GARCIA V. PHILIPPINE AIRLINES, INC.

(PAL)

Counsel for Petitioners: Rolando Go, Jr.
Counsel for Respondents: Bienvenido T. Jamoralin, Jr.

FACTS:

PAL dismissed Juanito Garcia and Alberto Dumago (collectively, Employees) for violating the
PAL Code of Discipline when they were caught using drugs in company premises. The
Employees filed a complaint for illegal dismissal with the Labor Arbiter. In the meantime, the
Securities and Exchange Commission placed PAL under an Interim Rehabilitation Receiver. On
31 January 1999, The Labor Arbiter ruled in the Employees favor and ordered immediate
compliance with the reinstatement aspect of its decision. On 7 June 1999, PAL was placed under
a Permanent Rehabilitation Receiver. Upon PALs appeal, the National Labor Relations
Commission (NLRC) reversed the Labor Arbiters decision in a resolution dated 31 January
2000. The subsequent Motion for Reconsideration was denied and, on 13 July 2000, entry of
judgment was issued.

On 5 October 2000, the Labor Arbiter issued a writ of execution as to the reinstatement aspect of
its previous decision. Subsequently, he issued a notice of garnishment. While moving to quash
both the writ and the notice, PAL likewise filed a petition for injunction with the NLRC. The
NLRC affirmed the validity of the writ and the notice but suspended their enforcement and
referred them to the Rehabilitation Receiver. Upon PALs appeal, the Court of Appeals nullified
the NLRC resolutions on two grounds: (1) a subsequent finding of a valid dismissal removes
the basis for implementing the reinstatement aspect of a labor arbiters decision, and (2) the
impossibility to comply with the reinstatement order due to corporate rehabilitation provides a
reasonable justification for the failure to exercise the options under Article 223 of the Labor
Code. Upon Employees petition for review, the Supreme Courts Second Division partially
granted the petition by suspending the proceedings on the ground that Employees claim is a
money claim suspended pending PALs corporate rehabilitation proceedings. PAL subsequently
informed the Supreme Court of its exit from rehabilitation proceedings.

ISSUE:

(1) Whether Employees were entitled to wages corresponding to the period pending their appeal
to the NLRC, despite the subsequent reversal of the Labor Arbiters decision by the NLRC.

(2) Whether enforcement can still be effected despite the delay caused the corporate
rehabilitation proceedings.

HELD (EN BANC) (CARPIO MORALES, J.):

(1) Employees are entitled to reinstatement or wages corresponding to the period pending
their appeal to the NLRC, despite the subsequent reversal of the Labor Arbiters
decision by the NLRC. The relevant provision is Article 223 of the Labor Code, which
states that a Labor Arbiters order to reinstate is immediately executory pending appeal,
which cannot be stayed even if the employer posts a bond. The employer has the option of
actual or payroll reinstatement.
1


The Court affirmed the prevailing jurisprudential principle interpreting this provision to
mean that, unless a restraining order is issued, the reinstatement order (and, consequently, the
payment of wages) is mandatory on the employer during the period of appeal until reversal
by the higher court,
2
without need for reimbursement by the employee in the event of
reversal, especially if he actually rendered services.
3
The Court found Genuino v. NLRC
which accorded the employer the right to require a refund of the salaries received from
payroll reinstatement pending appeal or its deduction from accrued benefits the employee is
entitled to
4
to be a stray decision, whose underlying reasoning is contrary to the rationale
of reinstatement pending appeal.
5


The Court ruled that [t]he social justice principles of labor law outweigh or render
inapplicable the civil law doctrine of unjust enrichment. To rule in favor of the Genuino
refund doctrine would unduly prejudice labor (i.e. the amount received pending appeal better
left unused or refused as it requires the employee to refund the amount meant to help him
make ends meet during the pendency of the appeal) and unduly favor management (i.e. the
salaries merely serving as a bond posted in installment, without the employer needing to
spend for bond premiums).


1
LABOR CODE, art. 223, 3 (emphasis supplied).
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, pending appeal. The employee shall either be
admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in
the payroll. The posting of a bond by the employer shall not stay the execution
for reinstatement provided herein.
2
Air Philippines Corporation v. Zamora, G.R. No. 148247, Aug. 7, 2006.
3
Air Philippines Corporation v. Zamora, G.R. No. 148247, Aug. 7, 2006. The Court cites cases where payroll-
reinstated employees were not required to refund salaries received despite the reversal of the orders for
reinstatement. Composite Enterprises, Inc. v. Caparoso, G.R. No. 159919, Aug. 8, 2007; Kimberly Clark (Phils),
Inc. v. Facundo, G.R. No. 144885, July 26, 2006 (unsigned resolution); Sanchez v. NLRC, G.R. No. 124348, Feb.
7, 2001 (unsigned resolution); International Container Terminal Services, Inc. v. NLRC, 360 Phil. 527 (1998).
4
Genuino v. NLRC, G.R. Nos. 142732-33, Dec. 4, 2007. The Court, however, ruled that an employee actually
reinstated pending appeal is entitle to compensation for actual services without need of refund. It must be noted
that the Court found that the employee was neither reinstated
5
Roquero v. Philippine Airlines, G.R. No. 152329, Apr. 22, 2003 (citing Aris (Phil.) Inc. v. NLRC, G.R. No. 90501,
Aug. 5, 1991).
Then, by and pursuant to the same power (police power), the State may
authorize an immediate implementation, pending appeal, of a decision
reinstating a dismissed or separated employee since that saving act is designed
to stop, although temporarily since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival or even the life of the
dismissed or separated employee and his family.
The argument that a writ of execution must be procured prior to the reversal of the order for
reinstatement is tenuous. Jurisprudence has established that to require a writ of execution
would be contrary to the immediately executory nature of the reinstatement order.
6


In sum, the Court ruled that the immediately executory nature of the order of reinstatement
requires the employer to choose between actual or payroll reinstatement. Failure to exercise
the options requires in the mandatory payment of the employees salaries.
7


(2) Employees are barred from collecting the accrued wages after the NLRCs reversal
because the delay in enforcing the reinstatement pending appeal was caused by
corporate rehabilitation proceedings. An employee may be barred from collecting accrued
wages after reversal of the order for reinstatement, if it is shown that the delay in
enforcing the reinstatement pending appeal was without fault on the part of the
employer.
8
The two-fold test requires that (a) there must be actual delay or the fact that the
order of reinstatement pending appeal was not executed prior to its reversal; and (b) the
delay must not be due to the employers unjustified act or omission. Jurisprudence has
established that enforcement of an order for reinstatement is mandatory unless there is a
restraining order.
9
The suspension of all claims upon appointment of a rehabilitation receiver
partakes of the nature of a restraining order that constitutes a legal justification for [PAL]s
non-compliance with the reinstatement order. PALs obligation to pay wages pending
appeal did not attach as a result of its justified failure to choose between actual reinstatement
and payroll reinstatement.

SEPARATE OPINIONS:

QUISUMBING, J.

(1) Employees are entitled to wages corresponding to the period pending their appeal to the
NLRC, despite the subsequent reversal of the Labor Arbiters decision by the NLRC.

The principle of unjust enrichment is not applicable. First, reinstatement pending appeal, in
accordance with the social justice philosophy of the Constitution, if for the full protection of
labor, aiming to alleviate a continuing threat or danger to the survival or even the life of the
dismissed employee and his family.
10
Second, unjust enrichment, a general law, must give
way to reinstatement pending appeal, a special law.


6
Panuncillo v. CAP Philippines, G.R. No. 161305, Feb. 9, 2007 (citing Pioneer Texturing Corporation v. NLRC,
345 Phil. 1057 (1997)).
7
See Kimberly Clark (Phils), Inc. v. Facundo, G.R. No. 144885, July 26, 2006 (unsigned resolution).
8
The Court cited cases where the employer attempted to evade or delay the execution. See Panuncillo v. CAP
Philippines, Inc., G.R. No. 161305, Feb. 9, 2007; Air Philippines Corporation v. Zamora, G.R. No. 148247, Aug.
7, 2006; Composite Enterprises, Inc. v. Caparoso, G.R. No. 159919, Aug. 8, 2007; Kimberly Clark (Phils), Inc. v.
Facundo, G.R. No. 144885, July 26, 2006 (unsigned resolution); Roquero v. Philippine Airlines, G.R. No.
152329, Apr. 22, 2003.
9
Roquero v. Philippine Airlines, G.R. No. 152329, Apr. 22, 2003.
10
See Aris (Phil.) Inc. v. NLRC, G.R. No. 90501, Aug. 5, 1991.
The reinstatement order is self-executory and does not require a writ of execution. Thus,
Enforcement cannot be barred on the argument that the Employees failed to enforce their
rights timely.

Failure to comply with reinstatement results in two reliefs: (a) payment of accrued salaries
and (b) citation for contempt, not just the latter. The 2006 NLRC Rules of Procedure directs
the employer to either actually reinstate or payroll reinstate the employee. Disobedience
results in exposure of the employer to a citation for contempt.

(2) Employees may still collect the accrued wages despite the delay caused by the
rehabilitation proceedings.

Corporate rehabilitation only stays pending actions or suspends payments; the corporation is
not relieved of its obligations. Otherwise the relief given to the employee would be nullified
when the law only sanctions suspension.

That PALs rehabilitation prevented it from choosing between actual or payroll reinstatement
is of no moment. The reinstatement order being self-executory, the Employees rights had
vested upon rendition by the Labor Arbiter.

PAL cannot argue against reinstatement pending appeal by citing substantial losses justifying
retrenchment, where these losses were not substantiated.
11
Corporate rehabilitation does not
necessarily signify substantial losses requiring retrenchment.

VELASCO, JR., J.

Employees are not entitled to, or are barred from collecting, accrued wages after the
NLRCs reversal because of their failure to obtain a writ of execution and the
implementation of the reinstatement prior to the reversal of the reinstatement order.

(a) The Employees must work for the release and implementation of a writ of execution pending
appeal. Paragraph 3 of Article 223 is procedural in nature and confers, at most, only the
right to execution of the reinstatement order pending appeal. It only dispenses with the
necessity for a motion for the issuance of the writ of execution, not the issuance of the writ
itself.
12
While it is mandatory for the Labor Arbiter to issue the writ, the employee must still

11
Flight Attendants and Stewards Association of the Philippines (FASAP) v. Philippine Airlines, Inc., G.R. No.
178083, July 22, 2008.
12
J. Velasco, Jr. cites the 2005 NLRC Revised Rules of Procedure as confirming this National Labor Relations
Commission, 2005 Revised Rules of Procedure, rule XI, sec. 6.
Section 6. Execution of Reinstatement Pending Appeal. In case the decision
includes an order of reinstatement, and the employer disobeys the directive
under the second paragraph of Section 14 of Rule V or refuses to reinstate the
dismissed employee, the Labor Arbiter shall immediately issue writ of
execution, even pending appeal, directing the employer to immediately reinstate
the dismissed employee either physically or in the payroll, and to pay the
accrued salaries as a consequence of such reinstatement at the rate specified in
the decision.
work its release and implementation. If unimplemented upon reversal due to the employees
inaction, he is not entitled to collect the wages; otherwise, the employers right to appeal the
Labor Arbiters decision would be nullified.

(b) Employees are required to return the salaries received under payroll reinstatement pending
appeal upon reversal of the reinstatement order.
13
Reinstatement pending appeal is a species
of execution pending appeal;
14
and, under Rule 39 of the Rules of Court, which applies
suppletorily,
15
in discretionary execution pending appeal, the prevailing party is obliged to
make restitution or reparation, as justice and equity may warrant, in case the executed
judgment is reversed on appeal.
16


(c) The NLRCs reversal removed the legal basis for the reinstatement. The employee must
prove his cause of action, i.e. illegal dismissal, before relief can be granted. Pending appeal,
the Labor Arbiters decision is the legal basis for the immediate execution of the
reinstatement order.
17
The non-implementation of the reinstatement prior to the reversal of
the order and its finality, bars the employee from the relief as there is no longer any legal
basis for the same.

(d) There is no legal basis for the payment of backwages for the period beginning from the
reinstatement order until its reversal. Article 223 is silent on the consequences of the non-
implementation of reinstatement pending appeal through the inaction of the employee, in the
event the reinstatement is set aside. Applying the plain-meaning rule, the law cannot be
extended to matters outside its scope.

(e) The only relief under the rules is compulsion of reinstatement through citation for contempt,
not the liability for backwages when reinstatement is not effected. While Pioneer Texturing
Corporation v. NLRC states that there is no need for the issuance of a writ of execution to
enforce reinstatement pending appeal, the Department of Labor and Employment has
rendered this procedure ineffective by providing for the issuance of the same under its rules
of procedure.
18
The 2005 NLRC Revised Rules of Procedure only allows the citation of the
employer in contempt if he disobeys the writ of execution, it does not provide for his liability
for backwages when reinstatement is not effected.


The Sheriff shall serve the writ of execution upon the employer or any other
person required by law to obey the same. If he disobeys the writ, such
employer or person may be cited for contempt in accordance with Rule IX.
13
Genuino v. NLRC, G.R. Nos. 142732-33, Dec. 4, 2007.
14
See Aris (Phil.) Inc. v. NLRC, G.R. No. 90501, Aug. 5, 1991.
15
National Labor Relations Commission, 2005 Revised Rules of Procedure, rule I, sec. 3.
16
RULES OF COURT, rule 39, sec. 5.
17
In Air Philippines Corporation v. Zamora, the appeal had not yet been resolved. Air Philippines Corporation v.
Zamora, G.R. No. 148247, Aug. 7, 2006.
18
National Labor Relations Commission, 2005 Revised Rules of Procedure, rule V, sec. 14 & rule XI, sec. 6;
National Labor Relations Commission, Rules of Procedure, rule VIII, sec. 3 (as amended by Resolution No. 01-
02, Series of 2002).
(f) Because PAL was justified in its failure to reinstate Employees, the latter should have
obtained a writ of execution to compel reinstatement. Pioneer neither stated that the
employer is liable for wages potentially earned during the appeal period for his unjustified
refusal to reinstate, nor that a writ of execution is no longer necessary in the event the
employer unjustifiably refuses to reinstate. Also, the illegal dismissal was upheld in that case.
A writ of execution is still required under the rules, as Article 223 only dispenses with the
filing of the motion for issuance of the writ and the presentation of evidence to justify its
issuance. PAL justifiably failed to reinstate Employees by reason of its corporate
rehabilitation. Employees should have obtained a writ of execution to compel reinstatement
and a citation for contempt in the event of PALs disobedience before the finality of the
reversal.

(g) If there is a justification for the refusal to reinstate, then the employer is not liable for the
payment of salaries during the appeal period.
19
Jurisprudence has ruled that reinstatement
pending appeal could be avoided if a strained employment relationship or an atmosphere of
antipathy and antagonism would ensue.
20
The refusal is justified in view of Employees
criminal act of using drugs, which could lead to contamination of other employees and
prejudicing the quality of work in a public service and utility company like PAL.

(h) The writ of execution must be issued prior to reversal. In the jurisprudence cited by the
majority opinion, the writ of execution was obtained during the pendency of the appeal.
These cases are not stare decisis to the issues at bar.

(i) To hold Employees are entitled to receive salaries potentially earned during the period of
appeal even after the case has been resolved against them with finality would result in unjust
enrichment.


BRION, J.

(1) Employees are entitled to wages corresponding to the period pending their appeal to the
NLRC, despite the subsequent reversal of the Labor Arbiters decision by the NLRC.

Under Article 223, the employer chooses between actual or payroll reinstatement in both
cases paying salaries without reimbursement in case of reversal for actual service rendered or
waived. Article 223s reinstatement pending appeal was enacted for the protection of labor
to account for the disadvantaged position of a worker deprived of his means livelihood
during the pendency of the appeal. The reinstatement aspect of Article 223 is self-executory,
needing no motion for, or the issuance of, a writ of execution. The NLRC rules leaves
enforcement with the employer, who must submit a compliance report within 10 days from
receipt of the decision, and a writ of execution is issued only upon his disobedience of the
writ. The employee is not tasked to actively seek reinstatement. If at all, only his refusal to

19
See Philippine Rabbit Bus Lines, Inc. v. NLRC, G.R. No. 122078, Apr. 21, 1999 (citing Medina v. Consolidated
Broadcating System (CBS)-DZWX, G.R. Nos. 99054-56, May 28, 1993) (emphasis supplied).
20
PT&T v. NLRC, G.R. No. 109281, Dec. 7, 1995; Equitable Banking Corporation v. NLRC, G.R. No. 102467,
June 13, 1997.
be reinstated or a waiver of this right on his part can disentitle him to what the law grants.
Prevailing jurisprudence is to the effect that despite reversal of the reinstatement order, the
dismissed employee is still entitled to accrued wages pending appeal.
21


J. Velasco, Jr.s arguments are not sufficiently persuasive. (a) Genuinos refund doctrine is a
stray decision. (b) Section 5 of Rule 39 refers to discretionary executions pending appeal and
is not applicable to the mandatory execution pending appeal under Article 223. (c) Article
223 grants a substantive, not a mere procedural, right that must be granted irrespective of
the presence of fault or lack of it on the part of the employer. (e) The silence of Article
223 on entitlement to wages pending appeal does not bar its existence, especially given the
provisions clear intent and the mandate that any doubt in the interpreting and implementing
the Labor Code should be construed in favor of labor.
22
(f) Prevailing jurisprudence has also
established that there can be no unjust enrichment pursuant to Article 22 of the Civil Code if
there is a legal basis for the situation complained of as unjust,
23
such as Article 233.

(2) Employees may collect the accrued wages due to PALs belated invocation of, or even
failure to invoke, the corporate rehabilitations suspension of claims. Contrary to the
majoritys view, corporate rehabilitation merely suspended the implementation of Article
223, but did not absolve PAL of its obligations under it. More importantly, PAL failed to
invoke the stay order to suspend Employees claim against it on the level of the Labor
Arbiter and, again, when it appealed the decision to the NLRC. Employees continued efforts
at reinstatement (i.e. letter to PAL, motion for the issuance of a writ of execution and to cite
PAL in contempt) were not opposed and the NLRC, in its resolutions, never indicated official
notice of the stay order. The burden was on PAL to actively assert the suspension of claims.
Its failure to assert the same raised the presumption of waiving the assertion of this right.
Further, its appeal to the NLRC was indicative of its active representation that suspension
was not necessary. The suspension of claims should apply to all proceedings. It cannot be
invoked to disregard reinstatement pending appeal, while simultaneously being discarded to
uphold PALs appeal to the NLRC and the NLRCs subsequent reversal of the Labor
Arbiters decision. Contrary to the majoritys view, the failure to effect reinstatement cannot
be ascribed to the Employees, but to PAL itself.




21
See Roquero v. Philippine Airlines, G.R. No. 152329, Apr. 22, 2003; International Container Terminal Services,
Inc. v. NLRC, G.R. No. 115452, Dec. 21, 1998; Kimberly Clark (Phils), Inc. v. Facundo, G.R. No. 144885, July
26, 2006 (unsigned resolution).
22
LABOR CODE, art. 4.
23
See Baje v. Court of Appeals, G.R. No. L-18783, May 25 1964; Commissioner of Internal Revenue v. Firemeans
Fund Insurance Co., G.R. No. 30644, Mar. 9, 1987.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 164856 August 29, 2007
JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners,
vs.
PHILIPPINE AIRLINES, INC., Respondent.
D E C I S I O N
QUISUMBING, J .:
This petition for review assails both the Decision
1
dated December 5, 2003 and the
Resolution
2
dated April 16, 2004 of the Court of Appeals in CA-G.R. SP No. 69540, which had
annulled the Resolutions
3
dated November 26, 2001 and January 28, 2002 of the National Labor
Relations Commission (NLRC) in NLRC Injunction Case No. 0001038-01, and also denied the
motion for reconsideration, respectively.
The antecedent facts of the case are as follows:
Petitioners Alberto J. Dumago and Juanito A. Garcia were employed by respondent Philippine
Airlines, Inc. (PAL) as Aircraft Furnishers Master "C" and Aircraft Inspector, respectively. They were
assigned in the PAL Technical Center.
On July 24, 1995, a combined team of the PAL Security and National Bureau of Investigation (NBI)
Narcotics Operatives raided the Toolroom Section Plant Equipment Maintenance Division (PEMD)
of the PAL Technical Center. They found petitioners, with four others, near the said section at that
time. When the PAL Security searched the section, they found shabu paraphernalia inside the
company-issued locker of Ronaldo Broas who was also within the vicinity. The six employees were
later brought to the NBI for booking and proper investigation.
On July 26, 1995, a Notice of Administrative Charge
4
was served on petitioners. They were allegedly
"caught in the act of sniffing shabu inside the Toolroom Section," then placed under preventive
suspension and required to submit their written explanation within ten days from receipt of the
notice.
Petitioners vehemently denied the allegations and challenged PAL to show proof that they were
indeed "caught in the act of sniffing shabu." Dumago claimed that he was in the Toolroom Section to
request for an allen wrench to fix the needles of the sewing and zigzagger machines. Garcia averred
he was in the Toolroom Section to inquire where he could take the Tracksters tire for vulcanizing.
On October 9, 1995, petitioners were dismissed for violation of Chapter II, Section 6, Article 46
(Violation of Law/Government Regulations) and Chapter II, Section 6, Article 48 (Prohibited Drugs)
of the PAL Code of Discipline.
5
Both simultaneously filed a case for illegal dismissal and damages.
In the meantime, the Securities and Exchange Commission (SEC) placed PAL under an Interim
Rehabilitation Receiver due to severe financial losses.
On January 11, 1999, the Labor Arbiter rendered a decision
6
in petitioners favor:
WHEREFORE, conformably with the foregoing, judgment is hereby rendered finding the
respondents guilty of illegal suspension and illegal dismissal and ordering them to reinstate
complainants to their former position without loss of seniority rights and other privileges.
Respondents are hereby further ordered to pay jointly and severally unto the complainants the
following:
Alberto J. Dumago - P409,500.00 backwages as of 1/10/99
34,125.00 for 13th month pay
Juanito A. Garcia - P1,290,744.00 backwages as of 1/10/99
107,562.00 for 13th month pay
The amounts of P100,000.00 and P50,000.00 to each complainant as and by way of moral and
exemplary damages; and
The sum equivalent to ten percent (10%) of the total award as and for attorneys fees.
Respondents are directed to immediately comply with the reinstatement aspect of this Decision.
However, in the event that reinstatement is no longer feasible, respondent[s] are hereby ordered, in
lieu thereof, to pay unto the complainants their separation pay computed at one month for [e]very
year of service.
SO ORDERED.
7

Meanwhile, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation
Receiver.
On appeal, the NLRC reversed the Labor Arbiters decision and dismissed the case for lack of
merit.
8
Reconsideration having been denied, an Entry of Judgment
9
was issued on July 13, 2000.
On October 5, 2000, the Labor Arbiter issued a Writ of Execution
10
commanding the sheriff to
proceed:
x x x x
1. To the Office of respondent PAL Building I, Legaspi St., Legaspi Village, Makati City or to
any of its Offices in the Philippines and cause reinstatement of complainants to their former
position and to cause the collection of the amount of [P]549,309.60 from respondent PAL
representing the backwages of said complainants on the reinstatement aspect;
2. In case you cannot collect from respondent PAL for any reason, you shall levy on the
office equipment and other movables and garnish its deposits with any bank in the
Philippines, subject to the limitation that equivalent amount of such levied movables and/or
the amount garnished in your own judgment, shall be equivalent to [P]549,309.60. If still
insufficient, levy against immovable properties of PAL not otherwise exempt from execution.
x x x x
11

Although PAL filed an Urgent Motion to Quash Writ of Execution, the Labor Arbiter issued a Notice
of Garnishment
12
addressed to the President/Manager of the Allied Bank Head Office in Makati City
for the amount of P549,309.60.
PAL moved to lift the Notice of Garnishment while petitioners moved for the release of the garnished
amount. PAL opposed petitioners motion. It also filed an Urgent Petition for Injunction which the
NLRC resolved as follows:
WHEREFORE, premises considered, the Petition is partially GRANTED. Accordingly, the Writ of
Execution dated October 5, 2000 and related [N]otice of Garnishment [dated October 25, 2000] are
DECLARED valid. However, the instant action is SUSPENDED and REFERRED to the Receiver of
Petitioner PAL for appropriate action.
SO ORDERED.
13

PAL appealed to the Court of Appeals on the grounds that: (1) by declaring the writ of execution and
the notice of garnishment valid, the NLRC gave petitioners undue advantage and preference over
PALs other creditors and hampered the task of the Permanent Rehabilitation Receiver; and (2)
there was no longer any legal or factual basis to reinstate petitioners as a result of the reversal by
the NLRC of the Labor Arbiters decision.
The appellate court ruled that the Labor Arbiter issued the writ of execution and the notice of
garnishment without jurisdiction. Hence, the NLRC erred in upholding its validity. Since PAL was
under receivership, it could not have possibly reinstated petitioners due to retrenchment and cash-
flow constraints. The appellate court declared that a stay of execution may be warranted by the fact
that PAL was under rehabilitation receivership. The dispositive portion of the decision reads:
WHEREFORE, premises considered and in view of the foregoing, the instant petition is
hereby GIVEN DUE COURSE. The assailed November 26, 2001 Resolution, as well as the January
28, 2002 Resolution of public respondent National Labor Relations Commission is
hereby ANNULLED and SET ASIDE for having been issued with grave abuse of discretion
amounting to lack or excess of jurisdiction. Consequently, the Writ of Execution and the Notice of
Garnishment issued by the Labor Arbiter are hereby likewise ANNULLED and SET ASIDE.
SO ORDERED.
14

Hence, the instant petition raising a single issue as follows:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
PETITIONERS ARE ENTITLED TO THEIR ACCRUED WAGES DURING THE PENDENCY OF
PALS APPEAL.
15

Simply put, however, there are really two issues for our consideration: (1) Are petitioners entitled to
their wages during the pendency of PALs appeal to the NLRC? and (2) In the light of new
developments concerning PALs rehabilitation, are petitioners entitled to execution of the Labor
Arbiters order of reinstatement even if PAL is under receivership?
We shall first resolve the issue of whether the execution of the Labor Arbiters order is legally
possible even if PAL is under receivership.
We note that during the pendency of this case, PAL was placed by the SEC first, under an Interim
Rehabilitation Receiver and finally, under a Permanent Rehabilitation Receiver. The pertinent law on
this matter, Section 5(d) of Presidential Decree (P.D.) No. 902-A, as amended, provides that:
SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to
hear and decide cases involving:
x x x x
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 of a rehabilitation receiver or] Management Committee created pursuant to
this Decree.
The same P.D., in Section 6(c) provides that:
SECTION 6. In order to effectively exercise such jurisdiction, the Commission shall possess the
following powers:
x x x x
c) To appoint one or more receivers of the property, real or personal, which is the subject of the
action pending before the Commission in accordance with the pertinent provisions of the Rules of
Court in such other cases whenever necessary in order to preserve the rights of the parties-litigants
and/or protect the interest of the investing public and creditors:Provided, finally, That upon
appointment of a management committee, rehabilitation receiver, board or body, pursuant to this
Decree, all actions for claims against corporations, partnerships or associations under management
or receivership pending before any court, tribunal, board or body shall be suspended accordingly.
x x x x
Worth stressing, upon appointment by the SEC of a rehabilitation receiver, all actions for claims
against the corporation pending before any court, tribunal or board shall ipso jure be suspended.
The purpose of the automatic stay of all pending actions for claims is to enable the rehabilitation
receiver to effectively exercise its/his powers free from any judicial or extra-judicial interference that
might unduly hinder or prevent the rescue of the corporation.
16

More importantly, the suspension of all actions for claims against the corporation embraces all
phases of the suit, be it before the trial court or any tribunal or before this Court.
17
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.
18

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.
19
No exception in favor of labor claims is mentioned in the law.
20
1avvphi 1
This Courts adherence to the above-stated rule has been resolute and steadfast as evidenced by its
oft-repeated application in a plethora of cases involving PAL, the most recent of which is Philippine
Airlines, Inc. v. Zamora.
21

Since petitioners claim against PAL is a money claim for their wages during the pendency of PALs
appeal to the NLRC, the same should have been suspended pending the rehabilitation proceedings.
The Labor Arbiter, the NLRC, as well as the Court of Appeals should have abstained from resolving
petitioners case for illegal dismissal and should instead have directed them to lodge their claim
before PALs receiver.
22

However, to still require petitioners at this time to re-file their labor claim against PAL under the
peculiar circumstances of the case that their dismissal was eventually held valid with only the
matter of reinstatement pending appeal being the issue this Court deems it legally expedient to
suspend the proceedings in this case.
WHEREFORE, the instant petition is PARTIALLY GRANTED in that the instant proceedings herein
are SUSPENDED until further notice from this Court. Accordingly, respondent Philippine Airlines,
Inc. is herebyDIRECTED to quarterly update the Court as to the status of its ongoing rehabilitation.
No costs.
SO ORDERED.





CAPITOL MEDICAL CENTER (CMC) v. MERIS,

FACTS: Petitioner closed its industrial service unit due to alleged loss and extinct demand resulting to the
termination of the employment of the respondent. The latter filed an illegal dismissal case but the same was
denied by the labor arbiter, and subsequently by the NLRC contending that the same is part of the management
prerogative.

ISSUE: W/N employer has the right to close its business even without basis resulting to the displacement of
the worker?

HELD: No. Employers are also accorded with rights and privileges to assure their self-determination and
independence and reasonable return of capital. This mass of privileges is called management prerogatives.
Although they may be broad and unlimited in scope, the State has the right to determine whether an employer's
privilege is exercised in a manner that complies with the legal requirements and does not offend the protected
rights of labor.

THIRD DIVISION



CAPITOL MEDICAL CENTER,
INC. and DR. THELMA
NAVARETTE-
CLEMENTE,
Petitioners,



- versus -



DR. CESAR E. MERIS,
Respondent.
G.R. No. 155098

Present:

PANGANIBAN,Chairman,
SANDOVAL- GUTIERREZ,
CORONA,
CARPIO MORALES, and
GARCIA, JJ.

Promulgated:

September 16, 2005


xx - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -xx




D E C I S I O N

CARPIO MORALES, J.:


Subject of the present appeal is the Court of Appeals
Decision
[1]
dated February 15, 2002 reversing the NLRC
Resolution
[2]
dated January 19, 1999 and Labor Arbiter Decision
[3]
dated April 28,
1998 which both held that the closure of the Industrial Service Unit of the
Capitol Medical Center, Inc., resulting to the termination of the services of herein
respondent Dr. Cesar Meris as Chief thereof, was valid.

On January 16, 1974, petitioner Capitol Medical Center, Inc. (Capitol) hired
Dr. Cesar Meris (Dr. Meris),
[4]
one of its stockholders,
[5]
as in charge of its
Industrial Service Unit (ISU) at a monthly salary of P10,270.00.

Until the closure of the ISU on April 30, 1992,
[6]
Dr. Meris performed dual
functions of providing medical services to Capitols more than 500 employees and
health workers as well as to employees and workers of companies having retainer
contracts with it.
[7]


On March 31, 1992, Dr. Meris received from Capitols president and
chairman of the board, Dr. Thelma Navarette-Clemente (Dr. Clemente), a notice
advising him of the managements decision to close or abolish the ISU and the
consequent termination of his services as Chief thereof, effective April 30,
1992.
[8]
The notice reads as follows:

March 31, 1992

Dr. Cesar E. Meris
Chief, Industrial Service Unit
Capitol Medical Center

Dear Dr. Meris:

Greetings!

Please be formally advised that the hospital management has decided
to abolish CMCs Industrial Service Unit as of April 30, 1992 in view of
the almost extinct demand for direct medical services by the private
and semi-government corporations in providing health care for their
employees. Such a decision was arrived at, after considering the
existing trend of industrial companies allocating their health care
requirements to Health Maintenance Organizations (HMOs) or thru a
tripartite arrangement with medical insurance carriers and designated
hospitals.

As a consequence thereof, all positions in the unit will be
decommissioned at the same time industrial services [are] deactivated.
In that event, you shall be entitled to return to your private practice as
a consultant staff of the institution and will become eligible to receive
your retirement benefits as a former hospital employee. Miss Jane
Telan on the other hand will be transferred back to Nursing Service for
reassignment at the CSR.

We wish to thank you for your long and faithful service to the
institution and hope that our partnership in health care delivery to our
people will continue throughout the future. Best regards.

Very truly yours,

(SGD.) DR. THELMA NAVARETTE-CLEMENTE
[9]
(Emphasis and
underscoring supplied)



Dr. Meris, doubting the reason behind the managements decision to close
the ISU and believing that the ISU was not in fact abolished as it continued to
operate and offer services to the client companies with Dr. Clemente as its head
and the notice of closure was a mere ploy for his ouster in view of his refusal to
retire despite Dr. Clementes previous prodding for him to do so,
[10]
sought
his reinstatement but it was unheeded.

Dr. Meris thus filed on September 7, 1992 a complaint against Capitol and
Dr. Clemente for illegal dismissal and reinstatement with claims for backwages,
moral and exemplary damages, plus attorneys fees.
[11]


Finding for Capitol and Dr. Clemente, the Labor Arbiter held that the
abolition of the ISU was a valid and lawful exercise of management prerogatives
and there was convincing evidence to show that ISU was being operated at a
loss.
[12]
The decretal text of the decision reads:


WHEREFORE, judgment is hereby rendered dismissing the
complaint. Respondents are however ordered to pay complainant all
sums due him under the hospital retirement plan.

SO ORDERED.
[13]
(Emphasis supplied)

On appeal by Dr. Meris, the National Labor Relations Commission (NLRC)
modified the Labor Arbiters decision. It held that in the exercise of Capitols
management prerogatives, it had the right to close the ISU even if it was not
suffering business losses in light of Article 283 of the Labor Code and
jurisprudence.
[14]


And the NLRC set aside the Labor Arbiters directive for the payment of
retirement benefits to Dr. Meris because he did not retire. Instead, it ordered the
payment of separation pay as provided under Article 283 as he was discharged
due to closure of ISU, to be charged against the retirement fund.
[15]


Undaunted, Dr. Meris elevated the case to the Court of Appeals via petition
for review
[16]
which, in the interest of substantial justice, was treated as one for
certiorari.
[17]


Discrediting Capitols assertion that the ISU was operating at a loss as the
evidence showed a continuous trend of increase in its revenue for three years
immediately preceding Dr. Meriss dismissal on April 30, 1992,
[18]
and finding that
the ISUs Analysis of Income and Expenses which was prepared long after Dr.
Meriss dismissal, hence, not yet available, on or before April 1992, was tainted
with irregular entries, the appellate court held that Capitols evidence failed to
meet the standard of a sufficient and adequate proof of loss necessary to justify
the abolition of the ISU.
[19]


The appellate court went on to hold that the ISU was not in fact abolished,
its operation and management having merely changed hands from Dr. Meris to
Dr. Clemente; and that there was a procedural lapse in terminating the services of
Dr. Meris, no written notice to the Department of Labor and Employment (DOLE)
of the ISU abolition having been made, thereby violating the requirement
embodied in Article 283.
[20]


The appellate court, concluding that Capitol failed to strictly comply with
both procedural and substantive due process, a condition sine qua non for the
validity of a case of termination,
[21]
held that Dr. Meris was illegally dismissed. It
accordingly reversed the NLRC Resolution and disposed as follows:

IN VIEW OF ALL THE FOREGOING, the assailed resolutions of the
NLRC are hereby set aside, and another one entered

1 declaring illegal the dismissal of petitioner as Chief of the Industrial
Service Unit of respondent Medical Center;

2 ordering respondents to pay petitioner

a) backwages from the date of his separation in April 1992 until
this decision has attained finality;

b) separation pay in lieu of reinstatement computed at the rate
of one (1) month salary for every year of service with a fraction of
at least six (6) months being considered as one year;

c) other benefits due him or their money equivalent;

d) moral damages in the sum of P50,000.00;

e) exemplary damages in the sum of P50,000.00; and

f) attorneys fees of 10% of the total monetary award payable to
petitioner.

SO ORDERED.
[22]



Hence, the present petition for review assigning to the appellate court the
following errors:

I

. . . IN OVERTURNING THE FACTUAL FINDINGS AND CONCLUSIONS OF
BOTH THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND THE
LABOR ARBITER.

II

. . . IN HOLDING, CONTRARY TO THE FINDINGS OF BOTH THE LABOR
ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION, THAT
THE INDUSTRIAL UNIT (ISU) WAS NOT INCURRING LOSSES AND THAT IT
WAS NOT IN FACT ABOLISHED.

III

. . . IN NOT UPHOLDING PETITIONERS MANAGEMENT PREROGATIVE TO
ABOLISH THE INDUSTRIAL SERVICE UNIT (ISU).

IV

. . . IN REQUIRING PETITIONERS TO PAY RESPONDENT BACKWAGES AS
WELL AS DAMAGES AND ATTORNEYS FEES.
[23]



Capitol questions the appellate courts deciding of the petition of Dr. Meris
on the merits, instead of merely determining whether the administrative bodies
acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

The province of a special civil action for certiorari under Rule 65, no doubt
the appropriate mode of review by the Court of Appeals of the NLRC
decision,
[24]
is limited only to correct errors of jurisdiction or grave abuse of
discretion amounting to lack or excess of jurisdiction.
[25]
In light of the merits of
Dr. Meris claim, however, the relaxation by the appellate court of procedural
technicality to give way to a substantive determination of a case, as this Court has
held in several cases,
[26]
to subserve the interest of justice, is in order.

Capitol argues that the factual findings of the NLRC, particularly when they
coincide with those of the Labor Arbiter, as in the present case, should be
accorded respect, even finality.
[27]


For factual findings of the NLRC which affirm those of the Labor Arbiter to
be accorded respect, if not finality, however, the same must be sufficiently
supported by evidence on record.
[28]
Where there is a showing that such findings
are devoid of support, or that the judgment is based on a misapprehension of
facts,
[29]
the lower tribunals factual findings will not be upheld.

As will be reflected in the following discussions, this Court finds that the
Labor Arbiter and the NLRC overlooked some material facts decisive of the instant
controversy.

Capitol further argues that the appellate courts conclusion that the ISU was
not incurring losses is arbitrary as it was based solely on the supposed increase in
revenues of the unit from 1989-1991, without taking into account the Analysis of
Income and Expenses of ISU from July 1, 1990 to July 1, 1991 which shows that
the unit operated at a loss;
[30]
and that the demand for the services of ISU
became almost extinct in view of the affiliation of industrial establishments with
HMOs such as Fortunecare, Maxicare, Health Maintenance, Inc. and Philamcare
and of tripartite arrangements with medical insurance carriers and designated
hospitals,
[31]
and the trend resulted in losses in the operation of the ISU.

Besides, Capitol stresses, the health care needs of the hospital employees
had been taken over by other units without added expense to it;
[32]
the appellate
courts decision is at best an undue interference with, and curtailment of, the
exercise by an employer of its management prerogatives;
[33]
at the time of the
closure of the ISU, Dr. Meris was already eligible for retirement under the
Capitols retirement plan; and the appellate court adverted to the alleged lack of
notice to the DOLE regarding Dr. Meriss dismissal but the latter never raised such
issue in his appeal to
the NLRC or even in his petition for review before the Court of Appeals, hence,
the latter did not have authority to pass on the matter.
[34]


Work is a necessity that has economic significance deserving legal
protection. The social justice and protection to labor provisions in the
Constitution dictate so.
Employers are also accorded rights and privileges to assure their self-
determination and independence and reasonable return of capital. This mass of
privileges comprises the so-called management prerogatives. Although they may
be broad and unlimited in scope, the State has the right to determine whether an
employers privilege is exercised in a manner that complies with the legal
requirements and does not offend the protected rights of labor. One of the rights
accorded an employer is the right to close an establishment or undertaking.

The right to close the operation of an establishment or undertaking is
explicitly recognized under the Labor Code as one of the authorized causes in
terminating employment of workers, the only limitation being that the closure
must not be for the purpose of circumventing the provisions on termination of
employment embodied in the Labor Code.

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

The phrase closures or cessation of operations of establishment or
undertaking includes a partial or total closure or cessation.
[35]


x x x Ordinarily, the closing of a warehouse facility and the termination
of the services of employees there assigned is a matter that is left to the
determination of the employer in the good faith exercise of its
management prerogatives. The applicable law in such a case is Article
283 of the Labor Code which permits closure or cessation of operation
of an establishment or undertaking not due to serious business losses
or financial reverses, which, in our reading includes both the complete
cessation of operations and the cessation of only part of a companys
business. (Emphasis supplied)


And the phrase closures or cessation x x x not due to serious business
losses or financial reverses recognizes the right of the employer to close or cease
his business operations or undertaking even if he is not suffering from serious
business losses or financial reverses, as long as he pays his employees their
termination pay in the amount corresponding to their length of service.
[36]





It would indeed be stretching the intent and spirit of the law if a court were
to unjustly interfere in managements prerogative to close or cease its business
operations just because said business operation or undertaking is not suffering
from any loss.
[37]
As long as the companys exercise of the same is in good faith to
advance its interest and not for the purpose of defeating or circumventing the
rights of employees under the law or a valid agreement, such exercise will be
upheld.
[38]


Clearly then, the right to close an establishment or undertaking may be
justified on grounds other than business losses but it cannot be an unbridled
prerogative to suit the whims of the employer.

The ultimate test of the validity of closure or cessation of establishment or
undertaking is that it must be bona fide in character.
[39]
And the burden of proving
such falls upon the employer.
[40]


In the case at bar, Capitol failed to sufficiently prove its good faith in closing
the ISU.

From the letter of Dr. Clemente to Dr. Meris, it is gathered that the abolition
of the ISU was due to the almost extinct demand for
direct medical service by the private and semi-government corporations in
providing health care for their employees; and that such extinct demand was
brought about by the existing trend of industrial companies allocating their
health care requirements to Health Maintenance Organizations (HMOs) or thru a
tripartite arrangement with medical insurance carriers and designated hospitals.

The records of the case, however, fail to impress that there was indeed
extinct demand for the medical services rendered by the ISU. The ISUs Annual
Report for the fiscal years 1986 to 1991, submitted by Dr. Meris to Dr. Clemente,
and uncontroverted by Capitol, shows the following:

Fiscal Year No. of Industrial No of No. of Capitol
Patients Companies Employees

1986-1987 466 11 1445
1987-1988 580 17 1707
1988-1989 676 14 1888
1989-1990 571 16 2731
1990-1991 759 18 2320
[41]



If there was extinct demand for the ISU medical services as what Capitol and
Dr. Clemente purport to convey, why the number of client companies of the ISU
increased from 11 to 18 from 1986 to 1991, as well as the number of patients
from both industrial corporations and Capitol employees, they did not explain.

The Analysis of Income and Expenses adduced by Capitol showing that the
ISU incurred losses from July 1990 to February 1992, to wit:

July 1, 1990 to July 1, 1991 to
June 30, 1991 February 29, 1992

INCOME P16, 772.00 P35, 236.00
TOTAL EXPENSES P225, 583.70 P169,244.34

NET LOSS P(208,811.70) P(134,008.34),
[42]


was prepared by its internal auditor Vicenta Fernandez,
[43]
a relative of Dr.
Clemente, and not by an independent external auditor, hence, not beyond
doubt. It is the financial statements audited by independent external auditors
which constitute the normal method of proof of the profit and loss performance
of a company.
[44]


At all events, the claimed losses are contradicted by the accounting records
of Capitol itself which show that ISU had increasing revenue from 1989 to 1991.

Year In-Patient Out-Patient Total Income

1989 P230,316.38 P 79,477.50 P309,793.88
1990 P278,438.10 P124,256.65 P402,694.75
1991 P305,126.35 P152,920.15 P458,046.50
[45]


The foregoing disquisition notwithstanding, as reflected above, the
existence of business losses is not required to justify the closure or cessation of
establishment or undertaking as a ground to terminate employment of
employees. Even if the ISU were not incurring losses, its abolition or closure could
be justified on other grounds like that proffered by Capitol extinct
demand. Capitol failed, however, to present sufficient and convincing evidence to
support such claim of extinct demand. In fact, the employees of Capitol
submitted a petition
[46]
dated April 21, 1992 addressed to Dr. Clemente opposing
the abolition of the ISU.

The closure of ISU then surfaces to be contrary to the provisions of the
Labor Code on termination of employment.

The termination of the services of Dr. Meris not having been premised on a
just or authorized cause, he is entitled to either reinstatement or separation pay if
reinstatement is no longer viable, and to backwages.

Reinstatement, however, is not feasible in case of a strained employer-
employee relationship or when the work or position formerly held by the
dismissed employee no longer exists, as in the instant case.
[47]
Dr. Meris is thus
entitled to payment of separation pay at the rate of one (1) month salary for
every year of his employment, with a fraction of at least six (6) months being
considered as one(1) year,
[48]
and full backwages from the time of his dismissal
from April 30, 1992 until the expiration of his term as Chief of ISU or his
mandatory retirement, whichever comes first.

The award by the appellate court of moral damages,
[49]
however, cannot be
sustained, solely upon the premise that the employer fired his employee without
just cause or due process. Additional facts must be pleaded and proven to
warrant the grant of moral damages under the Civil Code, such as that the act of
dismissal was attended by bad faith or fraud, or was oppressive to labor, or done
in a manner contrary to morals, good customs, or public policy; and of course,
that social humiliation, wounded feelings, grave anxiety, etc., resulted
therefrom.
[50]
Such circumstances, however, do not obtain in the instant case.
More specifically on bad faith, lack of it is mirrored in Dr. Clementes offer to Dr.
Meris to be a consultant of Capitol, despite the abolition of the ISU.

There being no moral damages, the award of exemplary damages does not
lie.
[51]


The award for attorneys fees, however, remains.
[52]


WHEREFORE, the decision of the Court of Appeals dated February 15,
2002 is hereby AFFIRMED with MODIFICATION. As modified, judgment is hereby
rendered ordering Capitol Medical Center, Inc. to pay Dr. Cesar Meris separation
pay at the rate of One (1) Month salary for every year of his employment, with a
fraction of at least Six (6) Months being considered as One (1) Year, full
backwages from the time of his dismissal from April 30, 1992 until the expiration
of his term as Chief of the ISU or his mandatory retirement, whichever comes
first; other benefits due him or their money equivalent; and attorneys fees.

Costs against petitioners.

SO ORDERED.





TIRAZONA v. PHILIPPINE EDS TECHNO-SERVICE (PET) INC
FACTS: The petitioner, a managerial employee who was holding a position of trust and confidence, was
admonished by the latter of her improper handling of a situation involving a rank-and-file employee. She
admitted having read a supposed confidential letter for the PET directors containing a legal opinion of the
respondent's counsel regarding the status of her employment. As a consequence, she was terminated for willful
breach of trust reposed upon by her employer. She claimed having been denied of due process.

ISSUE: Was her dismissal justified?

HELD: Yes. The petitioner has given the respondent more than enough reasons to distrust her. The arrogance
and hostility she has shown towards the company her stubborn uncompromising stance in almost all instances
justify the company's termination of her employment.




Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 169712 March 14, 2008
MA. WENELITA TIRAZONA, Petitioner,
vs.
COURT OF APPEALS, PHILIPPINE EDS-TECHNO SERVICE INC. (PET INC.) AND/OR KEN
KUBOTA, MAMORU ONO and JUNICHI HIROSE, Respondents.
D E C I S I O N
CHICO-NAZARIO, J .:
Assailed in this Special Civil Action for Certiorari
1
under Rule 65 of the Rules of Court are the
Decision
2
and Resolution
3
of the Court of Appeals dated 24 May 2005 and 7 September 2005,
respectively, in CA-G.R. SP No. 85065. The appellate courts Decision dismissed petitioner Ma.
Wenelita Tirazonas Special Civil Action forCertiorari and affirmed the Decision
4
dated 30 January
2004 of the National Labor Relations Commission (NLRC) in NLRC CA No. 034872-03, which ruled
that petitioners dismissal from employment was legal; and its Resolution which denied petitioners
Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
Private respondent Philippine EDS-Techno Services Inc. (PET) is a corporation duly registered
under Philippine laws and is engaged in the business of designing automotive wiring harnesses for
automobile manufacturers. Private respondents Ken Kubota, Mamoru Ono and Junichi Hirose are all
Japanese nationals, the first being the President and the latter two being the directors of PET.
On 21 July 1999, PET employed Ma. Wenelita S. Tirazona (Tirazona) as Administrative Manager.
Being the top-ranking Filipino Manager, she acted as the liaison between the Japanese
management and the Filipino staff.
On 15 January 2002, Fe Balonzo, a rank-and-file employee, wrote a letter
5
that was addressed to
nobody in particular, but was later acquired by PET management. In her letter, Balonzo complained
that Tirazona humiliated her while she was reporting back to work after recuperating from a bout of
tuberculosis. Balonzo explained that Tirazona insinuated, in a manner loud enough to be heard from
the outside, that Balonzo still had the disease. This allegedly occurred despite Balonzos possession
of a medical clearance that proved her fitness to return to work. Balonzo thus requested that the
necessary action be undertaken to address the said incident.
Upon receiving the letter, the PET management directed Tirazona to file her comment. Tirazona
replied accordingly in a letter
6
wherein she denied the accusations against her. Tirazona stated that
her only intention was to orient Balonzo about the latters rights as a sick employee, i.e., that under
the law, if the latter planned to resign, the company can give her separation pay. Tirazona likewise
asked for an independent investigation and threatened to file a libel case against Balonzo for
allegedly trying to destroy her reputation and credibility.
After weighing the situation, PET director Ono sent a memorandum to Tirazona, which reads:
February 8, 2002
To: Mrs. W. Tirazona
Re: Letter-Complaint of Fe S. Balonzo
This is to advise you that Management is satisfied that you did not intend to humiliate or embarrass
Ms. Balonzo during the incident on January 14, 2002. It also appreciates the concern you profess for
the welfare of PET employees.
Nonetheless, Management finds your handling of the situation less than ideal. Considering the
sensitive nature of the issue, a little more circumspection could have readily avoided the incident
which it cannot be denied caused unnecessary discomfort and hurt feelings to Ms. Balonzo.
Certainly, you could have discussed the matter in private and allowed her to first deliver her piece
rather than pre-empt her declaration. As it turned out, your assumption (that Ms. Balonzo would
request for a leave extension) was in fact wrong and she had a medical certificate attesting her
fitness to return to work.
Management therefore would like to remind you of the high expectations of your position.
Management considers this matter closed, and finds it appropriate to convey to you that it does not
view with favor your notice to file legal action. Management believes that you share the idea that
issues regarding employee relations are best threshed out within the Company. Resorting to legal
action is unlikely to solve but on the contrary would only exacerbate such problems.
We trust that, after emotions have calmed down, you would still see it that way.
(Sgd.)
Mamoru Ono
Director
7

On 6 March 2002, Tirazonas counsels sent demand letters
8
to PETs business address, directed
separately to Ono and Balonzo. The letter to Ono states:
February 27, 2002
MR. MAMORU ONO
Director
PET, Inc.
20/F 6788 Ayala Avenue
Oledan Square, Makati City
Dear Mr. Ono:
We are writing in [sic] behalf of our client, Ms. MA. WENELITA S. TIRAZONA, Administrative
Manager of your corporation.
We regret that on February 8, 2002, you delivered to our client a letter containing among others,
your conclusion that Ms. Tirazona was guilty of the unfounded and baseless charges presented by
Ms. Fe Balonzo in her letter-complaint dated January 15, 2002. You may please recall that in Ms.
Tirazonas letter to Mr. Junichi Hirose, she presented point by point, her side on the allegations
made by the complainant. In the same letter, Ms. Tirazona requested for an independent
investigation of the case in order to thresh out all issues, ferret out the truth and give her the
opportunity to be heard and confront her accuser. These were all denied our client.
As a result of the foregoing, Ms. Tirazonas constitutional right to due process was violated and
judgment was rendered by you on mere allegations expressed in a letter-complaint to an unknown
addressee.
Considering the position and stature of Mrs. Tirazona in the community and business circles, we are
constrained to formally demand payment of P2,000,000.00 in damages, injured feelings, serious
anxiety and besmirched reputation that she is now suffering.
We are giving you five (5) days from receipt hereof to make favorable response, otherwise, much to
our regret, we will institute legal procedures to protect our clients interests.
Please give this matter the attention it deserves.
Very truly yours,
PRINCIPE, VILLANO, VILLACORTA & CLEMENTE
By:
(Sgd.)
PEDRO S. PRINCIPE
(Sgd.)
GLICERIO E. VILLANO
The letter sent to Balonzo likewise sought the same amount of damages for her allegedly baseless
and unfounded accusations against Tirazona.
Because of Tirazonas obstinate demand for compensation, PET sent her a Notice of Charge,
9
which
informed her that they were considering her termination from employment by reason of serious
misconduct and breach of trust. According to the management, they found her letter libelous, since it
falsely accused the company of finding her guilty of the charges of Balonzo and depriving her of due
process.
On 26 March 2002, Tirazona explained in a letter
10
that her counsels demand letter was brought
about by the denial of her repeated requests for reinvestigation of the Balonzo incident, and that the
same was personally addressed to Mamoru Ono and not to the company. She also reiterated her
request for an investigation and/or an open hearing to be conducted on the matter.
The PET management replied
11
that the Balonzo incident was already deemed a closed matter, and
that the only issue for consideration was Tirazonas "ill-advised response to the Managements
disposition to the Fe Balonzo incident," for which an administrative hearing was scheduled on 4 April
2002.
On 3 April 2002, Tirazona submitted a written demand
12
to PET that the Balonzo incident be included
in the scheduled hearing. She further stated that since the management had already prejudged her
case, she would only participate in the proceedings if the investigating panel would be composed of
three employees, one each from the rank-and-file, supervisory, and managerial levels, plus a
representative from the Department of Labor and Employment (DOLE).
The PET management rejected Tirazonas demands in a letter
13
and informed her that the hearing
was reset to 10 April 2002, which would be presided by PETs external counsel.
On 10 April 2002, Tirazona and her counsel did not appear at the administrative hearing. The PET
management informed them through a memorandum
14
dated 12 April 2002 that the hearing was
carried out despite their absence. Nevertheless, Tirazona was granted a final chance to submit a
supplemental written explanation or additional documents to substantiate her claims.
Tirazonas written explanation
15
dated 17 April 2002 merely reiterated, without further details, her
previous claims, to wit: that Balonzos charges were unfounded and baseless; that she had been
denied due process; and that she would not submit herself to an investigating panel that had already
prejudged her case. Tirazona also stated that her claim for damages would be justified at the proper
forum, and that she admitted to reading a confidential letter addressed to PET directors Ono and
Fukuoka, containing the legal opinion of PETs counsel regarding her case.
After finding the explanations unsatisfactory, PET sent Tirazona a Notice of Termination,
16
which
found her guilty of serious misconduct and breach of trust because of her demand against the
company and her invasion of PETs right to privileged communication.
Tirazona then instituted with the NLRC a complaint for illegal dismissal, non-payment of salaries,
and damages against PET, docketed as NLRC-CA No. 034872-03.
In the Decision
17
dated 22 January 2003, Labor Arbiter Veneranda C. Guerrero ruled in favor of
Tirazona, holding that the latters termination from employment was illegal.
The Arbiter declared that there was no breach of trust when Tirazona sent the demand letter, as the
same was against Ono in his personal capacity, not against the company. The decision also ruled
that PET failed to discharge the burden of proving that the alleged breach of trust was fraudulent and
willful, and that the company was careless in handling its communications. The Arbiter further stated
that Tirazona was deprived of her right to due process when she was denied a fair hearing.
On appeal by PET, the NLRC reversed the rulings of the Labor Arbiter in a Decision dated 30
January 2004, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered SETTING ASIDE the Decision of the Labor Arbiter
dated January 27, 2003 and a new one is entered DISMISSING the complaint for lack of merit.
18

Contrary to the Labor Arbiters findings, the NLRC concluded that Tirazonas termination from
employment was in accordance with law. It ruled that Tirazonas demand letter addressed to Ono
constituted a just cause for dismissal, as the same was "an openly hostile act" by a high-ranking
managerial employee against the company.
19
The NLRC likewise found that PET complied with the
notice and hearing requirements of due process, inasmuch as Tirazonas demand for a special panel
was without any legal basis. Furthermore, petitioner breached the companys trust when she read
the confidential legal opinion of PETs counsel without permission.
The Motion for Reconsideration filed by Tirazona was denied by the NLRC in a Resolution dated 31
May 2004, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, Complainant-Appellees Motion for Reconsideration is
hereby DISMISSED for lack of merit and our Decision dated 30 January 2004 is thus AFFIRMED
with finality.
20

Aggrieved, Tirazona instituted with the Court of Appeals a Special Civil Action for Certiorari under
Rule 65, alleging grave abuse of discretion on the part of the NLRC, docketed as CA-G.R. SP No.
85065.
In a Decision dated 24 May 2005, the appellate court affirmed the NLRC and ruled thus:
WHEREFORE, in consideration of the foregoing, the petition is perforce dismissed.
21

Her Motion for Reconsideration having been denied by the appellate court in a Resolution dated 7
September 2005, Tirazona now impugns before this Court the Court of Appeals Decision dated 24
May 2005, raising the following issues:
I.
WHETHER THERE WAS BREACH OF TRUST ON THE PART OF PETITIONER TIRAZONA
WHEN SHE WROTE THE TWO MILLION PESO DEMAND LETTER FOR DAMAGES,
WARRANTING HER DISMISSAL FROM EMPLOYMENT.
II.
WHETHER DUE PROCESS WAS SUFFICIENTLY AND FAITHFULLY OBSERVED BY
RESPONDENTS IN THE DISMISSAL OF PETITIONER TIRAZONA FROM EMPLOYMENT.
In essence, the issue that has been brought before this Court for consideration is whether or not
Tirazona was legally dismissed from employment.
Prefatorily, the Court notes that Tirazona elevated her case to this Court via a Petition
for Certiorari under Rule 65 of the Rules of Court. The appropriate remedy would have been for
Tirazona to file an appeal through a Petition for Review on Certiorari under Rule 45.
For a Petition for Certiorari under Rule 65 of the Rules of Court to prosper, the following requisites
must be present: (1) the writ is directed against a tribunal, a board or an officer exercising judicial or
quasi-judicial functions: (2) such tribunal, board or officer has acted without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there
is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.
22

There is grave abuse of discretion "when there is a capricious and whimsical exercise of judgment
as is equivalent to lack of jurisdiction, such as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and it must be so patent and gross so as
to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act
at all in contemplation of law."
23

The Petition for Certiorari shall be filed not later than sixty (60) days from notice of the judgment,
order or resolution. In case a motion for reconsideration is timely filed, the sixty (60)-day period shall
be counted from notice of the denial of the said motion.
24

On the other hand, Rule 45 of the Rules of Court pertains to a Petition for Review
on Certiorari whereby "a party desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals x x x may file with the Supreme Court a verified petition for review
on certiorari. The petition shall raise only questions of law which must be distinctly set forth."
25

The petition shall be filed within fifteen (15) days from notice of the judgment or final order or
resolution appealed from, or of the denial of the petitioners motion for new trial or reconsideration
filed in due time after notice of the judgment.
26

In the present case, the assailed Decision is the dismissal by the Court of Appeals of Tirazonas
Petition forCertiorari under Rule 65. Said Decision partakes of the nature of a judgment or final
order, thus, is reviewable only through an appeal by certiorari under Rule 45.
As aptly declared by the Court in National Irrigation Administration v. Court of Appeals
27
:
[s]ince the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors
committed by it in the exercise of its jurisdiction would be errors of judgment which are
reviewable by timely appeal and not by a special civil action of certiorari. If the aggrieved party
fails to do so within the reglementary period, and the decision accordingly becomes final and
executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of his
deliberate inaction. [Emphasis ours.]
Even just a cursory glance at the issues raised by Tirazona before this Court readily reveals that
these pertain to purported errors of judgment committed by the appellate court in its appreciation of
the allegations, evidence, and arguments presented by the parties. There is no question here of the
Court of Appeals acting on Tirazonas Petition in CA-G.R. No. 85065 without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction.
A review of the rollo of the Petition at bar divulges even further that Tirazonas resort to a wrong
remedy was not an innocent mistake but a deliberate choice.
On 5 October 2005, Tirazona filed with this Court a Petition for Extension of Time to File a Petition
for Review onCertiorari.
28
Tirazona stated therein that she received the notice of the Court of
Appeals Resolution denying her Motion for Reconsideration on 23 September 2005. Since she only
had fifteen (15) days after the said date to file a Petition for Review on Certiorari, or until 8 October
2005, Tirazona prayed for an extension of thirty (30) days, with her counsel citing extreme pressures
of work.
In a Resolution
29
dated 19 October 2005, the Court granted Tirazonas Motion for Extension. The
extended period was to end on 7 November 2005. However, Tirazona failed to file a Petition for
Review on Certiorari within the said period. Instead, she filed the present Petition for Certiorari on 5
December 2005, seventy-three (73) days after notice of the Court of Appeals Resolution denying her
Motion for Reconsideration.
From the foregoing, it is fairly obvious that Tirazona was aware that she was supposed to file an
appeal through a Petition for Review on Certiorari under Rule 45. That she filed the instant Petition
for Certiorari under Rule 65 and only after an inexplicably long period of time leads to the
inescapable conclusion that the same was merely an afterthought, nothing more than a desperate
attempt to revive a lost appeal.
The special civil action of certiorari under Rule 65 is an independent action that cannot be availed of
as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45, especially if
such loss or lapse was occasioned by ones own neglect or error in the choice of remedies.
30
It also
bears to stress the well-settled principle that the remedies of appeal and certiorari are mutually
exclusive and not alternative or successive. Under Rule 56, Sec. 5(f) of the Revised Rules of Court,
a wrong or inappropriate mode of appeal merits an outright dismissal.
31

Tirazona, in her Reply
32
before this Court, even admits that although the instant Petition is one of
special civil action of certiorari under Rule 65, her petition is in reality an appeal under Rule 45 as
her petition raises pure questions of law. Tirazona herself acknowledges the formal defects of her
own Petition and attributes the same to the haste and inadvertence of her former counsel, who
allegedly prepared the instant Petition without her participation.
33
She thus urges this Court to
suspend the application of its own rules on grounds of equity and substantial justice, considering that
it is her employment that is at stake in this case.
In this regard, it needs to be emphasized that before the Court may treat the present petition as
having been filed under Rule 45, the same must comply with the reglementary period for filing an
appeal. This requirement is not only mandatory but also jurisdictional such that failure to do so
renders the assailed decision final and executory, and deprives this Court of jurisdiction to alter the
final judgment, much less to entertain the appeal.
34
Since the instant petition was filed after the lapse
of the extended period for filing an appeal, the same should be dismissed outright.
Nevertheless, the Court finds it essential that we discuss the case on its merits, bearing in mind that
the paramount consideration in this case is an employees right to security of tenure, and in order to
provide Tirazona the amplest opportunity to know how the Court arrived at a proper and just
determination of her case.
Even if the Court were to ignore the conspicuous procedural defects committed by Tirazona and
treat her Petition as an appeal under Rule 45, it still finds that the Petition must be denied for lack of
merit.
Petitioner contends that, contrary to the findings of the Court of Appeals, her dismissal from
employment was illegal for having lacked both a legal basis and the observance of due process.
In employee termination cases, the well-entrenched policy is that no worker shall be dismissed
except for a just or authorized cause provided by law and after due process. Clearly, dismissals
have two facets: first, the legality of the act of dismissal, which constitutes substantive due process;
and second, the legality in the manner of dismissal, which constitutes procedural due process.
35

Under Article 282(c)
36
of the Labor Code, loss of trust and confidence is one of the just causes for
dismissing an employee. It is an established principle that loss of confidence must be premised on
the fact that the employee concerned holds a position of trust and confidence. This situation obtains
where a person is entrusted with confidence on delicate matters, such as care and protection,
handling or custody of the employers property. But, in order to constitute a just cause for dismissal,
the act complained of must be "work-related" such as would show the employee concerned to be
unfit to continue working for the employer. Besides, for loss of confidence to be a valid ground for
dismissal, such loss of confidence must arise from particular proven facts.
37

Tirazona claims that her demand letter was merely an expression of indignation by a disgruntled
employee against a director, not against the company and, by itself, cannot constitute a breach of
trust and confidence. The companys notice of charge allegedly insinuated Tirazonas guilt in the
Balonzo incident; hence, the need to defend herself. Tirazona likewise asserts that she is an
ordinary rank-and-file employee as she is not vested with the powers and prerogatives stated in
Article 212(m)
38
of the Labor Code. As such, her alleged hostility towards her co-workers and the
PET management is not a violation of trust and confidence that would warrant her termination from
employment.
At the outset, the Court notes that the issues set forth above are factual in nature. As the Court is
asked to consider the instant Petition as an appeal under Rule 45, then only pure questions of law
will be entertained.
39

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 same 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.
40

In the instant case, Tirazona would have the Court examine the actual wording, tenor, and
contextual background of both her demand letter and the PETs notice of charge against her.
Similarly, the determination of whether Tirazona is a managerial or rank-and-file employee would
require the Court to review the evidence that pertains to Tirazonas duties and obligations in the
company. Also, in order to ascertain whether the breach of trust was clearly established against
Tirazona, the Court will have to sift through and evaluate the respective evidence of the parties as
well. These tasks are not for the Court to accomplish.
The Court is not a trier of facts. It is not the function of this Court to analyze or weigh evidence all
over again, unless there is a showing that the findings of the lower court are totally devoid of support
or are glaringly erroneous as to constitute palpable error or grave abuse of discretion.
41

In its assailed decision, the Court of Appeals affirmed the ruling of the NLRC and adopted as its own
the latters factual findings. Long established is the doctrine that findings of fact of quasi-judicial
bodies like the NLRC are accorded with respect, even finality, if supported by substantial evidence.
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.
42
Though this doctrine is not without
exceptions,
43
the Court finds that none are applicable to the present case.
Thus, on the matter of Tirazonas demand letter, this Court is bound by the following findings of the
Court of Appeals:
Clearly, petitioner Tirazonas letter to respondent Ono dated 27 February 2002, as DIRECTOR of
PET was addressed to an officer and representative of the corporation. The accusations in the
aforesaid demand letter were directed against respondent Onos official act as a representative of
respondent PET. Suffice it to stress, an attack on the integrity of his (Ono) corporate act is
necessarily aimed at respondent PET because a corporation can only act through its officers, agents
and representatives.
x x x x
A thorough and judicious examination of the facts and evidence obtaining in the instant case as
could be found in the records, would clearly show that petitioner Tirazona has absolutely no basis for
a P2 million demand, coupled with lawsuit if the same was not paid within the five (5) days [sic]
period. Her justification for the demand of money is that she was allegedly found by the respondent
PET through respondent Ono guilty of the charges filed by Ms. Balonzo. As the records would
indubitably show, petitioner Tirazona was never charged of any offense with respect to the Fe
Balonzos [sic] incident. She was never issued a Notice of Charge, much less a Notice of
Disciplinary Action. What was issued to her by respondent Ono in his letter x x x was a gentle and
sound reminder to be more circumspect in handling the incident or situation like this [sic]. As fully
evidenced in the last paragraph of the said letter, it states that:
x x x x
Management considers this matter closed, and finds it appropriate to convey to you that it does not
view with favor your notice to file legal action. Management believes that you share the idea that
issues regarding employee relations are best threshed out within the Company. Resorting to legal
action is unlikely to solve but on the contrary would only exacerbate such problems.
But for reasons only known to petitioner Tirazona, she treated respondent Onos letter as an affront
to her honor and dignity. This, instead of seeking a dialogue with respondent PET on her felt
grievance, petitioner Tirazona through her lawyer sent the questioned demand letter to respondent
Ono. Suffice it to state, this act of petitioner bared animosity in the company and was definitely not a
proper response of a top level manager like her over a trivial matter.
x x x x
In fine, the confluence of events and circumstances surrounding the petitioner Tirazonas actions or
omissions affecting her employers rights and interest, would undoubtedly show that she is no longer
worthy of being a recipient of the trust and confidence of her employer. x x x.
44

Likewise conclusive upon this Court is the Court of Appeals pronouncement that Tirazona is in fact
a managerial employee, to wit:
The records would indubitably show that it is only now that petitioner Tirazona is asserting that she is
not a managerial employee of respondent PET. From the very start, her dismissal was premised on
the fact that she is a managerial and confidential employee, and she never denied that fact. It was
never an issue at all before the Labor Arbiter and the public respondent NLRC. Therefore, she is
estopped to claim now that she is [just a] rank and file employee of respondent PET, especially that
she herself admitted in her pleading that she is a managerial employee:
x x x x
If the respondent Company has to protect Respondent Mamoru Ono, the Complainant [petitioner]
has also the right to be protected from the baseless accusations of a Rank and File Employee for
she [petitioner] is a part of the management like Mr. Mamoru Ono" (par. 5, Complainants Rejoinder
[to Respondents Reply] dated 2 September 2002 (note: unattached to the petitioner [sic]) [attached
as Annex "1" hereof]. (p. 263, Rollo).
45

Tirazona next argues that she was deprived of procedural due process as she was neither served
with two written notices, nor was she afforded a hearing with her participation prior to her dismissal.
Tirazonas arguments are baseless.
Procedural due process is simply defined as giving an opportunity to be heard before judgment is
rendered. The twin requirements of notice and hearing constitute the essential elements of due
process, and neither of those elements can be eliminated without running afoul of the constitutional
guaranty.
46

The employer must furnish the employee two written notices before termination may be effected.
The first notice apprises the employee of the particular acts or omissions for which his dismissal is
sought, while the second notice informs the employee of the employers decision to dismiss him.
47

It is fairly obvious in this case that Tirazona was served with the required twin notices. The first was
embodied in the Notice of Charge dated 25 March 2002 where PET informed Tirazona that it was
considering her termination from employment and required her to submit a written explanation. In the
said Notice, PET apprised Tirazona of the ground upon which it was considering her dismissal: (1)
her letter that contained false accusations against the company, and (2) her demand for two million
pesos in damages, with a threat of a lawsuit if the said amount was not paid. The Notice of
Termination dated 22 April 2002 given to Tirazona constitutes the second notice whereby the
company informed her that it found her guilty of breach of trust warranting her dismissal from
service.
Equally bereft of merit is Tirazonas allegation that she was not given the benefit of a fair hearing
before she was dismissed.
It needs to be pointed out that it was Tirazona herself and her counsel who declined to take part in
the administrative hearing set by PET 10 April 2002. Tirazona rejected the companys appointment
of its external counsel as the investigating panels presiding officer, because her own demands on
the panels composition were denied. As correctly held by the NLRC and the Court of Appeals,
Tirazonas stance is without any legal basis. On the contrary, this Courts ruling in Foster Parents
Plan International/Bicol v. Demetriou
48
is controlling:
The right to dismiss or otherwise impose disciplinary sanctions upon an employee for just and valid
cause, pertains in the first place to the employer, as well as the authority to determine the existence
of said cause in accordance with the norms of due process. In the very nature of things, any
investigation by the employer of any alleged cause for disciplinary punishment of an employee will
have to be conducted by the employer himself or his duly designated representative; and the
investigation cannot be thwarted or nullified by arguing that it is the employer who is
accuser, prosecutor and judge at the same time. x x x Of course, the decision of the employer
meting out sanctions against an employee and the evidentiary and procedural bases thereof may
subsequently be passed upon by the corresponding labor arbiter (and the NLRC on appeal) upon
the filing by the aggrieved employee of the appropriate complaint. [Emphasis ours.]1avvphi 1
This Court has held that there is no violation of due process even if no hearing was conducted,
where the party was given a chance to explain his side of the controversy. What is frowned upon is
the denial of the opportunity to be heard.
49
Tirazona in this case has been afforded a number of
opportunities to defend her actions. Even when Tirazona failed to attend the scheduled hearing, PET
still informed Tirazona about what happened therein and gave her the chance to submit a
supplemental written explanation. Only when Tirazona again failed to comply with the same did PET
terminate her employment.
As a final plea for her case, Tirazona asserts that her dismissal from employment was too harsh and
arbitrary a penalty to mete out for whatever violation that she has committed, if indeed there was
one.
Tirazona ought to bear in mind this Courts pronouncement in Metro Drug Corporation v.
NLRC
50
that:
When an employee accepts a promotion to a managerial position or to an office requiring full trust
and confidence, she gives up some of the rigid guaranties available to ordinary workers. Infractions
which if committed by others would be overlooked or condoned or penalties mitigated may be visited
with more severe disciplinary action. A companys resort to acts of self-defense would be more
easily justified. x x x.
Tirazona, in this case, has given PET more than enough reasons to distrust her. The arrogance and
hostility she has shown towards the company and her stubborn, uncompromising stance in almost
all instances justify the companys termination of her employment. Moreover, Tirazonas reading of
what was supposed to be a confidential letter between the counsel and directors of the PET, even if
it concerns her, only further supports her employers view that she cannot be trusted. In fine, the
Court cannot fault the actions of PET in dismissing petitioner.
WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of merit and the
Decision of the Court of Appeals dated 24 May 2005 is hereby AFFIRMED. Costs against the
petitioner.
SO ORDERED.





59. Fuentes et al. V. NLRC

Facts:
Petitioners filed with the DOLE a complaint for illegal dismissal with prayer for reinstatement,
backwages and damages against private respondent Agusan Plantation Inc., and Chan Chee Kong. In
their answer respondents denied the allegations of petitioner and contended that upon receipt of
instructions from the head office Singapore to implement retrenchment, private respondent conducted
grievance meeting with petitioners representative labor organization, the Association of Trade Unions.
Private respondents also contended that the 30-day notices of termination were duly sent to
petitioners.
Labor Arbiter rendered decision in favor of petitioners ordering private respondents to pay the
former separation pay equivalent to fifteen days pay for every year of service plus salary differentials
and attorneys fees. On appeal to NLRC, the Labor Arbiters decision was reversed. Petitioner elevated
the case for review alleging that respondent NLRC gravely abused its discretion amounting to lack or
excess of jurisdiction in ruling that their dismissal or retrenchment did not comply with the
requirements of Art. 283 of the Labor Code.
Issue:
WON there was a valid retrenchment.
Held:
The court sustained the ruling of Labor Arbiter that there was no valid retrenchment. Under Art.
283 of the Labor Code, retrenchment may be valid only when the following requisites are met: a.) it is to
prevent losses; b.) written notices were served on the workers and the DOLE at least one month before
the effective date of retrenchment; and c.) separation pay is paid to affected workers. The closure of a
business is a ground for the termination of the services of an employee unless the closing is for the
purpose of circumventing pertinent provisions of the Labor Code. But while business reverses can be a
just cause for terminating employees, they must be sufficiently proved by the employer. In the case at
hand, private respondents merely alleged in their position paper that after their officials from the head
office had visited the plantation respondent manager Chang Chee Kong received a letter from the head
office directing him to proceed immediately with the termination of the redundant workers and staff,
and change the operations to contact system against direct employment. They also alleged that after
five (5) years of operations, the return of investments of respondent company was meager; that the
coup attempt in August 1987 as well as that of December 1989 aggravated the floundering financial
state of respondent company; that the financial losses due to lack of capital funding resulted in the non-
payment of long-overdue accounts; that the untimely cut in the supply of fertilizers and manuring
materials and equipment parts delayed the payment of salaries and the implementation of weekly job
rotations by the workers. Except for these allegations, private respondents did not present any other
documentary proof of their alleged losses which could have been easily proven in the financial
statements which unfortunately were not shown. Indeed, private respondents failed to prove their claim
of business losses. What they submitted to the Labor Arbiter were mere self-serving documents and
allegations. Private respondents never adduced evidence which would show clearly the extent of losses
they suffered as a result of lack of capital funding, which failure is fatal to their cause.


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 75955 October 28, 1988
MARIA LINDA FUENTES, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), PHILIPPINE BANKING CORPORATION
and JOSE LAUREL IV, as its President, respondents.
Pedro S. Ravelo for petitioner.
The Solicitor General for public respondent.
Laurel Law Offices for private respondents.

FERNAN, C.J .:
Petitioner Maria Linda Fuentes seeks to set aside the resolution dated November 28, 1985 of the
National Labor Relations Commission (NLRC for brevity) affirming the Labor Arbiter's dismissal of
her complaint for illegal dismissal against private respondent Philippine Banking Corporation
(Philbanking for brevity).
Petitioner was employed as a teller at the Philbanking's office at Ayala Avenue, Makati, Metro
Manila. On May 28, 1982, at about 10:30 a.m., petitioner, who was acting as an overnight teller,
received a cash deposit of P200,000.00. She counted the money with the assistance of a co-teller,
finishing the task at 10:40 a.m. or ten (10) minutes after her closing time. Before she could start
balancing her transactions, the Chief Teller handed her several payroll checks for validation. Finding
the checks to be incomplete, petitioner left her cage to get other checks, without, however, bothering
to put the P200,000.00 cash on her counter inside her drawer. When she returned to her cubicle
after three (3) to five (5) minutes, she found that the checks for validation were still lacking, so she
went out of her cubicle again to get the rest of the checks. On her way to a co-teller's cubicle, she
noticed that the P200,000.00 pile on her counter had been re-arranged. She thus returned to her
cage, counted the money and discovered that one (1) big bundle worth P50,000.00 was missing
therefrom. She immediately asked her co-teller about it and getting a negative reply, she reported
the matter to the Chief Teller. A search for the P50,000.00 having proved unavailing, petitioner was
asked to explain why she should not be held liable for the loss. She submitted her explanation on
June 24, 1982.
Subsequently, on June 3, 1983, petitioner was dismissed for gross negligence. On June 21, 1983,
she filed a complaint for illegal dismissal with reinstatement and backwages.
Private respondent bank seasonably filed an answer with counterclaim that petitioner be ordered to
restitute the amount of P50,000.
On January 31, 1984, Labor Arbiter Bienvenido Hermogenes rendered a decision dismissing the
complaint as well as the counterclaim but without prejudice as to the latter.
1
Petitioner's appeal to the
NLRC was dismissed for lack of merit
2
and her motion for reconsideration was denied.
3
Hence, this
petition.
The issue in this case is whether petitioner's dismissal on the ground of gross negligence was
justified under Art. 282 of the Labor Code.
Upon a thorough consideration of the facts of this case, the Court finds no cogent reason for
reversing the conclusion of the Labor Arbiter and the NLRC that petitioner was grossly negligent in
the performance of her duties as a teller, which negligence resulted in the loss of P50,000.00.
Applying the test of negligence, we ask: did the petitioner in doing the alleged negligent act use
reasonable care and caution which an ordinarily prudent person would have used in the same
situation? If not, she is guilty of negligence.
The circumstances surrounding the loss in question lend us no sympathy for the petitioner. It was
established that petitioner simply left the pile of money within the easy reach of the crowd milling in
front of her cage, instead of putting it in her drawer as required under the private respondent bank's
General Memorandum No. 211 (Teller's Manual of Operations) which she was expected to know by
heart.
4
Moreover, she left the P200,000.00 on two occasions.
5

Her irresponsibility is nowhere made apparent than in her response to the following question:
Q Noong lumabas ka sa iyong cage para pumunta sa iyong Chief
Teller, hindi ba ipinagbilin itong pera sa iyong kasamahan?
A Hindi ko na ho ipinagbilin kasi masyadong maraming tao noon, at
iyong aking teller's counter ay nilagyan ko ng sign na nakasulat ng
'next teller please' na ang ibig sabihin ay kung meron mang mga
cliente doon sa akin ay doon muna sila maki-pagtransact ng negosyo
sa kabilang teller o kung sino man ang bakante kasi busy ako.
6

As a teller, petitioner must realize that the amount of care demanded by reasonable conduct is that
proportionate to the apparent risk. Since it was payday and depositors were milling around,
petitioner should have been extra cautious. At no time than the occasion under consideration was
the need to be extra careful more obvious. It was certainly not the time to breach the standard
operating procedure of keeping one's cash in the drawer as a precautionary and security measure.
"A teller's relationship with the bank is necessarily one of trust and confidence. The teller as a trustee
is expected to possess a high degree of fidelity to trust and must exercise utmost diligence and care
in handling cash. A teller cannot afford to relax vigilance in the performance of his duties."
7

Petitioner argues that there was contributor negligence on the part of private respondent bank
consisting in its failure to conduct an investigation minutes after the loss. We do not agree with
petitioner. The failure of private respondent bank to conduct an investigation minutes after the loss
was totally distinct and independent of, as well as remotely related to the fact of loss itself.
Petitioner Fuentes cannot invoke private respondent's alleged contributory negligence as there was
no direct causal connection between the negligence of the bank in not conducting the investigation
and the loss complained of. In a legal sense, negligence is contributory only when it contributes
proximately to the injury, and not simply a condition for its occurrence.
In the case at bar, the bank's inaction merely created a condition under which the loss was
sustained. Regardless of whether there was a failure to investigate, the fact is that the money was
lost in the first place due to petitioner's gross negligence. Such gross negligence was the immediate
and determining factor in the loss.
Besides, the petitioner's position is anathema to banking operations. By conducting an instant
search on its depositors for every loss that occurs, management holds suspect each depositor within
its premises. Considering that currency in the form of money bills bears no distinct earmarks which
would distinguish it from other similar bills of similar denominations except as to its serial numbers,
any innocent depositor with P50,000 in his possession would be a likely suspect. Such act would do
violence to the fiduciary relationship between a bank and its depositors. Ultimately it will result in the
loss of valued depositors.
Petitioner argues further that the NLRC failed to consider that petitioner left her cage at the instance
of the Chief Teller. Again we are not persuaded. The findings of the NLRC are clear. Petitioner left at
her own volition to approach her Chief Teller to ask for the remaining checks to ascertain their
authenticity and completeness. Besides, irrespective of who summoned her, her responsibility over
the cash entrusted to her remained.
Although petitioner's infraction was not habitual, we took into account the substantial amount lost.
Since the deposit slip for P200,000.00 had already been validated prior to the loss, the act of
depositing had already been complete and from thereon, the bank had already assumed the deposit
as a liability to its depositors. Cash deposits are not assets to banks but are recognized as current
liabilities in its balance sheet.
It would be most unfair to compel the bank to continue employing petitioner. In Galsim v. PNB,
8
we
upheld the dismissal of a bank teller who was found to have given money to a co-employee in violation of
bank rules and regulations. Said act, which caused prejudice to the bank, was a justifiable basis for the
bank to lose confidence in the employee.
Similarly, in the case at bar, petitioner, as aforesaid, violated private respondent bank's General
Memorandum, No. 211 (Teller's Manual of Operations) which strictly says:
Cash should never be left exposed. The coins and currencies should be kept in
drawers where they are not accessible to someone through the windows with the aid
of a stick or other devices.
9

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 and whose continuance in his office is
patently inimical to the employer's interest. "For the law in protecting the rights of the
employee/laborer authorizes neither oppression nor self-destruction of the employer.
10

WHEREFORE, the instant petition is hereby DISMISSED. The assailed decision dated November
28,1985 of the National Labor Relations Commission is affirmed in toto.
Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.