proper performance of her duties. 13 Due to the
nature and variety of these managerial functions, the best that Abbott could have done, at the
time of Alcaraz's engagement, was to inform her of her duties and responsibilities, the adequate
performance of which, to repeat, is an inherent and implied standard for regularization; this is
unlike the circumstance in Aliling where a quantitative regularization standard, in the term of a
sales quota, was readily articulable to the employee at the outset. Hence, since the
reasonableness of Alcaraz's assessment clearly appears from the records, her termination was
justified. Bear in mind that the quantum of proof which the employer must discharge is only
substantial evidence which, as defined in case law, means that amount of relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise. 14 To the Court's mind, this threshold of evidence
Abbott amply overcame in this case.
All told, the Court hereby denies the instant motion for reconsideration and thereby upholds the
Decision in the main case.
WHEREFORE, the motion for reconsideration dated August 23, 2013 of the Court's Decision dated
July 23, 2013 in this case is hereby DENIED.
SO ORDERED.

107
G.R. Nos. 196280 & 196286
April 2, 2014
UNIVERSIDAD DE STA. ISABEL, Petitioner,
vs.
MARVIN-JULIAN L. SAMBAJON, JR., Respondent.
DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 urging this Court to set aside the
Decision1 dated March 25, 2011 of the Court of Appeals (CA) in CA-GR. SP Nos. 108103 and
108168 which affirmed with modification the Decision 2 dated August 1, 2008 of the National
Labor Relations Commission (NLRC). The NLRC affirmed the Decision 3 dated August 22, 2006 of
the Labor Arbiter in NLRC Sub-RAB V-05-04-00053-05) declaring petitioner liable for illegal
dismissal of respondent.
The Facts
Universidad de Sta. Isabel (petitioner) is a non-stock, non-profit religious educational institution
in Naga City. Petitioner hired Marvin-Julian L. Sambajon, Jr. (respondent) as a full-time college
faculty member with the rank of Assistant Professor on probationary status, as evidenced by an
Appointment Contract4 dated November 1, 2002, effective November 1, 2002 up to March 30,
2003.
After the aforesaid contract expired, petitioner continued to give teaching loads to respondent
who remained a full-time faculty member of the Department of Religious Education for the two
semesters of school-year (SY) 2003-2004 (June 1, 2003 to March 31, 2004); and two semesters
of SY 2004-2005 (June 2004 to March 31, 2005). 5
Sometime in June 2003, after respondent completed his course in Master of Arts in Education,
major in Guidance and Counseling, he submitted the corresponding Special Order from the
Commission on Higher Education (CHED), together with his credentials for the said masters
degree, to the Human Resources Department of petitioner for the purpose of salary
adjustment/increase. Subsequently, respondents salary was increased, as reflected in his pay
slips starting October 1-15, 2004.6 He was likewise re-ranked from Assistant Professor to
Associate Professor.
In a letter dated October 15, 2004 addressed to the President of petitioner, Sr. Ma. Asuncion G.
Evidente, D.C., respondent vigorously argued that his salary increase should be made effective
as of June 2003 and demanded the payment of his salary differential. The school administration
thru Sr. Purita Gatongay, D.C., replied by explaining its policy on re-ranking of faculty
members7, viz:
xxxx
Please be informed that teachers in the Universidad are not re-ranked during their probationary
period. The Faculty Manual as revised for school year 2002-2003 provides (page 38) "Reranking is done every two years, hence the personnel hold their present rank for two years.
Those undergoing probationary period and those on part-time basis of employment are not
covered by this provision." This provision is found also in the 2000-2001 Operations Manual.
Your personnel file shows that you were hired as a probationary teacher in the second semester
of school year 2002-2003. By October 2004, you will be completing four (4) semesters (two
school years) of service. Even permanent teachers are re-ranked only every two years, and you
are not even a permanent teacher. I am informed that you have been told several times and
made to read the Provision in the Faculty Manual by the personnel office that you cannot be reranked because you are still a probationary teacher.
x x x x8
Respondent insisted on his demand for retroactive pay. In a letter dated January 10, 2005, Sr.
Evidente reiterated the school policy on re-ranking of teachers, viz:
xxx
Under the Faculty Manual a permanent teacher is not entitled to re-ranking oftener than once
every two years. From this it should be obvious that, with all the more reason, a probationary
teacher would not be entitled to "evaluation," which could result in re-ranking or "adjustment in
salary" oftener than once every two years.
Since you are a probationary teacher, the University is under no obligation to re-rank you or

108
adjust your salary after what you refer to as "evaluation." Nevertheless, considering that in
October 2004 you were completing two years of service, the University adjusted your salary in
the light of the CHED Special Order you submitted showing that you had obtained the degree of
Master of Arts in Education. Instead of being grateful for the adjustment, you insist that the
adjustment be made retroactive to June 2003. Simply stated, you want your salary adjusted
after one semester of probationary service. We do not think a probationary teacher has better
rights than a permanent teacher in the matter of re-ranking or "evaluation." 9
However, respondent found the above explanation insufficient and not clear enough. In his
letter dated January 12, 2005, he pointed out the case of another faculty member -- whom he
did not name -- also on probationary status whose salary was supposedly adjusted by petitioner
at the start of school year (June) after he/she had completed his/her masters degree in March.
Respondent thus pleaded for the release of his salary differential, or at the very least, that
petitioner give him categorical answers to his questions. 10
Apparently, to resolve the issue, a dialogue was held between respondent and Sr. Evidente. As
to the outcome of this conversation, the parties gave conflicting accounts. Respondent claimed
that Sr. Evidente told him that the school administration had decided to shorten his
probationary period to two years on the basis of his satisfactory performance. 11 This was
categorically denied by Sr. Evidente though the latter admitted having informed respondent
"that he was made Associate Professor on account of his incessant requests for a salary
increase which the Universidad de Santa Isabel eventually accommodatedconsidering that
[respondent] had obtained a Masters Degree in June 2003." She further informed respondent
that "his appointment as Associate Professor did not affect his status as a probationary
employee" and that petitioner "was not and did not exercise its prerogative to shorten his
probationary period to only two years." Sr. Stella O. Real, D.C., who issued a Certificate of
Employment to respondent, likewise denied that she confirmed to respondent that petitioner
has shortened his probationary employment.12
On February 26, 2005, respondent received his letter of termination which stated:
Greetings of Peace in the Lord!
We regret to inform your good self that your full time probationary appointment will not be
renewed when it expires at the end of this coming March 31, 2005.
Thank you so much for the services that you have rendered to USI and to her clientele the past
several semesters. We strongly and sincerely encourage you to pursue your desire to complete
your Post Graduate studies in the University of your choice as soon as you are able.
God bless you in all your future endeavors.
Godspeed!13
On April 14, 2005, respondent filed a complaint for illegal dismissal against the petitioner.
In his Decision dated August 22, 2006, Labor Arbiter Jesus Orlando M. Quinones ruled that there
was no just or authorized cause in the termination of respondents probationary employment.
Consequently, petitioner was found liable for illegal dismissal, thus:
WHEREFORE, in view of the foregoing, judgment is hereby rendered finding respondent school
UNIVERSIDAD DE SANTA ISABEL liable for the illegal dismissal of complainant MARVIN-JULIAN L.
SAMBAJON, JR.
Accordingly, and consistent with Article 279 of the Labor Code, respondent school is hereby
directed to pay complainant full backwages covering the period/duration of the 1st semester of
academic year 2005-2006. Reinstatement being rendered moot by the expiration of the
probationary period, respondent school is directed to pay complainant separation pay in lieu of
reinstatement computed at one (1) months pay for every year of service. An award of 10%
attorneys fees in favor of complainant is also held in order.
(please see attached computation of monetary award as integral part of this decision).
All other claims and charges are DISMISSED for lack of legal and factual basis.
SO ORDERED.14
Petitioner appealed to the NLRC raising the issue of the correct interpretation of Section 92 of
the Manual of Regulations for Private Schools and DOLE-DECS-CHED-TESDA Order No. 01, series
of 1996, and alleging grave abuse of discretion committed by the Labor Arbiter in ruling on a
cause of action/issue not raised by the complainant (respondent) in his position paper.

109
On August 1, 2008, the NLRC rendered its Decision affirming the Labor Arbiter and holding that
respondent had acquired a permanent status pursuant to Sections 91, 92 and 93 of the 1992
Manual of Regulations for Private Schools, in relation to Article 281 of the Labor Code, as
amended. Thus:
In the instant case, the first contract (records, pp. 36; 92) executed by the parties provides that
he was hired on a probationary status effective November 1, 2002 to March 30, 2003. While his
employment continued beyond the above-mentioned period and lasted for a total of five (5)
consecutive semesters, it appears that the only other contract he signed is the one (records, p.
103) for the second semester of SY 2003-2004. A portion of this contract reads:
"I am pleased to inform you that you are designated and commissioned to be an Apostle of
Love and Service, Unity and Peace as you dedicate and commit yourself in the exercise of your
duties and responsibilities as a:
FULL-TIME FACULTY MEMBER
of the Religious Education Department from November 1, 2003 to March 31, 2004.
Unless otherwise renewed in writing this designation automatically terminates as of the date
expiration above stated without further notice."
There is no showing that the complainant signed a contract for the first and second semesters
of SY 2004-2005.
Under the circumstances, it must be concluded that the complainant has acquired permanent
status. The last paragraph of Article 281 of the Labor Code provides that "an employee who is
allowed to work after a probationary period shall be considered a regular employee." Based
thereon, the complainant required [sic] permanent status on the first day of the first semester
of SY 2003-2004.
As presently worded, Section 92 of the revised Manual of Regulations for Private Schools merely
provides for the maximum lengths of the probationary periods of academic personnel of private
schools in the three (3) levels of education (elementary, secondary, tertiary). The periods
provided therein are not requirements for the acquisition, by them, of permanent status.
WHEREFORE, the decision appealed from is hereby AFFIRMED.
SO ORDERED.15
Petitioner and respondent sought reconsideration of the above decision, with the former
contending that the NLRC resolved an issue not raised in the appeal memorandum, while the
latter asserted that the NLRC erred in not awarding him full back wages so as to conform to the
finding that he had acquired a permanent status. Both motions were denied by the NLRC which
ruled that regardless of whether or not the parties were aware of the rules for the acquisition of
permanent status by private school teachers, these rules applied to them and overrode their
mistaken beliefs. As to respondents plea for back wages, the NLRC said the award of back
wages was not done in this case because respondent did not appeal the Labor Arbiters
decision.
Both parties filed separate appeals before the CA. On motion by respondent, the two cases
were consolidated (CA-G.R. SP Nos. 108103 and 108168). 16
By Decision dated March 25, 2011, the CA sustained the conclusion of the NLRC that
respondent had already acquired permanent status when he was allowed to continue teaching
after the expiration of his first appointment-contract on March 30, 2003. However, the CA found
it necessary to modify the decision of the NLRC to include the award of back wages to
respondent. The dispositive portion of the said decision reads:
WHEREFORE, premises considered, the petition docketed as CA-G.R. SP No. 108103 is
GRANTED. The challenged Decision of the NLRC dated August 1, 2008 in NLRC NCR CA No.
050481-06 (NLRC Sub-RAB V-05-04-00053-05) is AFFIRMED with MODIFICATION in that
Universidad de Sta. Isabel is directed to reinstate Marvin-Julian L. Sambajon, Jr. to his former
position without loss of seniority rights and to pay him full backwages computed from the time
his compensation was withheld from him up to the time of his actual reinstatement. All other
aspects are AFFIRMED.
As regards CA-G.R. SP No. 108168, the petition is DENIED for lack of merit.
SO ORDERED.17
The Petition/Issues

110
Before this Court, petitioner ascribes grave error on the part of the CA in sustaining the NLRC
which ruled that respondent was dismissed without just or authorized cause at the time he had
already acquired permanent or regular status since petitioner allowed him to continue teaching
despite the expiration of the first contract of probationary employment for the second semester
of SY 2002-2003. Petitioner at the outset underscores the fact that the NLRC decided an issue
which was not raised on appeal, i.e., whether respondent had attained regular status. It points
out that the Labor Arbiters finding that respondent was dismissed while still a probationary
employee was not appealed by him, and hence such finding had already become final.
In fine, petitioner asks this Court to rule on the following issues: (1) whether the NLRC correctly
resolved an issue not raised in petitioners appeal memorandum; and (2) whether respondents
probationary employment was validly terminated by petitioner.
Our Ruling
The petition is partly meritorious.
Issues on Appeal before the NLRC
Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC, which was in force at
the time petitioner appealed the Labor Arbiters decision, expressly provided that, on appeal,
the NLRC shall limit itself only to the specific issues that were elevated for review, to wit:
Section 4. Requisites for perfection of appeal. x x x.
xxxx
(d) Subject to the provisions of Article 218 of the Labor Code, once the appeal is perfected in
accordance with these Rules, the Commission shall limit itself to reviewing and deciding only
the specific issues that were elevated on appeal.
We have clarified that the clear import of the aforementioned procedural rule is that the NLRC
shall, in cases of perfected appeals, limit itself to reviewing those issues which are raised on
appeal. As a consequence thereof, any other issues which were not included in the appeal shall
become final and executory.18
In this case, petitioner sets forth the following issues in its appeal memorandum:
5.01
WHETHER THE MARVIN JULIAN L. SAMBAJON, JR. WAS ILLEGALLY DISMISSED FROM THE
UNIVERSIDAD DE STA. ISABEL.
5.02
WHETHER THE UNIVERSIDAD DE STA. ISABEL SHORTENED THE PROBATIONARY PERIOD OF
MARVIN JULIAN L. SAMBAJON.
5.03
WHETHER RESPONDENTS-APPELLANTS ARE ENTITLED TO DAMAGES. 19
Specifically, petitioner sought the correct interpretation of the Manual of Regulations for Private
School Teachers and DOLE-DECS-CHED-TESDA Order No. 01, series of 1996, insofar as the
probationary period for teachers.
In reviewing the Labor Arbiters finding of illegal dismissal, the NLRC concluded that respondent
had already attained regular status after the expiration of his first appointment contract as
probationary employee. Such conclusion was but a logical result of the NLRCs own
interpretation of the law. Since petitioner elevated the questions of the validity of respondents
dismissal and the applicable probationary period under the aforesaid regulations, the NLRC did
not gravely abuse its discretion in fully resolving the said issues.
As the Court held in Roche (Phils.) v. NLRC 20:
Petitioners then suggest that the respondent Commission abused its discretion in awarding
reliefs in excess of those stated in the decision of the labor arbiter despite the absence of an
appeal by Villareal. To stress this point, they cited Section 5(c) of the Rules of Procedure of the
National Labor Relations Commission which provides that the Commission shall, in cases of
perfected appeals, limits itself to reviewing those issues which were raised on appeal.
Consequently, those which were not raised on appeal shall be final and executory.
There is no merit to this contention. The records show that the petitioners elevated the issues
regarding the correctness of the award of damages, reinstatement with backpay, retirement
benefits and the cost-saving bonus to the respondent Commission in their appeal. This opened
the said issues for review and any action taken thereon by the Commission was well within the

111
parameters of its jurisdiction. (Emphasis supplied.)
Probationary Employment Period
A probationary employee is one who is on trial by the employer during which the employer
determines whether or not said employee is qualified for permanent employment. A
probationary appointment is made to afford the employer an opportunity to observe the fitness
of a probationary employee while at work, and to ascertain whether he will become a proper
and efficient employee. The word probationary as used to describe the period of employment
implies the purpose of the term or period, but not its length. 21
It is well settled that the employer has the right or is at liberty to choose who will be hired and
who will be denied employment. In that sense, it is within the exercise of the right to select his
employees that the employer may set or fix a probationary period within which the latter may
test and observe the conduct of the former before hiring him permanently. 22 The law, however,
regulates the exercise of this prerogative to fix the period of probationary employment. While
there is no statutory cap on the minimum term of probation, the law sets a maximum "trial
period" during which the employer may test the fitness and efficiency of the employee. 23
Article 281 of the Labor Code provides:
ART. 281. Probationary Employment.Probationary employment shall not exceed six (6) months
from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been engaged on
a probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
The probationary employment of teachers in private schools is not governed purely by the
Labor Code. The Labor Code is supplemented with respect to the period of probation by special
rules found in the Manual of Regulations for Private Schools. 24 On the matter of probationary
period, Section 92 of the 1992 Manual of Regulations for Private Schools regulations states:
Section 92. Probationary Period. Subject in all instances to compliance with the Department
and school requirements, the probationary period for academic personnel shall not be more
than three (3) consecutive years of satisfactory service for those in the elementary and
secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the
tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary
level where collegiate courses are offered on a trimester basis. (Emphasis supplied.)
Thus, it is the Manual of Regulations for Private Schools, and not the Labor Code, that
determines whether or not a faculty member in an educational institution has attained regular
or permanent status.25 Section 9326 of the 1992 Manual of Regulations for Private Schools
provides that full-time teachers who have satisfactorily completed their probationary period
shall be considered regular or permanent.
In this case, the CA sustained the NLRCs ruling that respondent was illegally dismissed
considering that he had become a regular employee when petitioner allowed him to work
beyond the date specified in his first probationary appointment contract which expired on
March 30, 2003. According to the CA:
As can be gleaned from Section 92 of the 1992 Manual of Regulations for Private Schools,
the probationary period applicable in this case is not more than six (6) consecutive regular
semesters of satisfactory service. In other words, the probationary period for academic
personnel in the tertiary level runs from one (1) semester to six (6) consecutive regular
semesters of satisfactory service. In the instant case, records reveal that Sambajon, Jr. only
signed two appointment contracts. The first appointment-contract which he signed was dated
November 2002 for the period November 1, 2002 to March 30, 2003, as Assistant Professor 10
on probationary status. x x x The second appointment-contract which Sambajon, Jr. executed
was dated February 26, 2004, for the period November 1, 2003 to March 31, 2004. x x x
Compared with the first appointment-contract, it was not indicated in the February 26, 2004
appointment-contract that Sambajon, Jr. was hired on probationary status, which explains the
NLRCs conclusion that Sambajon, Jr. already attained permanent status. At this juncture, it is
worthy to emphasize that other than the period provided under Article 281 of the Labor Code,

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the following quoted portion of Article 281 of the Labor Code still applies:
"ART. 281. PROBATIONARY EMPLOYMENT.
x x x x An employee who is allowed to work after a probationary period shall be considered a
regular employee."
Thus, We sustain the NLRCs conclusion that Sambajon, Jr. acquired permanent status on the
first day of the first semester of SY 2003-2004 when he was allowed to continue with his
teaching stint after the expiration of his first appointment-contract on March 30, 2003. 27
On record are five appointment contracts28 of respondent:
Date

Contract Period

November 1, 2002

November 1, 2002-March 30, 2003

September 28, 2003

June 1, 2003-October 31, 2003

February 26, 2004

November 1, 2003-March 31, 2004

September 30, 2004

June 1, 2004-October 31, 2004

October 28, 2004

November 3, 2004-March 31, 2005
Only the first and third contracts were signed by the respondent. However, such lack of
signature in the second contract appears not to be the crucial element considered by the CA
but the fact that the third contract dated February 26, 2004, unlike the previous contracts, does
not indicate the nature of the appointment as probationary employment. According to the CA,
this implies, as concluded by the NLRC, that respondent was already a regular employee.
We disagree.
The third appointment contract dated February 26, 2004 reads:
February 26, 2004
MR. MARVIN JULIAN SAMBAJON
Religious Education Department
Dear Mr. Sambajon,
I am pleased to inform you that you are designated and commissioned to be an Apostle of Love
and Service, Unity and Peace as you dedicate and commit yourself in the exercise of your
duties and responsibilities as a:
FULL TIME FACULTY MEMBER
of the Religious Education Department from November 1, 2003 to March 31, 2004.
Unless otherwise renewed in writing, this designation automatically terminates as of the date
expiration above states without further notice.
As a member of the academic/clinical community, you are expected to live by and give your full
support to the promotion and attainment of the Vision-Mission, goals and objectives, the rules
and regulations, the Core Values which the University professes to believe and live by.
Congratulations and keep your work full in the spirit of the Lord for the Charity of Christ urges
us to live life to the fullest.
God bless
In Christ,
Sr. Ma. Asuncion G. Evidente, D.C.
USI President
Witness:
Sr. Stella O. Real, D.C.
HR Officer
I, ______________________ understand that unless renewed in writing, my services as
________________ expires automatically on the specific date above stated.
Furthermore, I fully accept this appointment to help build the Kingdom of God here and now
and to facilitate the living of the Core Values and the attainment of the Vision-Mission and the
goals and objectives of the University.
Received and Conforme:
(SGD.) MARVIN-JULIAN L. SAMBAJON, JR.29
Since it was explicitly provided in the above contract that unless renewed in writing

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respondents appointment automatically expires at the end of the stipulated period of
employment, the CA erred in concluding that simply because the word "probationary" no longer
appears below the designation (Full-Time Faculty Member), respondent had already become a
permanent employee. Noteworthy is respondents admission of being still under probationary
period in his January 12, 2005 letter to Sr. Evidente reiterating his demand for salary
differential, which letter was sent almost one year after he signed the February 26, 2004
appointment contract, to wit:
The problem is that your good office has never categorically resolved whether or not
probationary teachers can also be evaluated for salary adjustment. Nevertheless, inferring from
your statement that evaluation precedes re-ranking and in fact is the basis for re-ranking, may I
categorically ask: does it really mean that since, it precedes re-ranking, evaluation should not
take place among probationary teachers for they can not yet be re-ranked? If so, then how
pitiful are we, probationary teachers for our credentials are never evaluated since we cannot
yet be re-ranked. Oh my goodness! Can your good office not give me a clearer and more
convincing argument shedding light on this matter? 30
Respondent nonetheless claims that subsequently, the probationary period of three years
under the regulations was shortened by petitioner as relayed to him by Sr. Evidente herself.
However, the latter, together with Sr. Real, categorically denied having informed respondent
that his probationary period was abbreviated, allegedly the reason his salary adjustment was
not made retroactive. Apart from his bare assertion, respondent has not adduced proof of any
decision of the school administration to shorten his probationary period.
In Rev. Fr. Labajo v. Alejandro, 31 we held that:
The three (3)-year period of service mentioned in paragraph 75 [of the Manual of Regulations
for Private Schools] is of course the maximum period or upper limit, so to speak, of
probationary employment allowed in the case of private school teachers. This necessarily
implies that a regular or permanent employment status may, under certain conditions, be
attained in less than three (3) years. By and large, however, whether or not one has indeed
attained permanent status in ones employment, before the passage of three (3) years, is a
matter of proof. (Emphasis supplied.)
There can be no dispute that the period of probation may be reduced if the employer,
convinced of the fitness and efficiency of a probationary employee, voluntarily extends a
permanent appointment even before the three-year period ends. Conversely, if the purpose
sought by the employer is neither attained nor attainable within the said period, the law does
not preclude the employer from terminating the probationary employment on justifiable
ground; or, a shorter probationary period may be incorporated in a collective bargaining
agreement. But absent any circumstances which unmistakably show that an abbreviated
probationary period has been agreed upon, the three-year probationary term governs. 32
As to the Certificate of Employment33 issued by Sr. Real on January 31, 2005, it simply stated
that respondent "was a full time faculty member in the Religious Education Department of this
same institution" and that he holds the rank of Associate Professor. There was no description or
qualification of respondents employment as regular or permanent. Neither did the similar
Certification34 also issued by Sr. Real on March 18, 2005 prove respondents status as a
permanent faculty member of petitioner.
It bears stressing that full-time teaching primarily refers to the extent of services rendered by
the teacher to the employer school and not to the nature of his appointment. Its significance
lies in the rule that only full-time teaching personnel can acquire regular or permanent status.
The provisions of DOLE-DECS-CHED-TESDA Order No. 01, series of 1996, "Guidelines on Status
of Employment of Teachers and of Academic Personnel in Private Educational Institutions" are
herein reproduced:
2. Subject in all instances to compliance with the concerned agency and school requirements,
the probationary period for teaching or academic personnel shall not be more than three (3)
consecutive school years of satisfactory service for those in the elementary and secondary
levels; six (6) consecutive regular semesters of satisfactory service for those in the tertiary and
graduate levels, and nine (9) consecutive trimesters of satisfactory service for those in the
tertiary level where collegiate courses are offered on a trimester basis.

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Unless otherwise provided by contract, school academic personnel who are under probationary
employment cannot be dismissed during the applicable probationary period, unless dismissal is
compelled by a just cause or causes.
3. Teachers or academic personnel who have served the probationary period as provided for in
the immediately preceding paragraph shall be made regular or permanent if allowed to work
after such probationary period. The educational institution, however, may shorten the
probationary period after taking into account the qualifications and performance of the
probationary teachers and academic personnel.
Full-time teaching or academic personnel are those meeting all the following requirements:
3.1. Who possess at least the minimum academic qualifications prescribed by the Department
of Education, Culture and Sports for Basic Education, the Commission on Higher Education for
Tertiary Education, and the Technical Education and Skills Development Authority for Technical
and Vocational Education under their respective Manual of Regulations governing said
personnel;
3.2 Who are paid monthly or hourly, based on the normal or regular teaching loads as provided
for in the policies, rules and standards of the agency concerned;
3.3 Whose regular working day of not more than eight (8) hours a day is devoted to the school;
3.4 Who have no other remunerative occupation elsewhere requiring regular hours of work that
will conflict with the working hours in the school; and
3.5 Who are not teaching full-time in any other educational institution.
All teaching or academic personnel who do not meet the foregoing qualifications are considered
part time.
4. Part-time teaching or academic personnel cannot acquire regular or permanent employment
status.
5. Teaching or academic personnel who do not meet the minimum academic qualifications shall
not acquire tenure or regular status. The school may terminate their services when a qualified
teacher becomes available.35
In this case, petitioner applied the maximum three-year probationary period equivalent to six
consecutive semesters provided in the Manual of Regulations. This can be gleaned from the
letter dated March 24, 2004 of Sr. Grace Namocancat, D.C. addressed to respondent, informing
the latter of the result of evaluation of his performance for SY 2003-2004 and stating that
November 2004 marks his second year of full-time teaching, which means he had one more
year to become a permanent employee.36
The circumstance that respondents services were hired on semester basis did not negate the
applicable probationary period, which is three school years or six consecutive semesters. In
Magis Young Achievers Learning Center37 the Court explained the three years probationary
period rule in this wise:
The common practice is for the employer and the teacher to enter into a contract, effective for
one school year. At the end of the school year, the employer has the option not to renew the
contract, particularly considering the teachers performance. If the contract is not renewed, the
employment relationship terminates. If the contract is renewed, usually for another school year,
the probationary employment continues. Again, at the end of that period, the parties may opt
to renew or not to renew the contract. If renewed, this second renewal of the contract for
another school year would then be the last year since it would be the third school year of
probationary employment. At the end of this third year, the employer may now decide whether
to extend a permanent appointment to the employee, primarily on the basis of the employee
having met the reasonable standards of competence and efficiency set by the employer. For
the entire duration of this three-year period, the teacher remains under probation. Upon the
expiration of his contract of employment, being simply on probation, he cannot automatically
claim security of tenure and compel the employer to renew his employment contract. It is when
the yearly contract is renewed for the third time that Section 93 of the Manual becomes
operative, and the teacher then is entitled to regular or permanent employment status. 38
(Emphasis supplied.)
Petitioner argues that respondents probationary period expires after each semester he was
contracted to teach and hence it was not obligated to renew his services at the end of the fifth

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semester (March 2005) of his probationary employment. It asserts that the practice of issuing
appointment contracts for every semester was legal and therefore respondent was not
terminated when petitioner did not renew his contract for another semester as his probationary
contract merely expired. Plainly, petitioner considered the subject appointment contracts as
fixed-term contracts such that it can validly dismiss respondent at the end of each semester for
the reason that his contract had expired.
The Court finds no merit in petitioners interpretation of the Manual of Regulations,
supplemented by DOLE-DECS-CHED-TESDA Order No. 01, series of 1996. As we made clear in
the afore-cited case of Magis Young Achievers Learning Center, the teacher remains under
probation for the entire duration of the three-year period. Subsequently, in the case of Mercado
v. AMA Computer College-Paraaque City, Inc. 39 the Court, speaking through Justice Arturo D.
Brion, recognized the right of respondent school to determine for itself that it shall use fixedterm employment contracts as its medium for hiring its teachers. Nevertheless, the Court held
that the teachers probationary status should not be disregarded simply because their
contracts were fixed-term. Thus:
The Conflict: Probationary Status
and Fixed-term Employment
The existence of the term-to-term contracts covering the petitioners employment is not
disputed, nor is it disputed that they were on probationary status not permanent or regular
status from the time they were employed on May 25, 1998 and until the expiration of their
Teaching Contracts on September 7, 2000. As the CA correctly found, their teaching stints only
covered a period of at least seven (7) consecutive trimesters or two (2) years and three (3)
months of service. This case, however, brings to the fore the essential question of which,
between the two factors affecting employment, should prevail given AMACCs position that the
teachers contracts expired and it had the right not to renew them. In other words, should the
teachers probationary status be disregarded simply because the contracts were fixed-term?
The provision on employment on probationary status under the Labor Code is a primary
example of the fine balancing of interests between labor and management that the Code has
institutionalized pursuant to the underlying intent of the Constitution.
On the one hand, employment on probationary status affords management the chance to fully
scrutinize the true worth of hired personnel before the full force of the security of tenure
guarantee of the Constitution comes into play. Based on the standards set at the start of the
probationary period, management is given the widest opportunity during the probationary
period to reject hirees who fail to meet its own adopted but reasonable standards. These
standards, together with the just and authorized causes for termination of employment the
Labor Code expressly provides, are the grounds available to terminate the employment of a
teacher on probationary status. For example, the school may impose reasonably stricter
attendance or report compliance records on teachers on probation, and reject a probationary
teacher for failing in this regard, although the same attendance or compliance record may not
be required for a teacher already on permanent status. At the same time, the same just and
authorize[d] causes for dismissal under the Labor Code apply to probationary teachers, so that
they may be the first to be laid-off if the school does not have enough students for a given
semester or trimester. Termination of employment on this basis is an authorized cause under
the Labor Code.
Labor, for its part, is given the protection during the probationary period of knowing the
company standards the new hires have to meet during the probationary period, and to be
judged on the basis of these standards, aside from the usual standards applicable to employees
after they achieve permanent status. Under the terms of the Labor Code, these standards
should be made known to the teachers on probationary status at the start of their probationary
period, or at the very least under the circumstances of the present case, at the start of the
semester or the trimester during which the probationary standards are to be applied. Of critical
importance in invoking a failure to meet the probationary standards, is that the school should
show as a matter of due process how these standards have been applied. This is effectively
the second notice in a dismissal situation that the law requires as a due process guarantee
supporting the security of tenure provision, and is in furtherance, too, of the basic rule in

116
employee dismissal that the employer carries the burden of justifying a dismissal. These rules
ensure compliance with the limited security of tenure guarantee the law extends to
probationary employees.
When fixed-term employment is brought into play under the above probationary period rules,
the situation as in the present case may at first blush look muddled as fixed-term
employment is in itself a valid employment mode under Philippine law and jurisprudence. The
conflict, however, is more apparent than real when the respective nature of fixed-term
employment and of employment on probationary status are closely examined.
The fixed-term character of employment essentially refers to the period agreed upon between
the employer and the employee; employment exists only for the duration of the term and ends
on its own when the term expires. In a sense, employment on probationary status also refers to
a period because of the technical meaning "probation" carries in Philippine labor law a
maximum period of six months, or in the academe, a period of three years for those engaged in
teaching jobs. Their similarity ends there, however, because of the overriding meaning that
being "on probation" connotes, i.e., a process of testing and observing the character or abilities
of a person who is new to a role or job.
Understood in the above sense, the essentially protective character of probationary status for
management can readily be appreciated. But this same protective character gives rise to the
countervailing but equally protective rule that the probationary period can only last for a
specific maximum period and under reasonable, well-laid and properly communicated
standards. Otherwise stated, within the period of the probation, any employer move based on
the probationary standards and affecting the continuity of the employment must strictly
conform to the probationary rules.
Under the given facts where the school year is divided into trimesters, the school apparently
utilizes its fixed-term contracts as a convenient arrangement dictated by the trimestral system
and not because the workplace parties really intended to limit the period of their relationship to
any fixed term and to finish this relationship at the end of that term. If we pierce the veil, so to
speak, of the parties so-called fixed-term employment contracts, what undeniably comes out
at the core is a fixed-term contract conveniently used by the school to define and regulate its
relations with its teachers during their probationary period.
To be sure, nothing is illegitimate in defining the school-teacher relationship in this manner. The
school, however, cannot forget that its system of fixed-term contract is a system that operates
during the probationary period and for this reason is subject to the terms of Article 281 of the
Labor Code. Unless this reconciliation is made, the requirements of this Article on probationary
status would be fully negated as the school may freely choose not to renew contracts simply
because their terms have expired. The inevitable effect of course is to wreck the scheme that
the Constitution and the Labor Code established to balance relationships between labor and
management.
Given the clear constitutional and statutory intents, we cannot but conclude that in a situation
where the probationary status overlaps with a fixed-term contract not specifically used for the
fixed term it offers, Article 281 should assume primacy and the fixed-period character of the
contract must give way. This conclusion is immeasurably strengthened by the petitioners and
the AMACCs hardly concealed expectation that the employment on probation could lead to
permanent status, and that the contracts are renewable unless the petitioners fail to pass the
schools standards.40 (Additional emphasis supplied.)
Illegal Dismissal
Notwithstanding the limited engagement of probationary employees, they are entitled to
constitutional protection of security of tenure during and before the end of the probationary
period.41 The services of an employee who has been engaged on probationary basis may be
terminated for any of the following: (a) a just or (b) an authorized cause; and (c) when he fails
to qualify as a regular employee in accordance with reasonable standards prescribed by the
employer.42
Thus, while no vested right to a permanent appointment had as yet accrued in favor of
respondent since he had not completed the prerequisite three-year period (six consecutive
semesters) necessary for the acquisition of permanent status as required by the Manual of

117
Regulations for Private Schools43 -- which has the force of law44 -- he enjoys a limited tenure.
During the said probationary period, he cannot be terminated except for just or authorized
causes, or if he fails to qualify in accordance with reasonable standards prescribed by petitioner
for the acquisition of permanent status of its teaching personnel.
In a letter dated February 26, 2005, petitioner terminated the services of respondent stating
that his probationary employment as teacher will no longer be renewed upon its expiry on
March 31, 2005, respondents fifth semester of teaching. No just or authorized cause was given
by petitioner. Prior to this, respondent had consistently achieved above average rating based
on evaluation by petitioners officials and students. He had also been promoted to the rank of
Associate Professor after finishing his masters degree course on his third semester of teaching.
Clearly, respondents termination after five semesters of satisfactory service was illegal.
Respondent therefore is entitled to continue his three-year probationary period, such that from
March 31, 2005, his probationary employment is deemed renewed for the following semester
(1st semester of SY 2005-2006). However, given the discordant relations that had arisen from
the parties dispute, it can be inferred with certainty that petitioner had opted not to retain
respondent in its employ beyond the three-year period.
On the appropriate relief and damages, we adhere to our disposition in Magis Young Achievers
Learning Center45:
Finally, we rule on the propriety of the monetary awards.1wphi1 Petitioner, as employer, is
entitled to decide whether to extend respondent a permanent status by renewing her contract
beyond the three-year period. Given the acrimony between the parties which must have been
generated by this controversy, it can be said unequivocally that petitioner had opted not to
extend respondent's employment beyond this period. Therefore, the award of backwages as a
consequence of the finding of illegal dismissal in favor of respondent should be confined to the
three-year probationary period. Computing her monthly salary of F15,000.00 for the next two
school years (F15,000.00 x 10 months x 2), respondent already having received her full salaries
for the year 2002-2003, she is entitled to a total amount of F300,000.00. Moreover, respondent
is also entitled to receive her 13th month pay correspondent to the said two school years,
computed as yearly salary, divided by 12 months in a year, multiplied by 2, corresponding to
the school years 2003-2004 and 2004-2005, or F150,000.00 I 12 months x 2 = F25,000.00.
Thus, the NLRC was correct in awarding respondent the amount of F325,000.00 as backwages,
inclusive of 13th month pay for the school years 2003-2004 and 2004-2005, and the amount of
P3,750.00 as pro-rated 13th month pay.
WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The Decision dated
March 25, 2011 of the Court of Appeals in CA-G.R. SP Nos. 108103 & 108168 is hereby
MODIFIED. Petitioner Universidad de Sta. Isabel is hereby DIRECTED to PAY respondent MarvinJulian L. Sambajon, Jr. back wages corresponding to his full monthly salaries for one semester
(1st semester of SY 2005-2006) and pro-rated 13th month pay.
The case is REMANDED to the Labor Arbiter for a recomputation of the amounts due to
respondent in conformity with this Decision.
No pronouncement as to costs.
SO ORDERED.

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G.R. No. 186439
January 15, 2014
UNIVERSAL ROBINA SUGAR MILLING CORPORATION and RENE CABATI, Petitioners,
vs.
FERDINAND ACIBO, ROBERTO AGUILAR, EDDIE BALDOZA, RENE ABELLAR, DIOMEDES
ALICOS, MIGUEL ALICOS, ROGELIO AMAHIT, LARRY AMASCO, FELIPE BALANSAG,
ROMEO BALANSAG, MANUEL BANGOT, ANDY BANJAO, DIONISIO BENDIJO, JR.,
JOVENTINO BROCE, ENRICO LITERAL, RODGER RAMIREZ, BIENVENIDO RODRIGUEZ,
DIOCITO PALAGTIW, ERNIE SABLAN, RICHARD PANCHO, RODRIGO ESTRABELA, DANNY
KADUSALE and ALLYROBYL OLPUS, Respondents.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari 1 the challenge to the November 29, 2007
decision2 and the January 22, 2009 resolution3 of the Court of Appeals (CA) in CA-G.R. CEB-SP No.
02028. This CA decision affirmed with modification the July 22, 2005 decision 4 and the April 28,
2006 resolution5 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-0000603 which, in turn, reversed the October 9, 2002 decision 6 of the Labor Arbiter (LA). The LAs
decision dismissed the complaint filed by complainants Ferdinand Acibo, et al. 7 against
petitioners Universal Robina Sugar Milling Corporation (URSUMCO) and Rene Cabati.
The Factual Antecedents
URSUMCO is a domestic corporation engaged in the sugar cane milling business; Cabati is
URSUMCOs Business Unit General Manager.
The complainants were employees of URSUMCO. They were hired on various dates (between
February 1988 and April 1996) and on different capacities, 8 i.e., drivers, crane operators, bucket
hookers, welders, mechanics, laboratory attendants and aides, steel workers, laborers,
carpenters and masons, among others. At the start of their respective engagements, the
complainants signed contracts of employment for a period of one (1) month or for a given
season. URSUMCO repeatedly hired the complainants to perform the same duties and, for every
engagement, required the latter to sign new employment contracts for the same duration of one
month or a given season.
On August 23, 2002,9 the complainants filed before the LA complaints for regularization,
entitlement to the benefits under the existing Collective Bargaining Agreement (CBA),and
attorneys fees.
In the decision10 dated October 9, 2002, the LA dismissed the complaint for lack of merit. The LA
held that the complainants were seasonal or project workers and not regular employees of
URSUMCO. The LA pointed out that the complainants were required to perform, for a definite
period, phases of URSUMCOs several projects that were not at all directly related to the latters
main operations. As the complainants were project employees, they could not be regularized
since their respective employments were coterminous with the phase of the work or special
project to which they were assigned and which employments end upon the completion of each
project. Accordingly, the complainants were not entitled to the benefits granted under the CBA
that, as provided, covered only the regular employees of URSUMCO.
Of the twenty-two original complainants before the LA, seven appealed the LAs ruling before the
NLRC, namely: respondents Ferdinand Acibo, Eddie Baldoza, Andy Banjao, Dionisio Bendijo, Jr.,
Rodger Ramirez, Diocito Palagtiw, Danny Kadusale and Allyrobyl Olpus.
The Ruling of the NLRC
In its decision11 of July 22, 2005, the NLRC reversed the LAs ruling; it declared the complainants
as regular URSUMCO employees and granted their monetary claims under the CBA. The NLRC
pointed out that the complainants performed activities which were usually necessary and
desirable in the usual trade or business of URSUMCO, and had been repeatedly hired for the
same undertaking every season. Thus, pursuant to Article 280 of the Labor Code, the NLRC
declared that the complainants were regular employees. As regular employees, the NLRC held
that the complainants were entitled to the benefits granted, under the CBA, to the regular
URSUMCO employees.
The petitioners moved to reconsider this NLRC ruling which the NLRC denied in its April 28, 2006
resolution.12 The petitioners elevated the case to the CA via a petition for certiorari. 13

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The Ruling of the CA
In its November 29, 2007 decision,14 the CA granted in part the petition; it affirmed the NLRCs
ruling finding the complainants to be regular employees of URSUMCO, but deleted the grant of
monetary benefits under the CBA.
The CA pointed out that the primary standard for determining regular employment is the
reasonable connection between a particular activity performed by the employee vis--vis the
usual trade or business of the employer. This connection, in turn, can be determined by
considering the nature of the work performed and the relation of this work to the business or
trade of the employer in its entirety.
In this regard, the CA held that the various activities that the complainants were tasked to do
were necessary, if not indispensable, to the nature of URSUMCOs business. As the complainants
had been performing their respective tasks for at least one year, the CA held that this repeated
and continuing need for the complainants performance of these same tasks, regardless of
whether the performance was continuous or intermittent, constitutes sufficient evidence of the
necessity, if not indispensability, of the activity to URSUMCOs business.
Further, the CA noted that the petitioners failed to prove that they gave the complainants
opportunity to work elsewhere during the off-season, which opportunity could have qualified the
latter as seasonal workers. Still, the CA pointed out that even during this off-season period,
seasonal workers are not separated from the service but are simply considered on leave until
they are re-employed. Thus, the CA concluded that the complainants were regular employees
with respect to the activity that they had been performing and while the activity continued.
On the claim for CBA benefits, the CA, however, ruled that the complainants were not entitled to
receive them. The CA pointed out that while the complainants were considered regular, albeit
seasonal, workers, the CBA-covered regular employees of URSUMCO were performing tasks
needed by the latter for the entire year with no regard to the changing sugar milling season.
Hence, the complainants did not belong to and could not be grouped together with the regular
employees of URSUMCO, for collective bargaining purposes; they constitute a bargaining unit
separate and distinct from the regular employees. Consequently, the CA declared that the
complainants could not be covered by the CBA.
The petitioners filed the present petition after the CA denied their motion for partial
reconsideration15 in the CAs January 22, 2009 resolution.16
The Issues
The petition essentially presents the following issues for the Courts resolution: (1) whether the
respondents are regular employees of URSUMCO; and (2) whether affirmative relief can be given
to the fifteen (15) of the complainants who did not appeal the LAs decision. 17
The Courts Ruling
We resolve to partially GRANT the petition.
On the issue of the status of the respondents employment
The petitioners maintain that the respondents are contractual or project/seasonal workers and
not regular employees of URSUMCO. They thus argue that the CA erred in applying the legal
parameters and guidelines for regular employment to the respondents case. They contend that
the legal standards length of the employees engagement and the desirability or necessity of
the employees work in the usual trade or business of the employer apply only to regular
employees under paragraph 1, Article 280 of the Labor Code, and, under paragraph 2 of the
same article, to casual employees who are deemed regular by their length of service.
The respondents, the petitioners point out, were specifically engaged for a fixed and
predetermined duration of, on the average, one (1) month at a time that coincides with a
particular phase of the companys business operations or sugar milling season. By the nature of
their engagement, the respondents employment legally ends upon the end of the predetermined
period; thus, URSUMCO was under no legal obligation to rehire the respondents.
In their comment,18 the respondents maintain that they are regular employees of URSUMCO.
Relying on the NLRC and the CA rulings, they point out that they have been continuously working
for URSUMCO for more than one year, performing tasks which were necessary and desirable to
URSUMCOs business. Hence, under the above-stated legal parameters, they are regular
employees.

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We disagree with the petitioners position.1wphi1 We find the respondents to be regular
seasonal employees of URSUMCO.
As the CA has explained in its challenged decision, Article 280 of the Labor Code provides for
three kinds of employment arrangements, namely: regular, project/seasonal and casual. Regular
employment refers to that arrangement whereby the employee "has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the
employer[.]"19 Under the definition, the primary standard that determines regular employment is
the reasonable connection between the particular activity performed by the employee and the
usual business or trade of the employer;20 the emphasis is on the necessity or desirability of the
employees activity. Thus, when the employee performs activities considered necessary and
desirable to the overall business scheme of the employer, the law regards the employee as
regular.
By way of an exception, paragraph 2, Article 280 of the Labor Code also considers regular a
casual employment arrangement when the casual employees engagement has lasted for at
least one year, regardless of the engagements continuity. The controlling test in this
arrangement is the length of time during which the employee is engaged.
A project employment, on the other hand, contemplates on arrangement whereby "the
employment has been fixed for a specific project or undertaking whose completion or
termination has been determined at the time of the engagement of the employee[.]" 21 Two
requirements, therefore, clearly need to be satisfied to remove the engagement from the
presumption of regularity of employment, namely: (1) designation of a specific project or
undertaking for which the employee is hired; and (2) clear determination of the completion or
termination of the project at the time of the employees engagement. 22 The services of the
project employees are legally and automatically terminated upon the end or completion of the
project as the employees services are coterminous with the project.
Unlike in a regular employment under Article 280 of the Labor Code, however, the length of time
of the asserted "project" employees engagement is not controlling as the employment may, in
fact, last for more than a year, depending on the needs or circumstances of the project.
Nevertheless, this length of time (or the continuous rehiring of the employee even after the
cessation of the project) may serve as a badge of regular employment when the activities
performed by the purported "project" employee are necessary and indispensable to the usual
business or trade of the employer. 23 In this latter case, the law will regard the arrangement as
regular employment.24
Seasonal employment operates much in the same way as project employment, albeit it involves
work or service that is seasonal in nature or lasting for the duration of the season. 25 As with
project employment, although the seasonal employment arrangement involves work that is
seasonal or periodic in nature, the employment itself is not automatically considered seasonal so
as to prevent the employee from attaining regular status. To exclude the asserted "seasonal"
employee from those classified as regular employees, the employer must show that: (1) the
employee must be performing work or services that are seasonal in nature; and (2) he had been
employed for the duration of the season.26 Hence, when the "seasonal" workers are continuously
and repeatedly hired to perform the same tasks or activities for several seasons or even after the
cessation of the season, this length of time may likewise serve as badge of regular
employment.27 In fact, even though denominated as "seasonal workers," if these workers are
called to work from time to time and are only temporarily laid off during the off-season, the law
does not consider them separated from the service during the off-season period. The law simply
considers these seasonal workers on leave until re-employed. 28
Casual employment, the third kind of employment arrangement, refers to any other employment
arrangement that does not fall under any of the first two categories, i.e., regular or
project/seasonal.
Interestingly, the Labor Code does not mention another employment arrangement contractual
or fixed term employment (or employment for a term) which, if not for the fixed term, should
fall under the category of regular employment in view of the nature of the employees
engagement, which is to perform an activity usually necessary or desirable in the employers
business.

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In Brent School, Inc. v. Zamora, 29 the Court, for the first time, recognized and resolved the
anomaly created by a narrow and literal interpretation of Article 280 of the Labor Code that
appears to restrict the employees right to freely stipulate with his employer on the duration of
his engagement. In this case, the Court upheld the validity of the fixed-term employment agreed
upon by the employer, Brent School, Inc., and the employee, Dorotio Alegre, declaring that the
restrictive clause in Article 280 "should be construed to refer to the substantive evil that the
Code itself x x x singled out: agreements entered into precisely to circumvent security of tenure.
It should have no application to instances where [the] fixed period of employment was agreed
upon knowingly and voluntarily by the parties x x x absent any x x x circumstances vitiating [the
employees] consent, or where [the facts satisfactorily show] that the employer and [the]
employee dealt with each other on more or less equal terms[.]" 30 The indispensability or
desirability of the activity performed by the employee will not preclude the parties from entering
into an otherwise valid fixed term employment agreement; a definite period of employment does
not essentially contradict the nature of the employees duties 31 as necessary and desirable to the
usual business or trade of the employer.
Nevertheless, "where the circumstances evidently show that the employer imposed the period
precisely to preclude the employee from acquiring tenurial security, the law and this Court will
not hesitate to strike down or disregard the period as contrary to public policy, morals, etc." 32 In
such a case, the general restrictive rule under Article 280 of the Labor Code will apply and the
employee shall be deemed regular.
Clearly, therefore, the nature of the employment does not depend solely on the will or word of
the employer or on the procedure for hiring and the manner of designating the employee.
Rather, the nature of the employment depends on the nature of the activities to be performed by
the employee, considering the nature of the employers business, the duration and scope to be
done,33 and, in some cases, even the length of time of the performance and its continued
existence.
In light of the above legal parameters laid down by the law and applicable jurisprudence, the
respondents are neither project, seasonal nor fixed-term employees, but regular seasonal
workers of URSUMCO. The following factual considerations from the records support this
conclusion:
First, the respondents were made to perform various tasks that did not at all pertain to any
specific phase of URSUMCOs strict milling operations that would ultimately cease upon
completion of a particular phase in the milling of sugar; rather, they were tasked to perform
duties regularly and habitually needed in URSUMCOs operations during the milling season. The
respondents duties as loader operators, hookers, crane operators and drivers were necessary to
haul and transport the sugarcane from the plantation to the mill; laboratory attendants, workers
and laborers to mill the sugar; and welders, carpenters and utility workers to ensure the smooth
and continuous operation of the mill for the duration of the milling season, as distinguished from
the production of the sugarcane which involves the planting and raising of the sugarcane until it
ripens for milling. The production of sugarcane, it must be emphasized, requires a different set of
workers who are experienced in farm or agricultural work. Needless to say, they perform the
activities that are necessary and desirable in sugarcane production. As in the milling of
sugarcane, the plantation workers perform their duties only during the planting season.
Second, the respondents were regularly and repeatedly hired to perform the same tasks year
after year. This regular and repeated hiring of the same workers (two different sets) for two
separate seasons has put in place, principally through jurisprudence, the system of regular
seasonal employment in the sugar industry and other industries with a similar nature of
operations.
Under the system, the plantation workers or the mill employees do not work continuously for one
whole year but only for the duration of the growing of the sugarcane or the milling season. Their
seasonal work, however, does not detract from considering them in regular employment since in
a litany of cases, this Court has already settled that seasonal workers who are called to work
from time to time and are temporarily laid off during the off-season are not separated from the
service in said period, but are merely considered on leave until re-employment. 34 Be this as it
may, regular seasonal employees, like the respondents in this case, should not be confused with

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the regular employees of the sugar mill such as the administrative or office personnel who
perform their tasks for the entire year regardless of the season. The NLRC, therefore, gravely
erred when it declared the respondents regular employees of URSUMCO without qualification and
that they were entitled to the benefits granted, under the CBA, to URSUMCOS regular
employees.
Third, while the petitioners assert that the respondents were free to work elsewhere during the
off-season, the records do not support this assertion. There is no evidence on record showing
that after the completion of their tasks at URSUMCO, the respondents sought and obtained
employment elsewhere.
Contrary to the petitioners position, Mercado, Sr. v. NLRC, 3rd Div. 35 is not applicable to the
respondents as this case was resolved based on different factual considerations. In Mercado, the
workers were hired to perform phases of the agricultural work in their employers farm for a
definite period of time; afterwards, they were free to offer their services to any other farm owner.
The workers were not hired regularly and repeatedly for the same phase(s) of agricultural work,
but only intermittently for any single phase. And, more importantly, the employer in Mercado
sufficiently proved these factual circumstances. The Court reiterated these same observations in
Hda. Fatima v. Natl Fed. of Sugarcane Workers-Food and Gen. Trade 36 and Hacienda
Bino/Hortencia Starke, Inc. v. Cuenca.37
At this point, we reiterate the settled rule that in this jurisdiction, only questions of law are
allowed in a petition for review on certiorari. 38 This Courts power of review in a Rule 45 petition is
limited to resolving matters pertaining to any perceived legal errors, which the CA may have
committed in issuing the assailed decision.39 In reviewing the legal correctness of the CAs Rule
65 decision in a labor case, we examine the CA decision in the context that it determined, i.e.,
the presence or absence of grave abuse of discretion in the NLRC decision before it and not on
the basis of whether the NLRC decision on the merits of the case was correct.40 In other words,
we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of
the NLRC decision challenged before it. 41
Viewed in this light, we find the need to place the CAs affirmation, albeit with modification, of
the NLRC decision of July 22, 2005 in perspective. To recall, the NLRC declared the respondents
as regular employees of URSUMCO.42 With such a declaration, the NLRC in effect granted the
respondents prayer for regularization and, concomitantly, their prayer for the grant of monetary
benefits under the CBA for URSUMCOs regular employees. In its challenged ruling, the CA
concurred with the NLRC finding, but with the respondents characterized as regular seasonal
employees of URSUMCO.
The CA misappreciated the real import of the NLRC ruling. The labor agency did not declare the
respondents as regular seasonal employees, but as regular employees. This is the only
conclusion that can be drawn from the NLRC decisions dispositive portion, thus:
WHEREFORE, premises considered, the appeal is hereby GRANTED. Complainants are declared
regular employees of respondent.1wphi1 As such, they are entitled to the monetary benefits
granted to regular employees of respondent company based on the CBA, reckoned three (3)
years back from the filing of the above-entitled case on 23 August 2002 up to the present or to
their entire service with respondent after the date of filing of the said complaint if they are no
longer connected with respondent company. 43
It is, therefore, clear that the issue brought to the CA for resolution is whether the NLRC gravely
abused its discretion in declaring the respondents regular employees of URSUMCO and, as such,
entitled to the benefits under the CBA for the regular employees.
Based on the established facts, we find that the CA grossly misread the NLRC ruling and missed
the implications of the respondents regularization. To reiterate, the respondents are regular
seasonal employees, as the CA itself opined when it declared that "private respondents who are
regular workers with respect to their seasonal tasks or activities and while such activities exist,
cannot automatically be governed by the CBA between petitioner URSUMCO and the authorized
bargaining representative of the regular and permanent employees." 44 Citing jurisprudential
standards,45 it then proceeded to explain that the respondents cannot be lumped with the regular
employees due to the differences in the nature of their duties and the duration of their work visa-vis the operations of the company.

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The NLRC was well aware of these distinctions as it acknowledged that the respondents worked
only during the milling season, yet it ignored the distinctions and declared them regular
employees, a marked departure from existing jurisprudence. This, to us, is grave abuse of
discretion, as it gave no reason for disturbing the system of regular seasonal employment
already in place in the sugar industry and other industries with similar seasonal operations. For
upholding the NLRCs flawed decision on the respondents employment status, the CA committed
a reversible error of judgment.
In sum, we find the complaint to be devoid of merit. The issue of granting affirmative relief to the
complainants who did not appeal the CA ruling has become academic.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. Except for the denial of
the respondents' claim for CBA benefits, the November 29, 2007 decision and the January 22,
2009 resolution of the Court of Appeals are SET ASIDE. The complaint is DISMISSED for lack of
merit.
SO ORDERED.

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G.R. No. 176893
June 13, 2012
VICENTE VILLANUEVA, JR., Petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION THIRD DIVISION, MANILA ELECTRIC
COMPANY, MANUEL LOPEZ, Chairman and CEO, and FRANCISCO COLLANTES, Manager,
Respondents.
DECISION
MENDOZA, J.:
This petition for review on certiorari assails the December 13, 2006 Decision 1 of the Court of
Appeals (CA) in CA-G.R. SP. No. 95826 which dismissed the petition challenging the November
30, 20042 and June 20, 20063 Resolutions of the National Labor Relations Commission (NLRC)
holding that petitioner Vicente Villanueva (Villanueva) was validly dismissed by respondent
company Manila Electric Company (Meralco) on account of serious misconduct and loss of trust
and confidence.
The Facts
Since 1990, Villanueva had been employed with Meralco as bill collector, teller and branch
representative. Sometime in June 2002, Francisco Collantes, Manager of Meralco Branch Office,
Novaliches, Quezon City, referred to the companys Investigation Office a report dated June 10,
2002 regarding "unusual contract modifications" in the transactions handled by Villanueva. The
report claimed that there were customers who were issued Contracts for Electric Service by
Villanueva which indicated their payment of P 930.00 (service deposit of P 520.00 and meter
deposit of P 410.00) as deposit payment when they actually gave him a total amount of P
1,240.00. The discrepancy amounting to P 310.00 was not covered by any receipt. Pursuant to
the complaints, a field investigation was conducted by the company-designated investigator who
was able to obtain sworn statements from nine (9) out of twenty four (24) complaining
customers.4 The said complainants identified Villanueva as the person they have transacted with,
from a line-up of pictures of several individuals. Further, the complaints were corroborated by the
sworn statements of Ben-Hur C. Nepomuceno (Nepomunceno) and Merle S. Santos (Santos),
office team leader and assistant office team leader of the Novaliches branch, respectively.
Nepomuceno stated that in the course of the routine checking of his men for March 2002, he
found the unusual additional deposit payments accepted by Villanueva. When he made further
verification on the collection reports of the latter, he also discovered additional deposits he
received from other customers. Upon confirming Villanuevas act of "contract modification" with
a customer named Sherwin Borja, Nepomuceno requested the Customer Process Management to
suspend Villanuevas CMS-User ID. Corporate Audit was also asked to investigate his irregular
transactions. In his statement, Nepomuceno described the additional payments as irregular
because customers normally paid for deposit payments on a one-time basis. With Villanuevas
transactions, however, customers who paid P 1,240.00 complained of getting receipts reflecting
only P 930.00 as the amount paid, constraining Villanueva to issue another receipt for an
additional deposit of P 310.00. Nepomuceno clarified that additional deposits were meant to
increase the contracted capacity of customers after a considerable period of time from their
initial electric service application.
For her part, Santos, whose duties included the preparation of summary reports in overages of
tellers and branch representatives, stated that the existing practice was for the personnel
concerned to report excess collections on the same day they were collected. Santos claimed that
Villanueva had never reported a case of overage in his collections since 2001.
In a letter5 dated August 1, 2002, Villanueva was informed of the investigation to be conducted
by the company. On the date of the scheduled hearing indicated in the letter, Villanueva
appeared with counsel who requested for time within which to submit a responsive paper. In his
counter-affidavit,6 he denied demanding payment in excess of the minimum deposit charged
from applicants for electric service connection. He admitted that there were times that
"Modification of Contract" was done because of the recommendations of a Meralco fieldman who,
upon inspection, approved a higher load of electricity than that applied for. Villanueva explained
that if ever there was error or discrepancy in the preparation of the contract, this would have to
be balanced at the end of the day. He claimed that there were instances when initial entries of

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applied loads were erroneous prompting him to modify the contract in order that the customers
deposit payment could be entered. In cases when the customer was no longer in the office
premises, he would just record them as pre-payment so as to reflect the same in their billing
upon installation of the electric meter.
In a letter7 dated August 28, 2002, Meralco denied the request of Villanuevas counsel to crossexamine the witnesses (complaining customers) who were not Meralco employees. Management
maintained that it was not the proper place to grill a witness on cross-examination which should
be done in an appropriate proceeding. Villanueva was then advised that the case would be
considered submitted for decision as the issues had already been joined with the submission of
his counter-affidavit.
On January 9, 2003, Villanueva received the Notice of Termination 8 which reads:
Formal administrative investigation duly conducted by Legal established that on several
occasions in the year 2002, you, as Branch Representative of Novaliches Branch,
misappropriated for your own personal purposes and benefits the excess service and meter
deposits you charged and exacted from several electric service applicants in the aggregate
amount of ONE THOUSAND SIX HUNDRED PESOS (P 1,600.00), to the damage and prejudice of
the said customers and the Company.
Your aforesaid act constitute willful and gross violations of Section 6, par. 11 of the
Company Code on Employee Discipline which penalizes (a)ll other acts of dishonesty
which cause or tend to cause prejudice to the Company, subject to disciplinary action
depending upon the gravity of the offense.
Under the Labor Code of the Philippines, Article 282 thereof, the termination of your employment
in Meralco is justified on the following grounds: "(a) Serious misconduct x x x by the employee x
x x in connection with his work;" "(c) Fraud x x x or willful breach by the employee of the trust
reposed in him by his employer or representative;" "(e) Other causes analogous to the
foregoing."
Based on the foregoing, Management is constrained to dismiss you for cause from the service
and employ of the Company effective January 10, 2003 with forfeiture of rights and privileges.
[Emphasis supplied]
On January 21, 2003, Villanueva filed a complaint 9 for illegal dismissal before the Regional
Arbitration Branch. He alleged that he was denied both substantive and procedural due process
because there was no formal charge yet when Meralco effected his termination. He argued that
the proceeding taken by the company was akin to a preliminary investigation subject to further
evaluation by the legal division and only upon findings of probable cause would it ripen to an
administrative charge. He thus waited for the formal charge against him as signed by the
Chairman.
Anent the charge of misappropriation of company funds, Villanueva claimed that the amount was
intact with the office and it was only during the preparation of forms that sometimes confusion
would occur, but this was promptly corrected upon discovery to reflect the correct amount for the
kind of service paid for. He further claimed that even assuming that the error was committed, the
offense could not have warranted a penalty of dismissal because the Company Code of Employee
Discipline failed to make mention of his case in a specific manner. At most, his case was one of
simple negligence because the company was not prejudiced financially. Lastly, Villanueva
asserted that the management committed a grievous error for not giving him a chance to
confront the customers who stood as witnesses against him. There being no financial report
relied on during the investigation save for mere affidavits executed by said customers, the
investigative process was a sham, entitling him not only to backwages but also moral and
exemplary damages.
For its part, Meralco defended Villanuevas dismissal as valid and for a just cause. The evidence
consisting of sworn statements of the customers, corporate audits, field reports, and affidavits of
Nepomuceno and Santos sufficiently substantiated the case against him. After evaluating the
pieces of evidence and the merits of Villanuevas defense, the assigned investigator arrived at
the recommended penalty of dismissal which was approved by management. The evidence
presented exposed Villanuevas modus operandi in the processing of customer applications.
Clearly, the issuance of receipts for purported additional deposits was Villanuevas way to thwart

126
the suspicion of customers regarding excessive payments they had made. Having defrauded
customers and tarnished Meralcos good name, Villanueva was justly terminated from
employment.
Ruling of the Labor Arbiter
On June 30, 2004, the Labor Arbiter (LA) rendered a decision10 in favor of Villanueva ordering his
reinstatement with backwages. The LA found no violation of procedural due process despite the
denial of Villanuevas request to confront the affiants because he was already given ample
opportunity to be heard by way of his counter-affidavit. On the matter of substantive due
process, however, the LA explained thus:
x x x although there is substantial evidence to show that complainant committed the acts as
charge[d] in the notice dated August 1, 2002 but the extreme penalty of dismissal given to him
should not be meted under the penalty for violation of Section 7, par. 11 of the Company Code
subject to disciplinary action depending upon the gravity of the offense considering the following
mitigating factors, such as:
a) first offender in his 13 years of service with the company;
b) the minimal amount involved (P 1,600.00)
c) failure of the company to reasonably establish that the act of the
employee is inimical to its interest or has caused undue prejudice to its
operation.
xxx
WHEREFORE, premises considered, respondent Manila Electric Company is hereby ordered to
take back within ten (10) days from receipt hereof, herein complainant Vicente Villanueva, Jr. to
any substantially equivalent position not dependent on the use of CMS, or by payroll
reinstatement, at the option of the former, without loss of seniority rights but without
backwages.
Complainants prayer for damages is hereby dismissed for lack of merit. 11 [Emphasis supplied]
Ruling of the NLRC
In its Resolution12 dated November 30, 2004, the NLRC Third Division reversed the ruling of the
LA and declared Villanuevas dismissal as valid. It held that Villanuevas vehement denial of the
offense could not stand against substantial evidence on record pointing to his guilt. Absent any
suspicion of ill motive against Villanueva, the sworn statements of the customers had bearing
that could not be ignored. Worse, Villanueva never presented proof that he indeed reported his
overages to his superiors. Santos likewise discredited him for this.
With respect to the propriety of the penalty of dismissal, the NLRC refused to appreciate the
mitigating circumstances outlined by the LA in Villanuevas favor. Instead, it found Villanueva
liable for dishonesty, warranting his dismissal on the ground of serious misconduct and loss of
trust and confidence. The dispositive portion of the NLRC Resolution reads:
WHEREFORE, the appealed Decision of Labor Arbiter a quo dated June 30, 2004 is hereby
ordered VACATED and SET ASIDE, and a new one entered declaring complainants dismissal from
service as VALID and JUSTIFIED.
All other claims are hereby DENIED for lack of merit. 13
Ruling of the Court of Appeals
After having filed his Motion for Reconsideration, 14 Villanueva moved for the execution of the LAs
decision alleging that while he had been reinstated in the payroll of Meralco effective July 16,
2004, he was not given the full benefits to which he was entitled prior to his dismissal, like one
(1) sack of rice per month and bonuses for two (2) months. Consequently, the LA ordered the
issuance of a Writ of Execution and Alias Writ of Execution on February 15, 2005. 15 On June 20,
2006, the NLRC denied Villanuevas motion for reconsideration rendering its decision as final. 16
On appeal to the CA, Villanuevas petition was dismissed. The CA ruled that Meralco had
established just cause for the dismissal of Villanueva by substantial evidence of his fraudulent
and dishonest acts resulting in the loss of trust and confidence that Meralco had reposed on him.
The CA said:
There can be no dispute that as Branch Representative petitioner occupies a position of trust and
confidence. He transacts daily with applicants for new and reactivated electric service
connections and directly receives from them amounts intended for the required deposit charges.

127
Indeed utmost honesty is expected of petitioner in the discharge of his functions not only
because of his duty to handle funds belonging to the company but also for the reason that as
front line personnel for MERALCOs customers, he carries the image of the company and his
interactions with them leave a lasting impression on the consuming public.
xxx
xxx in this case, the amount of discrepancy or money misappropriated by petitioner may be
minimal, even inconsequential (P 1,600.00). But what is reprehensible is petitioners irregular
and anomalous practice of requiring applicants for electric service connection to pay amounts in
excess of the minimum deposit charge but indicating only the said minimum charge in the
"Contract of Electric Service," making it appear later that the omission was only a mistake if the
customer comes back to the office and asks about the discrepancy and substituting another
contract with the full payment tendered already reflected therein, and not reporting any overage
at all to the branch supervisor with respect to those excess payments which were no longer
questioned by the customers.
xxx
WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and
accordingly DISMISSED for lack of merit. The challenged Resolutions dated November 30, 2004
and June 20, 2006 of the National Labor Relations Commission in NLRC-NCR CA No. 040992-04
(NLRC-NCR Case No. 00-01-00977-03) are hereby AFFIRMED. 17
Hence, this petition.
GROUNDS
I.
THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
ON THE PART OF THE PUBLIC RESPONDENTS ACT OF REVERSING THE
DECISION OF THE LABOR ARBITER A QUO, AND DECLARING PETITIONERS
DISMISSAL AS VALID AND JUSTIFIED, AND SUBSEQUENTLY DENYING
PETITIONERS MOTION FOR RECONSIDERATION.
II.
THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT PUBLIC
RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN NOT ACTING
UPON THE MOTION FOR ISSUANCE OF WRIT OF EXECUTION FOR THE
CONTINUATION OF THE PAYMENT OF SALARIES BY WAY OF PAYROLL
REINSTATEMENT, DURING THE PENDENCY OF PETITIONERS MOTION FOR
RECONSIDERATION, AND UNTIL ITS RESOLUTION MORE THAN ONE (1) YEAR
AND A HALF THEREAFTER AND UNTIL THE FINALITY OF THE DECISION. 18
The Courts Ruling
The petition is without merit.
Dismissal from employment has two aspects: 1) the legality of the act of dismissal per se, which
constitutes substantive due process, and 2) the legality of the manner of dismissal, which
constitutes procedural due process.
As to the first, the legal provision in point is Article 282 of the Labor Code which provides:
Art. 282. Termination by Employer. An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representative; and
(e) Other causes analogous to the foregoing.
In the case of Cruz v. Court of Appeals,19 the Court had the occasion to enumerate the essential
elements for "willful breach by the employee of the trust reposed in him by his employer":

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Xxx the loss of trust and confidence must be based on willful breach of the trust reposed in the
employee by his employer. Such breach is willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently. Moreover, it must be based on substantial evidence and not on the
employers whims or caprices or suspicions otherwise, the employee would eternally remain at
the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by
the employer against a claim that the dismissal of an employee was arbitrary. And, in order to
constitute a just cause for dismissal, the act complained of must be work-related and shows that
the employee concerned is unfit to continue working for the employer. In addition, loss of
confidence as a just cause for termination of employment is premised on the fact that the
employee concerned holds a position of responsibility, trust and confidence or that the employee
concerned is entrusted with confidence with respect to delicate matters, such as handling or
case and protection of the property and assets of the employer. The betrayal of this trust is the
essence of the offense for which an employee is penalized. 20 [Underscoring supplied]
As a safeguard against employers who indiscriminately use "loss of trust and confidence" to
justify arbitrary dismissal of employees, the Court, in addition to the above elements, came up
with the following guidelines for the application of the doctrine: (1) loss of confidence should not
be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal or
unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and (4) it must be genuine, not a mere afterthought, to justify an earlier action taken in
bad faith.21
In this case, the above requisites have been met. Meralcos loss of trust and confidence arising
out of Villanuevas act of misappropriation of company funds in the course of processing
customer applications has been proven by substantial evidence, thus, justified. Verily, the
issuance of additional receipts for excessive payments exacted from customers is a willful breach
of the trust reposed in him by the company.
One. Villanueva worked for Meralco as a Branch Representative whose tasks
included the issuance of Contracts for Electric Service after receipt of the amount
due for service connection from customers. Obviously, he was entrusted not only
with the responsibility of handling company funds but also to cater to customers
who intended to avail of Meralcos services. This is nothing but an indication that
trust and confidence were reposed in him by the company, although his position
was not strictly managerial by nature. Loss of confidence generally applies only to:
(1) cases involving employees occupying positions of trust and confidence; or (2)
situations where the employee is routinely charged with the care and custody of the
employers money or property. To the first class belong managerial employees, that
is, those vested with the powers and prerogatives to lay down management polices
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees, or effectively recommend such managerial actions. To the second class
belong cashiers, auditors, property custodians, or those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of money or
property.22 Villanueva falls in the latter category.
Two. Villanuevas acts of issuing contracts indicating therein an amount less than
the actual payment made by the customers and, thereafter, issuing a receipt in an
attempt to document the discrepancy are certainly work-related. This is, in fact, the
core of his position as a Branch Representative.
Three. Meralcos charge against Villanueva was adequately proven by substantial
evidence. The records provide an extensive showing of evidence against Villanueva.
The affidavits of co-employees and, more especially those of the customers
themselves, bear weight in establishing the specific acts constituting the charge
against him. In fact, no inconsistencies among these statements were found.
Villanueva likewise failed to pose a plausible defense
Four. The breach of the companys trust in Villanueva was shown to have been
committed knowingly and willfully.1wphi1 Although the amount of discrepancy or
money misappropriated may be considered minimal and even inconsequential to an

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established company such as Meralco, it is the anomalous practice of requiring
applicants for electric service connection to pay amounts higher than required that
is the crux of Villanuevas offense. The conscious design of issuing another receipt
to make it appear that there was a mistake in the initial transaction with the
customers exhibits a culpable act bordering on dishonesty and deceit. If not for
personal gain, why did Villanueva exact from customers amounts in excess of what
was required by the company? What would have Villanueva done had the customers
failed to discover the discrepancy between the amount they paid and that
appearing in the receipts issued to them? Why were there no overages reported to
his branch supervisor with respect to excess payments which were no longer
questioned by the customers? These questions arise out of the practice which
unfortunately corrupted an employee like Villanueva. These doubts sway the Court
away from Villanuevas claim that his errors were promptly corrected upon
discovery.
Villanuevas insistence, that the act which triggered his dismissal did not justify his separation
from the service because the Company Code of Employee Discipline failed to make mention of
his case in a specific manner, fails to persuade the Court. The established facts do not constitute
a mere case of simple negligence. The acts performed were without the slightest connotation of
inadvertence which Villanueva could have demonstrated during the proceedings a quo.
Besides, the Court is not unmindful of the prerogatives available to Meralco as an employer. The
company has the right to regulate, according to its discretion and best judgment, all aspects of
employment, including work assignment, working methods, processes to be followed, working
regulations, transfer of employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of workers. Management has the prerogative to discipline its employees and
to impose appropriate penalties on erring workers pursuant to company rules and regulations. 23
So long as they are exercised in good faith for the advancement of the employers interest and
not for the purpose of defeating or circumventing the rights of the employees under special laws
or under valid agreements, the employers exercise of its management prerogative must be
upheld.24 The law imposes many obligations on the employer such as providing just
compensation to workers and 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 and loyalty. The employer may not be compelled to continue to employ
such persons whose continuance in the service will patently be inimical to its interests. 25
In his case, no indication of bad faith can be attributed to Meralco as there was no dispute that it
had lost trust and confidence in Villanueva and his abilities to perform his tasks with utmost
efficiency and honesty expected of an employee trusted to handle customers and funds. With
substantial evidence presented and Villanuevas failure to proffer plausible explanation denying
the charges against him, there can be no other conclusion for the Court but to affirm his
dismissal.
Lastly, Villanueva argued that management committed a grievous error for not giving him a
chance to confront the customers who stood as witnesses against him. To this, the Court
disagrees. As the NLRC and the CA found, Villanueva was afforded due process when he was
given the required notices. More importantly, he was actually given the opportunity to be heard.
On the date of the scheduled hearing, Villanueva was assisted by counsel who requested for time
within which to submit a counter-affidavit. He was able to submit it, where he denied the charges
against him. Undoubtedly, Villanueva was afforded procedural due process even if the crossexamination of the witnesses was not permitted by Meralco. Where a party is given the
opportunity to explain his side of the case, the right to due process is deemed recognized for
what is frowned upon is the denial of the right to be heard.
The Court commiserates with the heirs of Villanueva for his death last 2007. The Court, as
dispenser of justice, however, has to apply the law based on the facts of the case. Considering
that the employer has proved a just and valid cause for Villanuevas termination, the Court has
no option but to dismiss the case.
WHEREFORE, the petition is DENIED.

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SO ORDERED.

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G.R. No. 193756
April 10, 2013
VENANCIO S. REYES, EDGARDO C. DABBAY, WALTER A. VIGILIA, NEMECIO M. CALANNO,
ROGELIO A. SUPE, JR., ROLAND R. TRINIDAD, and AURELIO A. DULDULAO, Petitioners,
vs.
RP GUARDIANS SECURITY AGENCY, INC., Respondent.
DECISION
MENDOZA, J.:
Before the Court is a petition for review under Rule 45 of the Rules of Court, assailing the May 18,
2010 Amended Decision1 and the September 13, 2010 Resolution 2 of the Court of Appeals (CA),
in C.A.-GR. SP No. 106643, which modified the April 9, 2008 Decision 3 of the National Labor
Relations Commission (NLRC) in NLRC LAC Case No. 11-002990-07, insofar as the award of
backwages, the computation of separation pay, and the refund for the trust fund contributions
are concerned.
The Facts:
Petitioners Venancio S. Reyes, Edgardo C. Dabbay, Walter A. Vigilia, Nemesio M. Calanno, Rogelio
A. Supe, Jr., Roland R. Trinidad, and Aurelio A. Duldulao (petitioners) were hired by respondent RP
Guardians Security Agency, Inc. (respondent) as security guards. They were deployed to various
clients of respondent, the last of which were the different branches of Banco Filipino Savings and
Mortgage Bank (Banco Filipino).
In September 2006, respondents security contract with Banco Filipino was terminated. In
separate letters,4 petitioners were individually informed of the termination of the security
contract with Banco de Oro. In two (2) memoranda, dated September 21, 2006 5 and September
29, 2006,6 petitioners were directed to turnover their duties and responsibilities to the incoming
security agency and were advised that they would be placed on floating status while waiting for
available post. Petitioners waited for their next assignment, but several months lapsed and they
were not given new assignments.
Consequently, on April 10, 2007, petitioners filed a complaint 7 for constructive dismissal.
In its position paper,8 respondent claimed that there was no dismissal, of petitioners, constructive
or otherwise, and asserted that their termination was due to the expiration of the service
contract which was coterminus with their contract of employment.
On August 20, 2007, the Labor Arbiter (LA) rendered a decision 9 in favor of petitioners ordering
respondent to pay petitioners separation pay, backwages, refund of trust fund, moral and
exemplary damages, and attorneys fees.
Aggrieved, respondent appealed to the NLRC.
On April 9, 2008, the NLRC promulgated its decision 10 sustaining the finding of constructive
dismissal by the LA, and the awards she made in the decision. The award of moral and
exemplary damages, however, were deleted.
Upon denial of its motion for reconsideration, 11 respondent filed a petition for certiorari before the
CA.
On February 26, 2010, the CA rendered a decision 12 dismissing the petition and affirming the
assailed NLRC decision and resolution.
On motion for reconsideration, the CA issued the Amended Decision 13 dated May 18, 2010,
modifying its earlier decision. Citing Section 6.5 (4) of Department Order No. 14 of the
Department of Labor and Employment (DOLE D.O. No. 14), otherwise known as Guidelines
Governing the Employment and Working Conditions of Security Guards and Similar Personnel in
the Private Security Industry, the CA reduced the computation of the separation pay from one
month pay per year of service to one-half month pay for every year of service; reduced the
refund of trust fund contribution from Sixty (P60.00) Pesos to Thirty (P30.00)Pesos; and deleted
the award of backwages and attorneys fees.
Hence, this petition anchored on the following:
GROUNDS FOR THE PETITION
8.0 The Court of Appeals has decided a question of substance in a way that is not in accord with
law and with applicable decisions of the Supreme Court concerning the Petitioners basic right to
fair play, justice and due process, with more reason that a conclusion of law cannot be made in
the motion for reconsideration.

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8.1 The first decision promulgated by the Court of Appeals on February 26, 2010 affirming the
decision of the NLRC awarding both backwages and separation pay of one month pay for every
year of service can only be set aside upon proof of grave abuse of discretion, fraud or error of
law.
8.2 Petitioners are entitled to backwages for the period covered from the time the Labor Arbiter
rendered the decision in their favor on August 20, 2007 until said decision was reversed by the
Court of Appeals in its Amended Decision promulgated on May 18, 2010. 14
There is no doubt that petitioners were constructively dismissed. The LA, the NLRC and the CA
were one in their conclusion that respondent was guilty of illegal dismissal when it placed
petitioners on floating status beyond the reasonable six-month period after the termination of
their service contract with Banco de Oro. Temporary displacement or temporary off-detail of
security guard is, generally, allowed in a situation where a security agencys client decided not to
renew their service contract with the agency and no post is available for the relieved security
guard.15 Such situation does not normally result in a constructive dismissal. Nonetheless, when
the floating status lasts for more than six (6) months, the employee may be considered to have
been constructively dismissed.16 No less than the Constitution17 guarantees the right of workers
to security of tenure, thus, employees can only be dismissed for just or authorized causes and
after they have been afforded the due process of law. 18
Settled is the rule that that 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 up to the time of actual reinstatement. 19 If reinstatement is
not possible, however, the award of separation pay is proper. 20
Backwages and reinstatement are separate and distinct reliefs given to an illegally dismissed
employee in order to alleviate the economic damage brought about by the employees
dismissal.21 "Reinstatement is a restoration to a state from which one has been removed or
separated" while "the payment of backwages is a form of relief that restores the income that was
lost by reason of the unlawful dismissal." Therefore, the award of one does not bar the other. 22
In the case of Aliling v. Feliciano,23 citing Golden Ace Builders v. Talde,24 the Court explained:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement.
The two reliefs provided are separate and distinct. In instances where reinstatement is no longer
feasible because of strained relations between the employee and the employer, separation pay is
granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss
of seniority rights, and payment of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an
option, separation pay equivalent to one (1) month salary for every year of service should be
awarded as an alternative. The payment of separation pay is in addition to payment of
backwages. [Emphasis Supplied]
Furthermore, the entitlement of the dismissed employee to separation pay of one month for
every year of service should not be confused with Section 6.5 (4) of DOLE D.O. No. 14 which
grants a separation pay of one-half month for every year service, to wit:
6.5 Other Mandatory Benefits. In appropriate cases, security guards/similar personnel are
entitled to the mandatory benefits as listed below, although the same may not be included in the
monthly cost distribution in the contracts, except the required premiums for their coverage:
a. Maternity benefit as provided under the SSS Law;
b. Separation pay if the termination of employment is for authorized cause as provided by law
and as enumerated below:
Half-Month Pay Per Year of Service, but in no case less than One Month Pay, if separation is due
to:
1. Retrenchment or reduction of personnel effected by management to prevent serious losses;
2. Closure or cessation of operation of an establishment not due to serious losses or financial
reverses;

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3. Illness or disease not curable within a period of 6 months and continued employment is
prohibited by law or prejudicial to the employee's health or that of co-employees; or
4. Lack of service assignment for a continuous period of 6 months.The said provision
contemplates a situation where a security guard is removed for authorized causes such as when
the security agency experiences a surplus of security guards brought about by lack of clients. In
such a case, the security agency has the option to resort to retrenchment upon compliance with
the procedural requirements of "two-notice rule" set forth in the Labor Code and to pay
separation pay of one-half month for every year of service.
In this case, respondent would have been liable for reinstatement and payment of backwages.
Reinstatement, however, was no longer feasible because, as found by the LA, respondent had
already ceased operation of its business. 25 Thus, backwages and separation pay, in the amount
of one month for every year of service, should be paid in lieu of reinstatement.
As to their claim of attorney's fees, petitioners were compelled to file an action for the recovery
of their lawful wages and other benefits and, in the process, incurred expenses. Hence,
petitioners are entitled to attorney's fees equivalent to ten percent (10%) of the monetary
award.26
Finally, as to the refund of the trust fund contribution, a perusal of the records shows that the
amount deducted for the trust fund contribution from each petitioner varies. Some petitioners
were deducted the amount of P15.00 every payday while others were deducted P30.00 every
payday. Thus, the Court deems it proper to refer the computation of the same to the LA.
WHEREFORE, the pet1t10n is GRANTED. The May 18, 2010 Amended Decision and the
September 13, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 106643 are REVERSED
and SET ASIDE. The April 9, 2008 Decision of the National Labor Relations Commission, modifying
the August 20, 2007 Decision of the Labor Arbiter, is REINSTATED.
The case is REMANDED to the Labor Arbiter for further proceedings to make a detailed
computation of the exact amount of monetary benefits due petitioners.
SO ORDERED.

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G.R. No. 120969 January 22, 1998
ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding
Commissioner RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner
VICTORIANO R. CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA FIMS, respondents.
DAVIDE, JR., J.:
By way of this special civil action for certiorari under Rule 65 of the Rules of Court, petitioners
seek to annul the 10 February 1995 Decision 1 of the National Labor Relations Commission
(hereafter NLRC), and its 6 April 1995 Resolution 2 denying the motion to reconsider the former in
NLRC-NCR-CA No. 006195-94. The decision reversed that of the Labor Arbiter in NLRC-NCR-Case
No. 00-07-03994-92.
The parties present conflicting sets of facts.
Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18
July 1989 as part of the filming crew with a salary of P375.00 per week. About four months later,
he was designated Assistant Electrician with a weekly salary of P400.00, which was increased to
P450.00 in May 1990. In June 1991, he was promoted to the rank of Electrician with a weekly
salary of P475.00, which was increased to P539.00 in September 1991.
Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990
as a member of the shooting crew with a weekly salary of P375.00, which was increased to
P425.00 in May 1991, then to P475.00 on 21 December 1991. 3
Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the shooting
area as instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting
in the "fixing" of the lighting system, and performing other tasks that the cameraman and/or
director may assign. 4
Sometime in May 1992, petitioners sought the assistance of their supervisors, Mrs. Alejandria
Cesario, to facilitate their request that private respondents adjust their salary in accordance with
the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario
would agree to increase their salary only if they signed a blank employment contract. As
petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then
refused to take him back when he reported for work on 20 July 1992. Meanwhile, Maraguinot was
dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992. He
was again asked to sign a blank employment contract, and when he still refused, private
respondents terminated his services on 20 July 1992. 5 Petitioners thus sued for illegal dismissal 6
before the Labor Arbiter.
On the other hand, private respondents claim that Viva Films (hereafter VIVA) is the trade name of
Viva Productions, Inc., and that it is primarily engaged in the distribution and exhibition of movies
but not in the business of making movies; in the same vein, private respondent Vic del Rosario
is merely an executive producer, i.e., the financier who invests a certain sum of money for the
production of movies distributed and exhibited by VIVA. 7
Private respondents assert that they contract persons called "producers" also referred to as
"associate producers" 8 to "produce" or make movies for private respondents; and contend that
petitioners are project employees of the association producers who, in turn, act as independent
contractors. As such, there is no employer-employee relationship between petitioners and private
respondents.
Private respondents further contend that it was the associate producer of the film "Mahirap
Maging Pogi," who hired petitioner Maraguinot. The movie shot from 2 July up to 22 July 1992, and
it was only then that Maraguinot was released upon payment of his last salary, as his services
were no longer needed. Anent petitioner Enero, he was hired for the movie entitled "Sigaw ng
Puso," later re-tired "Narito and Puso." He went on vacation on 8 June 1992, and by the time he
reported for work on 20 July 1992, shooting for the movie had already been completed. 9
After considering both versions of the facts, the Labor Arbiter found as follows:
On the first issue, this Office rules that complainants are the employees of the respondents. The
producer cannot be considered as an independent contractor but should be considered only as a

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labor-only contractor and as such, acts as a mere agent of the real employer, the herein
respondent. Respondents even failed to name and specify who are the producers. Also, it is an
admitted fact that the complainants received their salaries from the respondents. The case cited
by the respondents, Rosario Brothers, Inc. vs. Ople, 131 SCRA 72 does not apply in this case.
It is very clear also that complainants are doing activities which are necessary and essential to the
business of the respondents, that of movie-making. Complainant Maraguinot worked as an
electrician while complainant Enero worked as a crew [member]. 10
Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:
WHEREFORE, judgment is hereby rendered declaring that complainants were illegally dismissed.
Respondents are hereby ordered to reinstate complainant to their former positions without loss
[of] seniority rights and pay their backwages starting July 21, 1992 to December 31, 1993
temporarily computed in the amount of P38,000.00 for complainant Paulino Enero and P46,000.00
for complainant Alejandro Maraguinot, Jr. and thereafter until actually reinstated.
Respondents are ordered to pay also attorney's fees equivalent to ten (10%) and/or P8,400.00 on
top of the award. 11
Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In its
decision 12 of 10 February 1995, the NLRC found the following circumstances of petitioners' work
"clearly established:"
1. Complainants [petitioners herein] were hired for specific movie projects and their employment
was co-terminus with each movie project the completion/termination of which are pre-determined,
such fact being made known to complainants at the time of their engagement.
xxx xxx xxx
2 Each shooting unit works on one movie project at a time. And the work of the shooting units,
which work independently from each other, are not continuous in nature but depends on the
availability of movie projects.
3. As a consequence of the non-continuous work of the shooting units, the total working hours
logged by complainants in a month show extreme variations. . . For instance, complainant
Maraguinot worked for only 1.45 hours in June 1991 but logged a total of 183.25 hours in January
1992. Complainant Enero logged a total of only 31.57 hours in September 1991 but worked for
183.35 hours the next month, October 1991.
4. Further shown by respondents is the irregular work schedule of complainants on a daily basis.
Complainant Maraguinot was supposed to report on 05 August 1991 but reported only on 30
August 1991, or a gap of 25 days. Complainant Enero worked on 10 September 1991 and his next
scheduled working day was 28 September 1991, a gap of 18 days.
5. The extremely irregular working days and hours of complainants' work explain the lump sum
payment for complainants' services for each movie project. Hence, complainants were paid a
standard weekly salary regardless of the number of working days and hours they logged in.
Otherwise, if the principle of "no work no pay" was strictly applied, complainants' earnings for
certain weeks would be very negligible.
6. Respondents also alleged that complainants were not prohibited from working with such movie
companies like Regal, Seiko and FPJ Productions whenever they are not working for the
independent movie producers engaged by respondents . . . This allegation was never rebutted by
complainants and should be deemed admitted.
The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken
together, indicated that complainants (herein petitioners) were "project employees."
After their motion for reconsideration was denied by the NLRC in its Resolution 13 of 6 April 1995,
petitioners filed the instant petition, claiming that the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in: (1) finding that petitioners were project employees;
(2) ruling that petitioners were not illegally dismissed; and (3) reversing the decision of the Labor
Arbiter.
To support their claim that they were regular (and not project) employees of private respondents,
petitioners cited their performance of activities that were necessary or desirable in the usual trade
or business of private respondents and added that their work was continuous, i.e., after one
project was completed they were assigned to another project. Petitioners thus considered
themselves part of a work pool from which private respondents drew workers for assignment to

136
different projects. Petitioners lamented that there was no basis for the NLRC's conclusion that they
were project employees, while the associate producers were independent contractors; and thus
reasoned that as regular employees, their dismissal was illegal since the same was premised on a
"false cause," namely, the completion of a project, which was not among the causes for dismissal
allowed by the Labor Code.
Private respondents reiterate their version of the facts and stress that their evidence supports the
view that petitioners are project employees; point to petitioners' irregular work load and work
schedule; emphasize the NLRC's finding that petitioners never controverted the allegation that
they were not prohibited from working with other movie companies; and ask that the facts be
viewed in the context of the peculiar characteristics of the movie industry.
The Office of the Solicitor General (OSG) is convinced that this petition is improper since
petitioners raise questions of fact, particularly, the NLRC's finding that petitioners were project
employees, a finding supported by substantial evidence; and submits that petitioners' reliance on
Article 280 of the Labor Code to support their contention that they should be deemed regular
employees is misplaced, as said section "merely distinguishes between two types of employees,
i.e., regular employees and casual employees, for purposes of determining the right of an
employee to certain benefits."
The OSG likewise rejects petitioners' contention that since they were hired not for one project, but
for a series of projects, they should be deemed regular employees. Citing Mamansag v. NLRC, 14
the OSG asserts that what matters is that there was a time-frame for each movie project made
known to petitioners at the time of their hiring. In closing, the OSG disagrees with petitioners'
claim that the NLRC's classification of the movie producers as independent contractors had no
basis in fact and in law, since, on the contrary, the NLRC "took pains in explaining its basis" for its
decision.
As regards the propriety of this action, which the Office of the Solicitor General takes issue with,
we rule that a special civil action for certiorari under Rule 65 of the Rules of Court is the proper
remedy for one who complains that the NLRC acted in total disregard of evidence material to or
decisive of the controversy. 15 In the instant case, petitioners allege that the NLRC's conclusions
have no basis in fact and in law, hence the petition may not be dismissed on procedural or
jurisdictional grounds.
The judicious resolution of this case hinges upon, first, the determination of whether an employeremployee relationship existed between petitioners and private respondents or any one of private
respondents. If there was none, then this petition has no merit; conversely, if the relationship
existed, then petitioners could have been unjustly dismissed.
A related question is whether private respondents are engaged in the business of making motion
pictures. Del Rosario is necessarily engaged in such business as he finances the production of
movies. VIVA, on the other hand, alleges that it does not "make" movies, but merely distributes
and exhibits motion pictures. There being no further proof to this effect, we cannot rely on this
self-serving denial. At any rate, and as will be discussed below, private respondents' evidence
even supports the view that VIVA is engaged in the business of making movies.
We now turn to the critical issues. Private respondents insist that petitioners are project
employees of associate producers who, in turn, act as independent contractors. It is settled that
the contracting out of labor is allowed only in case of job contracting. Section 8, Rule VIII, Book III
of the Omnibus Rules Implementing the Labor Code describes permissible job contracting in this
wise:
Sec. 8. Job contracting. There is job contracting permissible under the Code if the following
conditions are met:
(1) The contractor carries on an independent business and undertakes the contract work on his
own account under his own responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected with the performance of
the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of his
business.
Assuming that the associate producers are job contractors, they must then be engaged in the

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business of making motion pictures. As such, and to be a job contractor under the preceding
description, associate producers must have tools, equipment, machinery, work premises, and
other materials necessary to make motion pictures. However, the associate producers here have
none of these. Private respondents' evidence reveals that the movie-making equipment are
supplied to the producers and owned by VIVA. These include generators, 16 cables and wooden
platforms, 17 cameras and "shooting equipment;" 18 in fact, VIVA likewise owns the trucks used to
transport the equipment. 19 It is thus clear that the associate producer merely leases the
equipment from VIVA. 20 Indeed, private respondents' Formal Offer of Documentary Evidence
stated one of the purposes of Exhibit "148" as:
To prove further that the independent Producers rented Shooting Unit No. 2 from Viva to finish
their films. 21
While the purpose of Exhibits "149," "149-A" and "149-B" was:
[T]o prove that the movies of Viva Films were contracted out to the different independent
Producers who rented Shooting Unit No. 3 with a fixed budget and time-frame of at least 30
shooting days or 45 days whichever comes first. 22
Private respondent further narrated that VIVA's generators broke down during petitioners' last
movie project, which forced the associate producer concerned to rent generators, equipment and
crew from another company. 23 This only shows that the associate producer did not have
substantial capital nor investment in the form of tools, equipment and other materials necessary
for making a movie. Private respondents in effect admit that their producers, especially
petitioners' last producer, are not engaged in permissible job contracting.
If private respondents insist that the associate producers are labor contractors, then these
producers can only be "labor-only" contractors, defined by the Labor Code as follows:
Art. 106. Contractor or subcontractor. . . .
There is "labor-only" contracting where the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such persons are performing
activities which are directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed
by him.
A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus Rules
Implementing the Labor Code:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an
employer shall be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises and other materials; and
(2) The workers recruited and placed by such person are performing activities which are directly
related to the principal business or operations of the employer in which workers are habitually
employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as
contractor shall be considered merely as an agent or intermediary of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed
by him.
(c) For cases not falling under this Article, the Secretary of Labor shall determine through
appropriate orders whether or not the contracting out of labor is permissible in the light of the
circumstances of each case and after considering the operating needs of the employer and the
rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure
the protection and welfare of the workers.
As labor-only contracting is prohibited, the law considers the person or entity engaged in the
same a mere agent or intermediary of the direct employer. But even by the preceding standards,
the associate producers of VIVA cannot be considered labor-only contractors as they did not
supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting Unit
Supervisor and an employee of VIVA, who recruited crew members from an "available group of
free-lance workers which includes the complainants Maraguinot and Enero." 24 And in their

138
Memorandum, private respondents declared that the associate producer "hires the services of . . .
6) camera crew which includes (a) cameraman; (b) the utility crew; (c) the technical staff; (d)
generator man and electrician; (e) clapper; etc. . . . ." 25 This clearly showed that the associate
producers did not supply the workers required by the movie project.
The relationship between VIVA and its producers or associate producers seems to be that of
agency, 26 as the latter make movies on behalf of VIVA, whose business is to "make" movies. As
such, the employment relationship between petitioners and producers is actually one between
petitioners and VIVA, with the latter being the direct employer.
The employer-employee relationship between petitioners and VIVA can further be established by
the "control test." While four elements are usually considered in determining the existence of an
employment relationship, namely: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to control of the
employee's conduct, the most important element is the employer's control of the employee's
conduct, not only as to the result of the work to be done but also as to the means and methods to
accomplish the same. 27 These four elements are present here. In their position paper submitted
to the Labor Arbiter, private respondents narrated the following circumstances:
[T]he PRODUCER has to work within the limits of the budget he is given by the company, for as
long as the ultimate finish[ed] product is acceptable to the company . . .
The ensure that qualify films are produced by the PRODUCER who is an independent contractor,
the company likewise employs a Supervising PRODUCER, a Project accountant and a Shooting unit
supervisor. The Company's Supervising PRODUCER is Mr. Eric Cuatico, the Project accountant
varies from time to time, and the Shooting Unit Supervisor is Ms. Alejandria Cesario.
The Supervising PRODUCER acts as the eyes and ears of the company and of the Executive
Producer to monitor the progress of the PRODUCER's work accomplishment. He is there usually in
the field doing the rounds of inspection to see if there is any problem that the PRODUCER is
encountering and to assist in threshing out the same so that the film project will be finished on
schedule. He supervises about 3 to 7 movie projects simultaneously [at] any given time by
coordinating with each film "PRODUCER". The Project Accountant on the other hand assists the
PRODUCER in monitoring the actual expenses incurred because the company wants to insure that
any additional budget requested by the PRODUCER is really justified and warranted especially
when there is a change of original plans to suit the tast[e] of the company on how a certain scene
must be presented to make the film more interesting and more commercially viable. (emphasis
supplied).
VIVA's control is evident in its mandate that the end result must be a "quality film acceptable to
the company." The means and methods to accomplish the result are likewise controlled by VIVA,
viz., the movie project must be finished within schedule without exceeding the budget, and
additional expenses must be justified; certain scenes are subject to change to suit the taste of the
company; and the Supervising Producer, the "eyes and ears" of VIVA and del Rosario, intervenes
in the movie-making process by assisting the associate producer in solving problems encountered
in making the film.
It may not be validly argued then that petitioners are actually subject to the movie director's
control, and not VIVA's direction. The director merely instructs petitioners on how to better comply
with VIVA's requirements to ensure that a quality film is completed within schedule and without
exceeding the budget. At bottom, the director is akin to a supervisor who merely oversees the
activities of rank-and-file employees with control ultimately resting on the employer.
Moreover, appointment slips 28 issued to all crew members state:
During the term of this appointment you shall comply with the duties and responsibilities of your
position as well as observe the rules and regulations promulgated by your superiors and by Top
Management.
The words "supervisors" and "Top Management" can only refer to the "supervisors" and "Top
Management" of VIVA. By commanding crew members to observe the rules and regulations
promulgated by VIVA, the appointment slips only emphasize VIVA's control over petitioners.
Aside from control, the element of selection and engagement is likewise present in the instant
case and exercised by VIVA. A sample appointment slip offered by private respondents "to prove
that members of the shooting crew except the driver are project employees of the Independent

139
Producers"

29

reads as follows:

VIVA PRODUCTIONS, INC.

16 Sct. Albano St.
Diliman, Quezon City
PEDRO NICOLAS Date: June 15, 1992
APPOINTMENT SLIP
You are hereby appointed as SOUNDMAN for the film project entitled "MANAMBIT". This
appointment shall be effective upon the commencement of the said project and shall continue to
be effective until the completion of the same.
For your services you shall receive the daily/weekly/monthly compensation of P812.50.
During the term of this appointment you shall comply with the duties and responsibilities of your
position as well as observe the rules and regulations promulgated by your superiors and by Top
Management.
Very truly yours,
(an illegible signature)
CONFORME:
_________________
Name of appointee
Signed in the presence of:
___________________
Notably, nowhere in the appointment slip does it appear that it was the producer or associate
producer who hired the crew members; moreover, it is VIVA's corporate name which appears on
the heading of the appointment slip. What likewise tells against VIVA is that it paid petitioners'
salaries as evidenced by vouchers, containing VIVA's letterhead, for that purpose. 30
All the circumstances indicate an employment relationship between petitioners and VIVA alone,
thus the inevitable conclusion is that petitioners are employees only of VIVA.
The next issue is whether petitioners were illegally dismissed. Private respondents contend that
petitioners were project employees whose employment was automatically terminated with the
completion of their respective projects. Petitioners assert that they were regular employees who
were illegally dismissed.
It may not be ignored, however, that private respondents expressly admitted that petitioners were
part of a work pool; 31 and, while petitioners were initially hired possibly as project employees,
they had attained the status of regular employees in view if VIVA's conduct.
A project employee or a member of a work pool may acquire the status of a regular employee
when the following concur:
1) There is a continuous rehiring of project employees even after cessation of a project; 32 and
2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable
to the usual business or trade of the employer. 33
However, the length of time during which the employee was continuously re-hired is not
controlling, but merely serves as a badge of regular employment. 34
In the instant case, the evidence on record shows that petitioner Enero was employed for a total
of two (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was
employed for some three (3) years and worked on at least twenty-three (23) projects. 35 Moreover,
as petitioners' tasks involved, among other chores, the loading, unloading and
FILM

DATE
START
ED

DATE
COMPLE
TED

ASSOCI
ATE
PRODU
CER

LOVE AT
FIRST
SIGHT

1/3/90

2/16/90

MARIVI
C ONG

PAIKOT-

1/26/9

3/11/90

EDITH

140
IKOT

MANUE
L

ROCKY &
ROLLY

2/13/9
0

3/29/90

M. ONG

PAIKOTIKOT
(addl.
1/2)

3/12/9
0

4/3/90

E.
MANUE
L

ROCKY &
ROLLY
(2nd
contract)

4/6/90

5/20/90

M. ONG

NARDON
G
TOOTHPI
CK

4/4/90

5/18/90

JUN
CHING

BAKIT
KAY
TAGAL
NG
SANDALI

6/26/9
0

10/20/90

E.
MANUE
L

BAKIT
KAY
TAGAL
(2nd
contract)

8/10/9
0

9/23/90

E.
MANUE
L

HINUKAY
KO NA
ANG
LIBINGA
N MO

9/6/90

10/20/90

JUN
CHING

MAGING
SINO KA
MAN

10/25/
90

12/8/90

SANDY
STA.
MARIA

M. SINO
KA MAN
(2nd
contract)

12/9/9
0

1/22/91

SANDY
S

NOEL
JUICO

1/29/9
1

3/14/90

JUN
CHING

NOEL
JUICO
(2nd
contract)

3/15/9
1

4/6/91

JUN
CHING

141
ROBIN
GOOD

5/7/91

6/20/91

M. ONG

UTOL
KONG
HOODLU
M#1

6/23/9
1

8/6/91

JUN
CHING

KAPUTOL
NG
ISANG
AWIT

8/18/9
1

10/2/91

SANDY
S.

DARNA

10/4/9
1

11/18/91

E.
MANUE
L

DARNA
(addl.
1/2)

11/20/
91

12/12/91

E.
MANUE
L

MAGNON
G REHAS

12/13/
91

1/27/92

BOBBY
GRIMAL
T

M.
REHAS
(2nd
contract)

1/28/9
2

3/12/92

B.
GRIMAL
T

HIRAM
NA
MUKHA

3/15/9
2

4/29/92

M. ONG

HIRAM
(2nd
contract)

5/1/92

6/14/92

M. ONG

KAHIT
AKO'Y
BUSABO
S

5/28/9
2

7/7/92

JERRY
OHARA

SIGAW
NG PUSO

7/1/92

8/4/92

M. ONG

SIGAW
(addl.
1/2)

8/15/9
2

9/5/92

M. ONG

NGAYON
AT
KAILANM
AN

9/6/92

10/20/92

SANDY
STA.
MARIA

While Maraguinot was a member of Shooting Unit III, which made the following movies (Annex "4A" of Respondents' Position Paper; OR, 29):

142
FILM

DATE
STARTE
D

DATE
COMPLET
ED

GUMAPANG
KA SA
LUSAK
PETRANG
KABAYO
LUSAK (2nd
contract)
P. KABAYO
(Addl 1/2
contract)
BADBOY

1/27/90

3/12/90

BADBOY
(2nd
contract)
ANAK NI
BABY AMA
A.B. AMA
(addl 1/2)
A.B. AMA
(addl 2nd
1/2)
BOYONG
MANALAC
HUMANAP
KA NG
PANGET
H.
PANGET(2n
d contract)
B.
MANALAC
(2nd
contract)
ROBIN
GOOD (2nd
contract)
PITONG
GAMOL
P. GAMOL
(2nd
contract)
GREASE
GUN GANG
ALABANG
GIRLS (1/2
contract)

2/19/90

4/4/90

3/14/90

4/27/90

4/21/90

5/13/90

6/15/90

7/29/90

7/30/90

8/21/90

9/2/90

10/16/90

ASSOCIA
TE
PRODUC
ER
JUN
CHING
RUTH
GRUTA
JUN
CHING
RUTH
GRUTA
EDITH
MANUEL
E.
MANUEL
RUTH
GRUTA
RUTH
GRUTA
R.
GRUTA

10/17/9
0
11/9/90

11/8/90

11/30/9
0
1/20/91

1/14/91

3/10/91

4/23/91

5/22/91

7/5/91

M. ONG

7/7/91

8/20/91

M. ONG

8/30/91

10/13/91

M. ONG

10/14/9
1

11/27/91

M. ONG

12/28/9
1
3/4/92

2/10/92

12/1/90

3/5/91

3/26/92

MARIVIC
ONG
EDITH
MANUEL
E.
MANUEL

E.
MANUEL
M. ONG

143
BATANG
3/9/92
3/30/92
BOBBY
RILES
GRIMALT
UTOL KONG
3/22/92
5/6/92
B.
HOODLUM
GRIMALT
(part 2)
UTOL (addl.
5/7/92
5/29/92
B.
1/2
GRIMALT
contract)
MANDURUG
5/25/92
7/8/92
JERRY
AS (2nd
OHARA
contract)
MAHIRAP
7/2/92
8/15/92
M. ONG
MAGING
POGI
arranging of movie equipment in the shooting area as instructed by the cameramen, returning the
equipment to the Viva Films' warehouse, and assisting in the "fixing" of the lighting system, it may
not be gainsaid that these tasks were vital, necessary and indispensable to the usual business or
trade of the employer. As regards the underscored phrase, it has been held that this is
ascertained by considering the nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. 36
A recent pronouncement of this Court anent project or work pool employees who had attained the
status of regular employees proves most instructive:
The denial by petitioners of the existence of a work pool in the company because their projects
were not continuous is amply belied by petitioners themselves who admit that: . . .
A work pool may exist although the workers in the pool do not receive salaries and are free to
seek other employment during temporary breaks in the business, provided that the worker shall
be available when called to report of a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as the effect of temporary
cessation of work is concerned. This is beneficial to both the employer and employee for it
prevents the unjust situation of "coddling labor at the expense of capital" and at the same time
enables the workers to attain the status of regular employees. Clearly, the continuous rehiring of
the same set of employees within the framework of the Lao Group of Companies is strongly
indicative that private respondents were an integral part of a work pool from which petitioners
drew its workers for its various projects.
In a final attempt to convince the Court that private respondents were indeed project employees,
petitioners point out that the workers were not regularly maintained in the payroll and were free
to offer their services to other companies when there were no on-going projects. This argument
however cannot defeat the workers' status of regularity. We apply by analogy the vase of
Industrial-Commercial-Agricultural Workers Organization v. CIR [16 SCRA 526, 567-568 (1966)]
which deals with regular seasonal employees. There we held: . . .
Truly, the cessation of construction activities at the end of every project is a foreseeable
suspension of work. Of course, no compensation can be demanded from the employer because
the stoppage of operations at the end of a project and before the start of a new one is regular and
expected by both parties to the labor relations. Similar to the case of regular seasonal employees,
the employment relation is not severed by merely being suspended. [citing Manila Hotel Co. v.
CIR, 9 SCRA 186 (1963)] The employees are, strictly speaking, not separated from services but
merely on leave of absence without pay until they are reemployed. Thus we cannot affirm the
argument that non-payment of salary or non-inclusion in the payroll and the opportunity to seek
other employment denote project employment. 37 (emphasis supplied)
While Lao admittedly involved the construction industry, to which Policy Instruction No.
20/Department Order No. 19 38 regarding work pools specifically applies, there seems to be no
impediment to applying the underlying principles to industries other than the construction
industry. 39 Neither may it be argued that a substantial distinction exists between the projects
undertaken in the construction industry and the motion picture industry. On the contrary, the

144
raison d' etre of both industries concern projects with a foreseeable suspension of work.
At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing
a duty to re-hire a project employee even after completion of the project for which he was hired.
The import of this decision is not to impose a positive and sweeping obligation upon the employer
to re-hire project employees. What this decision merely accomplishes is a judicial recognition of
the employment status of a project or work pool employee in accordance with what is fait
accompli, i.e., the continuous re-hiring by the employer of project or work pool employees who
perform tasks necessary or desirable to the employer's usual business or trade. Let it not be said
that this decision "coddles" labor, for as Lao has ruled, project or work pool employees who have
gained the status of regular employees are subject to the "no work-no pay" principle, to repeat:
A work pool may exist although the workers in the pool do not receive salaries and are free to
seek other employment during temporary breaks in the business, provided that the worker shall
be available when called to report for a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as the effect of temporary
cessation of work is concerned. This is beneficial to both the employer and employee for it
prevents the unjust situation of "coddling labor at the expense of capital" and at the same time
enables the workers to attain the status of regular employees.
The Court's ruling here is meant precisely to give life to the constitutional policy of strengthening
the labor sector, 40 but, we stress, not at the expense of management. Lest it be misunderstood,
this ruling does not mean that simply because an employee is a project or work pool employee
even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we
hold today is that once a project or work pool employee has been: (1) continuously, as opposed to
intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these
tasks are vital, necessary and indispensable to the usual business or trade of the employer, then
the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and
jurisprudence. To rule otherwise would allow circumvention of labor laws in industries not falling
within the ambit of Policy Instruction No. 20/Department Order No. 19, hence allowing the
prevention of acquisition of tenurial security by project or work pool employees who have already
gained the status of regular employees by the employer's conduct.
In closing then, as petitioners had already gained the status of regular employees, their dismissal
was unwarranted, for the cause invoked by private respondents for petitioners' dismissal, viz.:
completion of project, was not, as to them, a valid cause for dismissal under Article 282 of the
Labor Code. As such, petitioners are now entitled to back wages and reinstatement, without loss
of seniority rights and other benefits that may have accrued. 41 Nevertheless, following the
principles of "suspension of work" and "no pay" between the end of one project and the start of a
new one, in computing petitioners' back wages, the amounts corresponding to what could have
been earned during the periods from the date petitioners were dismissed until their reinstatement
when petitioners' respective Shooting Units were not undertaking any movie projects, should be
deducted.
Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already in
effect. Pursuant to Section 34 thereof which amended Section 279 of the Labor Code of the
Philippines and Bustamante v. NLRC, 42 petitioners are entitled to receive full back wages from the
date of their dismissal up to the time of their reinstatement, without deducting whatever earnings
derived elsewhere during the period of illegal dismissal, subject however, to the above
observations.
WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor
Relations Commission in NLRC NCR CA No. 006195-94 dated 01 February 1995, as well as its
Resolution dated 6 April 1995, are hereby ANNULLED and SET ASIDE for having been rendered
with grave abuse of discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 00-0703994-92 is REINSTATED, subject, however, to the modification above mentioned in the
computation of back wages.
No pronouncement as to costs.
SO ORDERED.

145
G.R. No. 49549 August 30, 1990
EVELYN CHUA-QUA, petitioner,
vs.
HON. JACOBO C. CLAVE, in his capacity as Presidential Executive Assistant, and TAY
TUNG HIGH SCHOOL, INC., respondents.
William C. Gunitang and Jaime Opinion for petitioner.
Laogan Law Offices for private respondent.
REGALADO, J.:
This would have been just another illegal dismissal case were it not for the controversial and
unique situation that the marriage of herein petitioner, then a classroom teacher, to her student
who was fourteen (14) years her junior, was considered by the school authorities as sufficient
basis for terminating her services.
Private respondent Tay Tung High School, Inc. is an educational institution in Bacolod City.
Petitioner had been employed therein as a teacher since 1963 and, in 1976 when this dispute
arose, was the class adviser in the sixth grade where one Bobby Qua was enrolled. Since it was
the policy of the school to extend remedial instructions to its students, Bobby Qua was imparted
such instructions in school by petitioner. 1 In the course thereof, the couple fell in love and on
December 24, 1975, they got married in a civil ceremony solemnized in Iloilo City by Hon.
Cornelio G. Lazaro, City Judge of Iloilo. 2 Petitioner was then thirty (30) years of age but Bobby
Qua being sixteen (16) years old, consent and advice to the marriage was given by his mother,
Mrs. Concepcion Ong. 3 Their marriage was ratified in accordance with the rites of their religion in
a church wedding solemnized by Fr. Nick Melicor at Bacolod City on January 10, 1976. 4
On February 4, 1976, private respondent filed with the sub-regional office of the Department of
Labor at Bacolod City an application for clearance to terminate the employment of petitioner on
the following ground: "For abusive and unethical conduct unbecoming of a dignified school
teacher and that her continued employment is inimical to the best interest, and would
downgrade the high moral values, of the school." 5
Petitioner was placed under suspension without pay on March 12, 1976. 6 Executive Labor Arbiter
Jose Y. Aguirre, Jr. of the National Labor Relations Commission, Bacolod City, to whom the case
was certified for resolution, required the parties to submit their position papers and supporting
evidence. Affidavits 7 were submitted by private respondent to bolster its contention that
petitioner, "defying all standards of decency, recklessly took advantage of her position as school
teacher, lured a Grade VI boy under her advisory section and 15 years her junior into an amorous
relation." 8 More specifically, private respondent raised issues on the fact that petitioner stayed
alone with Bobby Qua in the classroom after school hours when everybody had gone home, with
one door allegedly locked and the other slightly open.
On September 17, 1976, Executive Labor Arbiter Jose Y. Aguirre, Jr., without conducting any
formal hearing, rendered an "Award" in NLRC Case No. 956 in favor of private respondent
granting the clearance to terminate the employment of petitioner. It was held therein that
The affidavits . . . although self-serving but were never disputed by the
respondent pointed out that before the marriage of respondent to Bobby Qua,
fourteen (14) years her junior and during her employment with petitioner, an
amorous relationship existed between them. In the absence of evidence to
the contrary, the undisputed written testimonies of several witnesses
convincingly picture the circumstances under which such amorous
relationship was manifested within the premises of the school, inside the
classroom, and within the sight of some employees. While no direct
evidences have been introduced to show that immoral acts were committed
during these times, it is however enough for a sane and credible mind to
imagine and conclude what transpired and took place during these times. . . .
9

Petitioner, however, denied having received any copy of the affidavits referred to. 10
On October 7, 1976, petitioner appealed to the National Labor Relations Commission claiming
denial of due process for not having been furnished copies of the aforesaid affidavits relied on by

146
the labor arbiter. She further contended that there was nothing immoral, nor was it abusive and
unethical conduct unbecoming of a dignified school teacher, for a teacher to enter into lawful
wedlock with her student. 11
On December 27, 1976, the National Labor Relations Commission unanimously reversed the
Labor Arbiter's decision and ordered petitioner's reinstatement with backwages, with the
following specific findings:
Affiant Maselliones deposed and said that he saw appellant and Qua sitting
on the student desk inside a classroom after classes. The depositions of
affiants Despi and Chin are of the same tenor. No statements whatever were
sworn by them that they were eyewitnesses to immoral or scandalous acts.
xxx xxx xxx
Even if we have to strain our sense of moral values to accommodate the
conclusion of the Arbiter, we could not deduce anything immoral or
scandalous about a girl and a boy talking inside a room after classes with
lights on and with the door open.
xxx xxx xxx
Petitioner-appellee naively insisted that the clearance application was
precipitated by immoral acts which did not lend dignity to the position of
appellant. Aside from such gratuitous assertions of immoral acts or conduct
by herein appellant, no evidence to support such claims was introduced by
petitioner-appellee. We reviewed the the sequence of events from the
beginning of the relationship between appellant Evelyn Chua and Bobby Qua
up to the date of the filing of the present application for clearance in search
of evidence that could have proved detrimental to the image and dignity of
the school but none has come to our attention. . . . 12
The case was elevated by private respondent to the Minister of Labor who, on March 30, 1977,
reversed the decision of the National Labor Relations Commission. The petitioner was, however,
awarded six (6) months salary as financial assistance. 13
On May 20, 1977, petitioner appealed the said decision to the Office of the President of the
Philippines. 14 After the corresponding exchanges, on September 1, 1978 said office, through
Presidential Executive Assistant Jacobo C. Clave, rendered its decision reversing the appealed
decision. Private respondent was ordered to reinstate petitioner to her former position without
loss of seniority rights and other privileges and with full back wages from the time she was not
allowed to work until the date of her actual reinstatement. 15
Having run the gamut of three prior adjudications of the case with alternating reversals, one
would think that this decision of public respondent wrote finis to petitioner's calvary. However, in
a resolution dated December 6, 1978, public respondent, acting on a motion for reconsideration
16
of herein private respondent and despite opposition thereto, 17 reconsidered and modified the
aforesaid decision, this time giving due course to the application of Tay Tung High School, Inc. to
terminate the services of petitioner as classroom teacher but giving her separation pay
equivalent to her six (6) months salary. 18
In thus reconsidering his earlier decision, public respondent reasoned out in his
manifestation/comment filed on August 14, 1979 in this Court in the present case:
That this Office did not limit itself to the legal issues involved in the case, but
went further to view the matter from the standpoint of policy which involves
the delicate task of rearing and educating of children whose interest must be
held paramount in the school community, and on this basis, this Office
deemed it wise to uphold the judgment and action of the school authorities in
terminating the services of a teacher whose actuations and behavior, in the
belief of the school authorities, had spawned ugly rumors that had cast
serious doubts on her integrity, a situation which was considered by them as
not healthy for a school campus, believing that a school teacher should at all
times act with utmost circumspection and conduct herself beyond reproach
and above suspicion; 19

147
In this petition for certiorari, petitioner relies on the following grounds for the reversal of the
aforesaid resolution of public respondent, viz.:
1. The dismissal or termination of petitioner's employment, despite Tay Tung's
claim to the contrary, was actually based on her marriage with her pupil and
is, therefore, illegal.
2. Petitioner's right to due process under the Constitution was violated when
the hearsay affidavits of Laddy Maselliones, Eleuterio Despi, Pina D. Chiu, and
Ong Lee Bing, were admitted and considered in evidence without presenting
the affiants as witnesses and affording the petitioner the right to confront and
cross-examine them.
3. No sufficient proofs were adduced to show that petitioner committed
serious misconduct or breached the trust reposed on her by her employer or
committed any of the other grounds enumerated in Article 283 (Now Article
282) of the Labor Code which will justify the termination of her employment.
20

We first dispose of petitioner's claim that her right to due process was violated. We do not agree.
There is no denial of due process where a party was afforded an opportunity to present his side.
Also, the procedure by which issues are resolved based on position papers, affidavits and other
documentary evidence is recognized as not violative of such right. Moreover, petitioner could
have insisted on a hearing to confront and cross-examine the affiants but she did not do so,
obviously because she was convinced that the case involves a question of law. Besides, said
affidavits were also cited and discussed by her in the proceedings before the Ministry of Labor.
Now, on the merits. Citing its upright intention to preserve the respect of the community toward
the teachers and to strengthen the educational system, private respondent submits that
petitioner's actuations as a teacher constitute serious misconduct, if not an immoral act, a
breach of trust and confidence reposed upon her and, thus, a valid and just ground to terminate
her services. It argues that as a school teacher who exercises substitute parental authority over
her pupils inside the school campus, petitioner had moral ascendancy over Bobby Qua and,
therefore, she must not abuse such authority and respect extended to her. Furthermore, it
charged petitioner with having allegedly violated the Code of Ethics for teachers the pertinent
provision of which states that a "school official or teacher should never take advantage of his/her
position to court a pupil or student." 21
On the other hand, petitioner maintains that there was no ground to terminate her services as
there is nothing wrong with a teacher falling in love with her pupil and, subsequently, contracting
a lawful marriage with him. She argued that she was dismissed because of her marriage with
Bobby Qua This contention was sustained in the aforesaid decision of the National Labor
Relations Commission thus:
. . . One thing, however, has not escaped our observation: That the
application for clearance was filed only after more than one month elapsed
from the date of appellant's marriage to Bobby Qua Certainly, such belated
application for clearance weakens instead of strengthening the cause of
petitioner-appellee. The alleged immoral acts transpired before the marriage
and if it is these alleged undignified conduct that triggered the intended
separation, then why was the present application for clearance not filed at
that time when the alleged demoralizing effect was still fresh and abrasive? 22
After a painstaking perusal of the records, we are of the considered view that the determination
of the legality of the dismissal hinges on the issue of whether or not there is substantial evidence
to prove that the antecedent facts which culminated in the marriage between petitioner and her
student constitute immorality and/or grave misconduct. To constitute immorality, the
circumstances of each particular case must be holistically considered and evaluated in the light
of prevailing norms of conduct and the applicable law. Contrary to what petitioner had insisted on
from the very start, what is before us is a factual question, the resolution of which is better left to
the trier of facts.
Considering that there was no formal hearing conducted, we are constrained to review the
factual conclusions arrived at by public respondent, and to nullify his decision through the

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extraordinary writ of certiorari if the same is tainted by absence or excess of jurisdiction or grave
abuse of discretion. The findings of fact must be supported by substantial evidence; otherwise,
this Court is not bound thereby. 23
We rule that public respondent acted with grave abuse of discretion. As vividly and forcefully
observed by him in his original decision:
Indeed, the records relied upon by the Acting Secretary of Labor (actually the
records referred to are the affidavits attached as Annexes "A" to "D" of the
position paper dated August 10, 1976 filed by appellee at the arbitration
proceedings) in arriving at his decision are unbelievable and unworthy of
credit, leaving many question unanswered by a rational mind. For one thing,
the affidavits refer to certain times of the day during off school hours when
appellant and her student were found together in one of the classrooms of
the school. But the records of the case present a ready answer: appellant was
giving remedial instruction to her student and the school was the most
convenient place to serve the purpose. What is glaring in the affidavits is the
complete absence of specific immoral acts allegedly committed by appellant
and her student. For another, and very important at that, the alleged acts
complained of invariably happened from September to December, 1975, but
the disciplinenary action imposed by appellee was sought only in February,
1976, and what is more, the affidavits were executed only in August, 1976
and from all indications, were prepared by appellee or its counsel. The
affidavits heavily relied upon by appellee are clearly the product of afterthought. . . . The action pursued by appellee in dismissing appellant over one
month after her marriage, allegedly based on immoral acts committed even
much earlier, is open to basis of the action sought seriously doubted; on the
question. The basis of the action sought is seriously doubted; on the contrary,
we are more inclined to believe that appellee had certain selfish, ulterior and
undisclosed motives known only to itself. 24
As earlier stated, from the outset even the labor arbiter conceded that there was no direct
evidence to show that immoral acts were committed. Nonetheless, indulging in a patently unfair
conjecture, he concluded that "it is however enough for a sane and credible mind to imagine and
conclude what transpired during those times." 25 In reversing his decision, the National Labor
Relations Commission observed that the assertions of immoral acts or conducts are gratuitous
and that there is no direct evidence to support such claim, 26 a finding which herein public
respondent himself shared.
We are, therefore, at a loss as to how public respondent could adopt the volte-face in the
questioned resolution, which we hereby reject, despite his prior trenchant observations
hereinbefore quoted. What is revealing however, is that the reversal of his original decision is
inexplicably based on unsubstantiated surmises and non sequiturs which he incorporated in his
assailed resolution in this wise:
. . . While admittedly, no one directly saw Evelyn Chua and Bobby Qua doing
immoral acts inside the classroom it seems obvious and this Office is
convinced that such a happening indeed transpired within the solitude of the
classrom after regular class hours. The marriage between Evelyn Chua and
Bobby Qua is the best proof which confirms the suspicion that the two
indulged in amorous relations in that place during those times of the day. . . .
27

With the finding that there is no substantial evidence of the imputed immoral acts, it follows that
the alleged violation of the Code of Ethics governing school teachers would have no basis.
Private respondent utterly failed to show that petitioner took advantage of her position to court
her student. If the two eventually fell in love, despite the disparity in their ages and academic
levels, this only lends substance to the truism that the heart has reasons of its own which reason
does not know. But, definitely, yielding to this gentle and universal emotion is not to be so
casually equated with immorality. The deviation of the circumstances of their marriage from the
usual societal pattern cannot be considered as a defiance of contemporary social mores.

149
It would seem quite obvious that the avowed policy of the school in rearing and educating
children is being unnecessarily bannered to justify the dismissal of petitioner. This policy,
however, is not at odds with and should not be capitalized on to defeat the security of tenure
granted by the Constitution to labor. In termination cases, the burden of proving just and valid
cause for dismissing an employee rests on the employer and his failure to do so would result in a
finding that the dismissal is unjustified.
The charge against petitioner not having been substantiated, we declare her dismissal as
unwarranted and illegal. It being apparent, however, that the relationship between petitioner and
private respondent has been inevitably and severely strained, we believe that it would neither be
to the interest of the parties nor would any prudent purpose be served by ordering her
reinstatement.
WHEREFORE, the petition for certiorari is GRANTED and the resolution of public respondent,
dated December 6, 1978 is ANNULLED and SET ASIDE. Private respondent Tay Tung High School,
Inc. is hereby ORDERED to pay petitioner backwages equivalent to three (3) years, without any
deduction or qualification, and separation pay in the amount of one (1) month for every year of
service.
SO ORDERED.

150
G.R. No. 137795
March 26, 2003
COLEGIO DE SAN JUAN DE LETRAN CALAMBA, petitioner,
vs.
BELEN P. VILLAS, respondent.
CORONA, J.:
This is a petition for review on certiorari of the decision 1 of the former Eleventh Division2 of the
Court of Appeals affirming the decision3 of Voluntary Arbitrator (VA) Apolonio S. Mayuga that
respondent Belen P. Villas was illegally dismissed by petitioner Colegio de San Juan de Letran
(School) and thus, entitled to reinstatement and full backwages.
The antecedent facts show that respondent Belen Villas was employed by the petitioner School
as high school teacher in September 1985. On May 15, 1995, she applied for a study leave for six
months, from June to December 31, 1995. In a letter dated June 2, 1995, Mrs. Angelina
Quiatchon, principal of the high school department, told Villas that her request for study leave
was granted for one school year subject to the following conditions:
1. The requested study leave takes effect on June 5, 1995 and ends on March 31,
1996;
2. The requested study leave involves no remuneration on the part of the School;
3. The documents that justify the requested study leave should be submitted upon
return on April 1, 1996;
4. Faculty Manual Section 40 Special Provisions on the Granting of Leave of
Absence should be observed:
a. Once proven beyond reasonable doubt during the period of the approved
leave of absence that the faculty member shall engage himself in
employment outside the institution, the administration shall regard the
faculty member on leave as resigned;
b. The maximum length of leave of absence that may be applied for by the
faculty member and granted by administration is twelve (12) months. If, at
the lapse of the period, the faculty member fails to return for work, the
administration shall regard the faculty member as resigned. 4
Respondent alleged that she intended to utilize the first semester of her study leave to finish her
masteral degree at the Philippine Womens University (PWU). Unfortunately, it did not push
through so she took up an Old Testament course in a school of religion and at the same time
utilized her free hours selling insurance and cookware to augment her familys income. However,
during the second semester of her study leave, she studied and passed 12 units of education
subjects at the Golden Gate Colleges in Batangas City. In response to the letters sent her by
petitioner to justify her study leave, she submitted a certification from Golden Gate Colleges and
a letter explaining why she took up an Old Testament course instead of enrolling in her masteral
class during the first semester.
On June 3, 1996, the President and Rector of the School, Fr. Ramonclaro G. Mendez, O. P., wrote
her, stating that her failure to enroll during the first semester was a violation of the conditions of
the study leave and that the reasons she advanced for failure to enroll during the first semester
were not acceptable, thus:
In the first place, prudence dictates that you should have ascertained first that you
are still eligible to study at PWU to finish your masteral degree before applying and
securing the approval of your leave by the School. In the second place, you should
have informed the School at once that you could not enroll in the first semester so
that your leave could have been adjusted for only one-half (1/2) year. Thirdly, your
engaging in some part-time business instead of studying in the first semester of
your leave is sufficient justification for the School to consider you as resigned under
the Faculty Manual. And lastly, your failure to study in the first semester of your
study leave without informing the School beforehand constitutes deception, to say
the least, which is not a good example to the other teachers. 5
Her case was subsequently referred to the grievance committee, as provided for in the collective
bargaining agreement, and the report was submitted on July 12, 1996, both to the union and the

151
School. However, since the grievance committee could not reach a decision, the case was
referred for voluntary arbitration.
Respondent then filed a case for illegal dismissal and the case was assigned to VA Mayuga who
found that respondent was illegally dismissed, thus:
WHEREFORE premises considered, we rule that complainant Mrs. BELEN P. VILLAS
was illegally dismissed from her employment by respondent, and as prayed for,
respondent COLEGIO DE SAN JUAN DE LETRAN-CALAMBA is hereby ordered to
reinstate Mrs. Belen P. Villas to her former position or job in said school without loss
of seniority and with full backwages and other monetary benefits effective the start
of school year 1996-1997 up to the time she is reinstated. 6
Upon denial of its motion for reconsideration, petitioner filed a petition for review with the Court
of Appeals. This was denied. Thus, this petition for review. The sole issue is whether or not
respondents alleged violation of the conditions of the study grant constituted serious
misconduct which justified her termination from petitioner School.
Petitioner alleges that the dismissal of respondent was lawful inasmuch as (a) the requirements
of due process were followed and (b) she not only violated several lawful regulations but also
breached her contractual obligations to the School. All this constituted a valid ground for her
dismissal. In assailing the decision of the Court of Appeals, petitioner School basically questions
the court a quos findings of fact on respondents alleged violation of petitioner Schools policy
on study leave grants.
The petition has no merit.
Under the Labor Code, there are twin requirements to justify a valid dismissal from employment:
(a) the dismissal must be for any of the causes provided in Article 282 of the Labor Code
(substantive aspect) and (b) the employee must be given an opportunity to be heard and to
defend himself (procedural aspect).7 The procedural aspect requires that the employee be given
two written notices before she is terminated consisting of a notice which apprises the employee
of the particular acts/omissions for which the dismissal is sought and the subsequent notice
which informs the employee of the employers decision to dismiss him. 8
In the case at bar, the requirements for both substantive and procedural aspects were not
satisfied.
According to petitioner, respondent violated the following conditions of her study leave: (a) she
failed to report for work on April 1, 1996, the day after the lapse of her leave period, which was
violative of Section 40 of the Faculty Manual; (b) she failed to submit proof of her studies during
the first semester of her leave period, suggesting that she was not enrolled during this period;
and (c) she engaged in employment outside the School. In sum, petitioner School argues that the
conduct of respondent breached not only the provisions of the study grant (which was a
contractual obligation) but also the Faculty Manual. Respondent was thus guilty of serious
misconduct which was a ground for termination.
We affirm the findings of the Court of Appeals that there was no violation of the conditions of the
study leave grant. Thus, respondent could not be charged with serious misconduct warranting
her dismissal as a teacher in petitioner School. Petitioner has failed to convince us that the three
alleged violations of the study leave grant constituted serious misconduct which justified the
termination of respondents employment.
Misconduct is improper or wrongful conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error of judgment. 9 Under Article 282 of the Labor Code, the
misconduct, to be a just cause for termination, must be serious. This implies that it must be of
such grave and aggravated character and not merely trivial or unimportant. 10 Examples of
serious misconduct justifying termination, as held in some of our decisions, include: sexual
harassment (the managers act of fondling the hands, massaging the shoulder and caressing the
nape of a secretary);11 fighting within company premises;12 uttering obscene, insulting or
offensive words against a superior;13 misrepresenting that a student is his nephew and
pressuring and intimidating a co-teacher to change that students failing grade to passing. 14
In this light, the alleged infractions of the respondent could hardly be considered serious
misconduct.

152
With regard to respondents alleged failure to report for work on April 1, 1996 and failure to enroll
during the first semester, the Court of Appeals and the Voluntary Arbitrator found that she did in
fact report for work on April 1, 1996 and that she was in fact enrolled during the first semester.
Wellsettled is the rule that the factual findings of the Court of Appeals are conclusive on the
parties and are not reviewable by the Supreme Court. And they carry even more weight when the
Court of Appeals affirms the factual findings of a lower fact-finding body, in this case the
Voluntary Arbitrator.15 Likewise, findings of fact of administrative agencies and quasi-judicial
bodies which have acquired expertise because their jurisdiction is confined to specific matters,
are generally accorded not only great respect but even finality. They are binding upon this Court
unless there is a showing of grave abuse of discretion or where it is clearly shown that they were
arrived at arbitrarily or in utter disregard of the evidence on record. 16
Assuming arguendo that she did fail to report for work on April 1, 1996 and enroll during the first
semester, the most respondent could be charged with was simple misconduct. In both instances,
there was evidence of substantial compliance by respondent.
Her alleged failure to report for work exactly on April 1, 1996 is not equivalent to "failure to
return for work," a sanctionable offense under the Faculty Manual. As correctly pointed out by the
VA, petitioner failed to establish that there was a distinct and definite assignment that needed to
be done personally by respondent, and specifically on April 1, 1996, which she failed to do on
said date. Although we give credence to petitioners argument that a private high school teacher
still has work at the end of the schoolyear to assist in the graduation preparations and in the
beginning of the school year to assist in the enrollment such tasks cannot be considered a
teachers main duties, the failure to perform which would be tantamount to dereliction of duty or
abandonment. Besides, there is no disagreement that respondent reported for work on May 15,
1996 at which time petitioner School could have asked her to assist in the enrollment period. At
most, respondent failed to help out during the preparations for graduation and this, to us, was
not a significant reason for terminating or dismissing her from her job.
With regard to her alleged failure to enroll during the first semester, although we agree with the
President and Rector, Fr. Mendez, that respondent should have first ascertained whether she was
still eligible to study at the PWU before applying for a study leave, 17 such lapse was more of an
error in judgment rather than an act of serious misconduct. If respondent intended to use her
study leave for other unauthorized purposes, as petitioner would like us to believe, she would not
have enrolled at the Golden Gate Colleges during the second semester. Yet she did, as borne out
by the certification18 prepared by the Registrar of Golden Gate Colleges.
Furthermore, we find that respondent did not violate the prohibition on engaging in employment
outside the school as specified in her study leave grant and as provided in the Faculty Manual.
Section 40 (a) of the Manual19 states:
a. Once proven beyond reasonable doubt during the period of the approved leave of
absence that the faculty member shall engage himself in employment outside the
institution, the administration shall regard the faculty member on leave resigned.
(Emphasis supplied)
We find the provision of the Faculty Manual ambiguous as the term "employment" connotes a
number of meanings. Employment in its general sense connotes any work or service rendered in
exchange for money. The loose connotation of employment may therefore cover jobs without an
employer-employee relationship. However, inasmuch as in this case, petitioner School drafted
the said policy, the term "employment" should be strictly construed against it. 20 Moreover, it is a
settled rule that in controversies between a laborer and his master, doubts reasonably arising
from the evidence, or in the interpretation of agreements and writings should be resolved in the
formers favor.21 The act of respondent in selling insurance and cookware was not the
"employment" prohibited by the Faculty Manual. The prohibition against outside employment
was enacted to prevent the teacher from using the study leave period for unsanctioned purposes
since the School pays the teacher while pursuing further studies. That rationale was not violated
by respondent for the reason that her part-time activity of selling insurance and cookware could
not have prevented her in any way from studying and, more importantly, she was not being paid
by the School while on leave. How did the school expect her and her family to survive without
any income for one whole year?

153
Petitioner also failed to comply with the procedural requirements for a valid dismissal. As earlier
noted, the law requires the employer to give the worker to be dismissed two written notices
before terminating his employment. Considering that these notices are mandatory, the absence
of one renders any management decision to terminate null and void. Petitioner failed to give
respondent the first notice which should have informed the latter of the formers intention to
dismiss her. Petitioner argues that it complied with this requirement as there were several
exchanges of communication between the School and respondent regarding the cause of her
termination. However, we find that these letters did not apprise respondent that her dismissal
was being sought by petitioner School as said letters only required respondent to submit proof of
enrollment. The letter of Principal Angelina Q. Quiatchon dated April 17, 1996 22 was worded as
follows:
In accordance with the terms of your study leave from June 5, 1995 to March 31,
1996, you must submit credentials/proofs of your study to justify the approved
leave.
To this date, April 17, this office has not received your credentials. Please do so
within the next three days from receipt hereof so that this office can act accordingly.
Similarly, the May 10, 1996 letter23 of the Academic Affairs Director, Dr. Rhodora G. Odejar, was
worded thus:
The Academic Affairs Office has received your certification of graduate studies
completed in the second semester of Schoolyear 1995-1996. However, there is no
report as to how you utilized your leave in the first semester. You are therefore
instructed to submit your report on the matter within three days from receipt hereof.
The next letter from the petitioner, dated June 3, 1996, already informed respondent that she
was considered resigned effective schoolyear 1996-1997.
These letters did not comply with the requirements of the law that the first written notice must
apprise the employee that his termination is being considered due to a certain act or omission.
These letters merely required petitioner to submit proof of her studies and respondent could not
have reasonably inferred from them that her dismissal was being considered by the petitioner.
The fact that there was a hearing conducted by the grievance committee pursuant to the
collective bargaining agreement did not work in petitioners favor because this was done after
petitioner had informed respondent that she was already considered resigned from her teaching
job. Besides, the rights of an employee to be informed of his proposed dismissal are personal to
him24 and, therefore, the notice to the union was not notice to the employee.
With regard to the respondents claim for the six-month study leave and vacation pay, we affirm
the decision25 of the Voluntary Arbitrator that respondent is not entitled to such benefits:
While it is true that the collective bargaining agreement between respondent and
complainants union provides for six months pay for qualified teachers who will go
on sabbatical or study leave, the same was expressly waived by complainant when
she signed conforme to the letter dated June 2, 1995 approving her study leave
which states among others, to wit: 2. The requested study leave involves no
remuneration on the part of the school. And considering that her leave of absence
for the whole school year 1995-1996 was presumed to be a leave of absence
without pay, then she did not earn her vacation leave incentive for the next coming
summer. We find it just, fair and reasonable to grant vacation pay on April and May
of every calendar as additional incentive only to those teachers who rendered
continuous service to the Collegio the preceding school year.
We similarly affirm the Voluntary Arbitrators decision that respondent is not entitled to moral
and exemplary damages and attorneys fees because there is no evidence showing that bad faith
or malice attended the dismissal of respondent. Moral damages are recoverable only where the
dismissal is attended by bad faith or fraud, or constitutes an act oppressive to labor, or is done in
a manner contrary to morals, good customs or public policy. A dismissal may be contrary to law
but, by itself alone, it does not necessarily establish bad faith. 26
WHEREFORE, the petition is DENIED.
SO ORDERED.

154
G.R. No. 168215
June 9, 2009
LBC EXPRESS - METRO MANILA, INC. and LORENZO A. NIO, Petitioners,
vs.
JAMES MATEO, Respondent.
DECISION
CORONA, J.:
Respondent James Mateo, designated as a customer associate, was a regular employee of
petitioner LBC Express Metro Manila, Inc. (LBC). His job was to deliver and pick-up packages to
and from LBC and its customers. For this purpose, Mateo was assigned the use of a Kawasaki
motorcycle.1
On April 30, 2001 at about 6:10 p.m., Mateo arrived at LBCs Escolta office, along Burke Street, to
drop off packages coming from various LBC airposts. He parked his motorcycle directly in front of
the LBC office, switched off the engine and took the key with him. However, he did not lock the
steering wheel because he allegedly was primarily concerned with the packages, including a
huge sum of money that needed to be immediately secured inside the LBC office. He returned
promptly within three to five minutes but the motorcycle was gone. He immediately reported the
loss to his superiors at LBC and to the nearest police station.
LBC, through its vice-president petitioner, Lorenzo A. Nio, directed Mateo to appear in his office
to explain his side and for formal investigation. 2 As directed, Mateo appeared and presented his
side. After investigation, he received a notice of termination from LBC dated May 30, 2001. 3 He
was barred from reporting for work.
Mateo thereafter filed a complaint for illegal dismissal, payment of backwages and reinstatement
with damages. After the parties submitted their respective position papers, the labor arbiter
found Mateos dismissal to be lawful on the ground that he was grossly negligent. 4
Mateo appealed to the National Labor Relations Commission which, however, affirmed the labor
arbiters decision.5
In resolving Mateos petition for certiorari, the Court of Appeals (CA) ruled that Mateo was
illegally dismissed.6 Furthermore, due process was not observed in terminating Mateos
employment with LBC. The motion for reconsideration was denied.
LBC and Nio now seek a reversal of the CA decision. They contend that Mateo was grossly
negligent in the performance of his duties and that habituality may be dispensed with, specially
if the grossly negligent act resulted in substantial damage to the company.
We agree.
The services of a regular employee may be terminated only for just or authorized causes,
including gross and habitual negligence under Article 282, paragraph (b) of the Labor Code.
Gross negligence is characterized by want of even slight care, acting or omitting to act in a
situation where there is a duty to act, not inadvertently but willfully and intentionally with a
conscious indifference to consequences insofar as other persons may be affected. 7
Mateo was undisputedly negligent when he left the motorcycle along Burke Street in Escolta,
Manila without locking it despite clear, specific instructions to do so. His argument that he stayed
inside the LBC office for only three to five minutes was of no moment. On the contrary, it only
proved that he did not exercise even the slightest degree of care during that very short time.
Mateo deliberately did not heed the employers very important precautionary measure to ensure
the safety of company property. Regardless of the reasons advanced, the exact evil sought to be
prevented by LBC (in repeatedly directing its customer associates to lock their motorcycles)
occurred, resulting in a substantial loss to LBC.
Although Mateos infraction was not habitual, we must take into account the substantial amount
lost.8 In this case, LBC lost a motorcycle with a book value of P46,000 which by any means could
not be considered a trivial amount. Mateo was entrusted with a great responsibility to take care
of and protect company property and his gross negligence should not allow him to walk away
from that incident as if nothing happened and, worse, to be rewarded with backwages to boot.
An employer cannot legally be compelled to continue with the employment of a person
admittedly guilty of gross negligence in the performance of his duties. 9 This holds true specially if
the employees continued tenure is patently inimical to the employers interest.1avvphi1 What
happened was not a simple case of oversight and could not be attributed to a simple lapse of

155
judgment. No amount of good intent, or previous conscientious performance of duty, can
assuage the damage Mateo caused LBC when he failed to exercise the requisite degree of
diligence required of him under the circumstances.1awphi1
LBC and Nio likewise assail the CAs finding that procedural due process was not observed in
effecting Mateos dismissal. Specifically, the CA held that the first written notice (for Mateos
investigation) allegedly did not specify the grounds for termination required by the implementing
rules of the Labor Code. Mateo was allegedly not properly apprised of the grounds for his
investigation. We disagree.
The memorandum directing Mateo to be present for investigation clearly provided the reasons or
grounds for Mateos investigation. As stated there, the grounds were the "alleged carnapping of
the motorcycle and the alleged pilferage of a package." Nothing could be clearer. What the law
merely requires is that the employee be informed of the particular acts or omissions for which his
dismissal is sought.10 The memorandum did just that. Mateo was thereafter given the opportunity
to explain his side and was handed the requisite second notice (of termination). Procedural due
process was therefore complied with.
The law protecting the rights of the employee authorizes neither oppression nor self-destruction
of the employer.11 All told, Mateos dismissal was for just cause and was validly carried out.
WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated
February 18, 2005 and resolution dated May 23, 2005 in CA-G.R. SP No. 86034 are REVERSED
and SET ASIDE. The complaint for illegal dismissal is hereby DISMISSED.
SO ORDERED.

156
G.R. No. 156104
June 29, 2004
R.P. DINGLASAN CONSTRUCTION, INC., petitioner,
vs.
MARIANO ATIENZA and SANTIAGO ASI, respondents.
DECISION
PUNO, J.:
This is an appeal from the decision1 and resolution2 of the Court of Appeals, dated January 17,
2001 and October 30, 2002, respectively, upholding the finding of constructive dismissal against
petitioner.
Petitioner R.P. Dinglasan Construction, Inc. provided janitorial services to Pilipinas Shell Refinery
Corporation (Shell Corporation) in Batangas City. Private respondents Mariano Atienza and
Santiago Asi served as petitioners janitors assigned with Shell Corporation since 1962 and 1973,
respectively.
Private respondents claim that on July 7, 1994, petitioner called for a meeting and informed
private respondents and three (3) other employees that their employment with Shell Corporation
would be terminated effective July 15, 1994. They were told that petitioner lost the bidding for
janitorial services with Shell. Petitioner notified respondents that they may reapply as helpers
and redeployed in other companies where petitioner had subsisting contracts but they would
receive only a minimum wage. Private respondents refused as the offer would be a form of
demotion --- they would lose their seniority status and would not be guaranteed to work at
regular hours.
In December 1994, private respondents filed a complaint against petitioner for non-payment of
salary with the district office of the Department of Labor and Employment (DOLE) in Batangas
City. In February 1995, during the conciliation proceedings with the DOLE, petitioner sent notices
to respondents informing them that they would be reinstated with Shell Corporation as soon as
they submit their barangay clearance, medical certificate, picture and information sheet as per
the new identification badge requirements of Shell Corporation. Thereafter, petitioner again met
with private respondents, who were then accompanied by the barangay captain and a councilor,
and the latter confirmed to the former their willingness to be reinstated. Private respondents duly
submitted the documents required for their reinstatement.
In May 1995, respondents demanded the payment of their backwages starting from July 15,
1994. On June 1, 1995, petitioner notified private respondents that they have been declared
absent without leave (AWOL) as they allegedly failed to signify their intention to return to work
and submit the badge requirements for their reinstatement. On June 13, 1995, private
respondents wrote petitioner and insisted that they had complied with the badge requirements.
Accompanied by the barangay officials, private respondents attempted to meet with the officers
of petitioner but the latter refused to dialogue with them. As proof of their compliance with the
Shell requirements, private respondents submitted to the DOLE their x-ray results, dated May 17
and 19, 1995 and their barangay certification, dated May 13, 1995.
The case was eventually referred to the National Labor Relations Commission (NLRC) for
compulsory arbitration. Private respondents amended their complaint charging petitioner with
illegal dismissal and non-payment of 13th month pay, with a claim for payment of attorneys fees
and litigation expenses, and a prayer for reinstatement with payment of full backwages from July
15, 1994.
Petitioner gave a different version of the incident. It allegedly informed respondents and the
other affected employees that they would be deployed to petitioners other principal companies
but that their work would be different. Except for private respondents, all the affected employees
accepted its offer of redeployment and reported back to work. Respondents failed to submit a
resignation letter to signify their intention not to return to work.
Thereafter, during the pendency of the labor case, petitioner in two (2) separate notices, 3
informed private respondents that they could be reinstated at Shell Corporation with no
diminution in their salary provided that they submit the documents for the new identification
badge requirement of Shell Corporation. Private respondents, however, refused to return to work
until they were paid their backwages. Consequently, petitioner was constrained to consider them
as having abandoned their work and to terminate their employment on September 19, 1995.

157
Petitioner, thus, justified the dismissal of private respondents on the grounds of gross and
habitual neglect of duties and abandonment of work.
On September 3, 1998, labor arbiter Andres Zavalla rendered a decision 4 finding that private
respondents were illegally dismissed from service and ordering their reinstatement. The
dispositive portion reads:
WHEREFORE, premises considered, the following orders are hereby entered:
1. declaring that the complainants were illegally dismissed from their employment;
2. ordering the respondent to pay complainants the aggregate amount of P755,942.15
representing their full backwages and benefits from July 15, 1994 up to the promulgation of this
decision; separation pay in lieu of reinstatement; 13th month pay for 1994 and attorneys fees
equivalent to 10% of the total monetary award due complainants, broken down as follows:
Mariano Atienza Santiago Asi Attorneys fees 3. dismissing the claims for litigation expenses for lack of basis.
SO ORDERED.
On appeal, the decision of the labor arbiter was affirmed by the NLRC. 5 Without moving for
reconsideration, petitioner immediately filed a petition for certiorari before the Court of Appeals
but petitioner suffered the same fate. On the procedural aspect, the Court of Appeals ruled that
the petition could not prosper as petitioner failed to move for a reconsideration of the NLRC
decision. On the substantive issues, the appellate court upheld the findings of the labor arbiter
and the NLRC that: (1) private respondents were constructively dismissed as petitioners offer of
reassignment involved a diminution in pay and demotion in rank that made their continued
employment unacceptable; and, (2) private respondents could not be considered to have
abandoned their work.6
As petitioners motion for reconsideration was denied, 7 petitioner filed this appeal and assigned
the following errors:
I
THE COURT OF APPEALS, CONTRARY TO APPLICABLE DECISIONS OF THIS HONORABLE SUPREME
COURT, ERRED IN RULING THAT A MOTION FOR RECONSIDERATION OF THE DECISION OF THE
NLRC IS A CONDITION SINE QUA NON TO THE INSTITUTION OF A SPECIAL CIVIL ACTION OF (sic)
CERTIORARI, AS THE INSTANT CASE FALLS UNDER THE EXCEPTIONS.
II
THE COURT OF APPEALS, CONTRARY TO EXISTING LAW, ERRED IN DISMISSING THE PETITION FOR
CERTIORARI AND AFFIRMING THE DECISION OF THE NLRC INSOFAR AS THE MONETARY AWARD IS
CONCERNED.
We find no merit in the petition.
On the first issue, petitioner faults the Court of Appeals for dismissing its appeal for its failure to
move for a reconsideration of the NLRC Decision. Petitioner contends that its filing would have
been purely pro forma and a clear exercise in futility as the issues of illegal dismissal and
abandonment heard and passed upon by the NLRC were the same issues it brought on appeal to
the Court of Appeals.
Indeed, the well-established rule is that a motion for reconsideration of the decision of the NLRC
is necessary before an appeal may be allowed. 8 The rule on exhaustion of administrative
remedies intends to afford the tribunal or agency the first opportunity to rectify the errors it may
have committed before resort to courts of justice can be had. 9 Nonetheless, strict and rigid
application of technical rules of procedure, without regard to the merits of the case, is not
encouraged as it will only frustrate rather than promote substantial justice. Rules of procedure
should be viewed as tools designed to facilitate the dispensation of justice. 10
In the case at bar, however, we note that the Decision of the Court of Appeals dismissing
petitioners appeal was not grounded solely on a procedural lapse, i.e., failure of the
petitioner to move for a reconsideration of the NLRC Decision. The records clearly show that after
ruling against petitioner on this procedural issue, the Court of Appeals proceeded to discuss the

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substantive aspect of the case, i.e., whether petitioner validly dismissed private respondents due
to abandonment of work. Hence, it is not accurate to state that the Court of Appeals dismissed
the petition solely on the basis of a strict application of technical rules.
We now resolve the substantive issue.
Petitioner justifies its dismissal of private respondents on the ground that they failed to report
back to the office and thus abandoned their work. This allegation, however, is not supported by
the evidence.
In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of
an employee is for a valid cause.11 In the case at bar, petitioner failed to discharge its burden. It
failed to establish that private respondents deliberately and unjustifiably refused to resume their
employment without any intention of returning to work.
To constitute abandonment of work, two (2) requisites must concur: first, the employee must
have failed to report for work or must have been absent without justifiable reason; and second,
there must have been a clear intention on the part of the employee to sever the employeremployee relationship as manifested by overt acts. 12 Abandonment as a just ground for dismissal
requires deliberate, unjustified refusal of the employee to resume his employment. Mere absence
or failure to report for work, after notice to return, is not enough to amount to abandonment. 13
In the case at bar, the evidence of private respondents negates petitioners theory that
they abandoned their work. Firstly, private respondents reported back to petitioners office a
number of times expressing their desire to continue working for petitioner without demotion in
rank or diminution of salary. This fact was established by the corroborating testimony of
barangay councilman Valentin Clerigo who, together with the barangay captain,
accompanied private respondents to petitioners office at least ten (10) times to
negotiate their redeployment on more acceptable terms. Secondly, in seeking
reinstatement, private respondents also sought the intervention of the DOLE to arbitrate the
labor issue between the parties. Thirdly, private respondents submitted the barangay clearances
and x-ray results required from them by petitioner for their reinstatement as witnessed by the
barangay officials. Lastly, the records would bear that private respondents lost no time and
sought their reinstatement by filing an illegal dismissal case against petitioner, which act is
clearly inconsistent with a desire to sever employer-employee relations and abandon their work.
All these overt acts on the part of private respondents negate petitioners claim of abandonment
of work and prove beyond doubt their steadfast desire to continue their employment with
petitioner and be reinstated to their former position. Moreover, petitioner failed to explain why it
waited for 14 months from the time private respondents allegedly did not return to work before it
dismissed them for being AWOL.
We hold that private respondents were constructively dismissed by petitioner. Constructive
dismissal is defined as quitting when continued employment is rendered impossible,
unreasonable or unlikely as the offer of employment involves a demotion in rank and diminution
of pay.14 In the case at bar, petitioner committed constructive dismissal when it offered to
reassign private respondents to another company but with no guaranteed working hours and
payment of only the minimum wage. The terms of the redeployment thus became unacceptable
for private respondents and foreclosed any choice but to reject petitioners offer, involving as it
does a demotion in status and diminution in pay. Thereafter, for six (6) months, private
respondents were in a floating status. Interestingly, it was only after private respondents filed a
complaint with the DOLE that petitioner backtracked in its position and offered to reinstate
private respondents to their former job in Shell Corporation with no diminution in salary.
Eventually, however, petitioner unilaterally withdrew its offer of reinstatement, refused to meet
with the private respondents and instead decided to dismiss them from service.
On the second issue, petitioner cannot impugn for the first time the computation of the
monetary award granted by the labor arbiter to private respondents. The settled rule is that
issues not raised or ventilated in the court a quo cannot be raised for the first time on
appeal as to do so would be offensive to the basic rules of fair play and justice. 15 The
computation of monetary award granted to private respondents is a factual issue that
should have been posed at the arbitration level when the award was first granted by
the labor arbiter who received and evaluated the evidence of both parties, or, at the

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latest, raised by petitioner in its appeal with the NLRC. Petitioner omitted to do any of
these. All throughout the proceedings below, from the labor arbiter to the NLRC, and even in its
petition before the Court of Appeals, petitioner repeatedly pounded only on the sole issue of the
validity of its dismissal of private respondents. Thus, at this late stage of the proceedings, it
cannot ask the Court to review the bases and verify the correctness of the labor arbiters
computation of the monetary award which it never assailed below. A first-hand evaluation of the
evidence of the parties upon which the monetary award is based belongs to the labor arbiter.
This Court is not a trier of facts and factual issues are improper in a petition for review on
certiorari.16 Likewise, the Court notes that in seeking reinstatement and payment of their
monetary claims, private respondents have traversed a long and difficult path. This
case has passed the DOLE, the labor arbiter, the NLRC, the Court of Appeals and now this Court,
with the finding of illegal dismissal having been consistently affirmed in each stage. Private
respondents had been rendering janitorial services as early as 1962 and, at the time of their
dismissal, were receiving a measly P4,000.00 monthly salary. It is time to put a period to private
respondents travail. If there is anything that frustrates the search for justice by the poor, it is the
endless search for it.
IN VIEW WHEREOF, the petition is DISMISSED and the impugned decision and resolution of the
Court of Appeals, dated January 17, 2001 and October 30, 2002, respectively, are AFFIRMED in
toto. No pronouncement as to costs.
SO ORDERED.

160
G.R. No. 148205
February 28, 2005
COCA-COLA BOTTLERS, PHILS., INC., petitioner,
vs.
KAPISANAN NG MALAYANG MANGGAGAWA SA COCA- COLA-FFW and FLORENTINO
RAMIREZ, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review of the Resolution 1 of the Court of Appeals in CA-G.R. SP No. 58012
reversing the Resolution of the National Labor Relations Commission (NLRC) in NLRC NCR CASE
CA 018341-99.
The Antecedents
Petitioner Coca-Cola Bottlers Phil., Inc. is a domestic corporation engaged in the manufacture,
sale and distribution of softdrinks. It maintains plants in various areas of the country, among
others, in Calamba and Sta. Rosa, Laguna, in Lipa City and Balayan, Batangas; in Sta. Cruz,
Gumaca; in San Pablo City and Lucena City, Quezon Province; in Las Pias City, and Dasmarias,
Cavite.
On July 1, 1982, the petitioner hired Florentino Ramirez as "driver-helper" with the following
duties:
(a) as driver, he checks the trucks oil, water, wheels, etc.;
(b) as helper, he is charged of loading and unloading trucks load; putting bottles in
the coolers and displays company products to each outlet or customers store. 2
Ramirez became a member of the respondent Kapisanan ng Malayang Manggagawa Sales Force
Union, the bargaining representative of the rank- and-file employees of the petitioner company.
In 1996, he was the "shop steward" of the union at the companys Batangas Sales Office. 3
Sometime in October 1996, it happened that the route salesman for Route M11 was unavailable
to make his usual routes. Since Ramirez had been driving for the route salesman for so long, the
petitioner company decided to assign him as temporary replacement of the regular route
salesman for routes M11, AMC and LPR. Thereafter, in a Letter dated December 5, 1996, the
Officer-in-Charge of the Batangas Sales Office, Victor C. dela Cruz, informed the Officer-in-Charge
of DSS-District 44, Rolando Manzanares, that a review of the copies of the invoices relating to the
transactions of Ramirez in Rt. M11 revealed the following discrepancies: (a) the number of cases
delivered to customers; (b) empty bottles retrieved from them, and (c) the amounts in Sales
Invoices Nos. 3212215, 3288587, 3288763, 3288765 and 3288764, thus:
a. Finance and Customers Copies of Sales Invoice No. 3288765 showing the
deliberate omission in the finance copy of the delivery of 25 cases of Sprite (8
ounces) and the absence in the Customers Copy of the retrieval of 10 cases of Coke
(1.5 liters).
b. Finance and Customers Copies of Sales Invoice No. 3288764, a comparison of
which shows that the retrieval of empty bottles amounting to Two Thousand Two
Hundred Fifty Pesos (P2,250.00) reflected in the Finance Copy as having been
collected was not reflected in the Customers Copy.
c. Finance and Customers Copies of Sales Invoice No. 3212215 which shows that
the refund of thirty-three (33) cases was reflected only in the Finance Copy.
Ramirez received a Memorandum from District Office Nos. 44 and 45 requiring him to report to
the said office starting December 5, 1996 until such time that he would be notified of the formal
investigation of the charges against him.4
During the formal investigation conducted by a panel of investigators on December 20, 1996,
Ramirez was not represented by counsel. He also manifested that he was waiving his right to be
represented by counsel when the members of the panel asked him about it. Ramirez was then
asked to explain the discrepancies subject of the charges, and narrated the following:
(a) Re: Sales Invoice No. 3212215. Ramirez unloaded the products from the delivery
truck in the morning and delivered the same to the customer. He then gave a copy
of the sales invoice to the customer, which showed the quantity and prices of the
products delivered. He told the customer to prepare the payment and that he would
return later in the evening to collect the same. Because the customer did not have

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enough money on hand, he covered the deficit by returning 33 cases of empty
bottles, which was reflected in the copy of the sales invoice forwarded to the sales
department. Ramirez reasoned that he failed to note the return of the empty bottles
in the copy of sales invoice he later delivered to the customer because the latter
informed him that such copy had been misplaced. Besides, Ramirez and the
customer had agreed that he (Ramirez) would just note the return of the empty
bottles on the customers copy of the sales invoice the following day. Ramirez
pointed out that the petitioner company did not suffer any loss because the empty
bottles were turned over to it.
(b) Re: Sales Invoice No. 3288587 dated October 12, 1996. Ramirez admitted that
there the customer made an overpayment of P504.00. He claimed, however, that he
returned the amount to the customer from his own money, and retained the
P504.00 by way of reimbursement for the amount he had earlier given to the
customer. Hence, the petitioner company and the customer did not suffer any loss.
(c) Re: Sales Invoice No. 3288763 dated October 14, 1996. Ramirez claimed that he
had erroneously written Sales Invoice No. 3288763 instead of Sales Invoice No.
3288765 (customers copy) in his RHF Report dated October 14, 1996. He also
claimed to have overlooked Sales Invoice No. 3288763 when he issued a receipt to
customers "Iglesia or Dolor Hernandez," and mistakenly issued Sales Invoice No.
3288763. He also declared that he failed to include Sales Invoice No. 3288765 in his
RHF Report as one of the cancelled invoices because it was already too late in the
evening.
(d) Re: Sales Invoice No. 3288764. Ramirez declared that it was only after he had
unloaded and delivered the products to the customer and had given a copy of the
sales invoice to the latter that he realized that the customer had returned several
cases of empty bottles worth P2,250.00. He pointed out that he indicated the same
in the copy of the sales invoice he submitted to the company, but failed to do so in
the customers copy of the sales invoice.
On February 11, 1997, Ramirez received a notice from the company informing him that his
services were being terminated; that based on the investigation, it was clearly established that
he violated Sections 10 and 12 of the CCBPI Employees Code of Disciplinary Rules and
Regulations (Red Book); and that coupled with his prior infractions, his employment was
terminated effective February 12, 1997.
On March 17, 1997, Ramirez and the union filed a Complaint 5 for unfair labor practice and illegal
dismissal against the company with the Arbitration Branch of the NLRC, docketed as RAB-IV-38862-97-B. Ramirez claimed that although he was merely an acting salesman, the alleged
violations for which he was dismissed, i.e., Sections 10 and 12 of the petitioner companys rules
and regulations, particularly designated as fictitious sales and falsification of company reports,
were normally only for full-fledged salesmen. He pointed out that:
Firstly, respondent companys act of grounding individual complainant on alleged
shortage in the bodega, has no factual basis, as no actual inventory was conducted;
and
Secondly, individual complainant was terminated for violations which are alien to his
official functions and designation; and
Lastly, as officer of the union, individual complainant was terminated at the time the
collective bargaining negotiations was underway and at its critical stage.
These facts clearly establish a classic case of an employer harassing an official of the union,
which we humbly submit as a clear case of interference by an employer in the right of the
workers to self-organization and to collective bargaining. 6
Ramirez likewise claimed that he was denied of his right to due process, based on the following
grounds:
Firstly, individual complainant was dismissed without having been first issued a
"notice of dismissal" which supposedly should contain the charges against him,
which would be made as basis for his termination.

162
Secondly, individual complainant was dismissed without affording him an ample
opportunity to defend himself, as he was not notified in advance of the subject of
the administrative investigation.
Thirdly, individual complainant was terminated without just and valid cause, and in
gross violation of his right to due process.
Lastly, individual complainant was terminated by respondents in utter bad faith, as
the decision on the said termination was arrived at, without any just and valid
cause. Simply put, respondents simply acted oppressively, malevolently, and with
grave abuse of prerogatives.7
For its part, the petitioner company alleged that the dismissal of Ramirez was based on the facts
unearthed during the formal investigation, and that he was guilty of serious misconduct, a valid
ground for termination of employment. Even if he was occupying the position of route
driver/helper, he was nevertheless performing the functions and duties of a route salesman, and,
as such, he not only committed fraud, but also willfully breached the trust and confidence
reposed on him by the petitioner company. According to the petitioner company, considering the
sanctions imposed on Ramirez for prior breaches of company rules, his dismissal from
employment was with basis. The petitioner company also insisted that Ramirez was accorded his
right to due process: he was notified of the charges against him, was subjected to a formal
investigation during which he was allowed to explain the discrepancies, and was notified of the
outcome thereof, as well as the bases of the termination of his employment.
On July 31, 1998, the Labor Arbiter (LA) rendered judgment 8 dismissing the complaint for lack of
merit. The LA found that based on the evidence, there was a justifiable basis for the dismissal of
Ramirez. According to the LA, it was of no moment that the official designation of Ramirez was
"driver-helper," since he committed the infractions while he was performing the functions of an
"acting salesman." The LA further found that due process had been complied with. 9
Aggrieved, Ramirez appealed the decision to the NLRC, docketed as NLRC NCR CASE CA 01834199.
Ramirez argued that any errors or discrepancies he may have committed while he was assigned
as route salesman were excusable. He pointed out that he was merely a driver/helper and had no
formal training as route salesman before such temporary designation. He averred that the
petitioner company dismissed him because of the on-going collective bargaining negotiations
which were then in a critical stage.
On September 20, 1999, the NLRC rendered a Resolution 10 affirming the decision of the LA. It
declared that the petitioner company had adduced documentary evidence to show that Ramirez
failed to justify why the amount of P2,250.00 was not reflected in the customers copy of Sales
Invoice No. 3288764. According to the NLRC, Ramirez also failed to justify the omission of the
return of 33 cases of company products in the customers copy of Sales Invoice No. 3212215.
The NLRC found the same to be sufficient basis for a finding of grave misconduct, which rendered
Ramirez unworthy of the trust and confidence demanded of his position as an "acting salesman."
Citing the ruling of this Court in Philippine Commercial International Bank v. Jacinto,11 the NLRC
declared that Ramirezs claim that the penalty of dismissal was too harsh and disproportionate
on account of his being a mere "acting salesman," was untenable.
The NLRC, likewise, rejected Ramirezs plea of denial of due process, declaring that he was
accorded the chance to be heard on the complaint against him and to adduce evidence on his
behalf. It ruled that Ramirez failed to prove ill-motive on the part of the petitioner company for
dismissing him.
Upon the denial of his motion for reconsideration, Ramirez filed a petition for certiorari under
Rule 65 of the Rules of Court with the Court of Appeals (CA), docketed as CA-G.R. SP No. 58012
wherein he alleged the following:
1. THE HONORABLE PUBLIC RESPONDENT SERIOUSLY ERRED, THEREBY COMMITTING
GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION, IN AFFIRMING THE LABOR ARBITERS DECISION UPHOLDING THE
LEGALITY OF INDIVIDUAL PETITIONERS DISMISSAL, CONSIDERING THAT:
A. INDIVIDUAL PETITIONER WAS OFFICIALLY DESIGNATED AS "DRIVERHELPER," A POSITION WHICH DOES NOT INVOLVED (sic) THE ELEMENT OF

163
"TRUST AND CONFIDENCE," YET, WAS TERMINATED FOR ALLEGED "LOSS OF
TRUST AND CONFIDENCE;"
B. INDIVIDUAL PETITIONER, AS A "DRIVER-HELPER" WAS MERELY
TEMPORARILY ASSIGNED AS "ACTING SALESMAN" WHEN THE ALLEGED
DISCREPANCY IN THE TRANSACTION DOCUMENTS TOOK PLACE;
C. INDIVIDUAL PETITIONER WAS NOT SPECIFICALLY TRAINED AS "SALESMAN,"
THUS, CANNOT BE EXPECTED TO PERFORM IN THE SAME MANNER AS AN
OFFICIAL ONE, WHO ARE PRECISELY "TRAINED" FOR THE ENDEAVOR.
2. THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, IN FINDING
THAT INDIVIDUAL PETITIONER WAS VALIDLY DISMISSED FOR LOSS OF TRUST AND
CONFIDENCE, AS, EVEN IF THE SAID GROUND REALLY EXISTS, HE COULD HAVE
BEEN ALLOWED TO CONTINUE HIS EMPLOYMENT, AS "DRIVER-HELPER" HIS
OFFICIAL DESIGNATION, A POSITION WHICH DOES NOT INVOLVE AN ELEMENT
OF "TRUST AND CONFIDENCE."
3. THE HONORABLE PUBLIC RESPONDENT, LIKE THE HONORABLE LABOR ARBITER A
QUO, COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR
EXCESS OF JURISDICTION, IN DECLARING THAT "COMPLAINANTS DESIGNATION AT
THE TIME OF THE INFRACTION IS OF NO MOMENT."
4. IN SUM, THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, IN NOT
FINDING PRIVATE RESPONDENT GUILTY OF ILLEGAL DISMISSAL AND UNFAIR LABOR
PRACTICE; AND IN NOT ORDERING PRIVATE RESPONDENT TO REINSTATE INDIVIDUAL
PETITIONER TO HIS FORMER POSITION AS "DRIVER-HELPER," AND TO PAY FULL
BACKWAGES, DAMAGES AND ATTORNEYS FEES.12
In a Decision dated October 25, 2000, the CA dismissed the petition. 13 It ruled that the
petitioners designation at the time of the infraction was of no moment; when he agreed to be an
"acting salesman" for Route M11, AMC and LPR, he actually performed the duties of a salesman,
and in so doing, assumed the responsibilities of the position. The CA further ratiocinated that
notwithstanding Ramirezs lack of training, he had assumed and performed the duties of a
salesman; hence, he was obligated to do so with due care, dedication, and with due regard to the
exercise of the degree of diligence to prevent the commission of any serious error, mistake or
blunder on his part.
The CA also ruled that Ramirez had not been denied his right to due process. It concluded that
the falsification of the sales invoices and receipts violated company rules and policy, and that he
was guilty of gross misconduct which also constituted a breach of trust and confidence reposed
on him by the petitioner company.
Undaunted, the petitioner filed a motion for the reconsideration of the decision contending that:
THE HONORABLE COURT SERIOUSLY ERRED WHEN IT HELD THAT THE FINDING AND
DECLARATION OF THE LABOR ARBITER AND PUBLIC RESPONDENT THAT INDIVIDUAL
PETITIONERS "DESIGNATION AT THE TIME OF THE INFRACTION IS OF NO MOMENT" HAVE LEGAL
BASIS.14
THE HONORABLE COURT SERIOUSLY ERRED WHEN IT FAILED TO CONSIDER THAT INDIVIDUAL
PETITIONER WAS OFFICIALLY DESIGNATED AS "DRIVER-HELPER," A POSITION WHICH DOES NOT
INVOLVED (sic) THE ELEMENT OF "TRUST AND CONFIDENCE." 15
THE HONORABLE COURT SERIOUSLY ERRED IN NOT FINDING THAT THE INDIVIDUAL PETITIONERS
RIGHT TO DUE PROCESS WAS GROSSLY VIOLATED.16
This time, the CA found merit in petitioners cause and, on January 30, 2001, issued a Resolution
granting the said motion, and set aside its earlier ruling.
WHEREFORE, premises considered, the petitioners motion for reconsideration is hereby
GRANTED, and Our decision of 25 October 2000 is vacated. The assailed resolutions of public
respondent dated September 20, 1999 and December 21, 1999 are REVERSED and SET ASIDE,
and a new judgment is rendered, ordering the respondent company to reinstate petitioner
Florentino A. Ramirez to his job as driver-helper without loss of seniority and other rights, and to
pay him his full backwages, allowances and other benefits until his retirement, without

164
diminution, or their monetary equivalent, plus 10% as attorneys fees. Costs against private
respondent.17
The CA ratiocinated that as an acting salesman who did not possess the required basic training
of a route salesman, Ramirez was made to discharge the duties of a route salesman. It also
emphasized that as driver/helper, his job was not a position reposed with trust and confidence.
Thus, the CA declared that the petitioner committed a mere oversight of certain internal control
procedures in the proper recording of his sales and other transactions, resulting in the shortage
in one transaction, offset by an overage in another. While he was inefficient and incompetent as
a route salesman, he was not so as a driver/helper. Considering that he was merely discharging
the functions of a salesman in an acting capacity, and that the petitioner company did not suffer
any loss on account of the violations and/or omissions of Ramirez, the penalty of dismissal was
too harsh. The CA also ruled that there was no dishonesty or a demonstration of moral
perverseness as would justify the claimed loss of confidence attendant to the job, and, as such,
gave Ramirez the benefit of the doubt.
On the issue of due process, the CA ruled that the petitioner was not afforded due process
because the panel of investigators focused on Ramirezs violations of internal control procedures
instead of the substance of the charges against him. 18
Aggrieved by the appellate courts volte face, the petitioner company filed the instant petition for
review on certiorari, alleging that:
THE HONORABLE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE CONTRARY TO LAW
AND THE SETTLED RULINGS OF THE SUPREME COURT IN THAT:
A. THE RESPONDENT WAS LAWFULLY TERMINATED FROM EMPLOYMENT.
B. THE COURT OF APPEALS ACTED WITHOUT JURISDICTION IN RENDERING
THE QUESTIONED RESOLUTIONS.
C. THE FINDINGS OF FACT BY THE COURT OF APPEALS ARE CONTRARY TO
THOSE OF THE HONORABLE LABOR ARBITER AND THE NATIONAL LABOR
RELATIONS COMMISSION AND ARE MERE CONCLUSIONS REACHED WITHOUT
CITATION OR SPECIFIC EVIDENCE AND/OR ARE PREMISED ON THE PURPORTED
ABSENCE OF EVIDENCE CONTRADICTED BY THE EVIDENCE ON RECORD. 19
The core issue for resolution is whether or not respondent Florentino Ramirez was dismissed by
the petitioner without just or valid cause.
The Respondent Committed Irregularities in the Performance of His Duties as Route Salesman
We find, as the CA did in its assailed Resolution, that the respondent, by his acts and omissions,
committed irregularities in the performance of his duties. He made it appear in the customers
copy of Sales Invoice No. 3212215 that the latter returned 33 cases of family-size empty bottles
valued at P4,092.00; however, such transaction was not reflected in the invoice submitted by
him to the petitioner company.
A perusal of the customers copy of the sales invoice would show that the customer owed the
petitioner company P9,045.00. However, in the petitioner companys copy of the sales invoice,
the respondent declared that the customer returned 33 cases of empty bottles valued at
P4,092.00; hence, the customer owed the petitioner only P4,953.40 which the customer paid.
The respondent failed to indicate the return of the empty bottles in the petitioner companys
copy of the sales invoice. The explanation of the respondent, that while he intended to correct
the customers copy of the sales invoice he was unable to do so because such customers copy
had been misplaced by the customer, is unacceptable. The respondent should have presented
the affidavit of the customer to corroborate such claim. The fact that it turned out that the
customer still had his copy of the sales invoice does not sit well with the respondents cause. In
fine then, the explanation given by the respondent during the panel investigation is untrue.
There is no dispute that the respondent overcharged the customer in Sales Invoice No. 3288587
in the amount of P504.00, and that the respondent returned the overpayment to the customer.
However, the respondent was burdened to give a valid explanation for such overcharging on the
customer, which he failed to do.
The respondent also admitted that he failed to indicate in the customers copy of Sales Invoice
No. 3288764 the customers retrieval of 210 cases of empty Coca-Cola bottles of varied sizes,
amounting to P2,250.00. The respondent failed to give a valid explanation for his omission,

165
although there appears to be no doubt that, indeed, the customer returned the 210 empty
bottles to the petitioner through him.
The Penalty of Dismissal For the Respondents Infraction is, however, Too Severe
In order to effect a valid dismissal of an employee, the law requires that there be just and valid
cause as provided in Article 282 and that the employee was afforded an opportunity to be heard
and to defend himself.20 Pursuant to Article 282 of the Labor Code, an employees services can
be terminated for the following just causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly-authorized representative.
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duty-authorized
representative; and
(e) Other causes analogous to the foregoing.
In termination disputes, the burden of proof is always on the employer to prove that the
dismissal was for a just and valid cause.21 Considering the nature of the charges and the
penalties therefor, the petitioner is bound to adduce clear and convincing evidence to prove the
same.
We have always held that an employer enjoys a wide latitude of discretion in the promulgation of
policies, rules and regulations on work-related activities of the employees. 22 It is recognized that
company policies and regulations, unless shown to be grossly oppressive or contrary to law, are
generally valid and binding on the parties and must be complied with until finally revised or
amended, unilaterally or preferably through negotiation, by competent authority. The Court has
upheld a companys management prerogatives so long as they are exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws or under valid agreements. 23 For misconduct or
improper behavior to be a just cause for dismissal, the same must be related to the performance
of the employees duties and must show that he has become unfit to continue working for the
employer.24
In cases when an employer may dismiss an employee on the ground of willful disobedience,
there must be concurrence of at least two requisites: (1) the employees assailed conduct must
have been willful or intentional, the willfulness being characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he had been engaged to discharge. 25
In the present case, the respondent was dismissed for dishonesty, more specifically for violation
of the company policy, and, more particularly, Sections 10 and 12 of Company Rules and
Regulation No. 005-85, Fictitious sales transactions; Falsification of company
records/data/documents/reports; Conspiring or conniving with, or directing others to commit
fictitious transactions; and inefficiency in the performance of duties, negligence and blatant
disregard of or deviation from established control and other policies and procedures.
However, the petitioner failed to adduce clear and convincing evidence that the respondent had
fictitious sales transactions, or that he falsified company records/documents/reports, or that he
connived with customers of the petitioner to persuade them to commit fictitious transactions. It
is undisputed that the respondent entered into the sales transactions subject of the complaint of
the petitioner for and in behalf of the petitioner. While it is true that the respondent failed to
indicate the return of the empty bottles made by a customer either in the petitioner companys
copy of the sales invoice or in his reports on his sales transactions; and overcharged a customer
in one transaction, there is no clear and convincing evidence that the respondent did so
intentionally, for a wrong or criminal purpose. There is also no showing that the respondent
intentionally defied the lawful orders or regulations of the petitioner. Indeed, as declared by the
CA in its assailed resolution, the petitioner did not suffer any material loss by the respondents
actuations:

166
At the outset, it may be stated that the petitioners positive allegation that the individual
petitioner was also an official of the petitioner union, being the latters "shop steward" at
respondent companys Batangas Sales Office, as the real motive for his termination, has not
been established by sufficient proof to justify a finding in their favor.1vvphi1.nt

A quick review of the salient facts shows that individual petitioner Florentino A. Ramirez was
hired by private respondent company on July 1, 1982, as "driver-helper," with the latest basic
salary of P11,285.00 as of February 1997 and an average commission of P2,800.00 a month. As
such "driver-helper," his official duties and responsibilities, among others, are as follows: (a) as
driver, he checks the trucks oil, water, wheels, etc.; (b) as helper, he is tasked with loading and
unloading trucks load; putting bottles in the coolers and displays company products to each
outlet or customers store. Obviously, this job did not involve the same amount of trust and
confidence as that of a salesman. Officially, petitioner Ramirez had no other alternate duties.
It is not refuted that individual petitioner did not possess the required basic training to act as
salesman, and that this fact was known to the private respondent company at the time it
designated him as acting salesman during those days, particular October 02, 12, and 14, 1996,
when no route salesman was available. It is also self-evident that the job description of the
driver-helper hardly includes any task which would significantly overlap with those of the
salesman as would afford the driver-helper, through time perhaps, the experience to adequately
discharge the duties of a salesman. In fact, as admitted by the private respondent, because of
the amount of trust and confidence involved in the job of a salesman, rigorous requirements and
internal control procedures are enforced, and understandably, as well as strict accountability.
From the parties various pleadings both in this petition, as well as in the case below, what
becomes clear is that the private respondent suffered no damage whatsoever from the
actuations of the individual petitioner. His alleged dishonesty was not proven. What he
committed was merely non-compliance with, or oversight of, certain internal procedures in the
proper recording of his sales and other transactions, resulting in a shortage in one transaction,
which was nevertheless offset by an overage in another. It could be allowed that, indeed, he was
inefficient and incompetent for the function of a salesman which he had to temporarily perform. 26

In pointing out that the private respondent suffered no material loss, We note that it was very
possible that the discrepancies found in the documents reflecting the individual petitioners
transactions as an "acting salesman" could very well have been due to simple inadvertence and
the fact that the customers, who for some reason failed to pay their accounts with exact cash but
instead partly with empty bottles, later misplaced their copy of the invoice. Thus, their copy
could not be corrected seasonably. The recording was very likely bungled further by individual
petitioners lack of training and familiarity with the strict recording procedures. We are inclined to
give him this benefit of the doubt.
That the individual petitioner has not been specifically trained as salesman is undisputed. It is
likewise uncontroverted that before an employee could qualify as a full-fledge "salesman," the
respondent company requires as a condition sine qua non that he first undergo "basic salesman
training" and several seminars to be acquainted with his specific functions. This is
understandable, because the company salesman not only must find customers, promote and sell
its products, but he also must account for his sales and inventory to the last centavo, every day,
according to its internal controls and policies. It is obvious that this was not so with the individual
petitioner. He was tasked with a duty involving trust and specialized skills for which he was never
trained. His alleged failure to comply strictly with all the procedures, of which he was unfamiliar,
was to be expected.
Yet Ramirez was penalized as a full-fledge salesman, not as a driver-helper who was forced to
perform the functions of acting salesman or perhaps risk being charged with insubordination.
Then it was not just any penalty meted out to him, as if there is only one punishment possible for
him: the supreme sanction of dismissal.
We cannot but agree that the extreme penalty of dismissal was too harsh and manifestly
disproportionate to the infraction committed, which appears to have been fully explained, and, in
fact, to be not inexcusable under the circumstances. There was no dishonesty, no demonstration

167
of such moral perverseness as would have justified the claimed loss of confidence attendant to
the job. The company must bear a share of the blame for entrusting a mere driver-helper with a
highly fiduciary task knowing that he did not possess the required skills. At most, Ramirez failed
to comply with, or even violated, certain company rules of internal control procedures, but to say
that it was deliberate is gratuitous.
Perhaps, individual petitioner should first have been given a mere warning, then a reprimand or
even a suspension, but certainly not outright dismissal from employment. One must keep in mind
that a workers employment is property in the constitutional sense, and he cannot be deprived
thereof without due process and unless it was commensurate to his acts and degree of moral
depravity. 27
In Charles Joseph U. Ramos v. The Honorable Court of Appeals and Union Bank of the Philippines ,28
the Court held that, in order to validly dismiss an employee on the ground of loss of trust and
confidence under Article 282 of the Labor Code of the Philippines, the following guidelines must
be followed:
1. The loss of confidence must not be simulated;
2. It should not be used as a subterfuge for causes which are illegal, improper or
unjustified;
3. It may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary;
4. It must be genuine, not a mere afterthought, to justify earlier action taken in bad
faith; and
5. The employee involved holds a position of trust and confidence. 29
In Sulpicio Lines, Inc. v. Gulde,30 the Court emphasized that loss of trust and confidence as a just
cause for termination of employment is premised on the fact that the employee concerned holds
a position of responsibility or trust and confidence. As such, he must be invested with confidence
on delicate matters, such as the custody handling or care and protection of the property and
assets of the employer. In order to constitute a just cause for dismissal, the act complained of
must be work-related. It must be shown that the employee is unfit to continue to work for the
employer. Further, well-settled is the rule that "for loss of trust and confidence to be a valid
ground for dismissal of an employee, it must be substantial and founded on clearly established
facts sufficient to warrant the employees separation from employment." 31
We agree that route salesmen are likely individualistic personnel who roam around selling
softdrinks, deal with customers and are entrusted with large asset and funds and property of the
employer. There is a high degree of trust and confidence reposed on them, and when confidence
is breached, the employer may take proper disciplinary action on them. 32 The work of a salesman
exposes him to voluminous financial transactions involving his employers goods. The life of the
softdrinks company depends not so much on the bottling or production of the product since this
is primarily done by automatic machines and personnel who are easily supervised but upon
mobile and far-ranging salesmen who go from store to store all over the country or region.
Salesmen are highly individualistic personnel who have to be trusted and left essentially on their
own. A high degree of confidence is reposed on them because they are entrusted with funds or
properties of their employer.33
The designation of the respondent, who was employed as driver-helper, but temporarily assigned
as route salesman for a period of three (3) days, did not automatically make him an employee on
whom the petitioner reposed trust and confidence, for breach of which he shall be meted the
penalty of dismissal. The assumption by the respondent, for only three days, of some of the
duties of a route salesman on orders of the petitioner, did not automatically make him an
employee holding a position of trust and confidence. Despite his additional duties, the
respondent remained a driver-helper of the petitioner. Thus, respondent cannot be dismissed
pursuant to Article 282 of the Labor Code.
The rulings of the Court in Charles Joseph U. Ramos v. The Honorable Court of Appeals and Union
Bank of the Philippines,34 cited by the petitioner are not on all fours applicable in this case. This is
so because in Ramos, prior to the dismissed employees appointment as an acting branch
manager, he was the branch cashier, the position next to the branch manager.l^vvphi1.net The
positions of branch cashier and branch manager are positions endowed with trust and

168
confidence. Moreover, upon the appointment of Ramos as Officer-In-Charge (OIC) branch
manager, another person was appointed to serve as OIC branch cashier. Thus, for that period of
time, Ramos ceased to be a branch cashier when he was appointed as OIC branch manager. In
this case, however, the respondent continued to be a driver/helper when he was designated as
an acting salesman. Although barren of experience and training as route salesman, the
respondent had no choice but to comply with the petitioners orders and tried his best to do the
task assigned to him.
The ruling of the Court in Philippine Commercial International Bank v. Jacinto,35 is not also
applicable in the present case. In that case, Jacinto was a customer relations assistant and was
assigned to act as an alternate FX Teller when the FX Teller was not available. Both positions
involved trust and confidence. Moreover, the employee (Jacinto) was not dismissed but only
meted the penalty of suspension.
In its assailed resolution, the CA ruled:
That once, back in 1992, Ramirez had borrowed some empty bottles from a customer but later
returned them the same day and was suspended for it, or that he went AWOL several times in
1996 and thus was meted a suspension of 2 days, are the only blemishes in his record of any
significance. To our mind, coupled with his present predicament, these could not justify such a
professed loss of confidence as to sever him from his employment of 14 years. 36
We agree with the CA. As the Court ruled in Pepsi-Cola Distributors of the Philippines, Inc. v. NLRC :37
Moreover, private respondent was already penalized with suspensions in some of the
infractions imputed to him in this case, like sleeping while on route rides, incomplete
accomplishment of sales report and his failure to achieve sales commitments. He cannot again
be penalized for those misconduct. The foregoing acts cannot be added to support the imposition
of the ultimate penalty of dismissal which must be based on clear and not on ambiguous and
ambivalent ground.1a\^/phi1.net
Considering the factual backdrop in this case, we find and so rule that for his infractions, the
respondent should be meted a suspension of two (2) months.
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Resolution of the
Court of Appeals dated January 30, 2001 affirming the assailed resolution of the NLRC is SET
ASIDE. The Decision of the Court of Appeals dated October 25, 2000 is AFFIRMED with the
MODIFICATION that the respondent is meted the penalty of Two (2) months suspension. No costs.
SO ORDERED.

169
G.R. No. 199547
September 24, 2012
THE NEW PHILIPPINE SKYLANDERS, INC. and/or JENNIFER M. ENANO-BOTE, Petitioners,
vs.
FRANCISCO N. DAKILA, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
The Petition for Review on Certiorari1 assails the August 31, 20112 and November 23, 20113
Resolutions of the Court of Appeals (CA) in CA-G.R. SP No. 113015 which affirmed the September
10, 2009 Decision4 and December 15, 2009 Resolution5 of the National Labor Relations
Commission (NLRC) finding respondent Francisco N.Dakila (respondent Dakila) to have been
illegally dismissed.
The Factual Antecedents
Respondent Dakila was employed by petitionercorporation as early as 1987 and terminated for
cause in April 1997 when the corporation was sold. In May 1997, he was rehired as consultant by
the petitioners under a Contract for Consultancy Services 6 dated April 30, 1997.
Thereafter, in a letter7 dated April 19, 2007, respondent Dakila informed petitioners of his
compulsory retirement effective May 2, 2007 and sought for the payment of his retirement
benefits pursuant to the Collective Bargaining Agreement. His request, however, was not acted
upon. Instead, he was terminated from service effective May 1, 2007.
Consequently, respondent Dakila filed a complaint for constructive illegal dismissal, non-payment
of retirement benefits, under/non-payment of wages and other benefits of a regular employee,
and damages against petitioners, The New Philippine Skylanders, Inc. and its President and
General Manager, Jennifer M. Eano-Bote, before the NLRC. He averred, among others, that the
consultancy contract was a scheme to deprive him of the benefits of regularization, claiming to
have assumed tasks necessary and desirable in the trade or business of petitioners and under
their direct control and supervision. In support of his claim, he submitted, among others, copies
of his time cards, Official Business Itinerary Slips, Daily Attendance Sheets and other documents
prescribing the manner in which his tasks were to be accomplished under the control of the
petitioners and acknowledging his status as a regular employee of the corporation.
On the other hand, petitioners, in their position paper, 8 asserted that respondent Dakilawas a
consultant and not their regular employee. The latter was not included in petitioners' payroll and
paid a fixed amount under the consultancy contract. He was not required to observe regular
working hours and was free to adopt means and methods to accomplish his task except as to the
results of the work required of him. Hence, no employer-employee relationship existed between
them. Moreover, respondentDakila terminated his contract in a letter dated April 19, 2007, thus,
negating his dismissal.
Ruling of the Labor Arbiter
On May 28, 2008, Labor Arbiter Thomas T. Que, Jr. rendered a Decision 9 finding respondent Dakila
to have been illegally dismissed and ordered his reinstatement with full backwages computed
from the time of his dismissal on May 1, 2007 until his actual reinstatement as well as the
payment of his unpaid benefits under the Collective Bargaining Agreement (CBA). He declared
respondent Dakila to be a regular employee on the basis of the unrebutted documentary
evidence showing that he was under the petitioners' direct control and supervision and
performed tasks that were either incidental or usually desirable and necessary in the trade or
business of petitioner corporation for a period of ten years. Having been dismissed without cause
and notice, respondent Dakila was awarded moral and exemplary damages in the amount of P
50,000.00 each. He is also entitled to avail of thecorporation's retirement benefits upon his
reinstatement.
Ruling of the NLRC
On appeal, the NLRC sustained the Labor Arbiter's (LA) finding that respondent Dakila was a
regular employee and that his dismissal was illegal. However, it noted that since he was already
beyond the retirement age, his reinstatement was no longer feasible. As such, it ordered the
payment of his retirement pay to be computed from 1997 until the date of the decision.
Moreover, it found respondent Dakila entitled to reinstatement wages from the time petitioners
received a copy of the LAs Decision on July 7, 2008 up to the date of the NLRC's decision. Thus,

170
it ordered the petitioners to pay respondent Dakila the additional amount of P
278,508.33representing reinstatement wages and retirement pay. 10
The petitioners' motion for reconsideration having been denied in the Resolution 11 dated
December 15, 2009, they filed a petition for certiorari 12 before the CA raising the following errors:
(1) the complaint should have been dismissed against petitioner Jennifer M. EanoBote absent any showing of bad faith;
(2) respondent Dakila is not a regular employee;
(3) respondent was not illegally dismissed as it was the respondent who resigned;
and
(4) theLAs monetary award has no basis.
Ruling of the CA
In the Resolution13 dated August 31, 2011, the CA dismissed the petition for failure to show that
the NLRC committed grave abuse of discretion in affirming the LA's Decision. It found the factual
findings of the LA and the NLRC to be supported by substantial evidence and thus, should be
accorded respect and finality. Petitioners' motion for reconsideration therefrom was likewise
denied in the Resolution14 dated November 23, 2011.
Hence, the instant petition reiterating the arguments raised before the CA.
Ruling of the Court
The issue of illegal dismissal is premised on the existence of an employer-employee relationship
between the parties herein. It is essentially a question of fact, beyond the ambit of a petition for
review on certiorari under Rule 45 of the Rules of Court unless there is a clear showing of
palpable error or arbitrary disregard of evidence which does not obtain in this case. Records
reveal that both the LA and the NLRC, as affirmed by the CA, have found substantial evidence to
show that respondent Dakila was a regular employee who was dismissed without cause.
Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is
entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages computed from the time he was illegally dismissed. However, considering that
respondent Dakila was terminated on May 1, 2007, or one (1) day prior to his compulsory
retirement on May 2, 2007, his reinstatement is no longer feasible. Accordingly, the NLRC
correctly held him entitled to the payment of his retirement benefits pursuant to the CBA. On the
other hand, his backwages should be computed only for days prior to his compulsory retirement
which in this case is only a day. Consequently, the award of reinstatement wages pending appeal
must be deleted for lack of basis.
Similarly, the Court finds no basis to hold petitioner Jennifer M. Eano-Bote, President and
General Manager of The New Philippine Skylanders, Inc., jointly and severally liable with the
corporation for the payment of the monetary awards. The mere lack of authorized or just cause
to terminate one's employment and the failure to observe due process do not ipso facto mean
that the corporate officer acted with malice or bad faith. 15 There must be independent proof of
malice or bad faith which was not established in this case. Perforce, petitioner Jennifer M. EanoBote cannot be made personally liable for the liabilities of the corporation which, by legal fiction,
has a personality separate and distinct from its officers, stockholders and members. Moreover,
for lack of factual and legal bases, the awards of moral and exemplary damages cannot also be
sustained.161wphi1
WHEREFORE, premises considered, the petition is PARTLY GRANTED. The assailed August 31,
2011 and November 23, 2011 Resolutions of the Court of Appeals in CA-G.R. SP No. 113015 are
MODIFIED as follows:
(1) petitioner Jennifer M. Eano-Bote is ABSOLVED from liability for payment of
respondent Francisco N. Dakila's monetary awards;
(2) the awards of reinstatement wages pending appeal as well as the moral and
exemplary damages are ordered DELETED; and
(3) the computation of backwages should be limited only for a day prior to his
compulsory retirement.
The rest of the decision stands.
SO ORDERED.

171
G.R. No. 198662
September 12, 2012
RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY, Petitioners,
vs.
DOMINGO Z. YBAROLA, JR. and ALFONSO E. RIVERA, JR., Respondents.
RESOLUTION
BRION, J.:
We resolve the motion for reconsideration1 of petitioners Radio Mindanao Network, Inc. (RMN)
and Eric S. Canoy addressing our Resolution 2 of December 7, 2011 which denied the appeal from
the decision3 and the resolution4 of the Court of Appeals (CA) in CA-G.R. SP No. 109016.
Factual Background
Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and
June 1, 1983, respectively, by RMN. They eventually became account managers, soliciting
advertisements and servicing various clients of RMN.
On September 15, 2002, the respondents services were terminated as a result of RMNs
reorganization/restructuring; they were given their separation pay P 631,250.00 for Ybarola,
and P 481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim
affidavits.
Dissatisfied with their separation pay, the respondents filed separate complaints (which were
later consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several
money claims, including attorneys fees. They indicated that their monthly salary rates were P
60,000.00 for Ybarola and P 40,000.00 for Rivera.
The Compulsory Arbitration Proceedings
The respondents argued that the release/quitclaim they executed should not be a bar to the
recovery of the full benefits due them; while they admitted that they signed release documents,
they did so due to dire necessity.
The petitioners denied liability, contending that the amounts the respondents received
represented a fair and reasonable settlement of their claims, as attested to by the
release/quitclaim affidavits which they executed freely and voluntarily. They belied the
respondents claimed salary rates, alleging that they each received a monthly salary of P
9,177.00, as shown by the payrolls.
On July 18, 2007, Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but
ordered the payment of additional separation pay to the respondents P 490,066.00 for Ybarola
and P 429,517.55 for Rivera.5
The labor arbiter adjusted the separation pay award based on the respondents Certificates of
Compensation Payment/Tax Withheld showing that Ybarola and Rivera were receiving an annual
salary of P 482,477.61 and P 697,303.00, respectively.
On appeal by the petitioners to the National Labor Relations Commission (NLRC), the NLRC set
aside the labor arbiters decision and dismissed the complaint for lack of merit. 6 It ruled that the
withholding tax certificate cannot be the basis of the computation of the respondents separation
pay as the tax document included the respondents cost-of-living allowance and commissions; as
a general rule, commissions cannot be included in the base figure for the computation of the
separation pay because they have to be earned by actual market transactions attributable to the
respondents, as held by the Court in Soriano v. NLRC 7 and San Miguel Jeepney Service v. NLRC. 8
The NLRC upheld the validity of the respondents quitclaim affidavits as they failed to show that
they were forced to execute the documents.
From the NLRC, the respondents sought relief from the CA through a petition for certiorari under
Rule 65 of the Rules of Court.
The CA Decision and the Courts Ruling
In its decision9 of February 17, 2011, the CA granted the petition and set aside the assailed NLRC
dispositions. It reinstated the labor arbiters separation pay award, rejecting the NLRCs ruling
that the respondents commissions are not included in the computation of their separation pay. It
pointed out that in the present case, the respondents earned their commissions through actual
market transactions attributable to them; these commissions, therefore, were part of their salary.
The appellate court declared the release/quitclaim affidavits executed by the respondents invalid
for being against public policy, citing two reasons: (1) the terms of the settlement are

172
unconscionable; the separation pay the respondents received was deficient by at least P
400,000.00 for each of them; and (2) the absence of voluntariness when the respondents signed
the document, it was their dire circumstances and inability to support their families that finally
drove them to accept the amount the petitioners offered. Significantly, they dallied and it took
them three months to sign the release/quitclaim affidavits.
The petitioners moved for reconsideration, but the CA denied the motion in a resolution 10 dated
September 23, 2011.1wphi1 Thus, the petitioners appealed to this Court through a petition for
review on certiorari under Rule 45 of the Rules of Court.
By a Resolution11 dated December 7, 2011, the Court denied the petition for failure to show any
reversible error or grave abuse of discretion in the assailed CA rulings.
The Motion for Reconsideration
The petitioners seek reconsideration of the Courts denial of their appeal on the ground that the
CA, in fact, committed reversible error in: (1) failing to declare that Canoy is not personally liable
in the present case; (2) disregarding the rule laid down in Talam v. National Labor Relations
Commission12 on the proper appreciation of quitclaims; and (3) disregarding prevailing
jurisprudence which places on the respondents the burden of proving that their commissions
were earned through actual market transactions attributable to them.
The petitioners fault the CA for not expressly declaring that no basis exists to hold Canoy
personally liable for the award to the respondents as they failed to specify any act Canoy
committed against them or to explain how Canoy participated in their dismissal. They express
alarm as they believe that unless the Court acts, the respondents will enforce the award against
Canoy himself.
On the release/quitclaim issue, the petitioners bewail the CAs disregard of the Courts ruling in
Talam that the quitclaim that Francis Ray Talam, who was not an unlettered employee, executed
was a voluntary act as there was no showing that he was coerced into signing the instrument,
and that he received a valuable consideration for his less than two years of service with the
company. They point out that in this case, the labor arbiter and the NLRC correctly concluded
that the respondents are hardly unlettered employees, but intelligent, well-educated and who
were too smart to be caught unaware of what they were doing. They stress, too, that the
respondents submitted no proof that they were in dire circumstances when they executed the
release/quitclaim document.
With regard to the controversy on the inclusion of the respondents commissions in the
computation of their separation pay, the petitioners reiterate their contention that the
respondents failed to show proof that they earned the commissions through actual market forces
attributable to them.
The Respondents Position
Through their Comment/Opposition (to the Motion for Reconsideration), 13 the respondents pray
that the motion be denied for lack of merit. They argue that the motion is based on arguments
already raised in the petition for review which had already been denied by this Court.
The respondents submit that the issue of Canoys personal liability has become final and
conclusive on the parties as the petitioners failed to raise the issue on time. They maintain that
as the records show, the petitioners failed to raise the issue in their appeal to the NLRC and
neither did they bring it up in their motion for reconsideration of the CAs decision reinstating the
labor arbiters award.1wphi1
The Petitioners Reply
In their reply (to the respondents Comment/Opposition), 14 the petitioners ask that their petition
be reinstated to allow the full ventilation of the issues presented for consideration. They contend
that the respondents merely reiterated the CA pronouncements and have not confronted the
issues raised and the jurisprudence they cited.
On the question of Canoys personal liability, the petitioners take exception to the respondents
submission that the matter had been resolved with finality and has become conclusive on them.
They assert that they did not raise the issue with the CA because there was no reason for them
to do so as the ruling then being reviewed was one which held that they were not liable to the
respondents.
Our Ruling on the Motion for Reconsideration

173
We find the motion for reconsideration unmeritorious. The motion raises substantially the
same arguments presented in the petition and we find no compelling justification to grant the
reconsideration prayed for.
The petitioners insist that the respondents commissions were not part of their salaries, because
they failed to present proof that they earned the commission due to actual market transactions
attributable to them. They submit that the commissions are profit-sharing payments which do
not form part of their salaries. We are not convinced. If these commissions had been really profitsharing bonuses to the respondents, they should have received the same amounts, yet, as the
NLRC itself noted, Ybarola and Rivera received P 372,173.11 and P 586,998.50 commissions,
respectively, in 2002.15 The variance in amounts the respondents received as commissions
supports the CAs finding that the salary structure of the respondents was such that they only
received a minimal amount as guaranteed wage; a greater part of their income was derived from
the commissions they get from soliciting advertisements; these advertisements are the
"products" they sell. As the CA aptly noted, this kind of salary structure does not detract from the
character of the commissions being part of the salary or wage paid to the employees for services
rendered to the company, as the Court held in Philippine Duplicators, Inc. v. NLRC. 16
The petitioners reliance on our ruling in Talam v. National Labor Relations Commission, 17
regarding the "proper appreciation of quitclaims," as they put it, is misplaced. While Talam, in the
cited case, and Ybarola and Rivera, in this case, are not unlettered employees, their situations
differ in all other respects.1wphi1
In Talam, the employee received a valuable consideration for his less than two years of service
with the company;18 he was not shortchanged and no essential unfairness took place. In this
case, as the CA noted, the separation pay the respondents each received was deficient by at
least P 400,000.00; thus, they were given only half of the amount they were legally entitled to. To
be sure, a settlement under these terms is not and cannot be a reasonable one, given especially
the respondents length of service 25 years for Ybarola and 19 years for Rivera. The CA was
correct when it opined that the respondents were in dire straits when they executed the
release/quitclaim affidavits. Without jobs and with families to support, they dallied in executing
the quitclaim instrument, but were eventually forced to sign given their circumstances.
Lastly, the petitioners are estopped from raising the issue of Canoy's personal liability. They did
not raise it before the NLRC in their appeal from the labor arbiter's decision, nor with the CA in
their motion for reconsideration of the appellate court's judgment. The risk of having Canoy's
personal liability for the judgment award did not arise only with the filing of the present petition,
it had been there all along - in the NLRC, as well as in the CA.
WHEREFORE, premises considered, we hereby DENY the motion for reconsideration with
finality. No second motion for reconsideration shall be entertained. Let judgment be entered in
due course.
SO ORDERED.

174
G.R. No. 184116
June 19, 2013
CENTURY IRON WORKS, INC. and BENITO CHUA, Petitioners,
vs.
ELETO B. BANAS, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari 1 filed by petitioners Century Iron Works, Inc.
(Century Iron) and Benito Chua to challenge the January 31, 2008 decision 2 and the August 8,
2008 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 98632.
The Factual Antecedents
Respondent Eleto B. Banas worked at petitioner Century Iron beginning July 5, 2000 4 until his
dismissal on June 18, 2002.5 Baas responded to his dismissal by filing a complaint for illegal
dismissal with prayer for reinstatement and money claims. 6
According to Century Iron, Baas worked as an inventory comptroller whose duties are to: (1)
train newly hired warehouseman; (2) initiate analysis on the discrepancies concerning records
and inventories; (3) check and confirm warehousemans report; (4) check the accuracy of
materials requisition before issuance to the respective warehouseman at the jobsite; (5) monitor
and maintain records; and (6) recommend and initiate corrective or preventive action as may be
warranted.7
Sometime in 2002, Century Iron received letters of complaint from its gas suppliers regarding
alleged massive shortage of empty gas cylinders. 8 In the investigation that Century Iron
conducted in response to the letters, it found that Baas failed to make a report of the missing
cylinders. On May 14, 2002, Century Iron required Baas to explain within forty-eight (48) hours
from receipt of its letter why no disciplinary action should be taken against him for loss of trust
and confidence and for gross and habitual neglect of duty. 9 On May 31, 2002, Century Iron issued
a Memorandum requiring Baas to attend a hearing regarding the missing cylinders. 10 Baas
subsequently appeared at the hearing to air his side.
On June 17, 2002, Century Iron, through Personnel Officer Mr. Virgilio T. Baaga, terminated
Baas services on grounds of loss of trust and confidence, and habitual and gross neglect of
duty.11 The termination was effective June 18, 2002.
In his defense, Baas alleged that he merely worked as an inventory clerk who is not responsible
for the lost cylinders. He pointed out that his tasks were limited to conducting periodic and yearly
inventories, and submitting his findings to the personnel officer. He maintained that unlike a
supervisory employee, he was not required to post a bond and he did not have the authority to
receive and/or release cylinders in the way that a warehouseman does. Therefore, he cannot be
terminated on the ground of loss of confidence. 12
On the other hand, the petitioners asserted that Baas was a supervisory employee who was
responsible for the lost cylinders. They maintained that Baas committed numerous infractions
during his tenure amounting to gross and habitual neglect of duty. These included absences
without leave, unauthorized under time, failure to implement proper standard warehousing and
housekeeping procedure, negligence in making inventories of materials, and failure to ensure
sufficient supplies of oxygen-acetylene gases. 13
The Labor Arbitration Rulings
In a decision14 dated January 31, 2005, Labor Arbiter (LA) Joel S. Lustria ruled that Baas was
illegally dismissed. The LA did not believe Century Irons assertions that Baas worked as an
inventory comptroller and that he was grossly and habitually neglectful of his duties. The
evidence on record shows that Baas was an inventory clerk whose duties were merely to
conduct inventory and to submit his report to the personnel officer. As an inventory clerk, it was
not his duty to receive the missing items. The LA also ruled that Century Iron deprived Baas of
due process because the purpose of the hearing was to investigate the lost cylinders and not to
give Baas an opportunity to explain his side.
On appeal by Century Iron, the National Labor Relations Commission (NLRC) affirmed the LAs
ruling in toto.15 It ruled that the various memoranda issued by Century Iron explicitly show that
Baas was an inventory clerk. It noted that Century Iron unequivocally stated in its termination
report dated July 29, 2002 that Baas was an inventory clerk. It also pointed out that Century

175
Iron failed to present the Contract of Employment or the Appointment Letter which was the best
evidence that Baas was an inventory comptroller.
The NLRC denied16 the motion for reconsideration 17 that Century Iron subsequently filed,
prompting the employer company to seek relief from the CA through a petition for certiorari
under Rule 65 of the Rules of Court. 18
The CA Ruling
On January 31, 2008, the CA affirmed with modification the NLRC decision. It agreed with the
lower tribunals finding that Baas was merely an inventory clerk. It, however, ruled that Baas
was afforded due process. It held that Baas had been given ample opportunity to air his side
during the hearing, pointing out that the essence of due process is simply an opportunity to be
heard.19
Century Iron filed the present petition 20 after the CA denied21 its motion for reconsideration.22
The Petition
The petitioners impute the following errors committed by the appellate court:
1) The CA erred in holding that the factual findings of the NLRC may not be inquired
into considering that only questions of law may be brought in an original action for
certiorari;
2) The CA erred in finding that Baas was not a supervisory employee; and
3) The CA erred in not holding that Baas termination from his employment was for
valid and just causes.23
The petitioners argue that the CA erred when it did not disturb the NLRCs finding that Baas was
merely a rank-and-file employee. Citing Capitol Medical Center, Inc. v. Dr. Meris, 24 they contend
that for factual findings of the NLRC to be accorded respect, these must be sufficiently supported
by the evidence on record. The petitioners assert that Baas was a supervisory employee who, in
the interest of the employer, effectively recommended managerial actions using his independent
judgment. They point out that one of Baas duties as an inventory comptroller was to
recommend and initiate corrective or preventive action as may be warranted.
The petitioners also maintain that Baas was dismissed for just and valid causes. They reiterate
that since Baas was a supervisory employee, he could be dismissed on the ground of loss of
confidence. Finally, the petitioners claim that Baas was grossly and habitually negligent in his
duty which further justified his termination.
The Respondents Position
In his Comment,25 Baas posits that the petition raises purely questions of fact which a petition
for review on certiorari under Rule 45 of the Rules of Courts does not allow. He additionally
submits that the petitioners arguments have been fully passed upon and found unmeritorious by
the lower tribunals and the CA.
The Issues
This case presents to us the following issues:
1) Whether or not questions of fact may be inquired into in a petition for certiorari under Rule 65
of the Rules of Court;
2) Whether or not Baas occupied a position of trust and confidence, or was routinely charged
with the care and custody of Century Irons money or property; and
3) Whether or not Century Iron terminated Baas for just and valid causes.
As part of the third issue, the following questions are raised:
a) Whether or not loss of confidence is a ground for terminating a rank-and-file employee who is
not routinely charged with the care and custody of the employers money or property; and
b) Whether or not Baas was grossly and habitually neglectful of his duties.
The Courts Ruling
We reverse the CAs decision.
In a petition for review on certiorari
under Rule 45, only questions of law
may be put into issue while in a
petition for certiorari under Rule 65,
only questions of jurisdiction may be
inquired into

176
On the first issue, the CA relied on Cebu Shipyard & Engg Works, Inc. v. William Lines, Inc. 26 in
affirming the lower tribunals finding that Baas worked as an inventory clerk. According to the
CA, this Court has ruled in Cebu Shipyard that in petitions for certiorari, only questions of law
may be put into issue and questions of fact cannot be entertained. Not noticing such glaring
error, the petitioners agree to such disquisition.They, however, assert that there is an exception
to the rule that only questions of law may be brought in an original action for certiorari, such as
when the lower courts findings of facts are not supported by sufficient evidence or that the same
was based on misapprehension or erroneous appreciation of facts. 27
A revisit of Cebu Shipyard shows that the CA has inadvertently misquoted this Court. In the said
case, we held:28
In petitions for review on certiorari, only questions of law may be put into issue. Questions of fact
cannot be entertained. The finding of negligence by the Court of Appeals is a question which this
Court cannot look into as it would entail going into factual matters on which the finding of
negligence was based. [emphasis ours; italics supplied]
We clarify that the petitioners filed a petition for certiorari under Rule 65 of the Rules of Court
before the CA. Both the petitioners and the CA have confused Rule 45 and Rule 65. In several
Supreme Court cases,29 we have clearly differentiated between a petition for review on certiorari
under Rule 45 and a petition for certiorari under Rule 65. A petition for review on certiorari under
Rule 45 is an appeal from a ruling of a lower tribunal on pure questions of law. 30 It is only in
exceptional circumstances31 that we admit and review questions of fact.
A question of law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts. For a question to be one of law, the question must not involve an examination of the
probative value of the evidence presented by the litigants or any of them. The resolution of the
issue must rest solely on what the law provides on the given set of circumstances. Once it is
clear that the issue invites a review of the evidence presented, the question posed is one of
fact.32
Thus, the test of whether a question is one of law or of fact is not the appellation given to such
question by the party raising the same; rather, it is whether the appellate court can determine
the issue raised without reviewing or evaluating the evidence, in which case, it is a question of
law; otherwise it is a question of fact. 33
On the other hand, a petition for certiorari under Rule 65 is a special civil action, an original
petition confined solely to questions of jurisdiction because a tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without jurisdiction or in excess of jurisdiction or with
grave abuse of discretion amounting to lack of jurisdiction. 34
The petition before us involves mixed questions of fact and law. The issues of whether Baas
occupied a position of trust and confidence, or was routinely charged with the care and custody
of the employers money or property, and whether Baas was grossly and habitually neglectful of
his duties involve questions of fact which are necessary in determining the legal question of
whether Baas termination was in accordance with Article 282 of the Labor Code.
We will only touch these factual issues in the course of determining whether the CA correctly
ruled whether or not the NLRC committed grave abuse of discretion in the process of deducing its
conclusions from the evidence proffered by the parties. In reviewing in this Rule 45 petition the
CAs decision on a Rule 65 petition, we will answer the question: Did the CA correctly determine
whether the NLRC committed grave abuse of discretion in ruling on this case? 35
Baas did not occupy a position of
trust and confidence nor was he in
charge of the care and custody of
Century Irons money or property
The CA properly affirmed the NLRCs ruling that Baas was a rank-and-file employee who was not
charged with the care and custody of Century Irons money or property. The ruling of the CA,
finding no grave abuse of discretion in the LA and the NLRC rulings and are supported by
substantial evidence, is, to our mind, correct. The evidence on record supports the holding that
Baas was an ordinary employee. There is no indication that the NLRCs decision was unfair or
arbitrary. It properly relied on Century Irons numerous memoranda 36 where Baas was identified

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as an inventory clerk. It correctly observed that Century Iron unequivocably declared that Baas
was an inventory clerk in its July 29, 2002 termination report with the Department of Labor and
Employment.37 Moreover, as the NLRC judiciously pointed out, Century Iron failed to present the
Contract of Employment or the Appointment Letter, the best evidence that would show that
Baas was an inventory comptroller.
Since Baas was an ordinary rankand-file employee, his termination
on the ground of loss of confidence
was illegal
Since Baas did not occupy a position of trust and confidence nor was he routinely in charge with
the care and custody of Century Irons money or property, his termination on the ground of loss
of confidence was misplaced.
We point out in this respect that loss of confidence applies to: (1) employees occupying positions
of trust and confidence, the managerial employees; and (2) employees who are routinely
charged with the care and custody of the employers money or property which may include rankand-file employees. Examples of rank-and-file employees who may be dismissed for loss of
confidence are cashiers, auditors, property custodians, or those who, in the normal routine
exercise of their functions, regularly handle significant amounts of money or property. 38 Thus, the
phrasing of the petitioners second assignment of error is inaccurate because a rank-and-file
employee who is routinely charged with the care and custody of the employers money or
property may be dismissed on the ground of loss of confidence.
Baas was grossly and habitually
neglectful of his duties
With respect to Century Irons assertion that Baas was grossly and habitually neglectful of his
duties, the CA erred in ruling that the NLRC did not commit grave abuse of discretion in
concluding that the dismissal was illegal. The NLRCs finding that there was illegal dismissal on
the ground of gross and habitual neglect of duties is not supported by the evidence on record. It
believed in Baas bare and unsubstantiated denial that he was not grossly and habitually
neglectful of his duties when the record is replete with pieces of evidence showing the contrary.
Consequently, the NLRC capriciously and whimsically exercised its judgment by failing to
consider all material evidence presented to it by the petitioners and in giving credence to Baas
claim which is unsupported by the evidence on record. 39
Baas self-serving and unsubstantiated denials cannot defeat the concrete and overwhelming
evidence submitted by the petitioners. The evidence on record shows that Baas committed
numerous infractions in his one year and eleven-month stay in Century Iron. On October 27,
2000, Century Iron gave Baas a warning for failing to check the right quantity of materials
subject of his inventory.40 On December 29, 2000, Baas went undertime. 41 On January 2, 2001,
Baas incurred an absence without asking for prior leave. 42 On August 11, 2001, he was warned
for failure to implement proper warehousing and housekeeping procedures. 43 On August 21,
2001, he failed to ensure sufficient supplies of oxygen-acetylene gases during business hours. 44
On November 15, 2001, Baas was again warned for failing to secure prior permission before
going on leave.45 In May 2002, Century Irons accounting department found out that Baas made
double and wrong entries in his inventory. 46
Article 282 of the Labor Code provides that one of the just causes for terminating an employment
is the employees gross and habitual neglect of his duties. This cause includes gross inefficiency,
negligence and carelessness. 47 "Gross negligence connotes want or absence of or failure to
exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard
of consequences without exerting any effort to avoid them. Fraud and willful neglect of duties
imply bad faith of the employee in failing to perform his job, to the detriment of the employer
and the latters business. Habitual neglect, on the other hand, implies repeated failure to perform
one's duties for a period of time, depending upon the circumstances." 48
To our mind, such numerous infractions are sufficient to hold him grossly and habitually
negligent.1wphi1 His repeated negligence is not tolerable. The totality of infractions or the
number of violations he committed during his employment merits his dismissal. Moreover, gross
and habitual negligence includes unauthorized absences and tardiness, 49 as well as gross

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inefficiency, negligence and carelessness. 50 As pronounced in Valiao v. Court of Appeals, 51 "fitness
for continued employment cannot be compartmentalized into tight little cubicles of aspects of
character, conduct, and ability separate and independent of each other."
Besides, the determination of who to keep in employment and who to dismiss for cause is one of
Century Iron's prerogatives. Time and again, we have recognized that the employer has the right
to regulate, according to its discretion and best judgment, ell aspects of employment, including
work assignment, working methods, processes to be followed, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline, dismissal and recall of
workers.52 It would be the height of injustice if we force an employer to retain the services of an
employee who does not value his work.
In view of all the foregoing, we find the petition meritorious.
WHEREFORE, premises considered, we hereby GRANT the petition. The assailed decision and
resolution of the Court of Appeals are REVERSED and SET ASIDE. The complaint for illegal
dismissal is DISMISSED for lack of merit. Costs against respondent Eleto B. Baas.
SO ORDERED.

179
G.R. Nos. 141702-03
August 2, 2001
CATHAY PACIFIC AIRWAYS, LTD., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MARTHA Z. SINGSON, respondents.
BELLOSILLO, J.:
This petition for review on certiorari seeks to set aside the 20 September 1999 Decision 1 of the
Court of Appeals declaring respondent Martha Z. Singson illegally dismissed by petitioner Cathay
Pacific Airways, Ltd., and thus should be reinstated with full back wages and awarded moral as
well as exemplary damages.
This petition traces its origin to two (2) petitions for certiorari under Rule 65 initially filed with
Supreme Court: Martha Z. Singson v. National Labor Relations Commission (NLRC) and Cathay
Pacific Airways Ltd., SP Case No. 52104, and Cathay Pacific Airways, Ltd. V. National labor
Relations Commission and Martha Z. Singson, SP Case No. 52105, which were consolidated 2 and
referred3 to the Court of Appeals in consonance with the St. Martin Funeral Homes doctrine.
Cathay Pacific Airways, Ltd. (CATHAY), is an international airline company engaged in providing
international flight services while Martha Z. Singson was a cabin attendant of CATHAY hired in the
Philippines on 24 September 1990 with home base in Hongkong.
On 26 August 1991 Singson was scheduled on a five (5)-day flight to London but was unable to
take the flight as she was feeling fatigued and exhausted from her transfer to a new apartment
with her husband. On 29 August 1991 she visited the company doctor, Dr. Emer Fahy, who
examined and diagnosed her to be suffering from a moderately severe asthma attack. She was
advised to take a Ventolin nebulizer and increase the medication she was currently taking, an
oral Prednisone (steroid). Dr. Fahy thereafter conveyed to Dr. John G. Fowler, Principal Medical
Officer, her findings regarding Singson's medical condition as a result of which she was evaluated
as unfit for flying due to her medical condition.
On 3 September 1991 Singson again visited Dr. Fahy during which time the latter declared her
condition to have vastly improved. However, later that day, Cabin Crew Manager Robert J.
Nipperess informed Singson that CATHAY had decided to retire her on medical grounds effective
immediately based on the recommendation of Dr. Fowler and Dr. Fahy.
Martha Z. Singson was surprised with the suddenness of the notification but nonetheless
acknowledged it. Later, she met with Nipperess and inquired of possible employment that
entailed only ground duties within the company. She was advised to meet with certain personnel
who knew of the employment requirements in other departments in the company, and to await a
possible offer from the company.
On 20 December 1991 Singson filed before the Labor Arbiter a complaint against CATHAY for
illegal dismissal, with prayer for actual, moral and exemplary damages and attorney's fees.
Efforts on initial settlement having failed, trial followed.
Robert J. Nipperess and Dr. John G. Fowler appeared as witnesses for CATHAY. Nipperess
confirmed that the decision to retire respondent was made upon the recommendation of Dr.
Fowler. In turn, Dr. Fowler testified that the affliction of respondent with asthma rendered her
unfit to fly as it posed aviation risks, i.e., asthma disabled her from properly performing her cabin
crew functions, specifically her air safety functions.
On the other hand, Singson presented herself and Dr. Benjamin Lazo, a doctor in the country
specializing in internal medicine and pulmonary diseases. She denied being afflicted with asthma
at any point in her life, while Dr. Lazo confirmed the same declaring that at the time of his
examination of Singson he found her to be of normal condition.
On the basis of the evidence presented before him, Labor Arbiter Pablo C. Espiritu Jr. declared
CATHAY liable for illegal dismissal and ordered the airline to pay Singson HK$531,150.80
representing full back wages and privileges, HK$54,137.70 for undisputed benefits due her,
HK$100,000.00 as actual damages, HK$500.00 as moral damages, HK500.00 as exemplary
damages, and HK$168,528,85 as attorney's fees. Furthermore, CATHAY was ordered to reinstate
Singson to her former position as airline stewardess without loss of seniority rights, benefits and
privileges.
On 19 March 1993 CATHAY appealed the decision of the Labor Arbiter to the National Labor
Relations Commission. On 29 December 1994 the NLRC reversed the decision of the Labor

180
Arbiter and declared valid Singson's dismissal from service. 4 Relying on the testimony of Dr.
Fowler and the affidavit and medical records submitted by Dr. Fahy, admitted as newlydiscovered evidence, the NLRC found Singson to be indeed afflicted with asthma that rendered
her unfit to fly and perform cabin crew functions. Consequently, the NLRC withdrew the back
wages, moral and exemplary damages awarded to Singson for lack of factual or legal basis. It
however ordered CATHAY to retain her services as ground stewardess, with salaries and benefits,
noting that she had been reinstated therein since 12 March 1993. In turn, Singson was granted
the option to continue her employment with CATHAY.
Thereafter, both parties filed their respective motions for reconsideration 5 before the NLRC which
on 31 August 1995 were denied for lack of merit. Petitions for certiorari under Rule 65 were
subsequently filed by both parties before the Supreme Court which, after consolidation, were
referred to the Court of Appeals for resolution. 6
Meanwhile, pursuant to the decision of the NLRC, Singson was reinstated as cabin stewardess
with ground duties on 12 March 1993 pending the resolution of the petitions.
On 20 September 1999 the Court of Appeals reversed the ruling of the NLRC and reinstated the
decision of the Labor Arbiter declaring Singson to have been illegally terminated. The appellate
court anchored its judgment on the following findings: First, Dr. Fowler's opinion about Singson's
medical condition was based on the personal examination of Dr. Fahy, and not is own. The
appellate court held that a personal and prolonged examination of a patient was necessary and
crucial before he or she could be properly diagnosed as afflicted with asthma, 7 and thus Dr.
Fowler's expert opinion was unreliable and mere hearsay. Second, CATHAY disregarded Sec. 8,
Rule I, Book VI, of the Omnibus Rules Implementing the Labor Code8 which requires a certification
by a competent public health authority when disease is the reason for an employee's separation
from service, since it relied merely on the diagnosis of its company doctors, Dr. Fowler and Dr.
Fahy. Third, the NLRC erroneously relied on the affidavit executed by Dr. Fahy since she was not
personally presented as a witness to identify and testify on its contents. Fourth, respondent
passed the medical examination required of prospective flight cabin attendants, the International
Labor Organization's Occupational Health and Safety in Civil Aviation examination, prior to her
employment and found to be fit for flight-related service. Fifth, CATHAY failed to adequately
prove the health standards required in aviation, particularly the non-qualification of flight
attendants afflicted with asthma to flight-related service. 9
Consequently, the appellate court awarded respondent full back wages with reinstatement, as
well as moral and exemplary damages, while deleting the award of actual damages, while
deleting the award of actual damages reasoning that no undue damage inured to her since her
husband nonetheless remained in Hongkong managing two (2) corporations. The appellate court
however declared the option given to respondent to continue her employment as a ground
stewardess with CATHAY to have been erroneously issued and consequently nullified the same.
CATHAY now argues that the Court of Appeals should have confined its inquiry to issues of want
or excess of jurisdiction and grave abuse of discretion and not into the factual findings of the
NLRC since the petition before it was made under Rule 65.
This Court is not persuaded. CATHAY's petition for certiorari filed before the Court of Appeals
assailed specifically the judgment of the NLRC granting respondent the choice to continue her
employment with CATHAY as ground stewardess as, in fact, she had been reinstated as such
since 12 March 1993. On the other hand, respondent's petition attacked the NLRC decision
declaring her dismissal valid and nullifying the award of damages in her favor on the basis of Dr.
Fowler's testimony and not Dr. Lazo's. Consequently, it was inevitable for the Court of Appeals to
examine the evidence anew to determine whether the factual findings of the NLRC were
supported by the evidence presented and the conclusions derived therefrom accurately
ascertained. As pointed out by the appellate court, this became even more essential in view of
the fact that there was a conflict of decision between the Labor Arbiter and the NLRC. We thus
find no error in the appellate court's evaluation of the evidence despite the pleadings being
petitions for certiorari under Rule 65.
CATHAY next argues that the Court of Appeals erred in not admitting as evidence the affidavit of
Dr. Fahy. We agree. The appellate court may have overlooked the principle in labor cases that the
rules of evidence prevailing in courts of law or equity are not always controlling. 10 It is not

181
necessary that affidavits and other documents presented conform to the technical rules of
evidence as the Court maintains a liberal stance regarding procedural deficiencies in labor
cases.11 Section 3, Rule V, of the New Rules of Procedure of the NLRC specifically allows parties
to submit position papers accompanied by all supporting documents including affidavits of their
respective witnesses which take the place of their testimonies. 12 Thus, the fact that Dr. Fahy was
not presented as witness to identify and testify on the contents of her affidavit was not a fatal
procedural flaw that affected the admissibility of her affidavit as evidence.
The non-presentation of Dr. Fahy during the trial was duly explained she was no longer
connected with CATHAY and had transferred residence to Ireland. It is for this same reason that
we find no error in the NLRC'' admission of Dr. Fahy's written medical notes as newly-discovered
evidence. Moreover, the submission of additional evidence before the NLRC is not prohibited by
the New Rules of Procedure of the NLRC, such submissions not being prejudicial to the party for
the latter could submit counter-evidence. 13
Notwithstanding the foregoing, we find Singson to have been illegally dismissed from the service.
Granting without admitting that indeed respondent was suffering from asthma, this alone would
not be a valid ground for CATHAY to dismiss her summarily. Section 8, Rule I, Book VI, of the
Omnibus Rules Implementing the Labor Code requires a certification by a competent public
health authority that the disease is of such nature or at such a stage that it cannot be cured
within a period of six (6) months even with proper medical treatment.
In the instant case, no certification by a competent public health authority was presented by
CATHAY. It dismissed Singson based only on the recommendation of its company doctors who
concluded that she was afflicted with asthma. It did not likewise show proof that Singson's
asthma could not be cured in six (6) months even with proper medical treatment. On the
contrary, when Singson returned to the company clinic on 3 September 1991 or five (5) days
after her initial examination on 29 August 1991, Dr. Fahy diagnosed her condition to have vastly
improved.
CATHAY could not take refuge in Clause 22 of the Conditions of Service it entered into with
Singson. Although a certification by a competent public health authority is not required, still
CATHAY is obliged to follow several steps under the Conditions of Service before terminating its
employee. The pertinent part of Clause 22 thereof provides
Clause 22. Sick Leave. x x x x In case of serious illness the Company will grant sick
leave with full pay for the first three months and with 2/3 of pay for the fourth
month. Consideration will be given to granting the cabin crew further sick leave,
either with pay or off pay up to a further two months, or retiring the cabin crew on
medical ground x x x x
Thus, even on the assumption that asthma is a serious illness, this again would not excuse
CATHAY from ignoring the procedure specified in its employment contract with Singson. Under
the contract, CATHAY must first allow Singson to take a leave of absence and not to terminate
her services right there and then. It is only after the employee has enjoyed four (4) months of
sick leave that the option to retire the employee based on medical ground arises. In the instant
case, Singson went to the company clinic on 29 August 1991. On 3 September 1991 she returned
to the company clinic only to be told that "effective immediately" she was dismissed on medical
grounds.
We agree with the Court of Appeals in its award of moral and exemplary damages to respondent.
CATHAY summarily dismissed Singson from the service based only on the recommendation of its
medical officers, in effect, failing to observe the provision of the Labor Code which requires a
certification by a competent public health authority. Notably, the decision to dismiss Singson was
reached after a single examination only. CATHAY's medical officers recommended Singson's
dismissal even after having diagnosed her condition to have vastly improved. It did not make
even a token offer for Singson to take a leave of absence as what it provided in its Contract of
Service. CATHAY is presumed to know the law and the stipulation in its Contract to Service with
Singson.
WHEREFORE, the Decision of the Court of Appeals dated 20 September 1999 declaring the
dismissal of respondent Martha Z. Singson by petitioner CATHAY PACIFIC AIRWAYS, LTD. as illegal
and ordering her reinstatement to her former or an equivalent position without loss of seniority

182
rights, with full back wages and benefits, and to pay her HK$500.00 as moral damages,
HK$500.00 as exemplary damages plus ten percent (10%) of the total monetary award as
attorney's fees, is AFFIRMED. The amounts received by respondent representing her six (6)
months retirement gratuity and one (1) month pay in lieu of notices should be DEDUCTED from
respondent's computed back wages, with costs against petitioner.
SO ORDERED.1wphi1.nt