I. SUPREME COURT DECISIONS ON LABOR CASES CLUFEA answered Club Filipino, Inc.

CLUFEA answered Club Filipino, Inc.s Petition with the following officers verifying the Answer: Benjamin Bautista,
Illegal dismissal in relation to strike President (Bautista); Danilo Caluag, Vice President (Caluag); Ronie Sualog, Secretary (Sualog); and Joel Calida, Treasurer
a. Club Filipino, Inc. vs. De Leon, G.R. No. 168406, January 14, 2015 (Calida).14
Some issues covered/resolved-Bond requirement; McBurnie ruling; Provisional Bond; Judicial
courtesy precept; Compromise agreement; Appeal is not a natural right Labor Arbiter Manuel P. Asuncion decided Club Filipino, Inc.s Petition for declaration of illegal strike.15 He found that
CLUFEAs Notice of Strike did not contain CLUFEAs written proposals and Club Filipino, Inc.s counterproposals, in
SECOND DIVISION violation of then Rule XXII, Section 4 of the Omnibus Rules Implementing the Labor Code.16 The rule provided:
G.R. No. 168406 January 14, 2015
CLUB FILIPINO, INC. and ATTY. ROBERTO F. DE LEON, Petitioners,
In cases of bargaining deadlocks, the notice shall, as far as practicable, further state the unresolved issues in the bargaining
vs.
negotiations and be accompanied by the written proposals of the union, the counter-proposals of the employer and the
BENJAMIN BAUTISTA, RONIE SUALOG, JOEL CALIDA, JOHNNY ARINTO, CARLITO PRESENTACION, and ROBERTO
proof of a request for conference to settle differences. In cases of unfair labor practices, the notice shall, as far as practicable,
DE GUZMAN, Respondents.
state the acts complained of, and efforts taken to resolve the dispute amicably.
RESOLUTION
LEONEN, J.:
This resolves Club Filipino, Inc.'s Supplemental Motion for Reconsideration of this court's Resolution dated July 13, 2009. Any notice which does not conform with the requirements of this and the foregoing section shall be deemed as not having
been filed and the party concerned shall be so informed by the regional branch of the Board.
Club Filipino Employees Association (CLUFEA) is a union representing the employees of Club Filipino, Inc. CLUFEA and
Club Filipino, Inc. entered into previous collective bargaining agreements, the last of which expired on May 31, 2000.1 Thus, in the Decision17 dated November 28, 2001, the Labor Arbiter declared CLUFEAs strike "procedurally infirm"18 for
CLUFEAs failure to comply with the procedural requirements for staging a strike. The Labor Arbiter declared the strike
illegal and considered "all the officers of the union . . . terminated from service."19 Because of the retrenchment program
Before CLUFEA and Club Filipino, Inc.s last collective bargaining agreement expired and within the 60-day freedom
Club Filipino, Inc. allegedly launched before the Labor Arbiter issued his Decision, the dismissed union officers were
period,2 CLUFEA had made several demands on Club Filipino, Inc. to negotiate a new agreement. Club Filipino, Inc.,
ordered to receive separation pay "similar in terms with those offered to the employees affected by the retrenchment
however, replied that its Board of Directors could not muster a quorum to negotiate with CLUFEA.3
program of the club."20

CLUFEA then formally submitted its proposals to Club Filipino Inc.s negotiating panel sometime in June 2000. Still, Club
On December 20, 2001, CLUFEA appealed the Labor Arbiters Decision before the National Labor Relations Commission
Filipino, Inc. failed to negotiate, citing as reason the illness of the chairperson of its negotiating panel.4
(NLRC) with Bautista, Caluag, Sualog, and Calida verifying the Memorandum of Appeal on CLUFEAs behalf.21

To compel Club Filipino, Inc. to negotiate with it, CLUFEA filed before the National Conciliation and Mediation Board
The NLRC ruled that CLUFEAs Appeal was filed by persons "[having] no legal standing to question the [Labor Arbiters]
(NCMB) a request for preventive mediation. The negotiating panels of CLUFEA and Club Filipino, Inc. finally met on April
decision."22 Bautista had allegedly resigned from Club Filipino, Inc. on September 30, 2001, receiving separation benefits
5, 2001. However, the meeting ended with the parties respective panels declaring a deadlock in negotiation.5
pursuant to Club Filipino, Inc.s Employees Retirement Plan.23

Thus, on April 6, 2001, CLUFEA filed with the NCMB a Notice of Strike on the ground of bargaining deadlock. Club Filipino,
Inc. submitted the first part of its counterproposal on April 22, 2001.6
On May 4, 2001, CLUFEA conducted a strike vote under the Department of Labor and Employments supervision with the
majority of CLUFEAs total union membership voting to strike.7
On May 11, 2001, Club Filipino, Inc. submitted to CLUFEA the second part of its counterproposal, which CLUFEA countered
with an improved offer. Club Filipino, Inc., however, refused CLUFEAs improved offer.8
On May 26, 2001, CLUFEA staged a strike on the ground of bargaining deadlock.9
On May 31, 2001, Club Filipino, Inc. filed before the National Capital Regional Arbitration Branch of the National Labor
Relations Commission (NLRC) a Petition to Declare [CLUFEAs] Strike Illegal.10 According to Club Filipino, Inc., CLUFEA
failed to file a Notice of Strike and to conduct a strike vote, in violation of the legal requirements for staging a strike.11
Worse, CLUFEAs members allegedly committed illegal acts while on strike, preventing their co-workers from entering and
leaving Club Filipino, Inc.s premises and even cutting off Club Filipino, Inc.s electricity and water supply on the first day
of the strike.12 Club Filipino, Inc. prayed that all of CLUFEAs officers who participated in the strike be declared to have
lost their employment pursuant to Article 264(a) of the Labor Code.13
For their part, Caluag, Sualog, and Calida allegedly misrepresented themselves as CLUFEAs officers when they appealed to
the NLRC. According to the NLRC, CLUFEA had already elected a new set of officers on September 28, 2001. Caluag, Sualog,
and Calida, therefore, were no longer CLUFEAs officers when they filed the Appeal on December 20, 2001.24
Finding that CLUFEA no longer wished to appeal the Labor Arbiters Decision, the NLRC cited a letter the new officers of
CLUFEA allegedly gave Atty. Roberto F. De Leon, Club Filipino, Inc.s President:
Nais po naming ipabatid na ang ginawad na pagpapasya ng NLRC na naging ilegal ang pagdaos ng pag-aalsa noong Mayo
26, 2001 ay hindi lingid sa aming kaalaman at kamiylubos na nalulungkot para doon sa mga kasaping opisyal na nasangkot
at humantong sa ganito ng dahil na rin sa kanilang kapabayaan, mga padalos-dalos at mapusok na pagkilos na walang
pagkunsulta sa mga miyembro. Ang pamunuan sampu ng aming mga kasapi ay mariing tinututulan ang ano mang uri ng
pagaapela upang maisalba ang natitirang miyembro sa tiyak na kapahamakan kung magpapatuloy and [sic]ganitong uri ng
tagisan ng bawat isa.25
Lastly, the NLRC found that as of November 23, 2001, CLUFEA had terminated the services of its legal counsel.26 Yet, its
former legal counsel filed and signed CLUFEAs Memorandum of Appeal to the NLRC. The Memorandum of Appeal,
therefore, was filed without authority of CLUFEA.
Thus, in the Decision27 dated September 30, 2002, the NLRC denied the Appeal filed on December 20, 2001 for lack of
merit.

1
Club Filipino, Inc. filed a Motion for Partial Reconsideration, while Bautista, Caluag, Sualog, and Calida filed a Motion for As for Bautista, Fegalquin, and Presentacion, the Court of Appeals dismissed the Petition for Certiorari.39
Reconsideration of the NLRCs Decision dated September 30, 2002. Johnny Arinto (Arinto), Roberto de Guzman (de
Guzman), and Laureno Fegalquin (Fegalquin), all directors and officers of CLUFEA,28 joined Bautista, Caluag, Sualog, and
On June 23, 2005, Club Filipino, Inc. filed a Petition for Review on Certiorari40 with this court. Bautista, Sualog, Calida,
Calida in filing the Motion for Reconsideration.29
Arinto, Presentacion, and de Guzman filed their Comment41 to which Club Filipino, Inc. replied.42

The NLRC denied the Motions in the Resolution30 dated July 15, 2003.
After the parties had filed their respective memoranda,43 this court considered this case submitted for decision.44

On September 22, 2003, Bautista, Sualog, Calida, Arinto, de Guzman, and Fegalquin filed a Petition for Certiorari with the
This court agreed with the Court of Appeals Decision. This court ruled that CLUFEA could not have attached Club Filipino,
Court of Appeals.31 However, Caluag no longer joined his colleagues. Instead, Carlito Presentacion (Presentacion), a
Inc.s counterproposals in the Notice of Strike since Club Filipino, Inc. submitted it only after CLUFEA had filed the Notice
CLUFEA member, joined in the filing of the Petition for Certiorari.
of Strike. It was, therefore, "not practicable"45 for CLUFEA to attach Club Filipino, Inc.s counterproposal to the Notice of
Strike. CLUFEA did not violate Rule XXII, Section 4 of the Omnibus Rules Implementing the Labor Code.
The Court of Appeals first resolved whether Bautista, Sualog, Calida, Arinto, de Guzman, and Fegalquin had legal personality
to appeal before the NLRC. On this issue, the Court of Appeals ruled that "a worker ordered dismissed under a tribunals
This court sustained the Court of Appeals finding that the Labor Arbiter gravely abused his discretion in ordering the
decision has every right to question his or her dismissal especially if he [or she] had not been properly impleaded in the
"wholesale dismissal"46 of CLUFEAs officers. According to this court, the law requires "knowledge [of the illegality of the
case and in the decision that decreed his or her dismissal."32 Being officers of CLUFEA, Bautista, et al. had the right to
strike] as a condition sine qua non before a union officer can be dismissed . . . for participating in an illegal strike."47
appeal the loss of their employment with the NLRC.
However, "[n]owhere in the ruling of the labor arbiter can [there be found] any discussion of how respondents, as union
officers, knowingly participated in the alleged illegal strike. Thus, even assuming . . . that the strike was illegal, [the]
With respect to Arinto, de Guzman, and Fegalquin, the Court of Appeals further ruled that they were not granted "the full automatic dismissal [of CLUFEAs officers] had no basis."48
hearing that the due process requirements of the Philippine Constitution impose."33 Arinto, de Guzman, and Fegalquin
participated only during the Motion for Reconsideration stage with the NLRC. The Labor Arbiters Decision, therefore, did
Thus, in the Resolution49 dated July 13, 2009, this court denied Club Filipino, Inc.s Petition for Review on Certiorari.
not bind Arinto, de Guzman, and Fegalquin.

On August 17, 2009, Club Filipino, Inc. filed a Motion for Reconsideration,50 which this court denied with finality in the
On the merits, the Court of Appeals held that the Labor Arbiter gravely abused his discretion in declaring CLUFEAs strike
Resolution51 dated September 9, 2009. This court declared that it shall not entertain any further pleadings or motions and
illegal. The Court of Appeals ruled that the requirements under Rule XXII, Section 4 of the Omnibus Rules Implementing
ordered that Entry of Judgment in this case be made in due course.52
the Labor Code "[do] not appear to be absolute."34 Rule XXII, Section 4 only requires that the proposals and
counterproposals be attached to the Notice of Strike "as far as practicable."35 Since CLUFEA had already filed a Notice of
Strike when Club Filipino, Inc. submitted its counterproposals, it was not practicable for CLUFEA to attach Club Filipino, On September 14, 2009, Solis Medina Limpingco and Fajardo entered its appearance for Club Filipino, Inc.53 and
Inc.s counterproposals to the Notice of Strike. simultaneously filed a Motion for Leave54 to file and admit the attached Supplemental Motion for Reconsideration.55

The Court of Appeals found that the Labor Arbiter "disregarded"36 the law on the status of employees who participated in On November 3, 2009, Club Filipino, Inc. filed its Motion for Leave to File and Admit further Pleading/Motion,56 alleging
an illegal strike. Under the law, union officers may be dismissed for participating in an illegal strike only if they knowingly that this court failed to consider its Supplemental Motion for Reconsideration in issuing its September 9, 2009 Resolution
participated in it. According to the Court of Appeals, the Labor Arbiter erred in ordering all the officers of CLUFEA dismissed denying Club Filipino, Inc.s first Motion for Reconsideration. Club Filipino, Inc. prayed that this court resolve the
from the service without even naming these officers and specifying the acts these officers committed that rendered the Supplemental Motion for Reconsideration.
strike illegal.
In the Resolution57 dated January 11, 2010, this court granted Club Filipino, Inc.s Motions for Leave and noted the
The Court of Appeals, however, found that Bautista and Fegalquin had already resigned during the pendency of the case Supplemental Motion for Reconsideration.
and had received separation benefits from Club Filipino, Inc. Bautista and Fegalquin, therefore, "no longer [had] any legal
interest [in filing the petition for certiorari]."37
However, because of this courts Resolution dated September 9, 2009, an Entry of Judgment58 was issued on October 26,
2010, declaring that this case had become final and executory as of October 26, 2009. This court likewise ordered the return
As for Presentacion, the Court of Appeals found that he was not an officer of CLUFEA and was not dismissed by virtue of of the case records to the Court of Appeals for remand to the court of origin.59
the Labor Arbiters Decision. He, therefore, had no personality to join Bautista, Sualog, Calida, Arinto, de Guzman, and
Fegalquin in filing the Petition for Certiorari. As for Sualog, Calida, Arinto, and de Guzman, the Court of Appeals ruled that
Club Filipino, Inc. received the Entry of Judgment on November 10, 2010.60 Nine (9) days after, Club Filipino, Inc. filed a
the Labor Arbiters Decision was void.
Manifestation and Motion,61 arguing that the court prematurely issued the Entry of Judgment because it still had to resolve
the Supplemental Motion for Reconsideration.
Thus, in the Decision38 dated May 31, 2005, the Court of Appeals granted the Petition for Certiorari with respect to Sualog,
Calida, Arinto, and de Guzman. The Court of Appeals set aside the Labor Arbiters Decision for being null and void and
This court noted the Manifestation and Motion in the Resolution62 dated January 19, 2011. On October 18, 2011, Club
ordered the payment of full backwages and benefits to them from the time of their dismissal up to the finality of the Court
Filipino, Inc. filed a very urgent Motion to Resolve,63 alleging that respondents filed a Motion for Execution of this courts
of Appeals Decision. In lieu of reinstatement, the Court of Appeals ordered Club Filipino, Inc. to pay Sualog, Calida, Arinto,
Decision on the illegal strike case despite the pendency of its Supplemental Motion for Reconsideration with this court.
and de Guzman separation pay computed at one (1) month salary per year of service from the time of their hiring up to the
Club Flipino, Inc. prayed that this court resolve the Supplemental Motion for Reconsideration in order not to render the
finality of the Decision less any amount Sualog, Calida, Arinto, and de Guzman may have received pursuant to the Labor
filing of its Supplemental Motion for Reconsideration moot.
Arbiters Decision.

2
In the Resolution64 dated November 23, 2011, this court noted the very urgent Motion to Resolve.
On March 23, 2012, Club Filipino, Inc. filed the very urgent Motion for Leave to File and Admit very urgent Motion for
Clarification.65 It informed this court that the NLRC granted respondents Motion for Execution, which would allegedly
result in Club Filipino, Inc. paying respondents separation pay twice. Because of the "extreme urgency"66 brought about
by the developments in this case, Club Filipino, Inc. prayed that this court resolve its Supplemental Motion for
Reconsideration.
On April 2, 2012, Club Filipino, Inc. filed a second very urgent Motion for Clarification,67 pleading the court to clarify its
January 11, 2010 Resolution noting the Supplemental Motion for Reconsideration. It reiterated its claim that implementing
the Writ of Execution in the illegal strike case "will only result in doubly compensating respondents to the utmost prejudice
and manifest injustice of [Club Filipino, Inc.]."68
Club Filipino, Inc. subsequently filed the very urgent Manifestation and Omnibus Motion,69 very urgent Omnibus
Motion,70 and second very urgent Omnibus Motion,71 all arguing that the implementation of the Writ of Execution would
result in double compensation to respondents. All of these Motions were noted by this court.
In the Supplemental Motion for Reconsideration and the subsequent Motions to Resolve, Club Filipino, Inc. maintains that
this court erred in affirming the Court of Appeals award of backwages and separation pay in the illegal strike case on top
of the separation pay respondents received by virtue of Club Filipino, Inc.s retrenchment program.
Club Filipino, Inc. alleged that pending its Petition for declaration of illegal strike with the NLRC, it implemented a
retrenchment program to minimize its "mounting losses."72 Among the 76 retrenched employees were respondents.
Respondents, together with other retrenched employees, filed a Complaint for illegal dismissal with the NLRC, questioning
the validity of the retrenchment program. In the Decision73 dated October 2, 2002, Labor Arbiter Natividad M. Roma
dismissed the Complaint and found the retrenchment program valid. She ordered that the retrenched employees, which
included respondents, be paid their separation pay.
Labor Arbiter Natividad M. Romas Decision was affirmed by the NLRC in the Decision dated February23, 2004. The NLRCs
Decision became final and executory on March 27, 2004. Considering that the NLRC had finally resolved that respondents
were not illegally dismissed and had already ordered that respondents be paid separation pay under the retrenchment
program, Club Filipino, Inc. argues that the NLRCs Resolution of the issue constituted res judicata as to bar the Court of
Appeals from declaring that respondents were illegally dismissed and from awarding respondents separation pay in the
illegal strike case.
The issues for our Resolution are:
(1) Whether Club Filipino, Inc.s filing of the Supplemental Motion for Reconsideration prevented our Resolution
dated July 13, 2009 from becoming final and executory; and
(2) Whether the NLRCs Decision on the illegal dismissal case was res judicata on the illegal strike case.
The Supplemental Motion for Reconsideration must be denied with finality.
I
The filing of the Supplemental Motion for
Reconsideration did not prevent this
courts Resolution dated July 13, 2009
from becoming final and executory.
3
Petitioner Club Filipino, Inc.s Supplemental Motion for Reconsideration of the Resolution dated July 13, 2009 is in the
nature of a second Motion for Reconsideration.
As a general rule, the filing of second Motions for Reconsideration of a judgment or final resolution is prohibited. Rule 52,
Section 2 of the Rules of Court provides:
Section 2. Second motion for reconsideration. No second motion for reconsideration of a judgment or final resolution
by the same party shall be entertained.
This prohibition is reiterated in Rule 15, Section 3 of the Internal Rules of the Supreme Court: Section 3. Second motion for
reconsideration. The Court shall not entertain a second motion for reconsideration, and any exception to this rule can
only be granted in the higher interest of justice by the Court en banc upon a vote of at least two-thirds of its actual
membership. There is reconsideration "in the higher interest of justice" when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and irremediable injury or
damage to the parties. A second motion for reconsideration can only be entertained before the ruling sought to be
reconsidered becomes final by operation of law or by the Courts declaration.
In the Division, a vote of three Members shall be required to elevate a second motion for reconsideration to the Court En
Banc.
For this court to entertain second Motions for Reconsideration, the second Motions must present "extraordinarily
persuasive reasons and only upon express leave first obtained."74 Once leave to file is granted, the second Motion for
Reconsideration is no longer prohibited.75
This court explained the rationale for the rule in Ortigas and Company Limited Partnership v. Judge Velasco,76 thus:
A second motion for reconsideration is forbidden except for extraordinarily persuasive reasons, and only upon express
leave first obtained. The propriety or acceptability of such a second motion for reconsideration is not contingent upon the
averment of "new" grounds to assail the judgment, i.e., grounds other than those theretofore presented and rejected.
Otherwise, attainment of finality of a judgment might be staved off indefinitely, depending on the party's ingeniousness or
cleverness in conceiving and formulating "additional flaws" or "newly discovered errors" therein, or thinking up some
injury or prejudice to the rights of the movant for reconsideration. "Piece-meal" impugnation of a judgment by successive
motions for reconsideration is anathema, being precluded by the salutary axiom that a party seeking the setting aside of a
judgment, act or proceeding must set out in his motion all the grounds therefor, and those not so included are deemed
waived and cease to be available for subsequent motions.
For all litigation must come to an end at some point, in accordance with established rules of procedure and jurisprudence.
As a matter of practice and policy, courts must dispose of every case as promptly as possible; and in fulfillment of their role
in the administration of justice, they should brook no delay in the termination of cases by stratagems or maneuverings of
parties or their lawyers.77
In the present case, this court granted leave to petitioner Club Filipino, Inc. to file the Supplemental Motion for
Reconsideration in the Resolution dated January 11, 2010. The Supplemental Motion for Reconsideration, therefore, is no
longer prohibited.
The grant of leave to file the Supplemental Motion for Reconsideration, however, did not prevent this courts July 13, 2009
Resolution from becoming final and executory. A decision or resolution of this court is deemed final and executory after
the lapse of 15 days from the parties receipt of a copy of the decision or resolution.78 The grant of leave to file the second
Motion for Reconsideration does not toll this 15-day period. It only means that the Entry of Judgment first issued may be
lifted should the second Motion for Reconsideration be granted.79
In Aliviado v. Procter and Gamble Philippines, Inc.80 this court explained that:
[i]t is immaterial that the Entry of Judgment was made without the Court having first resolved P&Gs second motion for
reconsideration. This is because the issuance of the entry of judgment is reckoned from the time the parties received a copy
of the resolution denying the first motion for reconsideration. The filing by P&G of several pleadings after receipt of the
resolution denying its first motion for reconsideration does not in any way bar the finality or entry of judgment. Besides,
to reckon the finality of a judgment from receipt of the denial of the second motion for reconsideration would be absurd.
First, the Rules of Court and the Internal Rules of the Supreme Court prohibit the filing of a second motion for
reconsideration. Second, some crafty litigants may resort to filing prohibited pleadings just to delay entry of judgment.81
(Underscoring in the original, emphasis supplied)
This case became final and executory on October 26, 2009, after the lapse of the 15th day from petitioner Club Filipino,
Inc.s receipt of the Resolution denying its first Motion for Reconsideration. Entry of Judgment, therefore, was in order.
Since this court did not issue any temporary restraining order to enjoin the execution of the Court of Appeals Decision, the
NLRC correctly proceeded in implementing the Court of Appeals Decision in the illegal strike case.
II
The NLRCs Decision on the illegal
dismissal case was not res judicata on the
illegal strike case.
Res judicata "literally means a matter adjudged; a thing judicially acted upon or decided; [or] a thing or matter settled by
judgment."82 Res judicata" lays the rule that an existing final judgment or decree rendered on the merits, and without
fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction,is conclusive of the rights
of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction
on the points and matters in issue in the first suit."83
Res judicata has two (2) aspects. The first is bar by prior judgment that precludes the prosecution of a second action upon
the same claim, demand or cause of action.84 The second aspect is conclusiveness of judgment, which states that "issues
actually and directly resolved in a former suit cannot again be raised in any future case between the same parties involving
a different cause of action."85
The elements of res judicata are:
(1) the judgment sought to bar the new action must be final;
(2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties;
(3) the disposition of the case must be a judgment on the merits; and
(4) there must be as between the first and second action identity of parties, subject matter, and causes of
action.86
The first three (3) elements of res judicata are present in this case.
The NLRCs judgment on the illegal dismissal case is already final with respondents not having appealed the Decision within
the reglementary period.
The Labor Arbiter, who has the exclusive original jurisdiction to hear, try, and decide illegal dismissal cases,87 decided the
case. The Labor Arbiters Decision was heard on appeal by the NLRC, which has exclusive appellate jurisdiction over all
cases decided by Labor Arbiters.88
The Labor Arbiters judgment was on the merits.89 Based on the facts presented by the parties, the Labor Arbiter ruled
that petitioner Club Filipino, Inc.s retrenchment program was valid.
4
The fourth element of res judicata, however, is absent. Although the cases have substantially identical parties and subject
matter of the dismissal of respondents, the cause of action for declaration of illegal strike and the cause of action for illegal
dismissal are different.
A cause of action is "the act or omission by which a party violates the rights of another."90 Its elements are:
1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created;
2) an obligation on the part of the named defendant to respect or not to violate such right; and 3) act or omission
on the part of such defendant in violation of the right of the plaintiff or constituting a breach of the obligation of
the defendant to the plaintiff for which the latter may maintain an action for recovery of damages or other
appropriate relief.91
In an action for declaration of illegal strike, the cause of action is premised on a union or a labor organizations conduct of
a strike without compliance with the statutory requirements.92
On the other hand, in an action for illegal dismissal, the cause of action is premised on an employers alleged dismissal of
an employee without a just or authorized cause as provided under Articles 282, 283, and 284 of the Labor Code.93
There is no res judicata in the present case. Petitioner Club Filipino, Inc. filed the illegal strike because members of CLUFEA
allegedly disrupted petitioner Club Filipino, Inc.s business when they staged a strike without complying with the
requirements of the law. For their part, respondents filed the illegal dismissal case to question the validity of petitioner
Club Filipino, Inc.s retrenchment program.
Although there is no res judicata, the actions have the same subject matter.1wphi1 The subject matter of an action is "the
matter or thing from which the dispute has arisen."94 Both the illegal strike and illegal dismissal cases involve the dismissal
of respondents. In respondents action for illegal dismissal, respondents were found to have been dismissed by virtue of a
valid retrenchment program. The NLRC then ordered that they be paid separation pay based on the parties collective
bargaining agreement.
In petitioner Club Filipino, Inc.s action for declaration of illegal strike, the Labor Arbiters finding that respondents
conducted an illegal strike resulted in their dismissal. Respondents were ordered to receive separation pay "similar in
terms with those offered to the employees affected by the retrenchment program of the club."95 The Court of Appeals,
however, found that the Labor Arbiter gravely abused his discretion in declaring the strike illegal. It then reversed the
Labor Arbiters Decision and awarded some of the respondents full backwages, benefits, and separation pay.
Because of the cases similar subject matter, it was possible that an employee who had already availed of the benefits under
the retrenchment program would be declared entitled to separation benefits under the illegal strike case. This is true
especially if the retrenched employee did not execute a valid quitclaim upon receiving the benefits under the retrenchment
program.
Thus, to prevent double compensation, the Court of Appeals ordered that those who already retired and received their
benefits may no longer claim full backwages, benefits, and separation pay under the decision in the illegal strike case. This
is with respect to respondents Benjamin Bautista and Laureno Fegalquin who already executed their quitclaims. The Court
of Appeals said:
We agree in theory with the petitioners position that workers releases and quitclaims are frowned upon and cannot
simply be accepted at face value. Jurisprudence however provides us guidance on when to accept and when to reject
workers releases and quitclaims. In the present case where the recipients are responsible union officers who have
regularly acted in behalf of their members in the discharge of their union duties and where there is no direct evidence of
coercion or vitiation of consent, we believe we can safely conclude that the petitioners Bautista and Fegalquin fully knew
that they entered into when they accepted their retirement benefits and when they executed their quitclaims. The Club (as
well as the NLRC) is therefore correct in their position that these petitioners no longer have any interest that can serve as
basis for their participation in the present petition.96 (Citations omitted)
With respect to respondent Carlito Presentacion who was not a union officer and, therefore, could not have been dismissed
under the illegal strike case, the Court of Appeals held that he cannot receive benefits under Court of Appeals Decision:
The same is true with respect to petitioner Carlito Presentacion who does not appear to be covered by the assailed Labor
Arbiter and NLRC decisions because he was not a union officer and was not dismissed under the assailed decisions, and
who had sought redress through a separately-filed case.97
The Motion for Reconsideration is anchored on the following grounds:
A. The Court failed to consider the "Motion for Leave of Court to file and Admit Herein Statement and Confession of
Judgment to Buy Peace and/or to Secure Against any Possible Contingent Liability by Petitioner Sara Lee Corporation"
(hereafter the "compromise agreement") filed by petitioner Sara Lee Corporation on June 23, 2014 before receipt of the
Decision of June 04, 2014 on July 31, 2014 with the conformity of the respondents in their "Manifestation and Conformity
to the Petitioners Motion for Leave to File and Admit Statement of Confession of Judgment" dated July 04, 2014 which
could have terminated the present cases and avoid delays with its remand for further proceedings below.
B. The Court did not duly rule on the violations of the rights of due process of Petitioner SLPI as shown by the following:

For respondents who were not found to have executed a quitclaim with respect to the benefits under the retrenchment 1. The Labor Arbiter has never acquired jurisdiction over Petitioner SLPI which was never impleaded as a party
program, the Court of Appeals ruled that any benefits received" as a result of the decisions [of the Labor Arbiter]"98 must respondent and was never validly served with summons which fact was specifically mentioned in NLRCs Resolution of
be deducted from the separation pay received under the illegal strike case. This is with respect to Ronie Sualog, Joel Calida, December 19, 2006; and
Roberto de Guzman, and Johnny Arinto:
2. There is no employer-employee relationships between Petitioner SLPI and the respondents.
We grant the petition and declare the assailed decision null and void with respect to petitioners Ronie Sualog, Joel Calida,
Roberto de Guzman and Johnny Arinto as the decision to dismiss them had been attended by grave abuse of discretion on
C. The Court did not duly rule on the violations of the rights of due process of Petitioner SLC because of the following:
the part of the Labor Arbiter and the NLRC as discussed above. In the exercise of our discretion, however, we stop short of
ordering the reinstatement of these petitioners [sic] in light of their obviously strained relationship with the Club resulting
from the strike and in light as well of the restructuring of the Clubs workforce since then. We confine our order therefore 1. The Labor Arbiter has never acquired jurisdiction over Petitioner SLC which was never impleaded as a party
to the payment of the petitioners full backwages and benefits from the time of their dismissal up the finality of this respondent and was never validly served with summons which fact was specifically raised by the Court as an issue in
Decision, and to the payment of petitioners' separation pay computed at one (1) month salary per year of service from the page 12 of the Decision of June 04, 2014 but remained unresolved; and
time they were hired up to the finality of this Decision. Any amount they might have received from the Club as a result of
the decisions below can be deducted from the payments we hereby find to be due them.99
2. There is no employer-employee relationship between Petitioner SLC and the respondents.

Since the Court of Appeals ordered that any benefit received from the illegal dismissal case be deducted from any benefit
D. The Court did not duly rule on the violations of the rights of due process of Petitioner Cesar C. Cruz as shown by the
receivable under the Court of Appeals' Decision, there was no "double compensation" as petitioner Club Filipino, Inc.
following:
claims.

1. The Labor Arbiter has never acquired jurisdiction over Petitioner Cesar C. Cruz who was never impleaded as a party
All told, the Decision in the illegal dismissal case was not res judicata on the illegal strike case. The NLRC correctly executed
respondent and was never validly served with summons; and
the Court of Appeals' Decision in the illegal strike case. WHEREFORE, the Supplemental Motion for Reconsideration is
DENIED. No further pleadings shall be entertained in this case. The Entry of Judgment issued in this case is AFFIRMED.
2. There is no employer-employee relationship between petitioner Cesar C. Cruz and the respondents.
SO ORDERED.
E. There was no legal impediment for the NLRC to issue its Resolution of December 19, 2006 vacating the Labor Arbiters
Decision and remanding the case to the Labor Arbiter for further proceeding as no Temporary Restraining Order (TRO)
b. Sara Lee Philippines, Inc. vs. Macatlang, G.R. No. 180147, January 14, 2015
or Writ of Preliminary Injunction was issued by the Court of Appeals and the rule on judicial courtesy remains the
exception rather than the rule.
PEREZ, J.:
This treats of the 1) Motion for Reconsideration with Urgent Petition for the Courts Approval of the Pending "Motion for
F. The Court did not duly rule on the applicability of the final and executory Decision of Fullido, et al., v. Aris Philippines,
Leave of Court to File and Admit Herein Statement and Confession of Judgment to Buy Peace and/or Secure against any
Inc. and Cesar C. Cruz (G.R. No. 185948) with respect to the present consolidated cases considering the identical facts and
Possible Contingent Liability by Sara Lee Corporation" filed by Sara Lee Philippines Inc. (SLPI),Aris Philippines Inc. (Aris),
issues involved plus the fact that the Court in Fullido sustained the findings and decisions of three (3) other tribunals, i.e.,
Sara Lee Corporation (SLC) and Cesar C. Cruz, 2) Motion for Reconsideration filed by Fashion Accessories Phils. Inc.
the Court of Appeals, the NLRC and the Labor Arbiter.
(FAPI), and 3) Manifestation of Conformity to the Motion for Leave of Court to File and Admit Confession of Judgment
to Buy Peace and/or to Secure against any Possible Contingent Liability by Petitioner SLC.
G. The Court failed to consider the prescription of the complaints for money claims filed by the respondents against the
Petitioners under Article 291 of the Labor Code due to the lapse of three (3) years and four (4) months when Petitioners
In the Decision dated 4 June 2014, this Court directed SLPI, Aris, SLC, Cesar Cruz, and FAPI, collectively known as the
were impleaded as respondents only through the amendment of complaints by the complainants, the respondents herein.
Corporations, to post P725 Million, in cash or surety bond, within 10 days from the receipt of the Decision. The Court
further nullified the Resolution of the National Labor Relations Commission (NLRC) dated 19 December 2006 for being
premature. H. The Court also did not consider that the Complaints filed by the respondents are barred by res judicata because of the
final and executory decision rendered by the Voluntary Arbitrator on the identical facts and issues in the case filed by the
labor union representing the respondents against Petitioner API.
5
I. Contrary to the Decision of June 04, 2014, the Abelardo petition (CA GR SP No. 95919, Pacita S. Abelardo v. NLRC, Aris,
Philippines, Inc.) was filed earlier than the Macatlang petition (CA GR SP No. 96363) as shown by the lower docket
number, thus, the Macatlang petition should be the one dismissed for forum shopping.
J. In fixing the bond to PhP725 Million which is 25% of the monetary award, the Court failed to consider the En Banc
Decision in McBurnie v. Ganzon, 707 SCRA 646, 693 (2013) which required only the posting of a bond equivalent to ten
percent (10%) of the monetary award.2 We briefly revisit the factual milieu of this case.
Aris permanently ceased operations on 9 October 1995 displacing 5,984 rank-and-file employees. On 26 October 1995,
FAPI was incorporated prompting former Aris employees to file a case for illegal dismissal on the allegations that FAPI
was a continuing business of Aris. SLC, SLP and Cesar Cruz were impleaded as defendants being major stockholders of
FAPI and officers of Aris, respectively.
On 30 October 2004, the Labor Arbiter found the dismissal of 5,984 Aris employees illegal and awarded them monetary
benefits amounting to P3,453,664,710.86. The judgment award is composed of separation pay of one month for every
year of service, backwages, moral and exemplary damages and attorneys fees.
The Corporations filed a Notice of Appeal with Motion to Reduce Appeal Bond. They posted a P4.5 Million bond. The NLRC
granted the reduction of the appeal bond and ordered the Corporations to post an additional P4.5 Million bond.
The 5,984 former Aris employees, represented by Emilinda Macatlang (Macatlang petition), filed a petition for review
before the Court of Appeals insisting that the appeal was not perfected due to failure of the Corporations to post the
correct amount of the bond which is equivalent to the judgment award.
While the case was pending before the appellate court, the NLRC prematurely issued an order setting aside the decision
of the Labor Arbiter for being procedurally infirmed.
The Court of Appeals, on 26 March 2007, ordered the Corporations to post an additional appeal bond of P1 Billion.
In our Decision dated 4 June 2014, we modified the Court of Appeals Decision, to wit:
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No. 96363 dated 26 March 2007 is MODIFIED. The
Corporations are directed to post P725 Million, in cash or surety bond, within TEN (10) days from the receipt of this
DECISION. The Resolution of the NLRC dated 19 December 2006 is VACATED for being premature and the NLRC is
DIRECTED to act with dispatch to resolve the merits of the case upon perfection of the appeal.3
We also resolved the procedural issue of forum-shopping by holding that the 411 petitioners of the Pacita Abelardo
petition (Abelardo petition) are not representative of the interest of all petitioners in Macatlang petition. The number is
barely sufficient to comprise the majority of petitioners in Macatlang petition and it would be the height of injustice to
dismiss the Macatlang petition which evidently enjoys the support of an overwhelming majority due to the mistake
committed by petitioners in the Abelardo petition.
The Motion for Reconsideration has no merit.
The Corporations score this Court for failing to consider the ruling in McBurnie v. Ganzon4 which purportedly required
only the posting of a bond equivalent to 10% of the monetary award. The Corporations gravely misappreciated the ruling
in McBurnie. The 10% requirement pertains to the reasonable amount which the NLRC would accept as the minimum of
the bond that should accompany the motion to reduce bond in order to suspend the period to perfect an appeal under the
NLRC rules. The 10% is based on the judgment award and should in no case be construed as the minimum amount of
bond to be posted in order to perfect appeal. There is no room for a different interpretation when McBurnie made it clear
that the percentage of bond set is provisional, thus:
6
The foregoing shall not be misconstrued to unduly hinder the NLRCs exercise of its discretion, given that the percentage
of bond that is set by this guideline shall be merely provisional. The NLRC retains its authority and duty to resolve the
motion and determine the final amount of bond that shall be posted by the appellant, still in accordance with the standards
of "meritorious grounds" and "reasonable amount." Should the NLRC, after considering the motions merit, determine
that a greater amount or the full amount of the bond needs to be posted by the appellant, then the party shall comply
accordingly. The appellant shall be given a period of 10 days from notice of the NLRC order within which to perfect the
appeal by posting the required appeal bond.
The Corporations argue that there was no legal impediment for the NRLC to issue its 19 December 2006 Resolution
vacating the Labor Arbiters Decision as no TRO or injunction was issued by the Court of Appeals. The Corporations assert
that the rule on judicial courtesy remains the exception rather than the rule.
We do not agree. In the recent case of Trajano v. Uniwide Sales Warehouse Club,5 this Court gave a brief discourse on
judicial courtesy, which concept was first introduced in Eternal Gardens Memorial Park Corp. v. Court of Appeals,6 to wit:
x x x [t]he principle of judicial courtesy to justify the suspension of the proceedings before the lower court even without
an injunctive writ or order from the higher court. In that case, we pronounced that "[d]ue respect for the Supreme Court
and practical and ethical considerations should have prompted the appellate court to wait for the final determination of
the petition [for certiorari] before taking cognizance of the case and trying to render moot exactly what was before this
[C]ourt." We subsequently reiterated the concept of judicial courtesy in Joy Mart Consolidated Corp. v. Court of Appeals.
We, however, have qualified and limited the application of judicial courtesy in Go v. Abrogar and Republic v.
Sandiganbayan. In these cases, we expressly delimited the application of judicial courtesy to maintain the efficacy of
Section 7, Rule 65 of the Rules of Court, and held that the principle of judicial courtesy applies only "if there is a strong
probability that the issues before the higher court would be rendered moot and moribund as a result of the continuation
of the proceedings in the lower court." Through these cases, we clarified that the principle of judicial courtesy remains to
be the exception rather than the rule.7
The Corporations argument is specious. Judicial courtesy indeed applies if there is a strong probability that the issues
before the higher court would be rendered moot as a result of the continuation of the proceedings in the lower court. This
is the exception contemplated in the aforesaid ruling and it obtains in this case. The 19 December 2006 ruling of the NLRC
would moot the appeal filed before the higher courts because the issue involves the appeal bond which is an indispensable
requirement to the perfection of the appeal before the NLRC. Unless this issue is resolved, the NLRC should be precluded
from ruling on the merits on the case. This is the essence of judicial courtesy.
The other grounds raised by the Corporations in this Motion for Reconsideration such as the denial of due process due to
invalid service of summons on SLPI, SLC and Cesar Cruz; prescription, res judicata, and the applicability of the Fulido
case8 with the instant case were all raised and resolved by the Labor Arbiter in favor of former Aris employees in its
Decision dated 30 October 2004. That same decision was appealed by the Corporations before the NLRC. The perfection
of said appeal through the posting of a partial bond was put into question and that is precisely the main issue brought
before the appellate court and before us.
By urging this Court to make a definitive ruling on these issues petitioners would have us rule on the merits, which at this
point this Court cannot do as the labor proceedings remain incomplete. If at all, the stage that has been passed is the
proceedings before the Labor Arbiter. And, without the NLRC stage, the Labor Arbiters decision is final and executory. It
is obvious that petitioners do not want either of the two options now open to them: a) allow the finality of the adverse
judgment in the amount of P3,453,664,710.86, or b) file the P750 Million bond for the review by the NLRC of the
P3,453,664,710.86 decision of the Labor Arbiter. They would want their liability finally reduced to just half of the amount
of the required appeal bond, or P350 million. The injustice to the employees is patent.
Now we proceed to tackle the Motion filed by the parties to Admit Confession of Judgment.
The Corporations entered into a compromise with some of the former Aris employees which they designate as Confession The compromise agreement which the Corporations deem as Confession of Judgment is reproduced in full below:
of Judgment. The Corporations reason that a resort to judgment by confession is the acceptable alternative to a
compromise agreement because of the impossibility to obtain the consent to a compromise of all the 5,984 complainants.
CONFESSION OF JUDGMENT

A confession of judgment is an acknowledgment that a debt is justly due and cuts off all defenses and right of appeal. It is
The undersigned counsel, by virtue of the special authority granted by HILLSHIRE earlier attached as Annex "B" and made
used as a shortcut to a judgment in a case where the defendant concedes liability. It is seen as the written authority of the
an integral part hereof seeks the approval of this Honorable Court of this Judgment by Confession under the following
debtor and a direction for entry of judgment against the debtor.9
terms and conditions, to wit:

The Corporations cite the case of Republic of the Philippines v. Bisaya Land Transportation Co.10 to outline the distinction
between a compromise agreement/judgment on consent and a confession of judgment/judgment by confession, thus:
x x x a motion for judgment on consent is not to be equated with a judgment by confession. The former is one the
provisions and terms of which are settled and a agreed upon by the parties to the action, and which is entered in the
record by the consent and sanction of the court, Hence, there must be an unqualified agreement among the parties to be
bound by the judgment on consent before said judgment may be entered. The court does not have the power to supply
terms, provisions, or essential details not previously agreed to by the parties x x x. On the other hand, a judgment by
confession is not a plea but an affirmative and voluntary act of the defendant himself. Here, the court exercises a certain
amount of supervision over the entry of judgment, as well as equitable jurisdiction over their subsequent status.11
1. HILLSHIRE will pay to the 5,984 respondents (complainants) the total amount of THREE HUNDRED FORTY TWO
MILLION TWO HUNDRED EIGHTY-FOUR THOUSAND AND EIGHT HUNDRED PESOS (PhP342,284,800.00) or at FIFTY
SEVEN THOUSAND TWO HUNDRED PESOS (PhP57,200.00) for each respondent (complainant) inclusive of the attorneys
fees of EIGHT THOUSAND FIVE HUNDRED EIGHTY PESOS (PhP8,580.00) which each respondent (complainant) will
actually pay to their counsel of record as the total consideration for the dismissal with prejudice of all the pending cases
before this Honorable Court and all the cases pending before the National Labor Relations Commission against all the
petitioners.
2. The above agreed amount of THREE HUNDRED FORTY TWO MILLION TWO HUNDRED EIGHTY-FOUR THOUSAND AND
EIGHT HUNDRED PESOS (PhP342,284,800.00) shall be distributed as follows:

In the same breadth, the Corporations also acknowledge that a compromise agreement and a judgment by confession
2.1 FORTY EIGHT THOUSAND SIX [HUNDRED] TWENTY PESOS (PhP48,620.00) to each respondent (complainant), and
stand upon the same footing in that both may not be executed by counsel without knowledge and authority of the client.
If we were to rely on the Corporations submission that all 5,984 complainants SPAs could not be obtained, then the
Confession of Judgment is void. 2.2 EIGHT THOUSAND FIVE HUNDRED EIGHTY PESOS (PhP8,580.00) to the lawyer of each respondent (complainant) by
virtue of the Special Power of Attorney given by each respondent (complainant) to lead Emilinda D. Macatlang who gave
SPA to Atty. Alex Tan.
Even if we dismiss the Corporations choice of designation as pure semantics and consider the agreement they entered
into with the complainants as a form of a compromise agreement, we still could not approve the same.
3. HILLSHIRE will deposit the amount of THREE HUNDRED FORTY TWO MILLION TWO HUNDRED EIGHTY-FOUR
THOUSAND AND EIGHT HUNDRED PESOS (PhP342,284,800.00) with a local bank duly licensed by the Bangko Sentral ng
We elucidate.
Pilipinas (BSP) within sixty (60) days from the date of the issuance of a Certificate of Finality and/or Entry of Judgment
of the Decision of this Honorable Court on this Confession of Judgment.
A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one
already commenced. It is an agreement between two or more persons, who, for preventing or putting an end to a lawsuit,
4. The amount of FORTY EIGHT THOUSAND SIX HUNDRED TWENTY PESOS (PhP48,620.00) shall be paid directly to each
adjust their difficulties by mutual consent in the manner which they agree on, and which everyone of them prefers to the
respondent (complainant) and the corresponding attorneys fees of EIGHT THOUSAND FIVE HUNDRED EIGHTY PESOS
hope of gaining, balanced by the danger of losing.12
(PhP8,580.00) shall be paid to their lawyers (duly authorized by an SPA) by the bank through a managers check.

A compromise must not be contrary to law, morals, good customs and public policy; and must have been freely and
5. The total deposit of THREE HUNDRED FORTY TWO MILLION TWO HUNDRED EIGHTY FOUR THOUSAND EIGHT
intelligently executed by and between the parties.13
HUNDRED PESOS (PhP342,284,800.00) must be claimed by the respondents (complainants) from the depository bank
within two (2) years from the date of the Certificate of Finality or Entry of Judgment issued by this Honorable Court.
Article 227 of the Labor Code of the Philippines authorizes compromise agreements voluntarily agreed upon by the
parties, in conformity with the basic policy of the State "to promote and emphasize the primacy of free collective
6. Any balance of the deposited amount which remains unclaimed by the respondents (complainants) within the two (2)
bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or
year period referred to above shall automatically revert and be returned to and may be withdrawn by HILLSHIRE and/or
industrial disputes."14 The provision reads:
its attorney-in-fact, without the necessity of any prior Order or permission from this Honorable Court.

ART. 227 Compromise Agreements. Any compromise settlement, including those involving labor standard laws,
7. Thereafter, upon expiration of the two (2) year period referred to above, HILLSHIREs obligation to make any payment
voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor,
to the respondents (Complainants) shall ipso facto cease, expire and terminate and the judgment by confession shall be
shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume
considered satisfied, fulfilled and terminated.
jurisdiction over issues involved therein except in case of noncompliance thereof or if there is prima facie evidence that
the settlement was obtained through fraud, misrepresentation, or coercion.
8. The bank to which the amount of the confessed judgment (PhP342,284,800.00) is deposited shall be authorized by
HILLSHIRE through the undersigned attorney to pay to individual respondents (complainants) listed in the original
A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver
Decision dated October 30, 2004 of the Labor Arbiter and/or their lawyers the above agreed amounts subject to the
voluntarily, with a full understanding of what he was entering into.15
following conditions:

7
8.1 Complainants shall personally claim the payment to them from the bank upon presentation of any recognized
government IDs such as Drivers License, Senior Citizens Card, Voters ID, SSS ID, Unified Multipurpose Identification
Card, Postal ID, Passport, or Certification Under Oath by the Barangay Chairman as to the identity of the respondent
(complainant), or
8.2 By the duly authorized representative of respondent (complainant) evidenced by a duly notarized Special Power of
Attorney in case the respondent (complainant) cannot personally claim his/her payment due to sickness or physical
disability.
9. The lead complainant, Ms. Emilinda D. Macatlang, and Atty. Alex Tan shall take adequate steps to inform all the
respondents (complainants) by personal notice or media announcement of this confession of judgment upon receipt of
the Decision of this Honorable Court.
10. All fully paid respondents (complainants) shall execute a Waiver, Release and Quitclaim.
11. Upon the approval of this Confession of Judgment by this Honorable Court, all cases pending before this Honorable
Court and the NLRC shall automatically be considered dismissed, terminated and of no force and effect.
Petitioners invite the attention of this Honorable Court that the above monetary consideration for both the respondents
(complainants) and their counsel under the above terms and conditions have been agreed upon with Atty. Alex Tan before
the filing of this confession of judgment.
To reiterate, this confession of judgment is made by HILLSHIRE for the purpose of buying peace and/or to secure to the
said petitioner and the other Petitioners against any possible contingent liability which may accrue to them as a
consequence of their having been made Respondents in the Complaints filed by the Complainants before the NLRC.16
A review of the compromise agreement shows a gross disparity between the amount offered by the Corporations
compared to the judgment award. The judgment award is P3,453,664,710.86 or each employee is slated to receive
P577,149.85. On the other hand, the P342,284,800.00 compromise is to be distributed among 5,984 employees which
would translate to only P57,200.00 per employee. From this amount, P8,580.00 as attorneys fees will be deducted,
leaving each employee with a measly P48,620.00. In fact, the compromised amount roughly comprises only 10% of the
judgment award.
In our Decision, the appeal bond was set at P725 Million after taking into consideration the interests of all parties. To
reiterate, the underlying purpose of the appeal bond is to ensure that the employer has properties on which he or she can
execute upon in the event of a final, providential award. Thus, non-payment or woefully insufficient payment of the appeal
bond by the employer frustrates these ends.17 As a matter of fact, the appeal bond is valid and effective from the date of
posting until the case is terminated or the award is satisfied.18 Our Decision highlights the importance of an appeal bond
such that said amount should be the base amount for negotiation between the parties. As it is, the P342,284,800.00
compromise is still measly compared to the P725 Million bond we set in this case, as it only accounts to approximately
50% of the reduced appeal bond.
In Arellano v. Powertech Corporation,19 we voided the P150,000.00 compromise for the P2.5 Million judgment on appeal
to the NLRC. We note that the compromise is a mere 6% of the contingent sum that may be received by petitioners and
the minuscule amount is certainly questionable because it does not represent a true and fair amount which a reasonable
agent may bargain for his principal.20
In Mindoro Lumber and Hardware v. Bacay,21 we found that the private respondents individual claims, ranging from
P6,744.20 to P242,626.90, are grossly disproportionate to what each of them actually received under the Sama-samang
Salaysay sa Pag-uurong ng Sakdal. The amount of the settlement is indubitably unconscionable; hence, ineffective to bar
the workers from claiming the full measure of their legal rights.22
8
The complainants filed a motion for reconsideration asking this Court to modify its Decision on the ground that the parties
have entered into a compromise agreement. The complainants justified their acquiescence to the compromise on the
possibility that it will take another decade before the case may be resolved and attained finality. We beg to disagree.
In our Decision, we have already directed the NLRC to act with dispatch in resolving the merits of the case upon receipt
of the cash or surety bond in the amount of P725 Million within 10 days from receipt of the Decision. If indeed the parties
want an immediate and expeditious resolution of the case, then the NLRC should be unhindered with technicalities to
dispose of the case. Accepting an outrageously low amount of consideration as compromise defeats the complainants
legitimate claim.
In Unicane Workers Union-CLUP v. NLRC,23 we held the P100,000.00 amount in the quit claim is unconscionable because
the complainants had been awarded by the labor arbiter more than P2 million. It should have been aware that had
petitioners pursued their case, they would have been assured of getting said amount, since, absent a perfected appeal,
complainants were already entitled to said amount by virtue of a final judgment. We proceeded to state that:
Not all quitclaims are per se invalid as against public policy.1wphi1 But, where there is clear proof that the waiver was
wrangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, then the law
will step in to annul the questionable transaction.24
In fine, we will not hesitate to strike down a compromise agreement which is unconscionable and against public policy.
WHEREFORE, the Court DENIES petitioners' Motion for Reconsideration and Motion for Leave of Court to File and Admit
Herein Statement and Confession of Judgment; and the respondents' Partial Motion for Reconsideration for their lack of
merit. The directive in the Decision dated 4 June 2014 to the National Labor Relations Commission to act with dispatch
to resolve the merits of the case upon perfection of the appeal is hereby REITERATED.
SO ORDERED.
c.
Manila Mining Corporation vs. Amor, G.R. No. 182800, April 20, 2015
FIRST DIVISION
G.R. No. 182800 April 20, 2015
MANILA MINING CORPORATION, Petitioner,
vs.
LOWITO AMOR, ET. AL., Respondents.
DECISION
PEREZ, J.:
Compliance with the requirements for the perfection of an appeal from the decision of a Labor Arbiter is at issue in this
Rule 45 Petition for Review on Certiorari which primarily seeks the nullification of the 29 November 2007 Decision1
rendered by the then Twenty-Second Division of the Court of Appeals (CA) in CA-G.R. SP No. 00609,2 the decretal portion
of which states:
WHEREFORE, the petition is hereby GRANTED. The Resolutions of the NLRC dated 25 April 2005 and 30 June 2007,
respectively, are ANNULLED and SET ASIDE. The 25 October 2004 Resolution of the Labor Arbiter is REINSTATED.
SO ORDERED.3
The facts are not in dispute.
Respondents Lowito Amor, Rollybie Ceredon, Julius Cesar, Ronito Martinez and Fermin Tabili, Jr. were regular employees
of petitioner Manila Mining Corporation, a domestic corporation which operated a mining claim in Placer, Surigao del
Norte, in pursuit of its business of large-scale open-pit mining for gold and copper ore. In compliance with existing
environmental laws, petitioner maintained Tailing Pond No. 7 (TP No. 7), a tailings containment facility required for the
storage of waste materials generated by its mining operations. When the mine tailings being pumped into TP No. 7 reached
the maximum level in December 2000, petitioner temporarily shut down its mining operations pending approval of its
application to increase said faciltys capacity by the Department of Environment and Natural Resources-Environment
Management Bureau (DENR-EMB), Butuan City. Although the DENR-EMB issued a temporary authority on 25 January 2001
for it to be able to continue operating TP No. 7 for another six (6) months and to increase its capacity, petitioner failed to
secure an extension permit when said temporary authority eventually lapsed.4
On 27 July 2001, petitioner served a notice, informing its employees and the Department of Labor and Employment
Regional Office No. XII (DOLE) of the temporary suspension of its operations for six months and the temporary lay-off of
two-thirds of its employees.5 After the lapse of said period, petitioner notified the DOLE on 11 December 2001 that it was
extending the temporary shutdown of its operations for another six months.6 Adversely affected by petitioners continued
failure to resume its operations, respondents filed the complaint for constructive dismissal and monetary claims which
was docketed as NLRC Case No. RAB-13-10-00226-2003 before the Regional Arbitration Branch No. XIII of the National
Labor Relations Commission (NLRC). On 25 October 2004, Executive Labor Arbiter Benjamin E. Pelaez rendered a Decision
holding petitioner liable for constructive dismissal in view of the suspension of its operations beyond the six-month period
allowed under Article 2867 of the Labor Code of the Philippines. Finding that the cause of suspension of petitioners
business was not beyond its control,8 the Labor Arbiter applied Article 2839 of the same Code and disposed of the case in
the following wise:
WHEREFORE, premises considered, judgment is hereby entered:
1) Declaring [respondents] to have been constructively dismissed from their employment; and 2) Ordering [petitioner] to
pay xxx [respondents] their separation pay equivalent to one (1) month pay or to at least one-half (1/2) month pay for
every year of service, whichever is higher, a fraction of at least six (6) months shall be considered as one whole year, moral
damages and exemplary damages in the amount of Ten Thousand Pesos (P10,000.00) and Five Thousand Pesos
(P5,000.00), respectively, for each of the [respondents] and attorneys fees equivalent to ten (10%) percent in the total
amount of TWO MILLION ONE HUNDRED THIRTY EIGHT THOUSAND ONE HUNDRED NINETY & 02/100 PESOS
(P2,138,190.02) ONLY x x x x
All other claims are dismissed for lack of merit.
SO ORDERED.10
Aggrieved, petitioner filed its memorandum of appeal before the NLRC11 and moved for the reduction of the appeal bond
to P100,000.00, on the ground that its financial losses in the preceding years had rendered it unable to put up one in cash
and/or surety equivalent to the monetary award.12 In opposition, respondents moved for the dismissal of the appeal in
view of the fact that, despite receipt of the appealed decision on 24 November 2004, petitioner mailed their copy of the
memorandum of appeal only on 7 February 2005. Respondents also argued that the appeal bond tendered by petitioner
was so grossly disproportionate to monetary award for the same to be considered substantial compliance with the
requirements for the perfection of an appeal from a Labor Arbiters decision.13 Without addressing the procedural issues
raised by respondents, however, the NLRC Fifth Division went on to render a Resolution dated 25 April 2005 in NLRC CA
No. M-008433-2005, reversing the appealed decision and dismissing the complaint for lack of merit. Finding that the
continued suspension of petitioners operations was due to circumstances beyond its control, the NLRC ruled that, under
Article 283 of the Labor Code, respondents were not even entitled to separation pay considering the eventual closure of
their employers business due to serious business losses or financial reverses.14
Unfazed by the denial of their motion for reconsideration in the NLRCs 30 June 2005 Resolution,15 respondents filed the
Rule 65 petition for certiorari which was docketed as CA-G.R. SP No. 00609 before the Mindanao Station of the CA. Insisting
that petitioners memorandum of appeal was filed 65 days after the lapse of reglementary period for appeal, respondents
called attention to the fact that, as grossly inadequate as it already was vis--vis the P2,138,190.0216 monetary award
adjudicated in their favor, the check in the sum of P100,000.00 deposited by petitioner by way of appeal bond was
9
dishonored upon presentment for payment. Aside from the fact that the Labor Arbiters25 October 2004 Decision had
already attained finality, respondents faulted the NLRC for applying Article 283 of the Labor Code absent allegation and
proof of compliance with the requirements for the closure of an employers business due to serious business losses.17 In
its comment, on the other hand, petitioner claimed that, having caused the same to be immediately funded, the check it
issued for the appeal bond had since been deposited by the NLRC. Insisting that the cessation of its operations was due to
causes beyond its control, petitioner argued that the subsequent closure of its business due to business losses exempted it
from paying separation pay.18
On 29 November 2007, the CAs then Twenty-Second Division rendered the herein assailed decision, granting respondents
petition and nullifying the NLRCs 25 April 2005 Resolution. In reinstating the Labor Arbiters 25 October 2004 Decision,
the CA ruled that petitioner failed to perfect its appeal therefrom considering that the copy of its 3 December 2004
Memorandum of Appeal intended for respondents was served the latter by registered mail only on 7 February 2005. Aside
from posting an unusually smaller sum as appeal bond, petitioner was likewise faulted for replenishing the check it issued
only on 1 April 2005 or 24 days before the rendition of the assailed NLRC Decision. Applying the principle that the right to
appeal is merely a statutory remedy and that the party who seeks to avail of the same must strictly follow the requirements
therefor, the CA decreed that the Labor Arbiters Decision had already attained finality and, for said reason, had been placed
beyond the NLRCs power of review.19 Petitioners motion for reconsideration of the foregoing decision was denied for
lack of merit in the CAs 2 May 2008 Resolution,20 hence, this Rule 45 petition for review on certiorari.21 Petitioner seeks
the reversal of the CAs 29 November 2007 Decision and 2 May 2008 Resolution on the following grounds:
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT PETITIONERS APPEAL FILED WITH THE NATIONAL LABOR
RELATIONS COMMISSION WAS FATALLY DEFECTIVE [SINCE IT] HAD FULLY COMPLIED WITH THE REQUIREMENTS OF
THE LABOR CODE FOR PERFECTING AN APPEAL.
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN IMMEDIATELY SETTING ASIDE THE DECISION
OF THE NLRC WITHOUT REVIEWING THE MERITS OF THE CASE.
AT THE TIME OF THE PROMULGATION OF THE ASSAILED DECISION BY THE COURT OFAPPEALS, THE HONORABLE
SUPREME COURT HAD ALREADY AFFIRMED THE FINDING THAT PETITIONER WAS ALREADY PERMANENTLY CLOSED
DUE TO MASSIVE FINANCIAL LOSSES.22
Time and again, it has been held that the right to appeal is not a natural right or a part of due process; it is merely a statutory
privilege, and may be exercised only in the manner and in accordance with the provisions of law.23 A party who seeks to
avail of the right must, therefore, comply with the requirements of the rules, failing which the right to appeal is invariably
lost.24 Insofar as appeals from decisions of the Labor Arbiter are concerned, Article 223 of the Labor Code of the
Philippines25 provides that, "(d)ecisions, awards, or orders of the Labor Arbiter are final and executory unless appealed
to the [NLRC] by any or both parties within ten (10) calendar days from the receipt of such decisions, awards or orders."
In case of a judgment involving a monetary award, the same provision mandates that, "an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the
[NLRC] in the amount equivalent to the monetary award in the judgment appealed from." Alongside the requirement that
"the appellant shall furnish a copy of the memorandum of appeal to the other party," the foregoing requisites for the
perfection of an appeal are reiterated under Sections 1, 4 and 6, Rule VI of the NLRC Rules of Procedure in force at the time
petitioner appealed the Labor Arbiters 25 October 2004 Decision, viz.:
SECTION 1. PERIODS OF APPEAL. - Decisions, resolutions or orders of the Labor Arbiter shall be final and executory unless
appealed to the Commission by any or both parties within ten (10)calendar days from receipt of such decisions, resolutions
or orders of the Labor Arbiter x x x x. If the 10th x x x x day x x x x falls on a Saturday, Sunday or a holiday, the last day to
perfect the appeal shall be the next working day.
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. - (a) The Appeal shall be filed within the reglementary period as
provided in Section 1 of this Rule; shall be verified by appellant himself in accordance with Section 4, Rule 7 of the Rules of
Court, with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 6
of this Rule; shall be accompanied by memorandum of appeal in three (3) legibly typewritten copies which shall state the
grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of the date when the
appellant received the appealed decision, resolution or order and a certificate of non-forum shopping with proof of service
on the other party of such appeal. A mere notice of appeal without complying with the other requisites aforestated shall
not stop the running of the period for perfecting an appeal. (Italics supplied)
xxxx
The issue that has be devilled labor litigation for long has been clarified by the ruling in McBurnie v. Ganzon, et al.,35 which
built on and extended the ruling that while it is true that reduction of the appeal bond has been allowed in meritorious
cases36 on the principle that substantial justice is better served by allowing appeals on the merits,37 it has been ruled that
the employer should comply with the following conditions: (1) the motion to reduce the bond shall be based on meritorious
grounds; and (2) a reasonable amount in relation to the monetary award is posted by the appellant, otherwise the filing of
the motion to reduce bond shall not stop the running of the period to perfect an appeal.38

The McBurnie ruling pronounced:

SECTION 6. BOND. - In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal
by the employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall either be in cash
or surety in an amount equivalent to the monetary award, exclusive of damages and attorneys fees. xxx

xxxx Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as provided in Section 6, Rule
VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES that henceforth, the following guidelines shall be
observed:
No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a
reasonable amount in relation to the monetary award.
(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the following conditions: (1)
there is meritorious ground; and (2) a bond in a reasonable amount is posted;
The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall not stop
the running of the period to perfect an appeal.
(b) For purposes of compliance with condition no. (2), a motion shall be accompanied by the posting of a provisional cash
or surety bond equivalent to ten percent (10), of the monetary award subject of the appeal, exclusive of damages and
Having received the Labor Arbiters Decision on 24 November 2004,26 petitioner had ten (10) calendar days or until 4
attorney's fees;
December 2004 within which to perfect an appeal. Considering that the latter date fell on a Saturday, petitioner had until
the next working day, 6 December 2004, within which to comply with the requirements for the perfection of its appeal.
Our perusal of the record shows that, despite bearing the date 3 December 2004, petitioners memorandum of appeal was (c) Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day reglementary period to
subscribed before Notary Public Ronald Rex Recidoro only on 6 December 2004.27 Without proof as to the actual date of perfect an appeal from the labor arbiter's decision to the NLRC;
filing of said pleading being presented by both parties, the CA discounted the timeliness of its filing in light of the
established fact that the copy thereof intended for respondents was only served by registered mail on 7 February 2005.28
(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final amount of bond
Since proof of service of the memorandum on appeal is required for the perfection of an appeal from the decision of the
that shall be posted by the appellant, still in accordance with the standards of meritorious grounds and reasonable amount;
Labor Arbiter, the CA ruled that "respondents filed its appeal not earlier than 07 February 200[5], which is way beyond
and
the ten-day reglementary period to appeal."29

(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the amount of the
As allegation is not evidence, however, the rule is settled that the burden of evidence lies with the party who asserts the
provisional bond, the appellant shall be given a fresh period of ten (10) days from notice of the NLRC order within which
affirmative of an issue.30 As the parties claiming the non-perfection of petitioners appeal, it was, therefore, respondents
to perfect the appeal by posting the required appeal bond.39
who had the burden of proving that said memorandum of appeal was, indeed, filed out of time. By and of itself, the fact that
the copy of memorandum of appeal intended for respondents was served upon them by registered mail only on 7 February
2005 does not necessarily mean that petitioners appeal from the Labor Arbiters decision was filed out of time. On the In this case, we see that with no proof to substantiate its claim, petitioner moved for a reduction of the appeal bond on the
principle that justice should not be sacrificed for technicality,31 it has been ruled that the failure of a party to serve a copy proferred basis of serious losses and reverses it supposedly sustained in the years prior to the rendition of the Labor
of the memorandum to the opposing party is not a jurisdictional defect and does not bar the NLRC from entertaining the Arbiter's decision.
appeal.32 Considering that such an omission is merely regarded as a formal lapse or an excusable neglect,33 the CA
reversibly erred in ruling that, under the circumstances, petitioner could not have filed its appeal earlier than 7 February
The first condition may be left for the nonce. As to the second condition, we may consider that the amount of P100,000.00
2005.
supposedly posted was provisional bond sufficient to suspend the running of the 10-day reglementary period to perfect an
appeal from the Labor Arbiter's decision. That would however not improve petitioner's position one bit.
The question regarding the appeal bond rises from the record which shows that, in addition to its memorandum of appeal,
petitioner filed a 6 December 2004 motion for the reduction of the appeal bond on the ground that the cash equivalent of
Respondent correctly called attention to the fact that the check submitted by petitioner was dishonored upon presentment
the monetary award and/or cost of the surety bond have proven to be prohibitive in view of the tremendous business
for payment, thereby rendering the tender thereof ineffectual. Although the NLRC chose not to address the issue of the
losses it allegedly sustained. As supposed measure of its good faith in complying with the Rules, petitioner attached to its
perfection of the appeal as well as the reduction of the bond in its Resolution dated 25 April 2005, the record shows that
motion Philam Bank Check No. 0000627153, dated 6 December2004, in the amount of P100,000.00 only. As pointed out
petitioner only manifested its deposit of the funds for the check 24 days before the resolution of its appeal or 116 days
by respondents, however, said check was subsequently dishonored upon presentment for payment for insufficiency of
after its right to appeal the Labor Arbiters decision had expired. Having filed its motion and memorandum on the very last
funds. In its 1 April 2005 Ex-Parte Manifestation, petitioner informed the NLRC that it "only learned belatedly that the same
day of the reglementary period for appeal, moreover, petitioner had no one but itself to blame for failing to post the full
check was dishonored" as there appeared to be "an inadvertent mix-up as other checks issued for [its] other obligations
amount pending the NLRCs action on its motion for reduction of the appeal bond. If redundancy be risked it must be
were negotiated ahead [thereof], leaving an insufficient balance in its account." As a consequence, petitioner claimed that
emphasized that the posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards
"the deficiency in deposit has been promptly and immediately replenished as soon as the check's dishonor was reported"
from the decision of the Labor Arbiter. Since it is the posting of a cash or surety bond which confers jurisdiction upon the
and that the same may already be re-deposited at any of NLRC's depositary banks.34
NLRC,40 the rule is settled that non-compliance is fatal and has the effect of rendering the award final and executory.41

10
Viewed in the light of the foregoing considerations, the CA cannot be faulted for no longer discussing the merits of
petitioners case.1avvphi1 Although appeal is an essential part of our judicial process, it has been held, time and again, that
the right thereto is not a natural right or a part of due process but is merely a statutory privilege. Thus, the perfection of an
appeal in the manner and within the period prescribed by law is not only mandatory but also jurisdictional and failure of
a party to conform to the rules regarding appeal will render the judgment final and executory. Once a decision attains
finality, it becomes the law of the case and can no longer be revised, reviewed, changed or altered. The basic rule of finality
of judgment is grounded on the fundamental principle of public policy and sound practice that, at the risk of occasional
error, the judgment of courts and the award of quasi-judicial agencies must become final at some definite date fixed by
law.42
Without necessarily resulting to a termination of employment, an employer may at any rate, bona fide suspend the
operation of its business for a period of not exceeding six months under Article 286 of the Labor Code.43 While the
employer is, on the one hand, duty bound to reinstate his employees to their former positions without loss of seniority
rights if the operation of the business is resumed within six months, employment is deemed terminated where the
suspension exceeds said period.44 Not having resumed its operations within six months from the time it suspended its
operations on 27 July 2001, it necessarily follows that petitioner is liable to pay respondents separation pay45 computed
at one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher,46 as well as the
damages and attorneys fees adjudicated by the Labor Arbiter. Without proof of the serious business losses it allegedly
sustained and/or compliance with the reportorial requirements under Article 283 of the Labor Code, petitioner cannot
expediently plead exemption from said liabilities due to the supposed financial reverses which led to the eventual closure
of its business. It is essentially required that the alleged losses in business operations must be proven for, otherwise, said
ground for termination would be susceptible to abuse by scheming employers who might be merely feigning business
losses or reverses in their business ventures in order to ease out employees.47 The condition of business losses justifying
retrenchment is normally shown by audited financial documents like yearly balance sheets and profit and loss statements
as well as annual income tax returns48 which were not presented in this case.
Neither can petitioner evade said liabilities on the strength of the 28 July 2005 Decision rendered by the CA's Twenty-
Second Division in CAG.R. SP No. 00072, entitled Rosita Asumen, et al. v. National Labor Relations Commission, et al., where
its employees' claim for separation pay was denied on account of the subsequent closure of its business due to serious
business losses and financial reverses.49 Although the employees Rule 45 petition for review on certiorari had been denied
in the 7 February 2007 Resolution issued by this Court's Second Division in UDK-13776,50 the ruling in said case can
hardly be considered binding on respondents who were not parties thereto. As for the inequality in benefits which would
supposedly result if the CA's assailed decision and resolution were not reversed, suffice it to say that this Court had
sustained the claim for . separation pay of petitioner's employees in the case of Manila Mining Corp Employees Association-
Federation of Free Workers Chapter, et al. v. Manila Mining Corporation, et al.51 Stare decisis is inapplicable; the matter of
separation pay for petitioner's employees has been decided case to case.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.
d. Beduya vs. Ace Promotion and Marketing Corporation, G.R. No. 195513, June 22, 2015
Some issues covered/resolved-Dismissal after filing of illegal dismissal case; abandonment; loss of
confidence;dishonesty;closure and cessation of business;proof of losses in dismissal due to closure of business
SECOND DIVISION
G.R. No. 195513 June 22, 2015
MARLON BED UY A, ROSARIO DUMAS* ALEX LEONOZA, RAMILO FAJARDO, HARLAN LEONOZA, ALVIN ABUYOT,
DINDO URSABIA,** BERNIE BESONA, ROMEO ONANAD,*** ARMANDO LIPORADA,**** FRANKFER ODULIO,
MARCELO MATA, ALEX COLOCADO, JOJO PACATANG, RANDY GENODIA and ISABINO B. ALARMA, JR.,
Petitioners,******
vs.
ACE PROMOTION AND MARKETING CORPORATION and GLEN******** HERNANDEZ, Respondents.
DECISION
DEL CASTILLO, J.:
11
Procedural rules should be relaxed if only to serve the ends of justice.
This Petition for Review on Certiorari1 assails the November 30, 2010 Decision2 of the Court of Appeals (CA) in CA-G.R. SP
No. 111536 affirming the February 23, 2009 Decision3 and August 4, 2009 Resolution4 of the National Labor Relations
Commission (NLRC), which granted respondents appeal from the April 24, 2008 Decision5 of the Labor Arbiter and
ordered the dismissal of petitioners complaint for illegal dismissal. Likewise assailed is the February 3, 2011 CA
Resolution6 which denied petitioners Motion for Reconsideration of the said CA Decision.
Antecedent Facts
Respondent Ace Promotion and Marketing Corporation (APMC), with respondent Glen Hernandez as its President, is a
contractor engaged in the deployment of workers to various companies to promote the latters products through
promotional and merchandising services. In pursuance of its business, APMC entered into a Promotional Contract7 with
Delfi Marketing, Inc.8 (Delfi) whereby the former undertook to conduct promotional activities for the latters confectionery
products. For this purpose, APMC employed workers, including petitioners Marlon Beduya, Rosario Dumas, Alex Leonoza,
Alvin Abuyot, Dindo Ursabia, Bernie Bosona, Romeo Onanad, Armando Liporada, Frankfer Odulio, Marcelo Mata, Alex
Colocado, Jojo Pacatang, Randy Genodia and Isabino B. Alarma, Jr. (petitioners), as merchandisers and assigned them to
various retail outlets and supermarkets under fixed-term employment contracts. The last contracts of employment9 that
petitioners signed were until January 30, 2007.
In a letter10 dated December 27, 2006, Delfi notified APMC that their Promotional Contract will expire effective January
31, 2007. On January 29, 2007, APMC informed petitioners, among other workers, that their last day of work would be on
January 30, 2007.
Proceedings before the Labor Arbiter
Before the Labor Arbiter, three separate complaints11 for illegal dismissal and money claims against respondents were
filed by petitioners and by other employees (complainants) w hose employment was terminated allegedly by reason of the
expiration of APMCs contract with Delfi. The said complaints, docketed as NLRC-NCR Case No s. 00-02-01022-07, 00-02-
0185-07 and 00-03-02756-07, were consolidated.
In their Position Paper,12 complainants alleged that: they are regular employees of APMC, having continuously worked in
APMC since 1997; they are bona fide members of the Social Security System (SSS) and the companys Home Development
Mutual Fund (HDMF); the expiration of the Promotional Contract between APMC and Delfi does not automatically result
in their dismissal; and, the said Promotional Contract is still subsisting as new workers were hired as their replacements.
All of the complainants asked for wage differentials, claiming that part of their wages were unlawfully withheld unless they
sign a waiver and quitclaim in favor of APMC, while 18 of them additionally prayed for recovery of unpaid ECOLA.
Respondents, on the other hand, countered that AP MC is a legitimate job contractor that hires employees for a specific job
on a contractual basis. With respect to complainants, respondents claimed that they were duly apprised of the contractual
nature of their employment, its duration, working hours, basic salaries, and the basic work policies as stipulated in their
contracts of employment. And since complainants were hired as merchandisers for Delfi, their employment automatically
ended when APMCs Promotional Contract with Delfi expired. On the complainants allegation of continuous employment,
respondents explained that, indeed, complainants were previously engaged as merchandisers for a client, Goya, Inc. (Goya).
But when Goyas business interest was sold to Delfi, complainants fixed-term employment contracts also accordingly
expired. They were then rehired and reassigned to Delfi, again on a fixed-term basis, which employment was necessarily
terminated upon the end of the term. In view of this, respondents denied liability over complainants money claims,
damages, and attorneys fees.
In a Decision13 dated April 24, 2008, the Labor Arbiter, after finding no credible evidence to prove that they were employed
on a contractual basis, declared complain ants to have been illegally dismissed. He found unconvincing APMCs allegation
that complainants employment was terminated due to the expiration of its contract with Delfi considering that it continued
to hire new employees as replacements for complainants. This, the Labor Arbiter opined, infringed upon complainants
right to security of tenure. On the other hand, he viewed complainants continuous employment with APMC for a
considerable length of time and the fact that they are SSS and HDMF members, as indications of their being regular
employees. Thus, he ordered complainants reinstatement or payment of separation pay, payment of backwages, unpaid
wages, ECOLA, moral and exemplary damages, and attorneys fees. The dispositive portion of the Labor Arbiters Decision
reads:
WHEREFORE, premises considered, judgment is hereby rendered GRANTING the instant appeal. The Decision of the Labor
Arbiter dated 24 April 2008 is hereby reversed and set aside, and a new one is issued dismissing the complaint.
Respondents-Appellants are, however, directed to cause the immediate satisfaction of complainants-appellees unpaid
wages for fifteen (15) days and ECOLA for one (1) year.
SO ORDERED.20

WHEREFORE, premises all considered, judgment is hereby rendered finding the dismissal illegal and ordering respondents,
In their Motion for Reconsideration,21 complainants maintained that the
as follows:

437,210.00 appeal bond is in sufficient and unreasonable in relation to the total monetary award of 6,269,856 .89, which
1. To reinstate complainants to their former position with full backwages to be reckoned from the date of their
should have warranted the dismissal of respondents appeal. Complainants likewise pointed out that the NLRC gravely
dismissal up to the finality of this decision.
abused its discretion when it did not re solve respondents motion to reduce bond and their opposition thereto with motion
2. In the alternative, to pay them x x x their backwages plus separation pay equivalent to half month salary for
to dismiss before rendering its decision granting the appeal. Complainants Motion for Reconsideration was, however,
every year of service if employment is no longer tenable.
denied by the NLRC in its Resolution22 dated August 4, 2009.
3. To pay the named eighteen (18) employees x x x their unpaid ECOLA for one (1) year.
4. To pay complainants x x x their unpaid wages for fifteen (15) days.
5. To pay moral damages in the amount of P10,000.00 each. Proceedings before the Court of Appeals
6. To pay exemplary damages [in] the [amount] of P5,000.00 each.
7. To pay attorneys fees equivalent to 10% of the total monetary award.
Some of the complainants, including petitioners, filed a Petition for Certiorari23 with the CA. They insisted that the NLRC
gravely abused its discretion in granting respondents appeal despite the latters failure to perfect the same since the appeal
The computation of the monetary award as computed by the Computation Division of this Office is attached hereto and bond filed was grossly insufficient and inadequate. Consequently, the Labor Arbiters Decision had already become final
forms part of this decision. and executory.

SO ORDERED.14
Proceedings before the National Labor Relations Commission
Respondents filed a Memorandum of Appeal with Motion for Reduction of Bond15 with the NLRC. They maintained that
complainants were contractual employees. As such, their contracts of employment were terminated upon the expiration
of APMCs Promotional Contract with Delfi. Anent their motion for reduction of appeal bond, respondents contended that
the awards granted to complainants amounting to 6,269,856.89 should be decreased considering that:
(1) eight complainants did not sign the position paper submitted to the Labor Arbiter and therefore, the monetary awards
given in their favor should be excluded in the computation of the total award; (2) nine complainants already withdrew
their complaints as shown by their Affidavits of Desistance;16 (3) assuming that separation pay was correctly awarded,
the computation thereof should start from year 2003 when complainants started working for Goya and not from year 1997
as computed by the Labor Arbiter; and (4) the backwages should be computed only up to January 31, 2007 or up to the
expiration of the Promotional Contract with Delfi and not until July 31, 2008. Respondents attached a supersede as bond17
in the amount of 437,210.00 along with their appeal.
In their Opposition with Motion to Dismiss Appeal,18 complainants prayed for the dismissal of respondents appeal based
on insufficiency of the bond posted. This thus resulted in the non-perfection of the appeal, and consequently, the Labor
Arbiters Decision had become final and executory.
Without acting on respondents motion for reduction of bond and the complainants opposition thereto, the NLRC rendered
a Decision19 on February 23, 2009 finding complainants to be contractual employees hired for a specific duration. The
NLRC noted that complainants were duly informed at the commencement of their employment that they were hired for a
definite period and for a specific project, i.e., Delfi, and that they voluntarily agreed to these and the other terms of their
employment contracts. Hence, when the specific project or undertaking for which they were hired cease d, their
employment also ceased. They were therefore not illegally dismissed. In the ultimate, the NLRC reversed the Labor
Arbiters Decision and dismissed the complaints for illegal dismissal. It, however, affirmed the awards of unpaid wages and
ECOLA in favor of complainants. Thus:
On November 30, 2010, the CA rendered a Decision24 dismissing the petition. It found respondents willingness and good
faith in complying with the requirements as sufficient justification to relax the rule on posting of an appeal bond. Moreover,
the CA agreed with the NLRC in finding that complainants were not illegally dismissed. The termination of their
employment was simply brought about by the expiration of the fixed period stipulated in their contract s that they
voluntarily signed after the terms thereof were fully explained to them.
Complainants Motion for Reconsideration25 was denied by the CA in its Resolution26 of February 3, 2011.
Thus, petitioners, from among all the complainants, are now before this Court through the present Petition.
Issues
(a)
WHETHER X X X THE FILING OF APPEAL WITH MOTION TO REDUCE APPEAL BOND WILL TOLL THE RUNNING
OF THE PERIOD TO PERFECT AN APPEAL
(b)
WHETHER X X X AN APPEAL BOND IN THE AMOUNT OF P473,210.00 IS REASONABLE IN RELATION TO [A
POSSIBLE] MONETARY AWARD OF 6,269,856.00
(c)
WHETHER X X X THE DECISION RENDERED BY THE LABOR ARBITER IS DEEMED FINAL AND EXECUTORY AS
THE APPEAL WAS NOT PERFECTED
(d)
WHETHER X X X IT IS PROCEDURALLY CORRECT TO PASS JUDGMENT ON A CASE WHEN THERE IS STILL A
PENDING MOTION TO BE RESOLVED27
For respondents alleged failure to comply with the jurisdictional requirements on appeal bonds, petitioners maintain that
the NLRC did not acquire jurisdiction over respondents appeal. Moreover, they claim that the NLRC erred in resolving the
merits of the appeal without first ruling on respondents motion to reduce appeal bond and their opposition thereto with
motion to dismiss.
Our Ruling

12
The Petition has no merit.
Article 223 of the Labor Code provides:
ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders.
Such appeal may be entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
(b) If the decision, order or award was secured through fraud or coercion, including graft and corruption;
(c) If made purely on questions of law; and
(d) If serious errors in the finding of facts are raised which would cause grave or irreparable damage or injury
to the appellant.
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent
to the monetary award in the judgment appealed from.
While Sections 4(a) and 6 of Rule VI of the 2005 Revised Rules of Procedure of the NLRC provide:
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. (a) The Appeal shall be: 1) filed within the reglementary period as
provided in Section 1 of this Rule; 2) verified by appellant himself in accordance with Section 4, Rule 7 of the Rules of Court,
as amended; 3) in the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in
support thereof, the relief prayed for, and with a statement of the date the appellant received the appealed decision,
resolution or order; 4) in three (3) legibly written or printed copies; and 5) accompanied by i) proof of payment of the
required appeal fee; ii) posting of a cash or surety bond as provided in Section 6 of this Rule; iii) a certificate of non-forum
shopping; and iv) proof of service upon the other parties.
SECTION 6. BOND. In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal
by the employer may be perfected only upon the posting of a bond which shall either be in the form of cash deposit or
surety bond equivalent in amount to the monetary award, exclusive of damages and attorneys fees.
No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a
reasonable amount in relation to the monetary award.
The mere filing of a motion to reduce bond without complying with the requisites in the preceding paragraphs shall not
stop the running of the period to perfect an appeal.
It is thus clear from the foregoing that the filing of supersede as bond for the perfection of an appeal is mandatory and
jurisdictional and failure to comply with this requirement renders the decision of the Labor
Arbiter final and executory.28
However, this Court, in many cases,29 has relaxed this stringent requirement whenever justified. Thus, the rules,
specifically Section 6 of Rule VI of the 2005 Revised Rules of Procedure of the NLRC, allows the reduction of the appeal
13
bond subject to the conditions that: (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a
reasonable amount in relation to the monetary award is posted by the appellant. Otherwise, the filing of a motion to reduce
bond shall not stop the running of the period to perfect an appeal. Still, the rule that the filing of a motion to reduce bond
shall not stop the running of the period to perfect an appeal is not absolute.30 The Court may relax the rule under certain
exceptional circumstances which include fundamental consideration of substantial justice, prevention of miscarriage of
justice or of unjust enrichment and special circumstances of the case combined with its legal merits, and the amount and
the issue involved.31 Indeed, in meritorious cases, the Court was propelled to relax the requirements relating to appeal
bonds such as when there are valid issues raised in the appeal32 and in the absence of any valid claims against the
employer.33
In the case at bench, the Court finds that respondents motion to reduce appeal bond was predicated on meritorious and
justifiable grounds. First, the fact that eight complainants failed to verify or affix their signatures on the position paper filed
before the Labor Arbiter merits the exclusion of the monetary awards adjudged to them. In Martos v. New San Jose Builders,
Inc.,34 it was held that the failure of some of the complainants therein to verify their position paper submitted before the
Labor Arbiter brought about the dismissal of the complaint as to them who did not verify. The Court went on to say that
their negligence and passive attitude towards the rule on verification amounted to their refusal to further prosecute their
claims. Second, the withdrawal of seven complainants35 in this case likewise warrants the reduction of the monetary
award rendered against respondents. Suffice it to say that the said seven complainants are bound by the Affidavits of
Desistance which are presumed to have been freely and voluntarily executed by them. Accordingly, they no longer
participated in the subsequent proceedings after having received their last salaries and due benefits.
Petitioners, however, posit that the amount of the appeal bond posted, i.e.,
437,210.00, is unreasonable and inadequate vis-a-vis the total monetary award of 6,269,856.83. What they consider as
reasonable percentage of the total monetary award is at least 30% thereof.
In the recent case of Mcburnie v. Ganzon,36 the Court has set a provisional percentage of 10% of the monetary award,
exclusive of damages and attorneys fees, as a reasonable amount of bond that an appellant should post pending resolution
by the NLRC of a motion to reduce bond. It is only after the posting of this bond that an appellants period to perfect an
appeal is suspended. Here, after deducting from the total monetary award the amount of attorneys fees and the amounts
awarded to those complainants who did not verify their position papers and those who had withdrawn their complaints,
the total monetary award amounts to only more than 3 million.37 Hence, the appeal bond of 437,210.00 posted by
respondents is in fact even more than 10% of the said total monetary award. Thus, applying the same parameter set in
Mcburnie, the Court finds the amount of bond posted by respondents in the present case to be reasonable.
In any event, the Court notes that in Mcburnie, it was held that the required 10% of the monetary award as appeal bond is
merely provisional given that the NLRC still retains the authority to exercise its full discretion to resolve a motion for the
reduction of bond and determine the final amount of bond that should be posted by an appellant in accordance with the
standards of meritorious grounds and reasonable amount.38
In consideration of the foregoing, the Court finds no merit in petitioners contention that the NLRC fa iled to establish its
jurisdictional authority over respondents appeal. Again, the filing of a motion to reduce bond predicated on meritorious
grounds coupled with the posting of a reasonable amount of cash or surety bond suffice to suspend the running of the
period within which to appeal. As discussed, respondents in this case have substantially complied with these requirements
and, on account thereof, their appeal from the Labor Arbiters Decision was timely filed. Clearly, the NLRC was conferred
with jurisdiction over respondents appeal thus placing the same within the power of the said labor tribunal to review.
With respect to the NLRCs failure to initially ac t upon respondents motion to reduce bond and petitioners opposition
thereto with motion to dismiss, suffice it to say that the same did not divest the NLRC of its authority to resolve the appeal
on its substantive matters. After all, the NLRC is not bound by technical rules of procedure and is allowed to be liberal in
the application of its rules in deciding labor cases.39 Further, the NLRC is mandated to use every and all reasonable means
to ascertain the fact s in each case speedily and objectively, without regard to technicalities of law or procedure, all in the
interest of due process.40
Coming now to the substantive matters, the Court finds that the CA correctly affirmed the NLRC Decision which granted
respondents appeal and dismissed the illegal dismissal complaints. As aptly found by them, petitioners were fixed-term
employees whose respective contracts of employment had already expired. Therefore, there can be no illegal dismissal to
speak of. The following observations made by the CA were supported by substantial evidence on record, viz:
We find and so rule that private respondents are independent contractors, and petitioners were deployed to Delfi Foods
to render various services.1wphi1 This was admitted by petitioners during the proceedings before the labor tribunal. The
relationship between the parties is governed by the Employment Contract which petitioners voluntarily signed before
being deployed at Delfi Foods.
The NLRC extensively quoted the aforesaid contract which primarily provided that petitioners employment was for a fixed
period, that is, from 1 December 2006 until 30 January 2007. Significantly, no allegations were made that petitioners were
forced or pressure d into affixing their signatures upon the contract. There is likewise no concrete proof that private
respondents prevailed upon petitioners, exercising moral dominance over the latter, to accept the conditions set forth in
the said contract. Having accepted the terms thereof, petitioners were bound by its unequivocal stipulation that their
employment was not permanent, but would expire at the end of the fixed period.41
WHEREFORE, the Petition is DENIED. The November 30, 2010 Decision and February 3, 2011 Resolution of the Court of
Appeals in CA-G.R. SP No. 111536 are AFFIRMED.
Suability of foreign corporation with NLRC; Forum Non Conveniens; CEDAW;Termination due to pregnancy
e. Saudi Arabian Airlines vs. Rebesencio, G.R. No. 198587, January 14, 2015
SECOND DIVISION
G.R. No. 198587, January 14, 2015
SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA, Petitioners, v. MA. JOPETTE M. REBESENCIO,
MONTASSAH B. SACAR-ADIONG, ROUEN RUTH A. CRISTOBAL AND LORAINE S. SCHNEIDER-CRUZ, Respondents.
DECISION
LEONEN, J.:
All Filipinos are entitled to the protection of the rights guaranteed in the Constitution.
This is a Petition for Review on Certiorari with application for the issuance of a temporary restraining order and/or writ
of preliminary injunction under Rule 45 of the 1997 Rules of Civil Procedure praying that judgment be rendered
reversing and setting aside the June 16, 2011 Decision1 and September 13, 2011 Resolution2 of the Court of Appeals in
CA-G.R. SP. No. 113006.
Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and existing under the laws of Jeddah,
Kingdom of Saudi Arabia. It has a Philippine office located at 4/F, Metro House Building, Sen. Gil J. Puyat Avenue, Makati
City.3 In its Petition filed with this court, Saudia identified itself as follows:chanroblesvirtuallawlibrary
1. Petitioner SAUDIA is a foreign corporation established and existing under the Royal Decree No. M/24 of 18.07.1385H
(10.02.1962G) in Jeddah, Kingdom of Saudi Arabia ("KSA"). Its Philippine Office is located at 4/F Metro House Building,
Sen, Gil J. Puyat Avenue, Makati City (Philippine Office). It may be served with orders of this Honorable Court through
undersigned counsel at 4th and 6th Floors, Citibank Center Bldg., 8741 Paseo de Roxas, Makati City. 4 (Emphasis supplied)
Respondents (complainants before the Labor Arbiter) were recruited and hired by Saudia as Temporary Flight
Attendants with the accreditation and approval of the Philippine Overseas Employment Administration. 5 After
undergoing seminars required by the Philippine Overseas Employment Administration for deployment overseas, as well
as training modules offered by Saudia (e.g., initial flight attendant/training course and transition training), and after
working as Temporary Flight Attendants, respondents became Permanent Flight Attendants. They then entered into
Cabin Attendant contracts with Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette) on May 16, 1990; 6 Montassah B. Sacar-
Adiong (Montassah) and Rouen Ruth A. Cristobal (Rouen Ruth) on May 22, 1993; 7 and Loraine Schneider-Cruz (Loraine)
on August 27, 1995.8
Respondents continued their employment with Saudia until they were separated from service on various dates in 2006. 9
14
Respondents contended that the termination of their employment was illegal. They alleged that the termination was
made solely because they were pregnant.10
As respondents alleged, they had informed Saudia of their respective pregnancies and had gone through the necessary
procedures to process their maternity leaves. Initially, Saudia had given its approval but later on informed respondents
that its management in Jeddah, Saudi Arabia had disapproved their maternity leaves. In addition, it required respondents
to file their resignation letters.11
Respondents were told that if they did not resign, Saudia would terminate them all the same. The threat of termination
entailed the loss of benefits, such as separation pay and ticket discount entitlements. 12
Specifically, Ma. Jopette received a call on October 16, 2006 from Saudia's Base Manager, Abdulmalik Saddik
(Abdulmalik).13 Montassah was informed personally by Abdulmalik and a certain Faisal Hussein on October 20, 2006
after being required to report to the office one (1) month into her maternity leave. 14 Rouen Ruth was also personally
informed by Abdulmalik on October 17, 2006 after being required to report to the office by her Group Supervisor. 15
Loraine received a call on October 12, 2006 from her Group Supervisor, Dakila Salvador. 16
Saudia anchored its disapproval of respondents' maternity leaves and demand for their resignation on its "Unified
Employment Contract for Female Cabin Attendants" (Unified Contract). 17 Under the Unified Contract, the employment of
a Flight Attendant who becomes pregnant is rendered void. It provides:chanroblesvirtuallawlibrary
(H) Due to the essential nature of the Air Hostess functions to be physically fit on board to provide various services
required in normal or emergency cases on both domestic/international flights beside her role in maintaining continuous
safety and security of passengers, and since she will not be able to maintain the required medical fitness while at work in
case of pregnancy, accordingly, if the Air Hostess becomes pregnant at any time during the term of this contract, this
shall render her employment contract as void and she will be terminated due to lack of medical fitness.18 (Emphasis
supplied)
In their Comment on the present Petition,19 respondents emphasized that the Unified Contract took effect on September
23, 2006 (the first day of Ramadan),20 well after they had filed and had their maternity leaves approved. Ma. Jopette filed
her maternity leave application on September 5, 2006.21 Montassah filed her maternity leave application on August 29,
2006, and its approval was already indicated in Saudia's computer system by August 30, 2006.22 Rouen Ruth filed her
maternity leave application on September 13, 2006,23 and Loraine filed her maternity leave application on August 22,
2006.24
Rather than comply and tender resignation letters, respondents filed separate appeal letters that were all rejected.25
Despite these initial rejections, respondents each received calls on the morning of November 6, 2006 from Saudia's office
secretary informing them that their maternity leaves had been approved. Saudia, however, was quick to renege on its
approval. On the evening of November 6, 2006, respondents again received calls informing them that it had received
notification from Jeddah, Saudi Arabia that their maternity leaves had been disapproved. 26
Faced with the dilemma of resigning or totally losing their benefits, respondents executed handwritten resignation
letters. In Montassah's and Rouen Ruth's cases, their resignations were executed on Saudia's blank letterheads that
Saudia had provided. These letterheads already had the word "RESIGNATION" typed on the subject portions of their
headings when these were handed to respondents.27
On November 8, 2007, respondents filed a Complaint against Saudia and its officers for illegal dismissal and for
underpayment of salary, overtime pay, premium pay for holiday, rest day, premium, service incentive leave pay, 13 th
month pay, separation pay, night shift differentials, medical expense reimbursements, retirement benefits, illegal
deduction, lay-over expense and allowances, moral and exemplary damages, and attorney's fees.28 The case was initially
assigned to Labor Arbiter Hermino V. Suelo and docketed as NLRC NCR Case No. 00-11-12342-07.
Saudia assailed the jurisdiction of the Labor Arbiter.29 It claimed that all the determining points of contact referred to
foreign law and insisted that the Complaint ought to be dismissed on the ground of forum non conveniens.30 It added that
respondents had no cause of action as they resigned voluntarily. 31
On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-Franco rendered the Decision32 dismissing respondents' "Saudia Manila" was the employer of respondents because:
Complaint. The dispositive portion of this Decision reads:chanroblesvirtuallawlibrary
WHEREFORE, premises' considered, judgment is hereby rendered DISMISSING the instant complaint for lack of First, "Saudia Manila" was never a party to the Cabin Attendant contracts entered into by respondents;
jurisdiction/merit.33cralawlawlibrary
Second, it was "Saudia Jeddah" that provided the funds to pay for respondents' salaries and benefits; and
On respondents' appeal, the National Labor Relations Commission's Sixth Division reversed the ruling of Executive Labor
Arbiter Jambaro-Franco. It explained that "[considering that complainants-appellants are OFWs, the Labor Arbiters and
Lastly, it was with "Saudia Jeddah" that respondents filed their resignations. 44
the NLRC has [sic] jurisdiction to hear and decide their complaint for illegal termination." 34 On the matter of forum non
conveniens, it noted that there were no special circumstances that warranted its abstention from exercising jurisdiction.35
Saudia posits that respondents' Complaint was brought against the wrong party because "Saudia Manila," upon which
On the issue of whether respondents were validly dismissed, it held that there was nothing on record to support Saudia's
summons was served, was never the employer of respondents.45
claim that respondents resigned voluntarily.
Saudia is vainly splitting hairs in its effort to absolve itself of liability. Other than its bare allegation, there is no basis for
The dispositive portion of the November 19, 2009 National Labor Relations Commission Decision36
concluding that "Saudia Jeddah" is distinct from "Saudia Manila."
reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment is hereby rendered finding the appeal impressed with merit. The
What is clear is Saudia's statement in its own Petition that what it has is a "Philippine Office . . . located at 4/F Metro
respondents-appellees are hereby directed to pay complainants-appellants the aggregate amount of SR614,001.24
House Building, Sen. Gil J. Puyat Avenue, Makati City."46 Even in the position paper that Saudia submitted to the Labor
corresponding to their backwages and separation pay plus ten (10%) percent thereof as attorney's fees. The decision of
Arbiter,47 what Saudia now refers to as "Saudia Jeddah" was then only referred to as "Saudia Head Office at Jeddah,
the Labor Arbiter dated December 12, 2008 is hereby VACATED and SET ASIDE. Attached is the computation prepared by
KSA,"48 while what Saudia now refers to as "Saudia Manila" was then only referred to as "Saudia's office in Manila." 49
this Commission and made an integral part of this Decision.37cralawlawlibrary
In the Resolution dated February 11, 2010,38 the National Labor Relations Commission denied petitioners' Motion for By its own admission, Saudia, while a foreign corporation, has a Philippine office.
Reconsideration.
Section 3(d) of Republic Act No.. 7042, otherwise known as the Foreign Investments Act of 1991, provides the
In the June 16, 2011 Decision,39 the Court of Appeals denied petitioners' Rule 65 Petition and modified the Decision of the following:chanroblesvirtuallawlibrary
National Labor Relations Commission with respect to the award of separation pay and backwages. The phrase "doing business" shall include . . . opening offices, whether called "liaison" offices or branches; . . . and
any other act or acts that imply a continuity of commercial dealings or arrangements and contemplate to that extent the
The dispositive portion of the Court of Appeals Decision reads:chanroblesvirtuallawlibrary performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive
WHEREFORE, the instant petition is hereby DENIED. The Decision dated November 19, 2009 issued by public prosecution of commercial gain or of the purpose and object of the business organization. (Emphasis supplied)
respondent, Sixth Division of the National Labor Relations Commission - National Capital Region is MODIFIED only
A plain application of Section 3(d) of the Foreign Investments Act leads to no other conclusion than that Saudia is a
insofar as the computation of the award of separation pay and backwages. For greater clarity, petitioners are ordered to
foreign corporation doing business in the Philippines. As such, Saudia may be sued in the Philippines and is subject to the
pay private respondents separation pay which shall be computed from private respondents' first day of employment up
jurisdiction of Philippine tribunals.
to the finality of this decision, at the rate of one month per year of service and backwages which shall be computed from
the date the private respondents were illegally terminated until finality of this decision. Consequently, the ten percent
Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia Manila" the latter being nothing
(10%) attorney's fees shall be based on the total amount of the award. The assailed Decision is affirmed in all other
more than Saudia's local office service of summons to Saudia's office in Manila sufficed to vest jurisdiction over
respects.
Saudia's person in Philippine tribunals.chanRoblesvirtualLawlibrary
II
The labor arbiter is hereby DIRECTED to make a recomputation based on the foregoing.40cralawlawlibrary
Saudia asserts that Philippine courts and/or tribunals are not in a position to make an intelligent decision as to the law
In the Resolution dated September 13, 2011,41 the Court of Appeals denied petitioners' Motion for Reconsideration. and the facts. This is because respondents' Cabin Attendant contracts require the application of the laws of Saudi Arabia,
rather than those of the Philippines.50 It claims that the difficulty of ascertaining foreign law calls into operation the
Hence, this Appeal was filed. principle of forum non conveniens, thereby rendering improper the exercise of jurisdiction by Philippine tribunals. 51

The issues for resolution are the following: A choice of law governing the validity of contracts or the interpretation of its provisions dees not necessarily imply forum
non conveniens. Choice of law and forum non conveniens are entirely different matters.
First, whether the Labor Arbiter and the National Labor Relations Commission may exercise jurisdiction over Saudi
Arabian Airlines and apply Philippine law in adjudicating the present dispute; Choice of law provisions are an offshoot of the fundamental principle of autonomy of contracts. Article 1306 of the Civil
Code firmly ensconces this:chanroblesvirtuallawlibrary
Second, whether respondents' voluntarily resigned or were illegally terminated; and Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
Lastly, whether Brenda J. Betia may be held personally liable along with Saudi Arabian
In contrast, forum non conveniens is a device akin to the rule against forum shopping. It is designed to frustrate illicit
Airlines.chanRoblesvirtualLawlibrary
means for securing advantages and vexing litigants that would otherwise be possible if the venue of litigation (or dispute
I
resolution) were left entirely to the whim of either party.
Summons were validly served on Saudia and jurisdiction over it validly acquired.
Contractual choice of law provisions factor into transnational litigation and dispute resolution in one of or in a
combination of four ways: (1) procedures for settling disputes, e.g., arbitration; (2) forum, i.e., venue; (3) governing law;
There is no doubt that the pleadings and summons were served on Saudia through its counsel. 42 Saudia, however, claims
and (4) basis for interpretation. Forum non conveniens relates to, but is not subsumed by, the second of these.
that the Labor Arbiter and the National Labor Relations Commission had no jurisdiction over it because summons were
never served on it but on "Saudia Manila."43 Referring to itself as "Saudia Jeddah," it claims that "Saudia Jeddah" and not
15
Likewise, contractual choice of law is not determinative of jurisdiction. Stipulating on the laws of a given jurisdiction as
the governing law of a contract does not preclude the exercise of jurisdiction by tribunals elsewhere. The reverse is
equally true: The assumption of jurisdiction by tribunals does not ipso facto mean that it cannot apply and rule on the
basis of the parties' stipulation. In Hasegawa v. Kitamura:52ChanRoblesVirtualawlibrary
Analytically, jurisdiction and choice of law are two distinct concepts. Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further question whether the application of a substantive law
V'hich will determine the merits of the case is fair to both parties. The power to exercise jurisdiction does not
automatically give a state constitutional authority to apply forum law. While jurisdiction and the choice of the lex fori will
often, coincide, the "minimum contacts" for one do not always provide the necessary "significant contacts" for the other.
The question of whether the law of a state can be applied to a transaction is different from the question of whether the
courts of that state have jurisdiction to enter a judgment. 53cralawlawlibrary
As various dealings, commercial or otherwise, are facilitated by the progressive ease of communication and travel,
persons from various jurisdictions find themselves transacting with each other. Contracts involving foreign elements are,
however, nothing new. Conflict of laws situations precipitated by disputes and litigation anchored on these contracts are
not totally novel.
Transnational transactions entail differing laws on the requirements Q for the validity of the formalities and substantive
provisions of contracts and their interpretation. These transactions inevitably lend themselves to the possibility of
various fora for litigation and dispute resolution. As observed by an eminent expert on transnational
law:chanroblesvirtuallawlibrary
The more jurisdictions having an interest in, or merely even a point of contact with, a transaction or relationship, the
greater the number of potential fora for the resolution of disputes arising out of or related to that transaction or
relationship. In a world of increased mobility, where business and personal transactions transcend national boundaries,
the jurisdiction of a number of different fora may easily be invoked in a single or a set of related
disputes.54cralawlawlibrary
Philippine law is definite as to what governs the formal or extrinsic validity of contracts. The first paragraph of Article 17
of the Civil Code provides that "[t]he forms and solemnities of contracts . . . shall be governed by the laws of the country
in which they are executed"55 (i.e., lex loci celebrationis).
In contrast, there is no statutorily established mode of settling conflict of laws situations on matters pertaining to
substantive content of contracts. It has been noted that three (3) modes have emerged: (1) lex loci contractus or the law
of the place of the making; (2) lex loci solutionis or the law of the place of performance; and (3) lex loci intentionis or the
law intended by the parties.56
Given Saudia's assertions, of particular relevance to resolving the present dispute is lex loci intentionis.
An author observed that Spanish jurists and commentators "favor lex loci intentionis."57 These jurists and commentators
proceed from the Civil Code of Spain, which, like our Civil Code, is silent on what governs the intrinsic validity of
contracts, and the same civil law traditions from which we draw ours.
In this jurisdiction, this court, in Philippine Export and Foreign Loan Guarantee v. V.P. Eusebio Construction, Inc.,58
manifested preference for allowing the parties to select the law applicable to their contract":chanroblesvirtuallawlibrary
No conflicts rule on essential validity of contracts is expressly provided for in our laws. The rule followed by most legal
systems, however, is that the intrinsic validity of a contract must be governed by the lex contractus or "proper law of the
contract." This is the law voluntarily agreed upon by the parties (the lex loci voluntatis) or the law intended by them
either expressly or implicitly (the lex loci intentionis). The law selected may be implied from such factors as substantial
connection with the transaction, or the nationality or domicile of the parties. Philippine courts would do well to adopt the
first and most basic rule in most legal systems, namely, to allow the parties to select the law applicable to their contract,
subject to the limitation that it is not against the law, morals, or public policy of the forum and that the chosen law must
bear a substantive relationship to the transaction.59 (Emphasis in the original)
Saudia asserts that stipulations set in the Cabin Attendant contracts require the application of the laws of Saudi Arabia. It
insists that the need to comply with these stipulations calls into operation the doctrine of forum non conveniens and, in
turn, makes it necessary for Philippine tribunals to refrain from exercising jurisdiction.
As mentioned, contractual choice of laws factors into transnational litigation in any or a combination of four (4) ways.
16
Moreover, forum non conveniens relates to one of these: choosing between multiple possible fora.
Nevertheless, the possibility of parallel litigation in multiple fora along with the host of difficulties it poses is not
unique to transnational litigation. It is a difficulty that similarly arises in disputes well within the bounds of a singe
jurisdiction.
When parallel litigation arises strictly within the context of a single jurisdiction, such rules as those on forum shopping,
litis pendentia, and res judicata come into operation. Thus, in the Philippines, the 1997 Rules on Civil Procedure provide
for willful and deliberate forum shopping as a ground not only for summary dismissal with prejudice but also for citing
parties and counsels in direct contempt, as well as for the imposition of administrative sanctions. 60 Likewise, the same
rules expressly provide that a party may seek the dismissal of a Complaint or another pleading asserting a claim on the
ground "[t]hat there is another action pending between the same parties for the same cause," i.e., litis pendentia, or
"[t]hat the cause of action is barred by a prior judgment,"61 i.e., res judicata.
Forum non conveniens, like the rules of forum shopping, litis pendentia, and res judicata, is a means of addressing the
problem of parallel litigation. While the rules of forum shopping, litis pendentia, and res judicata are designed to address
the problem of parallel litigation within a single jurisdiction, forum non conveniens is a means devised to address parallel
litigation arising in multiple jurisdictions.
Forum non conveniens literally translates to "the forum is inconvenient."62 It is a concept in private international law and
was devised to combat the "less than honorable" reasons and excuses that litigants use to secure procedural advantages,
annoy and harass defendants, avoid overcrowded dockets, and select a "friendlier" venue. 63 Thus, the doctrine of forum
non conveniens addresses the same rationale that the rule against forum shopping does, albeit on a multijurisdictional
scale.
Forum non conveniens, like res judicata,64 is a concept originating in common law.65 However, unlike the rule on res
judicata, as well as those on litis pendentia and forum shopping, forum non conveniens finds no textual anchor, whether in
statute or in procedural rules, in our civil law system. Nevertheless, jurisprudence has applied forum non conveniens as
basis for a court to decline its exercise of jurisdiction. 66
Forum non conveniens is soundly applied not only to address parallel litigation and undermine a litigant's capacity to vex
and secure undue advantages by engaging in forum shopping on an international scale. It is also grounded on principles
of comity and judicial efficiency.
Consistent with the principle of comity, a tribunal's desistance in exercising jurisdiction on account of forum non
conveniens is a deferential gesture to the tribunals of another sovereign. It is a measure that prevents the former's having
to interfere in affairs which are better and more competently addressed by the latter. Further, forum non conveniens
entails a recognition not only that tribunals elsewhere are better suited to rule on and resolve a controversy, but also, that
these tribunals are better positioned to enforce judgments and, ultimately, to dispense justice. Forum non conveniens
prevents the embarrassment of an awkward situation where a tribunal is rendered incompetent in the face of the greater
capability both analytical and practical of a tribunal in another jurisdiction.
The wisdom of avoiding conflicting and unenforceable judgments is as much a matter of efficiency and economy as it is a
matter of international courtesy. A court would effectively be neutering itself if it insists on adjudicating a controversy
when it knows full well that it is in no position to enforce its judgment. Doing so is not only an exercise in futility; it is an
act of frivolity. It clogs the dockets of a.tribunal and leaves it to waste its efforts on affairs, which, given transnational
exigencies, will be reduced to mere academic, if not trivial, exercises.
Accordingly, under the doctrine of forum non conveniens, "a court, in conflicts of law cases, may refuse impositions on its
jurisdiction where it is not the most 'convenient' or available forum and the parties are not precluded from seeking
remedies elsewhere."67 In Puyat v. Zabarte,68 this court recognized the following situations as among those that may
warrant a court's desistance from exercising jurisdiction:chanroblesvirtuallawlibrary
1) The belief that the matter can be better tried and decided elsewhere, either because the main aspects of the case
transpired in a foreign jurisdiction or the material witnesses have their residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,] merely to
secure procedural advantages or to convey or harass the defendant;

3) The unwillingness to extend local judicial facilities to non residents or aliens when the docket may already be
overcrowded;
4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and
5) The difficulty of ascertaining foreign law.69
In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals,70 this court underscored that a
Philippine court may properly assume jurisdiction over a case if it chooses to do so to the extent: "(1) that the Philippine
Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and (3) that the Philippine Court has or is likely to have power to enforce
its decision."71
The use of the word "may" (i.e., "may refuse impositions on its jurisdiction"72) in the decisions shows that the matter of
jurisdiction rests on the sound discretion of a court. Neither the mere invocation of forum non conveniens nor the
averment of foreign elements operates to automatically divest a court of jurisdiction. Rather, a court should renounce
jurisdiction only "after 'vital facts are established, to determine whether special circumstances' require the court's
desistance."73 As the propriety of applying forum non conveniens is contingent on a factual determination, it is, therefore,
a matter of defense.74
The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil Procedure is exclusive in its recital of the grounds for
dismissal that are exempt from the omnibus motion rule: (1) lack of jurisdiction over the subject matter; (2) litis
pendentia; (3) res judicata; and (4) prescription. Moreover, dismissal on account offorum non conveniens is a
fundamentally discretionary matter. It is, therefore, not a matter for a defendant to foist upon the court at his or her own
convenience; rather, it must be pleaded at the earliest possible opportunity.
On the matter of pleading forum non conveniens, we state the rule, thus: Forum non conveniens must not only be clearly
pleaded as a ground for dismissal; it must be pleaded as such at the earliest possible opportunity. Otherwise, it shall be
deemed waived.
This court notes that in Hasegawa,76 this court stated that forum non conveniens is not a ground for a motion to dismiss.
The factual ambience of this case however does not squarely raise the viability of this doctrine. Until the opportunity
comes to review the use of motions to dismiss for parallel litigation, Hasegawa remains existing doctrine.
Consistent with forum non conveniens as fundamentally a factual matter, it is imperative that it proceed from & factually
established basis. It would be improper to dismiss an action pursuant to forum non conveniens based merely on a
perceived, likely, or hypothetical multiplicity of fora. Thus, a defendant must also plead and show that a prior suit has, in
fact, been brought in another jurisdiction.
The existence of a prior suit makes real the vexation engendered by duplicitous litigation, the embarrassment of
intruding into the affairs of another sovereign, and the squandering of judicial efforts in resolving a dispute already
lodged and better resolved elsewhere. As has been noted:chanroblesvirtuallawlibrary
A case will not be stayed o dismissed on [forum] non conveniens grounds unless the plaintiff is shown to have an available
alternative forum elsewhere. On this, the moving party bears the burden of proof.
A number of factors affect the assessment of an alternative forum's adequacy. The statute of limitations abroad may have
run, of the foreign court may lack either subject matter or personal jurisdiction over the defendant. . . . Occasionally,
doubts will be raised as to the integrity or impartiality of the foreign court (based, for example, on suspicions of
corruption or bias in favor of local nationals), as to the fairness of its judicial procedures, or as to is operational efficiency
(due, for example, to lack of resources, congestion and delay, or interfering circumstances such as a civil unrest). In one
noted case, [it was found] that delays of 'up to a quarter of a century' rendered the foreign forum... inadequate for these
purposes.77cralawlawlibrary
We deem it more appropriate and in the greater interest of prudence that a defendant not only allege supposed dangerous
tendencies in litigating in this jurisdiction; the defendant must also show that such danger is real and present in that
litigation or dispute resolution has commenced in another jurisdiction and that a foreign tribunal has chosen to exercise
jurisdiction.
17
III
Forum non conveniens finds no application and does not operate to divest Philippine tribunals of jurisdiction and to
require the application of foreign law.
Saudia invokes forum non conveniens to supposedly effectuate the stipulations of the Cabin Attendant contracts that
require the application of the laws of Saudi Arabia.
Forum non conveniens relates to forum, not to the choice of governing law. Thai forum non conveniens may ultimately
result in the application of foreign law is merely an incident of its application. In this strict sense, forum non conveniens is
not applicable. It is not the primarily pivotal consideration in this case.
In any case, even a further consideration of the applicability of forum non conveniens on the incidental matter of the law
governing respondents' relation with Saudia leads to the conclusion that it is improper for Philippine tribunals to divest
themselves of jurisdiction.
Any evaluation of the propriety of contracting parties' choice of a forum and'its incidents must grapple with two (2)
considerations: first, the availability and adequacy of recourse to a foreign tribunal; and second, the question of where, as
between the forum court and a foreign court, the balance of interests inhering in a dispute weighs more heavily.
The first is a pragmatic matter. It relates to the viability of ceding jurisdiction to a foreign tribunal and can be resolved by
juxtaposing the competencies and practical circumstances of the tribunals in alternative fora. Exigencies, like the statute
of limitations, capacity to enforce orders and judgments, access to records, requirements for the acquisition of
jurisdiction, and even questions relating to the integrity of foreign courts, may render undesirable or even totally
unfeasible recourse to a foreign court. As mentioned, we consider it in the greater interest of prudence that a defendant
show, in pleading forum non conveniens, that litigation has commenced in another jurisdiction and that a foieign tribunal
has, in fact, chosen to exercise jurisdiction.
Two (2) factors weigh into a court's appraisal of the balance of interests inhering in a dispute: first, the vinculum which
the parties and their relation have to a given jurisdiction; and second, the public interest that must animate a tribunal, in
its capacity as an agent of the sovereign, in choosing to assume or decline jurisdiction. The first is more concerned with
the parties, their personal circumstances, and private interests; the second concerns itself with the state and the greater
social order.
In considering the vinculum, a court must look into the preponderance of linkages which the parties and their transaction
may have to either jurisdiction. In this respect, factors, such as the parties' respective nationalities and places of
negotiation, execution, performance, engagement or deployment, come into play.
In considering public interest, a court proceeds with a consciousness that it is an organ of the state. It must, thus,
determine if the interests of the sovereign (which acts through it) are outweighed by those of the alternative jurisdiction.
In this respect, the court delves into a consideration of public policy. Should it find that public interest weighs more
heavily in favor of its assumption of jurisdiction, it should proceed in adjudicating the dispute, any doubt or .contrary
view arising from the preponderance of linkages notwithstanding.
Our law on contracts recognizes the validity of contractual choice of law provisions. Where such provisions exist,
Philippine tribunals, acting as the forum court, generally defer to the parties' articulated choice.
This is consistent with the fundamental principle of autonomy of contracts. Article 1306 of the Civ:l Code expressly
provides that "[t]he contracting parties may establish 'such stipulations, clauses, terms and conditions as they may deem
convenient."78 Nevertheless, while a Philippine tribunal (acting as the forum court) is called upon to respect the parties'
choice of governing law, such respect must not be so permissive as to lose sight of considerations of law, morals, good
customs, public order, or public policy that underlie the contract central to the controversy.
Specifically with respect to public policy, in Pakistan International Airlines Corporation v. Ople,79 this court explained
that:chanroblesvirtuallawlibrary
counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions of
applicable law, especially provisions relating to matters affected with public policy, are deemed written inta the contract.
Put a little differently, the governing principle is that parties may not contract away applicable provisions of law
especially peremptory provisions dealing with matters heavily impressed with public interest.80 (Emphasis supplied)
Article II, Section 14 of the 1987 Constitution provides that "[t]he State ... shall ensure the fundamental equality before
the law of women and men." Contrasted with Article II, Section 1 of the 1987 Constitution's statement that "[n]o person
shall ... be denied the equal protection of the laws," Article II, Section 14 exhorts the State to "ensure." This does not only
mean that the Philippines shall not countenance nor lend legal recognition and approbation to measures that
discriminate on the basis of one's being male or female. It imposes an obligation to actively engage in securing the
fundamental equality of men and women.
The Convention on the Elimination of all Forms of Discrimination against Women (CEDAW), signed and ratified by the
Philippines on July 15, 1980, and on August 5, 1981, respectively, 81 is part of the law of the land. In view of the
widespread signing and ratification of, as well as adherence (in practice) to it by states, it may even be said that many
provisions of the CEDAW may have become customary international law. The CEDAW gives effect to the Constitution's
policy statement in Article II, Section 14. Article I of the CEDAW defines "discrimination against women"
as:chanroblesvirtuallawlibrary
any distinction, exclusion or restriction made on the basis of sex which has the effect or purpose of impairing or
nullifying the recognition, enjoyment or exercise by women, irrespective of their marital status, on a basis of equality of
men and women, of human rights and fundamental freedoms in the political, economic, social, cultural, civil or any other
field.82cralawlawlibrary
The constitutional exhortation to ensure fundamental equality, as illumined by its enabling law, the CEDAW, must inform
and animate all the actions of all personalities acting on behalf of the State. It is, therefore, the bounden duty of this court,
in rendering judgment on the disputes brought before it, to ensure that no discrimination is heaped upon women on the
mere basis of their being women. This is a point so basic and central that all our discussions and pronouncements
regardless of whatever averments there may be of foreign law must proceed from this premise.
So informed and animated, we emphasize the glaringly discriminatory nature of Saudia's policy. As argued by
respondents, Saudia's policy entails the termination of employment of flight attendants who become pregnant. At the risk
of stating the obvious, pregnancy is an occurrence that pertains specifically to women. Saudia's policy excludes from and
restricts employment on the basis of no other consideration but sex.
We do not lose sight of the reality that pregnancy does present physical limitations that may render difficult the
performance of functions associated with being a flight attendant. Nevertheless, it would be the height of iniquity to view
pregnancy as a disability so permanent and immutable that, it must entail the termination of one's employment. It is clear
to us that any individual, regardless of gender, may be subject to exigencies that limit the performance of functions.
However, we fail to appreciate how pregnancy could be such an impairing occurrence that it leaves no other recourse but
the complete termination of the means through which a woman earns a living.
Apart from the constitutional policy on the fundamental equality before the law of men and women, it is settled that
contracts relating to labor and employment are impressed with public interest. Article 1700 of the Civil Code provides
that "[t]he relation between capital and labor are not merely contractual. They are so impressed with public interest that
labor contracts must yield to the common good."
Consistent with this, this court's pronouncements in Pakistan International Airlines Corporation83 are clear and
unmistakable:chanroblesvirtuallawlibrary
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly, the law of
Pakistan as the applicable law of the agreement, and, secondly, lays the venue for settlement of any dispute arising out of
or in connection with the agreement "only [in] courts of Karachi, Pakistan". The first clause of paragraph 10 cannot be
invoked to prevent the application of Philippine labor laws and'regulations to the subject matter of this case, i.e., the
employer-employee relationship between petitioner PIA and private respondents. We have already pointed out that the
relationship is much affected with public interest and that the otherwise applicable Philippine laws and regulations cannot
be rendered illusory by the parties agreeing upon some other law to govern their relationship. . . . Under these
circumstances, paragraph 10 of the employment agreement cannot be given effect so as to oust Philippine agencies and
courts of the jurisdiction vested upon them by Philippine law. 84 (Emphasis supplied)
As the present dispute relates to (what the respondents allege to be) the illegal termination of respondents' employment,
this case is immutably a matter of public interest and public policy. Consistent with clear pronouncements in law and
18
jurisprudence, Philippine laws properly find application in and govern this case. 'Moreover, as this premise for Saudia's
insistence on the application forum non conveniens has been shattered, it follows that Philippine tribunals may properly
assume jurisdiction over the present controversy. Philippine jurisprudence provides ample illustrations of when a court's
renunciation of jurisdiction on account of forum non conveniens is proper or improper.'
In Philsec Investment Corporation v. Court of Appeals,85 this court noted that the trial court failed to consider that one of
the plaintiffs was a domestic corporation, that one of the defendants was a Filipino, and that it was the extinguishment of
the latter's debt that was the object of the transaction subject of the litigation. Thus, this court held, among others, that
the trial court's refusal to assume jurisdiction was not justified by forum non conveniens and remanded the case to the
trial court.
In Raytheon International, Inc. v. Rouzie, Jr.,86 this court sustained the trial court's assumption of jurisdiction considering
that the trial court could properly enforce judgment on the petitioner which was a foreign corporation licensed to do
business in the Philippines.
In Pioneer International, Ltd. v. Guadiz, Jr.,87 this court found no reason to disturb the trial court's assumption of
jurisdiction over a case in which, as noted by the trial court, "it is more convenient to hear and decide the case in the
Philippines because Todaro [the plaintiff] resides in the Philippines and the contract allegedly breached involve[d]
employment in the Philippines."88
In Pacific Consultants International Asia, Inc. v. Schonfeld,89 this court held that the fact that the complainant in an illegal
dismissal case was a Canadian citizen and a repatriate did not warrant the application of forum non conveniens
considering that: (1) the Labor Code does not include forum non conveniens as a ground for the dismissal of a complaint
for illegal dismissal; (2) the propriety of dismissing a case based on forum non conveniens requires a factual
determination; and (3) the requisites for assumption of jurisdiction as laid out in Bank of America, NT&SA90 were all
satisfied.
In contrast, this court ruled in The Manila Hotel Corp. v. National Labor Relations Commission91 that the National Labor
Relations Q Commission was a seriously inconvenient forum. In that case, private respondent Marcelo G. Santos was
working in the Sultanate of Oman when he received a letter from Palace Hotel recruiting him for employment in Beijing,
China. Santos accepted the offer. Subsequently, however, he was released from employment supposedly due to business
reverses arising from political upheavals in China (i.e., the Tiananmen Square incidents of 1989). Santos later filed a
Complaint for illegal dismissal impleading Palace Hotel's General Manager, Mr. Gerhard Schmidt, the Manila Hotel
International Company Ltd. (which was, responsible for training Palace Hotel's personnel and staff), and the Manila Hotel
Corporation (which owned 50% of Manila Hotel International Company Ltd.'s capital stock).
In ruling against the National Labor Relations Commission's exercise of jurisdiction, this court noted that the main
aspects of the case transpired in two (2) foreign jurisdictions, Oman and China, and that the case involved purely foreign
elements. Specifically, Santos was directly hired by a foreign employer through correspondence sent to Oman. Also, the
proper defendants were neither Philippine nationals nor engaged in business in the Philippines, while the main
witnesses were not residents of the Philippines. Likewise, this court noted that the National Labor Relations Commission
was in no position to conduct the following: first, determine the law governing the employment contract, as it was
entered into in foreign soil; second, determine the facts, as Santos' employment was terminated in Beijing; and third,
enforce its judgment, since Santos' employer, Palace Hotel, was incorporated under the laws of China and was not even
served with summons.
Contrary to Manila Hotel, the case now before us does not entail a preponderance of linkages that favor a foreign
jurisdiction.
Here, the circumstances of the parties and their relation do not approximate the circumstances enumerated in Puyat,92
which this court recognized as possibly justifying the desistance of Philippine tribunals from exercising jurisdiction.
First, there is no basis for concluding that the case can be more conveniently tried elsewhere. As established earlier,
Saudia is doing business in the Philippines. For their part, all four (4) respondents are Filipino citizens maintaining
residence in the Philippines and, apart from their previous employment with Saudia, have no other connection to the
Kingdom of Saudi Arabia. It would even be to respondents' inconvenience if this case were to be tried elsewhere.
Second, the records are bereft of any indication that respondents filed their Complaint in an effort to engage in forum
shopping or to vex and inconvenience Saudia.
Third, there is no indication of "unwillingness to extend local judicial facilities to non-residents or aliens."93 That Saudia
has managed to bring the present controversy all the way to this court proves this.
Fourth, it cannot be said that the local judicial machinery is inadequate for effectuating the right sought to be maintained.
Summons was properly served on Saudia and jurisdiction over its person was validly acquired.
Lastly, there is not even room for considering foreign law. Philippine law properly governs the present dispute.
As the question of applicable law has been settled, the supposed difficulty of ascertaining foreign law (which requires the
application of forum non conveniens) provides no insurmountable inconvenience or special circumstance that will justify
depriving Philippine tribunals of jurisdiction.
Even if we were to assume, for the sake of discussion, that it is the laws of Saudi Arabia which should apply, it does not
follow that Philippine tribunals should refrain from exercising jurisdiction. To. recall our pronouncements in Puyat,94 as
well as in Bank of America, NT&SA,95 it is not so much the mere applicability of foreign law which calls into operation
forum non conveniens. Rather, what justifies a court's desistance from exercising jurisdiction is "[t]he difficulty of
ascertaining foreign law"96 or the inability of a "Philippine Court to make an intelligent decision as to the law[.]" 97
Consistent with lex loci intentionis, to the extent that it is proper and practicable (i.e., "to make an intelligent decision"98),
Philippine tribunals may apply the foreign law selected by the parties. In fact, (albeit without meaning to make a
pronouncement on the accuracy and reliability of respondents' citation) in this case, respondents themselves have made
averments as to the laws of Saudi Arabia. In their Comment, respondents write:chanroblesvirtuallawlibrary
Under the Labor Laws of Saudi Arabia and the Philippines[,] it is illegal and unlawful to terminate the employment of any
woman by virtue of pregnancy. The law in Saudi Arabia is even more harsh and strict [sic] in that no employer can
terminate the employment of a female worker or give her a warning of the same while on Maternity Leave, the specific
provision of Saudi Labor Laws on the matter is hereto quoted as follows:chanroblesvirtuallawlibrary
"An employer may not terminate the employment of a female worker or give her a warning of the same while on
maternity leave." (Article 155, Labor Law of the Kingdom of Saudi Arabia, Royal Decree No. M/51.)99cralawlawlibrary
All told, the considerations for assumption of jurisdiction by Philippine tribunals as outlined in Bank of America,
NT&SA100 have been satisfied. First, all the parties are based in the Philippines and all the material incidents transpired in
this jurisdiction. Thus, the parties may conveniently seek relief from Philippine tribunals. Second, Philippine tribunals are
in a position to make an intelligent decision as to the law and the facts. Third, Philippine tribunals are in a position to
enforce their decisions. There is no compelling basis for ceding jurisdiction to a foreign tribunal. Quite the contrary, the
immense public policy considerations attendant to this case behoove Philippine tribunals to not shy away from their duty
to rule on the case.chanRoblesvirtualLawlibrary
IV
Respondents were illegally terminated.
In Bilbao v. Saudi Arabian Airlines,101 this court defined voluntary resignation as "the voluntary act of an employee who is
in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and
one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an
office, with the intention of relinquishing the office accompanied by the act of relinquishment."102 Thus, essential to the
act of resignation is voluntariness. It must be the result of an employee's exercise of his or her own will.
In the same case of Bilbao, this court advanced a means for determining whether an employee resigned
voluntarily:chanroblesvirtuallawlibrary
As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the
alleged resignation must be considered in determining whether he or she, in fact, intended, to sever his or her employment.103
(Emphasis supplied)
On the other hand, constructive dismissal has been defined as "cessation of work because 'continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay' and other
benefits."104
19
In Penaflor v. Outdoor Clothing Manufacturing Corporation,105 constructive dismissal has been described as tantamount to
"involuntarily [sic] resignation due to the harsh, hostile, and unfavorable conditions set by the employer."106 In the same
case, it was noted that "[t]he gauge for constructive dismissal is whether a reasonable person in the employee's position
would feel compelled to give up his employment under the prevailing circumstances."107
Applying the cited standards on resignation and constructive dismissal, it is clear that respondents were constructively
dismissed. Hence, their termination was illegal.
The termination of respondents' employment happened when they were pregnant and expecting to incur costs on
account of child delivery and infant rearing. As noted by the Court of Appeals, pregnancy is a time when they need
employment to sustain their families.108 Indeed, it goes against normal and reasonable human behavior to abandon one's
livelihood in a time of great financial need.
It is clear that respondents intended to remain employed with Saudia. All they did was avail of their maternity leaves.
Evidently, the very nature of a maternity leave means that a pregnant employee will not report for work only temporarily
and that she will resume the performance of her duties as soon as the leave allowance expires.
It is also clear that respondents exerted all efforts to' remain employed with Saudia. Each of them repeatedly filed appeal
letters (as much as five [5] letters in the case of Rebesencio109) asking Saudia to reconsider the ultimatum that they
resign or be terminated along with the forfeiture of their benefits. Some of them even went to Saudia's office to
personally seek reconsideration.110
Respondents also adduced a copy of the "Unified Employment Contract for Female Cabin Attendants." 111 This contract
deemed void the employment of a flight attendant who becomes pregnant and threatened termination due to lack of
medical fitness.112 The threat of termination (and the forfeiture of benefits that it entailed) is enough to compel a
reasonable person in respondents' position to give up his or her employment.
Saudia draws attention to how respondents' resignation letters were supposedly made in their own handwriting. This
minutia fails to surmount all the other indications negating any voluntariness on respondents' part. If at all, these same
resignation letters are proof of how any supposed resignation did not arise from respondents' own initiative. As earlier
pointed out, respondents' resignations were executed on Saudia's blank letterheads that Saudia had provided. These
letterheads already had the word "RESIGNATION" typed on the subject portion of their respective headings when these
were handed to respondents.113ChanRoblesVirtualawlibrary
"In termination cases, the burden of proving just or valid cause for dismissing an employee rests on the employer." 114 In
this case, Saudia makes much of how respondents supposedly completed their exit interviews, executed quitclaims,
received their separation pay, and took more than a year to file their Complaint. 115 If at all, however, these circumstances
prove only the fact of their occurrence, nothing more. The voluntariness of respondents' departure from Saudia is non
sequitur.
Mere compliance with standard procedures or processes, such as the completion of their exit interviews, neither negates
compulsion nor indicates voluntariness.
As with respondent's resignation letters, their exit interview forms even support their claim of illegal dismissal and
militates against Saudia's arguments. These exit interview forms, as reproduced by Saudia in its own Petition, confirms
the unfavorable conditions as regards respondents' maternity leaves. Ma. Jopette's and Loraine's exit interview forms are
particularly telling:chanroblesvirtuallawlibrary
a. From Ma. Jopette's exit interview form:
3. In what respects has the job met or failed to meet your expectations?
THE SUDDEN TWIST OF DECISION REGARDING THE MATERNITY LEAVE.116
b. From Loraine's exit interview form:
1. What are your main reasons for leaving Saudia? What company are you joining?
xxx xxx xxx
Others
CHANGING POLICIES REGARDING MATERNITY LEAVE (PREGNANCY)117
As to respondents' quitclaims, in Phil. Employ Services and Resources, Inc. v. Paramio,118 this court noted that "[i]f (a) there
is clear proof that the waiver was wangled from an unsuspecting or gullible person; or (b) the terms of the settlement are
unconscionable, and on their face invalid, such quitclaims must be struck down as invalid or illegal." 119 Respondents
executed their quitclaims after having been unfairly given an ultimatum to resign or be terminated (and forfeit their
benefits).chanRoblesvirtualLawlibrary
V illegally terminated until the finality of this Decision;
Having been illegally and unjustly dismissed, respondents are entitled to full backwages and benefits from the time of
their termination until the finality of this Decision. They are likewise entitled to separation pay in the amount of one (1)
month's salary for every year of service until the fmality of this Decision, with a fraction of a year of at least six (6)
months being counted as one (1) whole year.
Moreover, "[m]oral damages are awarded in termination cases where the employee's dismissal was attended by bad
faith, malice or fraud, or where it constitutes an act oppressive to labor, or where it was done in a manner contrary to
morals, good customs or public policy."120 In this case, Saudia terminated respondents' employment in a manner that is
patently discriminatory and running afoul of the public interest that underlies employer-employee relationships. As such,
respondents are entitled to moral damages.
To provide an "example or correction for the public good"121 as against such discriminatory and callous schemes,
respondents are likewise entitled to exemplary damages.
In a long line of cases, this court awarded exemplary damages to illegally dismissed employees whose "dismissal[s were]
effected in a wanton, oppressive or malevolent manner."122 This court has awarded exemplary damages to employees
who were terminated on such frivolous, arbitrary, and unjust grounds as membership in or involvement with labor
unions,123 injuries sustained in the course of employment,124 development of a medical condition due to the employer's
own violation of the employment contract,125 and lodging of a Complaint against the employer.126 Exemplary damages
were also awarded to employees who were deemed illegally dismissed by an employer in an attempt to evade
compliance with statutorily established employee benefits. 127 Likewise, employees dismissed for supposedly just causes,
but in violation of due process requirements, were awarded exemplary damages.128
These examples pale in comparison to the present controversy. Stripped of all unnecessary complexities, respondents
were dismissed for no other reason than simply that they were pregnant. This is as wanton, oppressive, and tainted with
bad faith as any reason for termination of employment can be. This is no ordinary case of illegal dismissal. This is a case
of manifest gender discrimination. It is an affront not only to our statutes and policies on employees' security of tenure,
but more so, to the Constitution's dictum of fundamental equality between men and women. 129
The award of exemplary damages is, therefore, warranted, not only to remind employers of the need to adhere to the
requirements of procedural and substantive due process in termination of employment, but more importantly, to
demonstrate that gender discrimination should in no case be countenanced.
Having been compelled to litigate to seek reliefs for their illegal and unjust dismissal, respondents are likewise entitled to
attorney's fees in the amount of 10% of the total monetary award.130
VI
Petitioner Brenda J. Betia may not be held liable.
A corporation has a personality separate and distinct from those of the persons composing it. Thus, as a rule, corporate
directors and officers are not liable for the illegal termination of a corporation's employees. It is only when they acted in
bad faith or with malice that they become solidarity liable with the corporation. 131
In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng Ever Electrical,132 this court clarified that
"[b]ad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and
conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the
nature of fraud."133
Respondents have not produced proof to show that Brenda J. Betia acted in bad faith or with malice as regards their
termination. Thus, she may not be held solidarity liable with Saudia.cralawred
WHEREFORE, with the MODIFICATIONS that first, petitioner Brenda J. Betia is not solidarity liable with petitioner Saudi
20
Arabian Airlines, and second, that petitioner Saudi Arabian Airlines is liable for moral and exemplary damages. The June
16, 2011 Decision and the September 13, 2011 Resolution of the Court of Appeals in CA-G.R. SP. No. 113006 are hereby
AFFIRMED in all other respects. Accordingly, petitioner Saudi Arabian Airlines is ordered to pay respondents:
(1) Full backwages and all other benefits computed from the respective dates in which each of the respondents were
(2) Separation pay computed from the respective dates in which each of the respondents commenced employment
until the finality of this Decision at the rate of one (1) month's salary for every year of service, with a fraction of a
year of at least six (6) months being counted as one (1) whole year;
(3) Moral damages in the amount of P100,000.00 per respondent;
(4) Exemplary damages in the amount of P200,000.00 per respondent; and
(5) Attorney's fees equivalent to 10% of the total award.
Interest of 6% per annum shall likewise be imposed on the total judgment award from the finality of this Decision until
full satisfaction thereof.
This case is REMANDED to the Labor Arbiter to make a detailed computation of the amounts due to respondents which
petitioner Saudi Arabian Airlines should pay without delay.
SO ORDERED.chanroblesvirtuallawlibrary
f. Manarpiis vs. Texan Philippines, Inc., G.R. No. 1197011, January 28, 2015
THIRD DIVISION
G.R. No. 197011 January 28, 2015
ESSENCIA Q. MANARPIIS, Petitioner,
vs.
TEXAN PHILIPPINES, INC., RICHARD TAN and CATHERINE P. RIALUBIN-TAN, Respondents.
DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 assailing the Decision1 dated March 24, 2010, and
Resolution2 dated May 19, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 106661. The CA reversed and set aside the
Decision3 dated January 25, 2008 and Resolution4 dated September 22, 2008 of the First Division of the National Labor
Relations Commission (NLRC) in NLRC CA No. 029806-01, which affirmed the Decision5 dated June 28, 2001 of the Labor
Arbiter (LA) in NLRC Case No. 00-08-04110-2000.
Texan Philippines, Inc. (TPI), which is owned and managed by Catherine Rialubin-Tan and her Singaporean husband
Richard Tan (respondents), is a domestic corporation engaged in the importation, distribution and marketing of
imported fragrances and aroma and other specialized products and services. In July 1999, respondents hired Essencia Q.
Manarpiis (petitioner) as Sales and Marketing Manager of the company's Aroma Division with a monthly salary of
P33,800.00.6
Claiming insurmountable losses, respondents served a written notice (July 27, 2000) addressed to all their employees
that TPI will cease operations by August 31, 2000.7
On August 7, 2000, petitioner filed a complaint for illegal dismissal, non-payment of overtime pay, holiday pay, service
incentive leave pay, unexpired vacation leave and 13th month pay and with prayer for moral and actual damages.
Subsequently, petitioner amended her complaint to state the true date of her dismissal which is July 27, 2000 and not
August 31, 2000. She averred that on the same day she was served with notice of company closure, respondents barred After receiving the September 15,2000 memorandum, petitioners counsel sent a reply stating that there was no point in
her from reporting for work and paid her last salary up to the end of July 2000.8 the investigation because respondents already dismissed petitioner purportedly on the ground of cessation of business
due to insurmountable losses, and also it was impossible for petitioner to respond tothe charges which are devoid of
particulars as to the alleged irregularities she committed. It was pointed out that respondents should have investigated
On September 18, 2000, petitioner received the following Memorandum9:
the supposed violations of company rules and fraudulent acts earlier and not when petitioner had filed an illegal
dismissal complaint.11
September 15, 2000
Subsequently, petitioner received the following memorandum12:
MEMO TO : MS. ESSENCIA MANARPIIS
Sales and Marketing Manager
September 25, 2000
Aroma Division

TO : MS. ESSENCIA MANARPIIS

SUBJECT : Notice Of Investigation And Grounding
Sales and Marketing Manager
Aroma Division
Dear Ms. Manarpiis,
SUBJECT : NOTICE OF TERMINATION
You are hereby notified that an investigation will be conducted on 20 September 2000 at 2:00 p.m. in our office regarding
your alleged violation of company rules and regulations, specifically: I (par. B) - - Fraudulent Expense/Disbursement
Ms. Manarpiis,
expenses
I (par. G) - - Collusion/Connivance with Intent to Defraud
II (Section 6) - - Sabotage This is to inform you that your employment with the Company is terminated effective today, September 25, 2000, due to
II (Section 12) - - Loss of Confidence Dishonesty, Loss of Confidence, and Abandonment of Work.
III (Section 2) - - Libel/Slander
III (Section 8 par. e) - - Other acts of Insubordination
An internal audit of the Company shows that several obligations of the Company were paid twice to the same supplier.
V (par. C & D) - - AWOL/Abandonment
Considering the level of your position, the inescapable conclusion is that you have colluded with the Company supplier to
V (par. I) - - Committing other acts of gross inefficiency or incompetence said acts constitutive of gross
defraud the Company of its finances. Moreover, you have fraudulently caused to be reimbursed representation expenses
misconduct, gross insubordination and dishonesty. You may bring your witnesses and counsel if you so desire.
and other expense statements purporting to be that of your sales representatives while in truth and in fact they were
In the meantime, you will not be allowed to perform your usual functions, but will instead report to the
yours, and you received the corresponding payments therefor.
undersigned.

Also, your attendance record showed that you have been absent without official leave (AWOL)since August 3, 2000 up to
Additionally, you are directed to submit to the undersigned your explanation in writing, within (72) hours from receipt
date.
hereof (but in no case later than 20 September 2000), why no appropriate disciplinary action and/or penalties may be
imposed against you relative to the foregoing.
A notice of AWOL dated September 14, 2000 has been sent to you but you refused to accept the same, much less, refused
to act on it.
Failure to submit said written explanation within the prescribed period and/or attend the investigation hearing on 20
September 2000 shall constitute an implied admission of the charges and waiver on your part to due process.
For your information and guidance
For your information and compliance.
(SGD.) RICHARD TAN
President
(SGD.) RICHARD TAN
(President)
Believing that her dismissal was without just cause, petitioner prayed for reinstatement if still viable, and if not, award of
separation pay with back wages from August 1, 2000, and payment of her monetary claims for sales commissions, pro-
Petitioner alleged that assales and marketing manager, she received the agreed commission based on actual sales
rated 13th month pay, five days service incentive leave pay and sick leaves, as well as moral and exemplary damages plus
collection on the first quarter of 2000 and was expecting to also receive such commission on the 2nd , 3rd and 4th
attorneys fees.13
quarters. However, on July 27, 2000, after receiving a text message from respondent Richard Tan, she proceeded to her
office and learned that her table drawers were forcibly opened and her files confiscated. She protested the company
closure asserting that the alleged business losses were belied by TPIs financial documents. But despite her pleas, she was Respondents denied the charge of illegal dismissal and explained that TPIs closure was averted by a new financing
asked to pack up her things and by the end of the month her salary was discontinued. She then received the package obtained by respondent Richard Tan. They asserted that the requisite notices of business closure to government
memorandum regarding the company closure and was required to turn over the company car, pager and cellphone. She authorities and to their employees were complied with, and notwithstanding that TPI has in fact continued its operations,
was told not to report for work anymore.10 petitioner was found to have committed infractions resulting in loss of confidence which was the ground for the
termination of her employment. They likewise averred that respondent Rialubin-Tan gave specific instructions to

21
petitioner for her to continue reporting for work even after August 31, 2000 but she instead went AWOL and
subsequently abandoned her job, to the utmost prejudice of the company.14
On June 28, 2001, LA Melquiades Sol D. Del Rosario rendered a Decision declaring the dismissal of petitioner as illegal:
CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered finding complainants dismissal to be illegal.
Consequently, she should be paid in solidum by respondents the following:
a) P304,200.00 as backwages as of May 31, 2001[;]
b) P101,400.00 as separation pay for 3 years[;]
c) 1% of the gross sales of complainant and .75% on other sales as determined by the parties as complainants
commissions;
d) 10% for and as attorneys fees of the money awards.
SO ORDERED.15
Respondents appealed to the NLRC which affirmed the LAs decision. Their motion for reconsideration was also denied.
In a petition for certiorari filed with the CA, respondents argued that the subsequent termination of petitioner on the
grounds of dishonesty, loss of confidence and abandonment, after TPI was able to regain financial viability, was made in
view of the fact that commission of the said offenses surfaced only during the audit investigation conducted after notice
of cessation of business operation was sent to the employees. Despite advice for her to continue reporting for work after
August 31, 2000, the effectivity date of the intended closure, petitioner just stopped doing so and instead filed the
complaint for illegal dismissal and likewise failed to turn over all company documents and records in her possession.
They also discovered that petitioner put up her own company "Vita VSI Scents," enticing clients to buy the same products
they used to purchase from TPI.
By Decision dated March 24, 2010, the CA reversed the NLRC and ruled that petitioner was validly dismissed:
WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated January 25, 2008 and the Resolution dated
September 22, 2008 of the National Labor Relations Commission are hereby REVERSED and SET ASIDE. Resultantly,
Essencia Manarpiis complaint for illegal dismissal against Texan Philippines, Inc., Richard Tan and Catherine Realubin-
Tan is hereby DISMISSEDfor lack of merit. No costs.
SO ORDERED.16
Petitioner filed a motion for reconsideration but it was denied by the CA.
Hence, this petition arguing that the CA committed patent reversible errors when it: (1) granted the unverified/unsworn
certification of non-forum shopping accompanying respondents petition for certiorari; (2) granted respondents petition
for certiorari without finding any grave abuse of discretion on the part of NLRC; (3) disturbed the consistent factual
findings of the LA and NLRC which were duly supported by substantial evidence and devoid of any unfairness and
arbitrariness; and (4) substituted its own findings of facts to those of the LA and NLRC, the CAs findings being
unsupported by substantial evidence.17
The petition is meritorious.
22
We first address petitioners contention on the alleged formal infirmity of the petition for certiorari filed before the CA.
Petitioner argued that the same was defective as the jurat therein was based on the mere community tax certificate of
respondent Rialubin-Tan, instead of a government-issued identification card required under the 2004 Rules on Notarial
Practice. Such ground was never raised by herein petitioner in her comment on the CA petition, thus, it cannot be validly
raised by the petitioner at this stage.18
Furthermore, we have consistently held that verification of a pleading is a formal, not a jurisdictional, requirement
intended to secure the assurance that the matters alleged in a pleading are true and correct. Thus, the court may simply
order the correction of unverified pleadings or act on them and waive strict compliance withthe rules. It is deemed
substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint
or petition signs the verification; and when matters alleged in the petition have beenmade in good faith or are true and
correct.19
Under the Rules of Court and settled doctrine, a petition for review on certiorari under Rule 45 of the Rules of Court is
limited to questions of law. As a rule, the findings of fact of the CA are final and conclusive, and this Court will not review
them on appeal.20
However, there are instances in which factual issues may be resolved by this Court, to wit: (1) the conclusion is a finding
grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly mistaken; (3) there is
grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting;
(6) the CA goes beyond the issues of the case and its findings are contrary to the admissions of both appellant and
appellee;(7) the findings of fact of the CA are contrary to those of the trial court; (8) said findings of facts are conclusions
without citation of specific evidence on which they are based; (9) the facts set forth in the petition aswell as in the
petitioners main and reply briefs are not disputed by the respondent; and (10) the findings of fact of the CA are premised
on the supposed absence of evidence and contradicted by the evidence on record.21
Considering that the findings of facts and the conclusions of the CA are contrary to those of the LA and the NLRC, we find
it necessary to evaluate such findings.
On the issue of illegal dismissal, both the LA and NLRC found no just or authorized cause for the termination of
petitioners employment.
LA Del Rosario observed that respondents flip-flopped on the issue of petitioners termination as when they claimed she
was dismissed due to insurmountable losses so that TPIs personnel were notified of the company closure effective
August 31, 2000, and at the same time they accused petitioner of fraudulent acts and abandonment of work resulting in
loss of trust and confidence which caused her dismissal. He also found there was no compliance with the legal requisites
of the said grounds for dismissal under Article 283 (business closure) suchas the lack of termination report sent to the
Department of Labor and Employment (DOLE), financial documents which are audited and signed by an independent
auditor, and the two-notice requirement sent to the last known address of the employee alleged to have abandoned work
under Book V, RuleXIV, Section 2 of the Omnibus Rules Implementing the Labor Code. It was noted that while TPIs
financial documents have BIR stampmark, they were not shown to have been prepared by an independent auditor.
The NLRC upheld the LAs ruling that petitioners dismissal was not valid, viz:
As between the above, conflicting allegations, We find the version of the complainant more credible. Record of the instant
case would provide that other than respondents bare allegations that complainant was instructed to continue working
even beyond 31 August 2000, no evidence was presented to substantiate the same. If respondents could easily issue a
notice of business closure to all its employees, and at the same time, immediately require the complainant to surrender
all company properties assigned to her, We could not understand why they could not easily issue another letter, this
time, intended only for the complainant informing her that her employment was still necessary.
Relative to the companys closure due to business losses, prevailing jurisprudence would dictate that the same should be
substantiated by competent evidence. Financial statements audited by independent external auditors constitute the
normal method of proof of the profit and loss performance of the company. To exempt an employer [from] the payment
of separation pay, he or she must establish by sufficient and convincing evidence that the losses were serious, substantial
and actual x x x.
In the instant case, respondents may have presented before the Labor Arbiter its Statement of Income for the year 1999.
While its preparation may be in compliance with the requirements of the Bureau of Internal Revenue for taxation
purposes, based on the jurisprudence provided above, the same would not suffice for purposes of respondents defense
in the instant case. In their appeal, respondents alleged that on the basis of the audited Statement of Income and Retained
Earnings For the Year Ending 31 December 2000, the company incurred a net loss of almost half a million pesos.
Assuming the same to be true since we cannot find a copy of said statement attached to [the] record, it would appear that
the company had attained a better position in year 2000 as compared to year 1999 when they incurred a net loss of more
than Two Million Pesos. Furthermore, said evidence is already immaterial considering that the companys intended
closure did not actually take effect.
Upon a finding that complainant was not instructed to continue working even beyond 31 August 2000 butwas told not to
report to work upon receipt of the notice of companys closure, it certainly follows that respondents would no longer
inform complainant of the companys continued operation after respondent Tan had allegedly succeeded in searching for
funds. In fact, We are not even persuaded that the companys closure was prevented by the new funds sought by
respondent Tan when in the first place, there was no intended closure at all but only a decision to dismiss complainant in
a manner that would enable respondents evade liabilities under the Labor Code.
With regard to the alleged violation of company rules and regulations, We agree with the finding that respondent[s] acts
of issuing the two notices setting the case [for] investigation were mere afterthoughts. As highlighted in the assailed
Decision, the first notice was issued after respondents had already received the summons in the instant case. More
importantly, the above discussion would provide that prior to issuance of said first notice, complainant was already
illegally dismissed. Furthermore, assuming for the sake of argument that complainant was not yet terminated, a reading
of the said first notice would show that it does not conform with the requirements of due process. The same had failed to
discuss the circumstances under which each of the charges therein was committed by the complainant. As can be noted
from the letter dated 19 September 2000 sent by complainants counsel to respondent Tan, it was impossible for his
client to submit a written explanation thereto since the notice to explain is devoid of particulars regarding the alleged
irregularities.
As a consequence of complainant[s] double termination, initially through the purported cessation of business operations,
and thereafter, by imputing offenses violative of company rules and regulations, we agree with the finding [that] she was
illegally dismissed, and as such, entitled to backwages. She would have been entitled to reinstatement but we believe that
the charges lodged by the respondents against the complainant had rendered reinstatement non-viable. Thus, she should
be granted separation pay instead.22 (Citations omitted)
The CA, however, considered the evidence of respondents sufficient to prove the alleged business losses and their good
faith in resorting to closure of the company. It cited the 1999 Annual Income Tax Return showing a net loss of
P2,290,580.48 and financial statement indicating a net loss of P2,301,228.61 for the year ended December 31, 1999;
respondents claim that it was forced to sell six company cars; and the DOLE termination report.
On the other grounds invoked by respondents to justify petitioners termination, the CA cited the following infractions:
(a) several company obligations towards a supplier which were paid twice during her term as Marketing and Sales
Manager; (b) company funds procured by petitioner, represented to be "under the table" expenditures for the Bureau of
Customs which she cannot explain when queried; (c) divulging confidential company matters to the customers; and (d)
establishing her own company while still employed with TPI.
We reverse the CA and reinstate the LAs decision as affirmed by the NLRC.
23
Closure or cessation of business is the complete or partial cessation of the operations and/or shut-down of the
establishment of the employer. It is carried out to either stave off the financial ruin or promote the business interest of
the employer. Closure ofbusiness as an authorized cause for termination of employment is governed by Article 28323 of
the Labor Code, as amended.
If the business closure is due to serious losses or financial reverses, the employer must present sufficient proof of its
actual or imminent losses; it must show proof that the cessation of or withdrawal from business operations was bona
fidein character.24 A written notice tothe DOLE thirty days before the intended date of closure is also required, the
purpose of which is to inform the employees of the specific date of termination or closure of business operations, and
which must be served upon each and every employee of the company one month before the date of effectivity to give
them sufficient time to make the necessary arrangement.25
The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fidein
character.1wphi1 And the burden of proving such falls upon the employer.26 After evaluating the evidence on record,
we uphold the factual findings and conclusions of the labor tribunals that petitioner was dismissed without just or
authorized cause, and that the announced cessation of business operations was a subterfuge for getting rid of petitioner.
While the introduction of additional evidence before the NLRC is not proscribed, the said tribunal was still not persuaded
by the company closure purportedly averted only by the alleged fresh funding procured by respondent Tan, for the latter
claim remained unsubstantiated. The CAs finding of serious business losses is not borne by the evidence on record. The
financial statements supposedly bearing the stamp mark of BIR were not signed by an independent auditor. Besides, the
non-compliance with the requirements under Article 283 of the Labor Code, as amended, gains relevance in this case not
for the purpose of proving the illegality of the company closure or cessation of business, which did not materialize, butas
an indication of bad faith on the part of respondents inhastily terminating petitioners employment. Under the
circumstances, the subsequent investigation and termination of petitioner on grounds of dishonesty, loss of confidence
and abandonment of work, clearlyappears as an afterthought as it was done only after petitioner had filed an illegal
dismissal case and respondents have been summoned for hearing before the LA.
We have laid down the two elements which must concur for a valid abandonment, viz: (1) the failure to report to work or
absence without valid or justifiable reason, and (2) a clear intention to sever the employer employee relationship, with
the second element as the more determinative factor being manifested by some overt acts.27 Abandonment as a just
ground for dismissal requires the deliberate, unjustified refusalof the employee to perform his employment
responsibilities. Mere absence or failure to work, even after notice to return, is not tantamount to abandonment.28
Furthermore, it is well-settled that the filing by an employee of a complaint for illegal dismissal with a prayer for
reinstatement is proof enough of his desire to return to work, thus, negating the employers charge of abandonment.29
An employee who takes steps to protest his dismissal cannot logically be said to have abandoned his work.30
Abandonment in this case was a trumped up charge, apparently to make it appear that petitioner was not yet terminated
when she filed the illegal dismissal complaint and to give a semblance of truth to the belated investigation against the
petitioner. Petitioner did not abandon her work but was told not to report for work anymore after being served a written
notice of termination of company closure on July 27, 2000 and turning over company properties to respondent Rialubin-
Tan.
On the issue of loss of confidence, we have held that proof beyond reasonable doubt is not needed to justify the loss as
long as the employer has reasonable ground to believe that the employee is responsible for the misconduct and his
participation therein renders him unworthy of the trust and confidence demanded of his position.31 Nonetheless, the
right of an employer to dismiss employees on the ground of loss of trust and confidence, however, must not be exercised
arbitrarily and without just cause. Unsupported by sufficient proof, loss of confidence is without basis and may not be
successfully invoked as a ground for dismissal. Loss of confidence as a ground for dismissal has never been intended to
afford an occasion for abuse by the employer of its prerogative, as it can easily be subject to abuse because of its
subjective nature, as in the case at bar, and the loss must be founded on clearly established facts sufficient to warrant the
employees separation from work.32
Here, loss of confidence was belatedly raised by the respondents who initiated an investigation on the alleged
irregularities committed by petitioner only after the latter had questioned the legality of her earlier dismissal due to the
purported company closure. As correctly observed by the NLRC, assuming to be true that respondents had not yet
actually dismissed the petitioner, the notice of cessation of operations (memo dated July 27, 2000) addressed to all
employees never mentioned the supposed charges against the petitioner who was also never issued a separate
memorandum to that effect. Moreover, the turn over of company properties by petitioner on the same date as demanded
by respondent Rialubin-Tan belies the latters claim that she verbally instructed the former to continue reporting for
work in view of the audit of the companys finances. Indeed, considering the gravity of the accusations of fraud against
the petitioner, it is strange that respondents have not at least issued her a separate memorandum on her accountability
for the alleged business losses.
To prove the dishonesty imputed to petitioner, respondents submitted before the NLRC a letter dated August 4, 2000
from one of TPIs suppliers advising the company of a supposed double payment made in February and March 2000.
However, there is no showing that such payment was made or ordered by petitioner, and neither was it shown that this
overpayment was reflected in the account books of TPI. Respondents likewise failed to prove their accusation that
petitioner put up a competing business while she was still employed with TPI, and their bare allegation thatpetitioner
divulged confidential company matters to customers. As to the supposed failure of petitioner to account for funds
intended for "under the table" transactions at the Bureau of Customs, the same was never raised before the labor
tribunals and not a shred of evidence was presented by respondent to prove this allegation.
Apropos we recall our pronouncement in Lima Land, Inc., et al. v. Cuevas33:
As a final note, the Court is wont to reiterate that while an employer has its own interest to protect, and pursuant thereto,
it may terminate a managerial employee for a just cause, such prerogative to dismiss or lay off an employee mustbe
exercised without abuse of discretion. Its implementation should be tempered with compassion and understanding. The
employer should bear in mind that, in the execution of the said prerogative, whatis at stake is not only the employees
position, but his very livelihood, his very breadbasket. Indeed, the consistent rule is that if doubts exist between the
evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The
employer must affirmatively show rationally adequate evidence that the dismissal was for justifiable cause. Thus, when
the breach of trust or loss of confidence alleged is not borne by clearly established facts, as in this case, such dismissal on
the cited grounds cannot be allowed.34 (Emphasis supplied)
The normal consequences of petitioners illegal dismissal are reinstatement without loss of seniority rights, and payment
of back wages computed from the time compensation was withheld up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay equivalent to one month salary for every year of service
should be awarded as an alternative. The payment of separation pay is in addition to payment of back wages.35 Given the
strained relations between the parties, the award of separation pay, in lieu of reinstatement, is in order.
Finally, on the solidary liabilityof respondents Richard Tan and Catherine Rialubin-Tan for the monetary awards.1wphi1
It is basic that a corporation being a juridical entity, may act only through its directors, officers and employees.
Obligations incurred by them, acting as such corporate agents are not theirs butthe direct accountabilities of the
corporation they represent. However,in certain exceptional situations, solidary liability may be incurred by corporate
officers. In labor cases for instance, this Court has held corporate directors and officers solidarily liable with the
corporation for the termination of employment of employees done with malice or bad faith.36 We sustain the NLRCs
conclusion that the schemes implemented by the respondents to justify petitioners baseless dismissal, and the manner
by which such schemes were effected showed malice and bad faith on their part. Consequently, its affirmance of the
order of the LA that the amounts awarded to petitioner are "payable in solidum by respondents"is proper. The NLRC
likewise correctly upheld the award of attorneys fees considering that petitioner was assisted by a private counsel to
prosecute her illegal dismissal complaint and enforce her rights under our labor laws.
WHEREFORE, the petition is GRANTED. The Decision dated March 24, 2010 and Resolution dated May 19, 2011 of the
Court of Appeals in CA-G.R. SP No. 106661 are hereby REVERSED and SET ASIDE.
24
The Decision dated June 28, 2001 of the Labor Arbiter in NLRC Case No. 00-08-04110-2000, as affirmed by the Decision
dated January 25, 2008 of the National Labor Relations Commission in NLRC CA No. 029806-01, is hereby REINSTATED.
No pronouncement as to costs.
SO ORDERED.
g. G.J.T. Rebuilders Machine Shop vs. Ambos, G.R. No. 174184, January 28, 2015
SECOND DIVISION
G.R. No. 174184 January 28, 2015
G.J.T. REBUILDERS MACHINE SHOP, GODO FREDO TRILLANA, and JULIANA TRILLANA, Petitioners, vs.
RICARDO AMBOS, BENJAMIN PUTIAN, and RUSSELL AMBOS, Respondents.
DECISION
LEONEN, J.:
To prove serious business losses, employers must present in evidence financial statements showing the net losses
suffered by the business within a sufficient period of time. Generally, it cannot be based on a single financial statement
showing losses. Absent this proof, employers closing their businesses must pay the dismissed employees separation pay
equivalent to one-month pay or to at least one-half-month pay for every year of service, whichever is higher.
This is a Petition for Review on Certiorari 1 of the Court of Appeals' Decision,2 granting Ricardo Ambos, Russell Ambos,3
and Benjamin Putian's Petition for Certiorari. The Court of Appeals found that G.J.T. Rebuilders Machine Shop (G.J.T.
Rebuilders) failed to prove its alleged serious business losses. Thus, when it closed its establishment on December 15,
1997, G.J.T. Rebuilders should have paid the affected employees separation pay.4
G.J.T. Rebuilders is a single proprietorship owned by the Spouses Godofredo and Juliana Trillana (Trillana spouses). It
was engaged in steel works and metal fabrication, employing Ricardo Ambos (Ricardo), Russell Ambos (Russell), and
Benjamin Putian (Benjamin) as machinists.5
G.J.T. Rebuilders rented space in the Far East Asia (FEA) Building in Shaw Boulevard, Mandaluyong City, which served as
the site of its machine shop. On September 8, 1996, a fire partially destroyed the FEA Building.6
Due to the damage sustained by the building, its owner notified its tenants to vacate their rented units by the end of
September 1996 "to avoid any unforeseen accidents which may arise due to the damage."7
Despite the building owners notice to vacate, G.J.T. Rebuilders continued its business in the condemned building. When
the building owner finally refused to accommodate it, G.J.T. Rebuilders left its rented space and closed the machine shop
on December 15, 1997.8 It then filed an Affidavit of Closure before the Department of Labor and Employment on
February 16, 1998 and a sworn application to retire its business operations before the Mandaluyong City Treasurers
Office on February 25, 1998.9
Having lost their employment without receiving separation pay, Ricardo, Russell, and Benjamin filed a Complaint for
illegal dismissal before the Labor Arbiter. They prayed for payment of allowance, separation pay, and attorneys fees.10
In their defense, G.J.T. Rebuilders and the Trillana spouses argued that G.J.T. Rebuilders suffered serious business losses
and financial reverses, forcing it to close its machine shop. Therefore, Ricardo, Russell, and Benjamin were not entitled to
separation pay.11
Labor Arbiter Facundo L. Leda (Labor Arbiter Leda) decided the Complaint, finding no convincing proof of G.J.T.
Rebuilders alleged serious business losses. Labor Arbiter Leda, in the Decision12 dated December 28, 1999, found that
Ricardo, Russell, and Benjamin were entitled to separation pay under Article 283 of the Labor Code.13 In addition, they
were awarded attorneys fees, having been constrained to litigate their claims.14
Even assuming that G.J.T. Rebuilders closure was due to serious business losses, Labor Arbiter Leda held that the
employees affected were still entitled to separation pay "based on social justice and equity."15
G.J.T. Rebuilders and the Trillana spouses appealed Labor Arbiter Ledas Decision before the National Labor Relations
Commission.16
In contrast with the Labor Arbiters finding, the National Labor Relations Commission found G.J.T. Rebuilders to have
suffered serious business losses. Because of the fire that destroyed the building where G.J.T. Rebuilders was renting
space, the demand for its services allegedly declined as "no same customer would dare to entrust machine works to be
done for them in a machine shop lying in a ruined and condemned building."17 The National Labor Relations Commission
then concluded that the fire "proximately caused"18 G.J.T. Rebuilders serious business losses, with its financial
statement for the fiscal year 1997 showing a net loss of 316,210.00.19
In the Decision20 dated January 25, 2001, the National Labor Relations Commission vacated and set aside Labor Arbiter
Ledas Decision and dismissed the Complaint for lack of merit. Since the Commission found that G.J.T. Rebuilders ceased
operations due to serious business losses, it held that G.J.T. Rebuilders and the Trillana spouses need not pay Ricardo,
Russell, and Benjamin separation pay.
Ricardo, Russell, and Benjamin filed a Motion for Reconsideration, which the National Labor Relations Commission
denied in the Resolution21 dated March 5, 2001.
Because of the alleged grave abuse of discretion of the National Labor Relations Commission, a Petition for Certiorari was
filed before the Court of Appeals.22
The Court of Appeals reversed the National Labor Relations Commissions Decision, agreeing with Labor Arbiter Leda
that G.J.T. Rebuilders failed to prove its alleged serious business losses. The Court of Appeals conceded that G.J.T.
Rebuilders had to close the machine shop for reasons connected with the fire that partially destroyed the building where
it was renting space. Nevertheless, G.J.T. Rebuilders continued its business for more than one year after the fire. Thus,
according to the Court of Appeals, G.J.T. Rebuilders did not suffer from serious business losses but closed the machine
shop to prevent losses.23
With respect to G.J.T. Rebuilders financial statement showing an alleged net loss in 1997, the Court of Appeals refused to
admit it in evidence since it was not subscribed under oath by the Certified Public Accountant who prepared it. According
to the Court of Appeals, the financial statement was subscribed under oath only after G.J.T. Rebuilders had submitted it to
Labor Arbiter Leda as an annex to its Motion to re-open proceedings and to submit additional evidence. Thus, the Court
of Appeals gave G.J.T. Rebuilders financial statement "scant consideration."24
In the Decision25 dated January 17, 2006, the Court of Appeals granted the Petition for Certiorari, vacating and setting
aside the National Labor Relations Commissions Decision. It reinstated Labor Arbiter Ledas Decision dated December
28, 1999.
G.J.T. Rebuilders and the Trillana spouses filed a Motion for Reconsideration, which the Court of Appeals denied in the
Resolution26 dated August 11, 2006.
Petitioners G.J.T. Rebuilders and the Trillana spouses filed before this court a Petition for Review on Certiorari.27
Respondents Ricardo, Russell, and Benjamin commented28 on the Petition, after which petitioners filed a Reply.29
In their Petition for Review on Certiorari, petitioners maintain that G.J.T. Rebuilders suffered serious business losses as
evidenced by its financial statement covering the years 1996 and 1997. Petitioners admit that the financial statement was
belatedly subscribed under oath.30 Nevertheless, "the credibility or veracity of the entries"31 in the financial statement
was not affected since the Bureau of Internal Revenue received the same unsubscribed financial statement when G.J.T.
Rebuilders allegedly filed its income tax return on April 15, 1998.32
25
Considering that petitioners sufficiently proved G.J.T. Rebuilders serious business losses, petitioners argue that
respondents are not entitled to separation pay.
As for respondents, they contend that G.J.T. Rebuilders failed to prove its alleged serious business losses. They argue that
the financial statement showing a net loss for the year 1997 was not credible, having been belatedly subscribed under
oath by the Certified Public Accountant who prepared it.33
With no credible proof of G.J.T. Rebuilders supposed serious business losses, respondents argue that petitioners must
pay them separation pay under Article 283 of the Labor Code.34
The issue for our resolution is whether petitioners sufficiently proved that G.J.T. Rebuilders suffered from serious
business losses.
This petition should be denied.
I
G.J.T. Rebuilders must pay respondents their separation pay for failure to prove
its alleged serious business losses
Article 283 of the Labor Code allows an employer to dismiss an employee due to the cessation of operation or closure of
its establishment or undertaking, thus:
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of
any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing
or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least
one (1) month before the intended date thereof. In case of termination due to installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay
or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
The decision to close ones business is a management prerogative that courts cannot interfere with.35 Employers can
"lawfully close shop at anytime,"36 even for reasons of their own. "Just as no law forces anyone to go into business, no
law can compel anybody to continue in it."37 In Mac Adams Metal Engineering Workers Union-Independent v. Mac
Adams Metal Engineering,38 this court said:
It would indeed be stretching the intent and spirit of the law if [courts] were to unjustly interfere with the managements
prerogative to close or cease its business operations just because [the] business operation or undertaking is not suffering
from any loss or simply to provide the workers continued employment.39
However, despite this management prerogative, employers closing their businesses must pay the affected workers
separation pay equivalent to one-month pay or to at least one-half-month pay for every year of service, whichever is
higher.40 The reason is that an employee dismissed, even for an authorized cause, loses his or her means of livelihood.41
The only time employers are not compelled to pay separation pay is when they closed their establishments or
undertaking due to serious business losses or financial reverses.42
Serious business losses are substantial losses, not de minimis.43 "Losses" means that the business must have operated at
a loss for a period of time for the employer "to [have] perceived objectively and in good faith"44 that the business
financial standing is unlikely to improve in the future.
The burden of proving serious business losses is with the employer.45 The employer must show losses on the basis of
financial statements covering a sufficient period of time. The period covered must be sufficient for the National Labor
Relations Commission and this court to appreciate the nature and vagaries of the business.
In North Davao Mining Corporation v. NLRC,46 North Davao Mining Corporation presented in evidence financial
statements showing a continuing pattern of loss from 1988 until its closure in 1992. The company suffered net losses
averaging 3 billion a year, with an aggregate loss of 20 billion by the time of its closure.47 This court found that North
Davao suffered serious business losses.48
In Manatad v. Philippine Telegraph and Telephone Corporation,49 the Philippine Telegraph and Telephone Corporation
presented in evidence financial statements showing a continuing pattern of loss from 1995 to 1999.50 By 2000, the
corporation suffered an aggregate loss of 2.169 billion, constraining it to retrench some of its employees. This court held
that the Philippine Telegraph and Telephone Corporation was "fully justified in implementing a retrenchment program
since it was undergoing business reverses, not only for a single fiscal year, but for several years prior to and even after
the program."51
In LVN Pictures Employees and Workers Association (NLU) v. LVN Pictures, Inc.,52 a case G.J.T. Rebuilders cited, LVN
Pictures, Inc. presented in evidence financial statements showing a continuing pattern of loss from 1957 to 1961. By the
time the corporation closed its business, it had suffered an aggregate loss of 1,560,985.14.53 This court found that LVN
Pictures, Inc. suffered serious business losses.54
Aside from the obligation to pay separation pay, employers must comply with the notice requirement under Article 283
of the Labor Code. Employers must serve a written notice on the affected employees and on the Department of Labor and
Employment at least one month before the intended date of closure. Failure to comply with this requirement renders the
employer liable for nominal damages.55
We uphold G.J.T. Rebuilders decision to close its establishment as a valid exercise of its management prerogative. G.J.T.
Rebuilders closed its machine shop, believing that its "former customers . . . seriously doubted [its] capacity . . . to
perform the same quality [of service]"56 after the fire had partially damaged the building where it was renting space.
Nevertheless, we find that G.J.T. Rebuilders failed to sufficiently prove its alleged serious business losses.
The financial statement G.J.T. Rebuilders submitted in evidence covers the fiscal years 1996 and 1997. Based on the
financial statement, G.J.T. Rebuilders earned a net income of 61,157.00 in 1996 and incurred a net loss of 316,210.00 in
1997.57
We find the two-year period covered by the financial statement insufficient for G.J.T. Rebuilders to have objectively
perceived that the business would not recover from the loss. Unlike in North Davao Mining Corporation, Manatad, and
LVN Pictures Employees and Workers Association (NLU), no continuing pattern of loss within a sufficient period of time
is present in this case. In fact, in one of the two fiscal years covered by the financial statement presented in evidence,
G.J.T. Rebuilders earned a net income. We, therefore, agree with the Labor Arbiter and the Court of Appeals that G.J.T.
Rebuilders closed its machine shop to prevent losses, not because of serious business losses.58
Considering that G.J.T. Rebuilders failed to prove its alleged serious business losses, it must pay respondents their
separation pay equivalent to one-month pay or at least one-half-month pay for every year of service, whichever is higher.
In computing the period of service, a fraction of at least six months is considered a year.59
Ricardo began working as a machinist on February 9, 1978.60 Since he last worked for G.J.T. Rebuilders on December 15,
1997, he worked a total of 19 years, 10 months, and six days. This period is rounded off to 20 years, with the last 10
months and six days being considered a year.61
26
Ricardo had a daily salary of 230.00 and worked 13 days a month.62 His one-month pay, therefore, is equal to 2,990.00.
On the other hand, his one-half-month pay for every year of service is equal to 29,250.00. The latter amount being higher,
Ricardo must receive 29,250.00 as separation pay.
With respect to Russell, he began his employment on September 1, 1992.63 Since he last worked for G.J.T. Rebuilders on
December 15, 1997, he worked a total of five years, three months, and 14 days. This period is rounded off to five years,
not six years, since the last three months and 14 days are less than the six months required to be considered a year.64
Russell had a daily salary of 225.00 and worked 13 days a month.65 His one-month pay, therefore, is equal to 2,925.00.
On the other hand, his one-half-month pay for every year of service is equal to 7,312.50. The latter amount being higher,
Russell must receive 7,312.50 as separation pay.
As for Benjamin, he began working as a machinist on February 1, 1994.66 Since he last worked for G.J.T. Rebuilders on
December 15, 1997, he worked a total of three years, 10 months, and 14 days. This period is rounded off to four years,
with the last 10 months and 14 days being considered a year.67
Benjamin had a daily salary of 225.00 and worked 13 days a month.68 His one-month pay, therefore, is equal to 2,925.00.
On the other hand, his one-half-month pay for every year of service is equal to 5,850.00. The latter amount being higher,
Benjamin must receive 5,850.00 as separation pay.
II
G.J.T. Rebuilders must pay respondents nominal damages for failure to comply
with the procedural requirements for closing its business
In addition to separation pay, G.J.T. Rebuilders must pay each of the respondents nominal damages for failure to comply
with the notice requirement under Article 283 of the Labor Code.
Notice of the eventual closure of establishment is a "personal right of the employee to be personally informed of his [or
her] proposed dismissal as well as the reasons therefor."69 The reason for this requirement is to "give the employee
some time to prepare for the eventual loss of his [or her] job."70
The requirement "is not a mere technicality or formality which the employer may dispense with."71 Should employers
fail to properly notify their employees, they shall be liable for nominal damages even if they validly closed their
businesses.72
Generally, employers that validly closed their businesses but failed to comply with the notice requirement are liable in
the amount of 50,000.00.73 This amount of nominal damages, however, may be reduced depending on "the sound
discretion of the court."74 In Sangwoo Philippines, Inc. v. Sangwoo Philippines, Inc. Employees Union-OLALIA,75 we said
that:
[i]n the determination of the amount of nominal damages which is addressed to the sound discretion of the court, several
factors are taken into account: (1) the authorized cause invoked . . .; (2) the number of employees to be awarded; (3) the
capacity of the employers to satisfy the awards, taking into account their prevailing financial status as borne by the
records; (4) the employers grant of other termination benefits in favor of the employees; and (5) whether there was
bona fide attempt to comply with the notice requirements as opposed to giving no notice at all.76
G.J.T. Rebuilders allegedly "conferred with all [of its employees] of [its] intention to cease business operations"77 one
month before closing its business. It allegedly submitted an Affidavit of Closure to the Department of Labor and
Employment on February 16, 1998.78
"Conferring with employees" is not the notice required under Article 283 of the Labor Code.1wphi1 The law requires a
written notice of closure served on the affected employees. As to when the written notice should be served on the
Department of Labor and Employment, the law requires that it be served at least one month before the intended date of
closure. G.J.T. Rebuilders served the written notice on the Department of Labor and Employment on February 16, 1998,
two months after it had closed its business on December 15, 1997.
With G.J.T. Rebuilders failing to comply with the notice requirement under Article 283 of the Labor Code, we find that it
deprived respondents of due process. However, considering that G.J.T. Rebuilders attempted to comply with the notice
requirement, we find the nominal damages of 10,000.00 for each of the respondents sufficient.79
III
Respondents are not entitled to attorneys fees
Attorneys fees "represent the reasonable compensation [a client pays his or her lawyer] [for legal service rendered]."80
The award of attorneys fees is the exception rather than the rule.81 Specifically in labor cases, attorneys fees are
awarded only when there is unlawful withholding of wages82 or when the attorneys fees arise from collective
bargaining negotiations that may be charged against union funds in an amount to be agreed upon by the parties.83 For
courts and tribunals to properly award attorneys fees, they must make "an express finding of fact and [citation] of
applicable law"84 in their decisions.
In the present case, there is no unlawful withholding of wages or an award of attorneys fees arising from collective
bargaining negotiations. Neither did the Labor Arbiter nor the Court of Appeals make findings of fact or cite the
applicable law in awarding attorneys fees. That respondents were "constrained to engage the services of counsel to
prosecute their claims"85 is not enough justification since "no premium should be placed on the right to litigate."86
For these reasons, we delete the award of attorneys fees.
All told, G.J.T. Rebuilders failed to prove that it closed its machine shop due to serious business losses. Moreover, it failed
to comply with Article 283 of the Labor Code on the notice requirement. Therefore, petitioners must pay respondents
Ricardo Ambos, Russell Ambos, and Benjamin Putian separation pay and nominal damages.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Court of Appeals Decision dated January 17, 2006 is
AFFIRMED with MODIFICATION.
Petitioners are ordered to PAY respondents their separation pay with 6% legal interest87 from the finality of this
Decision until full payment:
Ricardo Ambos P29,250.00
Russell Ambos P7,312.50
Benjamin Putian P5,850.00.
Furthermore, petitioners shall PAY each of the respondents P10,000.00 as nominal damages with 6% legal interest88
from the finality of this Decision until full payment.
The award of attorney's fees is DELETED.
SO ORDERED.
Dismissal due to pregnancy out of wedlock;immorality;secular vs religious morality
h. Leus vs St. Scholasticas College, G.R. No. 187226, January 28, 2015
THIRD DIVISION
G.R. No. 187226 January 28, 2015
CHERYLL SANTOS LEUS, Petitioner,
vs.
ST. SCHOLASTICA'S COLLEGE WESTGROVE and/or SR. EDNA QUIAMBAO, OSB, Respondents.
DECISION
REYES, J.:
27
Cheryll Santos Leus (petitioner) was hired by St. Scholastica's College Westgrove (SSCW), a Catholic educational
institution, as a non-teaching personnel, engaged in pre-marital sexual relations, got pregnant out of wedlock, married
the father of her child, and was dismissed by SSCW, in that order. The question that has to be resolved is whether the
petitioner's conduct constitutes a ground for her dismissal.
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside
the Decision1 dated September 24, 2008 and Resolution2 dated March 2, 2009 issued by the Court of Appeals (CA) in CA-
G.R. SP No. 100188, which affirmed the Resolutions dated February 28, 20073 and May 21, 20074 of the National Labor
Relations Commission (NLRC)in NLRC CA No. 049222-06.
The Facts
SSCW is a catholic and sectarian educational institution in Silang, Cavite. In May 2001, SSCW hired the petitioner as an
Assistant to SSCWs Director of the Lay Apostolate and Community Outreach Directorate.
Sometime in 2003, the petitioner and her boyfriend conceived a child out of wedlock. When SSCW learned of the
petitioners pregnancy, Sr. Edna Quiambao (Sr. Quiambao), SSCWs Directress, advised her to file a resignation letter
effective June 1, 2003. In response, the petitioner informed Sr. Quiambao that she would not resign from her employment
just because she got pregnant without the benefit of marriage.5
On May 28, 2003, Sr. Quiambao formally directed the petitioner to explain in writing why she should not be dismissed for
engaging in pre-marital sexual relations and getting pregnant as a result thereof, which amounts to serious misconduct
and conduct unbecoming of an employee of a Catholic school.6
In a letter7 dated May 31, 2003, the petitioner explained that her pregnancy out of wedlock does not amount to serious
misconduct or conduct unbecoming of an employee. She averred that she is unaware of any school policy stating that
being pregnant out of wedlock is considered as a serious misconduct and, thus, a ground for dismissal. Further, the
petitioner requested a copy of SSCWs policy and guidelines so that she may better respond to the charge against her. On
June 2, 2003, Sr. Quiambao informed the petitioner that, pending the promulgation of a "Support Staff Handbook," SSCW
follows the 1992 Manual of Regulations for Private Schools (1992 MRPS) on the causes for termination of employments;
that Section 94(e) of the 1992 MRPS cites "disgraceful or immoral conduct" as a ground for dismissal in addition to the
just causes for termination of employment provided under Article 282 of the Labor Code.8
On June 4, 2003, the petitioner, through counsel, sent Sr. Quiambao a letter,9 which, in part, reads:
To us, pre-marital sex between two consenting adults without legal impediment to marry each other who later on
married each other does not fall within the contemplation of "disgraceful or immoral conduct" and "serious misconduct"
of the Manual of Regulations for Private Schools and the Labor Code of the Philippines.
Your argument that what happened to our client would set a bad example to the students and other employees of your
school is speculative and is more imaginary than real. To dismiss her on that sole ground constitutes grave abuse of
management prerogatives.
Considering her untarnished service for two years, dismissing her with her present condition would also mean depriving
her to be more secure in terms of financial capacity to sustain maternal needs.10
In a letter11 dated June 6, 2003, SSCW, through counsel, maintained that pre-marital sexual relations, evenif between
two consenting adults without legal impediment to marry, is considered a disgraceful and immoral conduct or a serious
misconduct, which are grounds for the termination of employment under the 1992 MRPS and the Labor Code. That
SSCW, as a Catholic institution of learning, has the right to uphold the teaching of the Catholic Church and expect its
employees to abide by the same. They further asserted that the petitioners indiscretion is further aggravated by the fact
that she is the Assistant to the Director of the Lay Apostolate and Community Outreach Directorate, a position of
responsibility that the students look up to as rolemodel. The petitioner was again directed to submit a written
explanation on why she should not be dismissed.
On June 9, 2003, the petitioner informed Sr. Quiambao that she adopts her counsels letter dated June 4, 2003 as her
written explanation.12
Consequently, in her letter13 dated June 11, 2003, Sr. Quiambao informed the petitioner that her employment with SSCW
is terminated on the ground of serious misconduct. She stressed that pre-marital sexual relations between two
consenting adults with no impediment to marry, even if they subsequently married, amounts to immoral conduct. She
further pointed out that SSCW finds unacceptable the scandal brought about by the petitioners pregnancy out of wedlock
as it ran counter to the moral principles that SSCW stands for and teaches its students.
Thereupon, the petitioner filed a complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC in
Quezon City against SSCW and Sr. Quiambao (respondents). In her position paper,14 the petitioner claimed that SSCW
gravely abused its management prerogative as there was no just cause for her dismissal. She maintained that her
pregnancy out of wedlock cannot be considered as serious misconduct since the same is a purely private affair and not
connected in any way with her duties as an employee of SSCW. Further, the petitioner averred that she and her boyfriend
eventually got married even prior to her dismissal.
For their part, SSCW claimed that there was just cause to terminate the petitioners employment with SSCW and that the
same is a valid exercise of SSCWs management prerogative. They maintained that engaging in pre-marital sex, and
getting pregnant as a result thereof, amounts to a disgraceful or immoral conduct, which is a ground for the dismissal of
an employee under the 1992 MRPS.
They pointed out that SSCW is a Catholic educational institution, which caters exclusively to young girls; that SSCW
would lose its credibility if it would maintain employees who do not live up to the values and teachings it inculcates to its
students. SSCW further asserted that the petitioner, being an employee of a Catholic educational institution, should have
strived to maintain the honor, dignity and reputation of SSCW as a Catholic school.15
The Ruling of the Labor Arbiter
On February 28, 2006, the Labor Arbiter (LA) rendered a Decision,16 in NLRC Case No. 6-17657-03-C which dismissed
the complaint filed by the petitioner. The LA found that there was a valid ground for the petitioners dismissal; that her
pregnancy out of wedlock is considered as a "disgraceful and immoral conduct." The LA pointed out that, as an employee
of a Catholic educational institution, the petitioner is expected to live up to the Catholic values taught by SSCW to its
students. Likewise, the LA opined that:
Further, a deep analysis of the facts would lead us to disagree with the complainant that she was dismissed simply
because she violate[d] a Catholic [teaching]. It should not be taken in isolation but rather it should be analyzed in the
lightof the surrounding circumstances as a whole. We must also take into [consideration] the nature of her work and the
nature of her employer-school. For us, it is not just an ordinary violation. It was committed by the complainant in an
environment where her strict adherence to the same is called for and where the reputation of the school is at stake. x x
x.17
The LA further held that teachers and school employees, both in their official and personal conduct, must display
exemplary behavior and act in a manner that is beyond reproach.
The petitioner appealed to the NLRC, insisting that there was no valid ground for the termination of her employment. She
maintained that her pregnancy out of wedlock cannot be considered as "serious misconduct" under Article 282 of the
Labor Code since the same was not of such a grave and aggravated character. She asserted that SSCW did not present any
evidence to establish that her pregnancy out of wedlock indeed eroded the moral principles that it teaches its students.18
The Ruling of the NLRC
On February 28, 2007, the NLRC issued a Resolution,19 which affirmed the LA Decision dated February 28, 2006. The
NLRC pointed out that the termination of the employment of the personnel of private schools is governed by the 1992
MRPS; that Section 94(e) thereof cites "disgraceful or immoral conduct" as a just cause for dismissal, in addition to the
28
grounds for termination of employment provided for under Article 282 of the Labor Code. The NLRC held that the
petitioners pregnancy out of wedlock is a "disgraceful or immoral conduct" within the contemplation of Section 94(e) of
the 1992 MRPS and, thus, SSCW had a valid reason to terminate her employment.
The petitioner sought reconsideration20 of the Resolution dated February 28, 2007 but it was denied by the NLRC in its
Resolution21 dated May 21, 2007.
Unperturbed, the petitioner filed a petition22 for certiorari with the CA, alleging that the NLRC gravely abused its
discretion in ruling that there was a valid ground for her dismissal. She maintained that pregnancy out of wedlock cannot
be considered as a disgraceful or immoral conduct; that SSCW failed to prove that its students were indeed gravely
scandalized by her pregnancy out of wedlock. She likewise asserted that the NLRC erred in applying Section 94(e) of the
1992 MRPS.
The Ruling of the CA
On September 24, 2008, the CA rendered the herein assailed Decision,23 which denied the petition for certiorari filed by
the petitioner. The CA held that it is the provisions of the 1992 MRPS and not the Labor Code which governs the
termination of employment of teaching and non-teaching personnel of private schools, explaining that:
It is a principle of statutory construction that where there are two statutes that apply to a particular case, that which was
specially intended for the said case must prevail. Petitioner was employed by respondent private Catholic institution
which undeniably follows the precepts or norms of conduct set forth by the Catholic Church. Accordingly, the Manual of
Regulations for Private Schools followed by it must prevail over the Labor Code, a general statute. The Manual constitutes
the private schools Implementing Rules and Regulations of Batas Pambansa Blg. 232 or the Education Act of 1982. x x
x.24
The CA further held that the petitioners dismissal was a valid exercise of SSCWs management prerogative to discipline
and impose penalties on erring employees pursuant toits policies, rules and regulations. The CA upheld the NLRCs
conclusion that the petitioners pregnancy out of wedlock is considered as a "disgraceful and immoral conduct" and, thus,
a ground for dismissal under Section 94(e) of the 1992 MRPS. The CA likewise opined that the petitioners pregnancy out
of wedlock is scandalous per segiven the work environment and social milieu that she was in, viz:
Under Section 94 (e) of the [MRPS], and even under Article 282 (serious misconduct) of the Labor Code, "disgraceful and
immoral conduct" is a basis for termination of employment.
xxxx
Petitioner contends that her pre-marital sexual relations with her boyfriend and her pregnancy prior to marriage was not
disgraceful or immoral conduct sufficient for her dismissal because she was not a member of the schools faculty and
there is no evidence that her pregnancy scandalized the school community.
We are not persuaded. Petitioners pregnancy prior to marriage is scandalous in itself given the work environment and
social milieu she was in. Respondent school for young ladies precisely seeks to prevent its students from situations like
this, inculcating in them strict moral values and standards. Being part of the institution, petitionersprivate and public life
could not be separated. Her admitted pre-marital sexual relations was a violation of private respondents prescribed
standards of conduct that views pre-marital sex as immoral because sex between a man and a woman must only take
place within the bounds of marriage.
Finally, petitioners dismissal is a valid exercise of the employer-schools management prerogative to discipline and
impose penalties on erring employees pursuant to its policies, rules and regulations. x x x.25 (Citations omitted)
The petitioner moved for reconsideration26 but it was denied by the CA in its Resolution27 dated March 2, 2009.
Hence, the instant petition.
Issues
Essentially, the issues set forth by the petitioner for this Courts decision are the following: first, whether the CA
committed reversible error in ruling that it is the 1992 MRPS and not the Labor Code that governs the termination of
employment of teaching and non-teaching personnel of private schools; and second, whether the petitionerspregnancy
out of wedlock constitutes a valid ground to terminate her employment.
The Ruling of the Court
The Court grants the petition.
First Issue: Applicability of the 1992 MRPS
In resolving the foregoing question,the Court will assess the matter from a strictly neutral and secular point of view the
relationship between SSCW as employer and the petitioner as an employee, the causes provided for by law in the
termination of suchrelationship, and the evidence on record. The ground cited for the petitioners dismissal, i.e., pre-
marital sexual relations and, consequently, pregnancy outof wedlock, will be assessed as to whether the same constitutes
a valid ground for dismissal pursuant to Section 94(e) of the 1992 MRPS.
The standard of review in a Rule 45
petition from the CA decision in labor cases.

The petitioner contends that the CA, in ruling that there was a valid ground to dismiss her, erred in applying Section 94 of
the 1992 MRPS. Essentially, she claims that the 1992 MRPS was issued by the Secretary of Education as the revised
implementing rules and regulations of Batas Pambansa Bilang 232 (BP 232) or the "Education Act of 1982." That there is
no provision in BP 232, which provides for the grounds for the termination of employment of teaching and non-teaching
personnel of private schools. Thus, Section 94 of the 1992 MRPS, which provides for the causes of terminating an
employment, isinvalid as it "widened the scope and coverage" of BP 232.
In a petition for review under Rule 45 of the Rules of Court, such as the instant petition, where the CAs disposition in a
labor case is sought to be calibrated, the Courts review isquite limited. In ruling for legal correctness, the Court has to
view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; the Court has to
examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of
discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was
correct.33

The Court does not agree. The phrase "grave abuse of discretion" is well-defined in the Courts jurisprudence. It exists where an act of a court or
tribunal is performed with a capricious or whimsical exercise ofjudgment equivalent to lack of jurisdiction.34 The
determination of the presence or absence of grave abuse of discretion does not include an inquiry into the correctness of
The Court notes that the argument against the validity of the 1992 MRPS, specifically Section 94 thereof, is raised by the
the evaluation of evidence, which was the basis of the labor agency in reaching its conclusion.35
petitioner for the first time in the instant petition for review. Nowhere in the proceedings before the LA, the NLRC or the
CA did the petitioner assail the validity of the provisions of the 1992 MRPS.
Nevertheless, while a certiorari proceeding does not strictly include an inquiry as to the correctness of the evaluation of
evidence (that was the basis of the labor tribunals in determining their conclusion), the incorrectness of its evidentiary
"It is well established that issues raised for the first time on appeal and not raised in the proceedings in the lower court
evaluation should not result in negating the requirement of substantial evidence. Indeed, when there is a showing that
are barred by estoppel. Points of law, theories, issues, and arguments not brought to the attention of the trial court ought
the findings or conclusions, drawn from the same pieces of evidence, were arrived at arbitrarily or in disregard of the
not to be considered by a reviewing court, as these cannot be raised for the first time on appeal. To consider the alleged
evidence on record, they may be reviewed by the courts. In particular, the CA can grant the petition for certiorariif it finds
facts and arguments belatedly raised would amount to trampling on the basic principles of fair play, justice, and due
that the NLRC, in its assailed decision or resolution, made a factual finding not supported by substantial evidence. A
process."28
decision that is not supported by substantial evidence is definitely a decision tainted with grave abuse of discretion.36

In any case, even if the Court were to disregard the petitioners belated claim of the invalidity of the 1992 MRPS, the
The labor tribunals respective conclusions that the petitioners
Court still finds the same untenable.
pregnancy is a "disgraceful or immoral conduct" were arrived at
arbitrarily.
The 1992 MRPS, the regulation in force at the time of the instant controversy, was issued by the Secretary of Education
pursuant to BP 232. Section 7029 of BP 232 vests the Secretary of Education with the authority to issue rules and
The CA and the labor tribunals affirmed the validity of the petitioners dismissal pursuant to Section 94(e) of the 1992
regulations to implement the provisions of BP 232. Concomitantly, Section 5730 specifically empowers the Department
MRPS, which provides that:
of Education to promulgate rules and regulations necessary for the administration, supervision and regulation of the
educational system in accordance with the declared policy of BP 232.
Sec. 94. Causes of Terminating Employment In addition to the just causes enumerated in the Labor Code, the
employment of school personnel, including faculty, may be terminated for any of the following causes:
The qualifications of teaching and non-teaching personnel of private schools, as well as the causes for the termination of
xxxx
their employment, are an integral aspect of the educational system of private schools. Indubitably, ensuring that the
e. Disgraceful or immoral conduct;
teaching and non-teaching personnel of private schools are not only qualified, but competent and efficient as well goes
xxxx
hand in hand with the declared objective of BP 232 establishing and maintaining relevant quality education.31 It is thus
The labor tribunals concluded that the petitioners pregnancy out of wedlock, per se, is "disgraceful and
within the authority of the Secretary of Education to issue a rule, which provides for the dismissal of teaching and non-
immoral"considering that she is employed in a Catholic educational institution. In arriving at such conclusion, the labor
teaching personnel of private schools based on their incompetence, inefficiency, or some other disqualification.
tribunals merely assessed the fact of the petitioners pregnancy vis--visthe totality of the circumstances surrounding the
same.
Moreover, Section 69 of BP 232 specifically authorizes the Secretary of Education to "prescribe and impose such
administrative sanction as he may deem reasonable and appropriate in the implementing rules and regulations" for the
However, the Court finds no substantial evidence to support the aforementioned conclusion arrived at by the labor
"[g]ross inefficiency of the teaching or non-teaching personnel" of private schools.32 Accordingly, contrary to the
tribunals. The fact of the petitioners pregnancy out of wedlock, without more, is not enough to characterize the
petitioners claim, the Court sees no reason to invalidate the provisions of the 1992 MRPS, specifically Section 94 thereof.
petitioners conduct as disgraceful or immoral. There must be substantial evidence to establish that pre-marital sexual
Second Issue: Validity of the Petitioners Dismissal
relations and, consequently, pregnancy outof wedlock, are indeed considered disgraceful or immoral.

The validity of the petitioners dismissal hinges on the determination of whether pregnancy out of wedlock by an
employee of a catholic educational institution is a cause for the termination of her employment.
29
The totality of the circumstances surrounding the conduct alleged to
be disgraceful or immoral must be assessed against the prevailing
norms of conduct.
In Chua-Qua v. Clave,37 the Court stressed that to constitute immorality, the circumstances of each particular case must
be holistically considered and evaluated in light of the prevailing norms of conductand applicable laws.38 Otherwise
stated, it is not the totality of the circumstances surrounding the conduct per se that determines whether the same is
disgraceful or immoral, but the conduct that is generally accepted by society as respectable or moral. If the conduct does
not conform to what society generally views as respectable or moral, then the conduct is considered as disgraceful or
immoral. Tersely put, substantial evidence must be presented, which would establish that a particular conduct, viewed in
light of the prevailing norms of conduct, is considered disgraceful or immoral.
Thus, the determination of whether a conduct is disgraceful or immoral involves a two-step process: first, a consideration
of the totality of the circumstances surrounding the conduct; and second, an assessment of the said circumstances vis--
visthe prevailing norms of conduct, i.e., what the society generally considers moral and respectable.
That the petitioner was employed by a Catholic educational institution per se does not absolutely determine whether her
pregnancy out of wedlock is disgraceful or immoral. There is still a necessity to determine whether the petitioners
pregnancy out of wedlock is considered disgraceful or immoral in accordance with the prevailing norms of conduct.
Public and secular morality should
determine the prevailing norms of
conduct, not religious morality.
However, determining what the prevailing norms of conduct are considered disgraceful or immoral is not an easy task.
An individuals perception of what is moral or respectable is a confluence of a myriad of influences, such as religion,
family, social status, and a cacophony of others. In this regard, the Courts ratiocination in Estrada v. Escritor39 is
instructive.
In Estrada, an administrative case against a court interpreter charged with disgraceful and immoral conduct, the Court
stressed that in determining whether a particular conduct can be considered as disgraceful and immoral, the distinction
between public and secular morality on the one hand, and religious morality, on the other, should be kept in mind.40
That the distinction between public and secular morality and religious morality is important because the jurisdiction of
the Court extends only to public and secular morality.41 The Court further explained that:
The morality referred to in the law is public and necessarily secular, not religiousx x x. "Religious teachings as expressed
in public debate may influence the civil public order but public moral disputes may be resolved only on grounds
articulable in secular terms." Otherwise, if government relies upon religious beliefs in formulating public policies and
morals, the resulting policies and morals would require conformity to what some might regard as religious programs or
agenda.The non-believers would therefore be compelled to conform to a standard of conduct buttressed by a religious
belief, i.e., to a "compelled religion," anathema to religious freedom. Likewise, if government based its actions upon
religious beliefs, it would tacitly approve or endorse that belief and thereby also tacitly disapprove contrary religious or
non-religious views that would not support the policy. As a result, government will not provide full religious freedom for
all its citizens, or even make it appear that those whose beliefs are disapproved are second-class citizens. Expansive
religious freedom therefore requires that government be neutral in matters of religion; governmental reliance upon
religious justification is inconsistent with this policy of neutrality.
In other words, government action, including its proscription of immorality as expressed in criminal law like
concubinage, must have a secular purpose. That is, the government proscribes this conduct because it is "detrimental (or
dangerous) to those conditions upon which depend the existence and progress of human society" and not because the
conduct is proscribed by the beliefs of one religion or the other. Although admittedly, moral judgments based on religion
might have a compelling influence on those engaged in public deliberations over what actions would be considered a
moral disapprobation punishable by law. After all, they might also be adherents of a religion and thus have religious
30
opinions and moral codes with a compelling influence on them; the human mind endeavors to regulate the temporal and
spiritual institutions of society in a uniform manner, harmonizing earth with heaven. Succinctly put, a law could be
religious or Kantian or Aquinian or utilitarian in its deepest roots, but it must have an articulable and discernible secular
purpose and justification to pass scrutiny of the religion clauses.x x x.42 (Citations omitted and emphases ours)
Accordingly, when the law speaks of immoral or, necessarily, disgraceful conduct, it pertains to public and secular
morality; it refers to those conducts which are proscribed because they are detrimental to conditions upon which depend
the existence and progress of human society. Thus, in Anonymous v. Radam,43 an administrative case involving a court
utility worker likewise charged with disgraceful and immoral conduct, applying the doctrines laid down in Estrada, the
Court held that:
For a particular conduct to constitute "disgraceful and immoral" behavior under civil service laws, it must be regulated
on account of the concerns of public and secular morality. It cannot be judged based on personal bias, specifically those
colored by particular mores. Nor should it be grounded on "cultural" values not convincingly demonstrated to have been
recognized in the realm of public policy expressed in the Constitution and the laws. At the same time, the constitutionally
guaranteed rights (such as the right to privacy) should be observed to the extent that they protect behavior that may be
frowned upon by the majority.
Under these tests, two things may be concluded from the fact that an unmarried woman gives birth out of wedlock:
(1) if the father of the child is himself unmarried, the woman is not ordinarily administratively liable for
disgraceful and immoral conduct.It may be a not-so-ideal situation and may cause complications for both
mother and child but it does not give cause for administrative sanction. There is no law which penalizes an
unmarried mother under those circumstances by reason of her sexual conduct or proscribes the consensual
sexual activity between two unmarried persons. Neither does the situation contravene any fundamental state
policy as expressed in the Constitution, a document that accommodates various belief systems irrespective of
dogmatic origins.
(2) if the father of the child born out of wedlock is himself married to a woman other thanthe mother, then
there is a cause for administrative sanction against either the father or the mother. In sucha case, the
"disgraceful and immoral conduct" consists of having extramarital relations with a married person. The
sanctity of marriage is constitutionally recognized and likewise affirmed by our statutes as a special contract of
permanent union. Accordingly, judicial employees have been sanctioned for their dalliances with married
persons or for their own betrayals of the marital vow of fidelity.
In this case, it was not disputed that, like respondent, the father of her child was unmarried. Therefore, respondent
cannot be held liable for disgraceful and immoral conduct simply because she gave birth to the child Christian Jeon out of
wedlock.44 (Citations omitted and emphases ours)
Both Estrada and Radamare administrative cases against employees in the civil service. The Court, however, sees no
reason not to apply the doctrines enunciated in Estrada and Radamin the instant case. Estrada and Radamalso required
the Court to delineate what conducts are considered disgraceful and/or immoral as would constitute a ground for
dismissal. More importantly, as in the said administrative cases, the instant case involves an employees security of
tenure; this case likewise concerns employment, which is not merely a specie of property right, but also the means by
which the employee and those who depend on him live.45
It bears stressing that the right of an employee to security of tenure is protected by the Constitution. Perfunctorily, a
regular employee may not be dismissed unless for cause provided under the Labor Code and other relevant laws, in this
case, the 1992 MRPS. As stated above, when the law refers to morality, it necessarily pertains to public and secular
morality and not religious morality. Thus, the proscription against "disgraceful or immoral conduct" under Section 94(e)
of the 1992 MRPS, which is made as a cause for dismissal, must necessarily refer to public and secular morality.
Accordingly, in order for a conduct tobe considered as disgraceful or immoral, it must be "detrimental (or dangerous) to
those conditions upon which depend the existence and progress of human society and not because the conduct is
proscribed by the beliefs of one religion or the other."
Thus, in Santos v. NLRC,46 the Court upheld the dismissal of a teacher who had an extra-marital affair with his co-
teacher, who is likewise married, on the ground of disgraceful and immoral conduct under Section 94(e) of the 1992
MRPS. The Court pointed out that extra-marital affair is considered as a disgraceful and immoral conduct is an afront to
the sanctity of marriage, which is a basic institution of society, viz:
We cannot overemphasize that having an extra-marital affair is an afront to the sanctity of marriage, which is a basic
institution of society. Even our Family Code provides that husband and wife must live together, observe mutual love,
respect and fidelity. This is rooted in the fact that both our Constitution and our laws cherish the validity of marriage and
unity of the family. Our laws, in implementing this constitutional edict on marriage and the family underscore their
permanence, inviolability and solidarity.47
The petitioners pregnancy out of
wedlock is not a disgraceful or
immoral conduct since she and the
father of her child have no
impediment to marry each other.
In stark contrast to Santos, the Court does not find any circumstance in this case which would lead the Court to conclude
that the petitioner committed a disgraceful or immoral conduct. It bears stressing that the petitioner and her boyfriend,
at the time they conceived a child, had no legal impediment to marry. Indeed, even prior to her dismissal, the petitioner
married her boyfriend, the father of her child. As the Court held in Radam, there is no law which penalizes an unmarried
mother by reason of her sexual conduct or proscribes the consensual sexual activity between two unmarried persons;
that neither does such situation contravene any fundamental state policy enshrined in the Constitution.
Admittedly, the petitioner is employed in an educational institution where the teachings and doctrines of the Catholic
Church, including that on pre-marital sexual relations, is strictly upheld and taught to the students. That her indiscretion,
which resulted in her pregnancy out of wedlock, is anathema to the doctrines of the Catholic Church. However, viewed
against the prevailing norms of conduct, the petitioners conduct cannot be considered as disgraceful or immoral; such
conduct is not denounced by public and secular morality. It may be an unusual arrangement, but it certainly is not
disgraceful or immoral within the contemplation of the law.
To stress, pre-marital sexual relations between two consenting adults who have no impediment to marry each other, and,
consequently, conceiving a child out of wedlock, gauged from a purely public and secular view of morality, does not
amount to a disgraceful or immoral conduct under Section 94(e) of the 1992 MRPS.
Accordingly, the labor tribunals erred in upholding the validity of the petitioners dismissal. The labor tribunals
arbitrarily relied solely on the circumstances surrounding the petitioners pregnancy and its supposed effect on SSCW
and its students without evaluating whether the petitioners conduct is indeed considered disgraceful or immoral in view
of the prevailing norms of conduct. In this regard, the labor tribunals respective haphazard evaluation of the evidence
amounts to grave abuse of discretion, which the Court will rectify.
The labor tribunals finding that the petitioners pregnancy out of wedlock despite the absence of substantial evidence is
not only arbitrary, but a grave abuse of discretion, which should have been set right by the CA.
There is no substantial evidence to
prove that the petitioners pregnancy
out of wedlock caused grave scandal
to SSCW and its students.
31
SSCW claimed that the petitioner was primarily dismissed because her pregnancy out of wedlock caused grave scandal to
SSCW and its students. That the scandal brought about by the petitioners indiscretion prompted them to dismiss her.
The LA upheld the respondents claim, stating that:
In this particular case, an "objective" and "rational evaluation" of the facts and circumstances obtaining in this case would
lead us to focus our attention x x x on the impact of the act committed by the complainant. The act of the complainant x x
x eroded the moral principles being taught and project[ed] by the respondent [C]atholic school to their young lady
students.48 (Emphasis in the original)
On the other hand, the NLRC opined that:
In the instant case, when the complainant-appellant was already conceiving a child even before she got married, such is
considered a shameful and scandalous behavior, inimical to public welfare and policy. It eroded the moral doctrines
which the respondent Catholic school, an exclusive school for girls, is teaching the young girls. Thus, when the
respondent-appellee school terminated complainant-appellants services, it was a valid exercise of its management
prerogative. Whether or not she was a teacher is of no moment. There is no separate set of rules for non-teaching
personnel. Respondents-appellees uphold the teachings of the Catholic Church on pre-marital sex and that the
complainant-appellant as an employee of the school was expected to abide by this basic principle and to live up with the
standards of their purely Catholic values. Her subsequent marriage did not take away the fact that she had engaged in
pre-marital sex which the respondent-appellee school denounces as the same is opposed to the teachings and doctrines it
espouses.49 (Emphasis ours)
Contrary to the labor tribunals declarations, the Court finds that SSCW failed to adduce substantial evidence to prove
that the petitioners indiscretion indeed caused grave scandal to SSCW and its students. Other than the SSCWs bare
allegation, the records are bereft of any evidence that would convincingly prove that the petitioners conduct indeed
adversely affected SSCWs integrity in teaching the moral doctrines, which it stands for. The petitioner is only a non-
teaching personnel; her interaction with SSCWs students is very limited. Itis thus quite impossible that her pregnancy
out of wedlock caused such a grave scandal, as claimed by SSCW, as to warranther dismissal.
Settled is the rule that in termination cases, the burden of proving that the dismissal of the employees was for a valid and
authorized cause rests on the employer. It is incumbent upon the employer to show by substantial evidence that the
termination of the employment of the employees was validly made and failure to discharge that duty would mean that
the dismissal is not justified and therefore illegal.50 "Substantial evidence is more than a mere scintilla of evidence. It
means such relevant evidence as a reasonable mind might accept as adequateto support a conclusion, even if other minds
equally reasonable mightconceivably opine otherwise."51
Indubitably, bare allegations do not amount to substantial evidence. Considering that the respondents failed to adduce
substantial evidence to prove their asserted cause for the petitioners dismissal, the labor tribunals should not have
upheld their allegations hook, line and sinker. The labor tribunals respective findings, which were arrived at sans any
substantial evidence, amounts to a grave abuse of discretion, which the CA should have rectified. "Security of tenure is a
right which may not be denied on mere speculation of any unclearand nebulous basis."52
The petitioners dismissal is not a
valid exercise of SSCWs
management prerogative.
The CA be labored the management prerogative of SSCW to discipline its employees. The CA opined that the petitioners
dismissal is a valid exercise of management prerogative to impose penalties on erring employees pursuant to its policies,
rules and regulations.
The Court does not agree.
The Court has held that "management is free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and
discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it must
beexercised in good faith and with due regard to the rights of labor." Management cannot exercise its prerogative in a
cruel, repressive, or despotic manner.53
SSCW, as employer, undeniably has the right to discipline its employees and, if need be, dismiss themif there is a valid
cause to do so. However, as already explained, there is no cause to dismiss the petitioner. Her conduct is not considered
by law as disgraceful or immoral. Further, the respondents themselves have admitted that SSCW, at the time of the
controversy, does not have any policy or rule against an employee who engages in pre-marital sexual relations and
conceives a child as a result thereof. There being no valid basis in law or even in SSCWs policy and rules, SSCWs
dismissal of the petitioner is despotic and arbitrary and, thus, not a valid exercise of management prerogative.
In sum, the Court finds that the petitioner was illegally dismissed as there was no just cause for the termination of her
employment. SSCW failed to adduce substantial evidence to establish that the petitioners conduct, i.e., engaging in pre-
marital sexual relations and conceiving a child out of wedlock, assessed in light of the prevailing norms of conduct, is
considered disgraceful or immoral. The labor tribunals gravely abused their discretion in upholding the validity of the
petitioners dismissal as the charge against the petitioner lay not on substantial evidence, but on the bare allegations of
SSCW. In turn, the CA committed reversible error in upholding the validity of the petitioners dismissal, failing
torecognize that the labor tribunals gravely abused their discretion in ruling for the respondents.
The petitioner is entitled to
separation pay, in lieu of actual
reinstatement, full backwages and
attorneys fees, but not to moral and
exemplary damages.
Having established that the petitioner was illegally dismissed, the Court now determines the reliefs thatshe is entitled to
and their extent. Under the law and prevailing jurisprudence, "an illegally dismissed employee is entitled to
reinstatement as a matter of right."54 Aside from the instances provided under Articles 28355 and 28456 of the Labor
Code, separation pay is, however, granted when reinstatement is no longer feasible because of strained relations between
the employer and the employee. In cases of illegal dismissal, the accepted doctrine is that separation pay is available in
lieu of reinstatement when the latter recourse is no longer practical or in the best interest of the parties.57
In Divine Word High School v. NLRC,58 the Court ordered the employer Catholic school to pay the illegally dismissed high
school teacher separation pay in lieu of actual reinstatement since her continued presence as a teacher in the school "may
well bemet with antipathy and antagonism by some sectors in the school community."59
In view of the particular circumstances of this case, it would be more prudent to direct SSCW to pay the petitioner
separation pay inlieu of actual reinstatement. The continued employment of the petitioner with SSCW would only serve
to intensify the atmosphere of antipathy and antagonism between the parties. Consequently, the Court awards separation
pay to the petitioner equivalent to one (1) month pay for every year of service, with a fraction of at least six (6) months
considered as one (1) whole year, from the time of her illegal dismissal up to the finality of this judgment, as an
alternative to reinstatement.
Also, "employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or
their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of
their actual reinstatement but if reinstatement is no longer possible, the backwages shall be computed from the time of
their illegal termination up to the finality of the decision."60 Accordingly, the petitioner is entitled to an award of full
backwages from the time she was illegally dismissed up to the finality of this decision.
32
Nevertheless, the petitioner is not entitled to moral and exemplary damages. "A dismissed employee isentitled to moral
damages when the dismissal is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a
manner contrary to good morals, good customs or public policy. Exemplary damages may be awarded if the dismissal is
effected in a wanton, oppressive or malevolent manner."61
"Bad faith, under the law, does not simply connote bad judgment or negligence.1wphi1 It imports a dishonest purpose
or some moral obliquity and conscious doing of a wrong, or a breach of a known duty through some motive or interest or
ill will that partakes of the nature of fraud."62
"It must be noted that the burden of proving bad faith rests on the one alleging it"63 since basic is the principle that good
faith is presumed and he who alleges bad faith has the duty to prove the same.64 "Allegations of bad faith and fraud must
be proved by clear and convincing evidence."65
The records of this case are bereft of any clear and convincing evidence showing that the respondents acted in bad faith
or in a wanton or fraudulent manner in dismissing the petitioner. That the petitioner was illegally dismissed is
insufficient to prove bad faith. A dismissal may be contrary to law but by itself alone, it does not establish bad faith to
entitle the dismissed employee to moral damages. The award of moral and exemplary damages cannot be justified solely
upon the premise that the employer dismissed his employee without cause.66
However, the petitioner is entitled to attorneys fees in the amount of 10% of the total monetary award pursuant to
Article 11167 of the Labor Code. "It is settled that where an employee was forced to litigate and, thus, incur expenses to
protect his rights and interest, the award of attorneys fees is legally and morally justifiable."68
Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of six percent (6%) per
annumfrom the finality of this judgment until fully paid.69
WHEREFORE, in consideration of the foregoing disquisitions, the petition is GRANTED. The Decision dated September 24,
2008 and Resolution dated March 2, 2009 of the Court of Appeals in CA-G.R. SP No. 100188 are hereby REVERSED and
SET ASIDE.
The respondent, St. Scholasticas College Westgrove, is hereby declared guilty of illegal dismissal and is hereby ORDERED
to pay the petitioner, Cheryll Santos Leus, the following: (a) separation pay in lieu of actual reinstatement equivalent to
one (1) month pay for every year of service, with a fraction of at least six (6) months considered as one (1) whole year
from the time of her dismissal up to the finality of this Decision; (b) full backwages from the time of her illegal dismissal
up to the finality of this Decision; and (c) attorneys fees equivalent to ten percent (10%) of the total monetary award.
The monetary awards herein granted shall earn legal interest at the rate of six percent (6%) per annumfrom the date of
the finality of this Decision untilfully paid. The case is REMANDED to the Labor Arbiter for the computation of petitioners
monetary awards.
SO ORDERED.
Project employment in BPO Company
i. Gadia vs. Sykes Asia, Inc. G.R. No. 209499, January 28, 2015
FIRST DIVISION
G.R. No. 209499 January 28, 2015
MA. CHARITO C. GADIA, ERNESTO M. PENAS, GEMMABELLE B. REMO, LORENA S. QUESEA, MARIE JOY FRANCISCO,
BEVERLY A. CABINGAS, IVEE U. BALINGIT, ROMA ANGELICA 0. BORJA, MARIE JOAN RAMOS, KIM GUEVARRA, LYNN
S. DE LOS SANTOS, CAREN C. ENCANTO, EIDEN BALDOVINO, JACQUELINE B. CASTRENCE,MA.ESTRELLA V. LAPUZ,
JOSELITO L. LORD, RAYMOND G. SANTOS, ABIGAIL M. VILORIA, ROMMEL C. ACOSTA, FRANCIS JAN S. BAYLON,
ERIC 0. PADIERNOS, MA. LENELL P. AARON, CRISNELL P. AARON, and LAWRENCE CHRISTOPHER F. PAPA,
Petitioners,
vs.
SYKES ASIA, INC./ CHUCK SYKES/ MIKE HINDS/ MICHAEL HENDERSON, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated April 29, 2013 and the Resolution3 dated
October 3, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 120433, which annulled and set aside the Decision4 dated
November 15, 2010 and the Resolution5 dated May 10, 2011 of the National Labor Relations Commission (NLRC), in
NLRC LAC No. 07-001583-10, and reinstated the Decision6 dated June 23, 2010 of the Labor Arbiter (LA), holding that
herein petitioners Ma. Charito C. Gadia7 (Gadia), Ernesto M. Peas,8 Gemmabelle B. Remo (Remo), Lorena S. Quesea
(Quesea), Marie Joy Francisco, Beverly A. Cabingas, Ivee U. Balingit9 (Balingit), Roma Angelica O. Borja, Marie Joan
Ramos, Kim Guevarra, Lynn S. De Los Santos, Caren C. Encanto, Eiden Baldovino, Jacqueline B. Castrence (Castrence), Ma.
Estrella V.Lapuz (Lapuz), Joselito L. Lord (Lord), Raymond G. Santos, Abigail M. Viloria (Viloria), Rommel C. Acosta10
(Acosta), Francis Jan S. Baylon,Eric O. Padiernos, Ma. Lenell P. Aaron, Crisnell P. Aaron, and Lawrence Christopher F.Papa
(petitioners) are project employees of respondent Sykes Asia, Inc. (Sykes Asia), and thus, were validly terminated from
employment.
The Facts
complaints were dismissed without prejudice for failure to prosecute,30 were awarded their separation pay with interest
of 12% per annum reckoned from the date of their actual dismissal until full payment, plus attorneys fees amounting to
10% of the total monetary award. In addition, the NLRC awarded nominal damages in the amount of P10,000.00 each to
petitioners Gadia, Remo, Quesea, Balingit, Castrence, Lapuz, and Lord for respondents failure to furnish them the
required written notice of termination within the prescribed period.31
Contrary to the LAs finding, the NLRC found that petitioners could not be properly characterized as project-based
employees, ratiocinating that while it was made known to petitioners that their employment would be co-terminus to the
Alltel Project, it was neither determined nor made known to petitioners, at the time of hiring, when the said project
would end, be terminated, or be completed.32 In this relation, the NLRC concluded that inasmuch as petitioners had been
engaged to perform activities which are necessary or desirable in respondents usual business or trade of BPO,
petitioners should be deemed regular employees of Sykes Asia.33 This notwithstanding, and in view of the cessation of
the Alltel Project, the NLRC found petitioners employment with Sykes Asia to be redundant; hence, declared that they
were legally dismissed from service and were only entitled to receive their respective separation pay.34

Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO) which provides support to its international Respondents moved for reconsideration,35 which was, however, denied in a Resolution36 dated May 10, 2011.
clients from various sectors (e.g., technology, telecommunications, retail services) by carrying on some of their Unconvinced, Sykes Asia37 elevated the case to the CA on certiorari.38
operations, governed by service contracts that it enters with them.11 On September 2, 2003,12 Alltel Communications,
Inc. (Alltel), a United States-based telecommunications firm, contracted Sykes Asias services to accommodate the needs
The CA Ruling
and demands of Alltel clients for its postpaid and prepaid services (Alltel Project). Thus, on different dates, Sykes Asia
hired petitioners as customer service representatives, team leaders, and trainers for the Alltel Project.13
In a Decision39 dated April 29, 2013, the CA annulled and set aside the ruling of the NLRC, and accordingly, reinstated
that of the LA.40 It held that a perusal of petitioners respective employment contracts readily shows that they were
Services for the said project went on smoothly until Alltel sent two (2) letters to Sykes Asia dated August 7, 200914 and
hired exclusively for the Alltel Project and that it was specifically stated therein that their employment would be project-
September 9, 200915 informing the latter that it was terminating all support services provided by Sykes Asia related to
based.41 The CA further held that petitioners employment contracts need not state an actual date as to when their
the Alltel Project. In view of this development, Sykes Asia sent each of the petitioners end-of-life notices,16 informing
employment would end, opining that it is enough that such date is determinable.42
them of their dismissal from employment due to the termination of the Alltel Project. Aggrieved, petitioners filed
separate complaints17 for illegal dismissal against respondents Sykes Asia, Chuck Sykes, the President and Chief
Operating Officer of Sykes Enterprise, Inc., and Mike Hinds and Michael Henderson, the President and Operations Petitioners moved for reconsideration,43 which was, however, denied in a Resolution44 dated October 3, 2013, hence,
Director, respectively, of Sykes Asia (respondents), praying for reinstatement, backwages, 13th month pay, service this petition.
incentive leave pay, night shift differential, moral and exemplary damages, and attorneys fees. In their complaints,
petitioners alleged that their dismissal from service was unjust as the same was effected without substantive and
The Issue Before the Court
procedural due process.18

In their defense,19 respondents averred that petitioners were not regular employees but merely project-based
employees, and as such, the termination of the Alltel Project served as a valid ground for their dismissal.20 In support of
their position, respondents noted that it was expressly indicated in petitioners respective employment contracts that
their positions are "project-based" and thus, "co-terminus to the project."21 Respondents further maintained that they
complied with the requirements of procedural due process in dismissing petitioners by furnishing each of them their
notices of termination at least thirty (30) days prior to their respective dates of dismissal.22
The LA Ruling
In a Decision23 dated June 23, 2010 the LA ruled in favor of respondents, and accordingly, dismissed petitioners
complaints for lack of merit.24 It found that petitioners are merely project-based employees, as their respective
employment contracts indubitably provided for the duration and term of their employment, as well as the specific project
to which they were assigned, i.e., the Alltel Project.25 Hence, the LA concluded that the cessation of the Alltel Project
naturally resulted in the termination of petitioners employment in Sykes Asia.26 Dissatisfied, petitioners appealed27 to
the NLRC.
The NLRC Ruling
In a Decision28 dated November 15, 2010, the NLRC modified the LA Decision, ruling that petitioners are regular
employees but were validly terminated due to redundancy.29 Accordingly, petitioners, except Viloria and Acosta whose
33
The primordial issue for the Courts resolution is whether or not the CA correctly granted respondents petition for
certiorari, thereby setting aside the NLRCs decision holding that petitioners were regular employees and reinstating the
LA ruling that petitioners were merely project-based employees, and thus, validly dismissed from service.
The Courts Ruling
The petition is without merit.
At the outset, it must be stressed that to justify the grant of the extraordinary remedy of certiorari, petitioners must
satisfactorily show that the court or quasi-judicial authority gravely abused the discretion conferred upon it. Grave abuse
of discretion connotes judgment exercised in a capricious and whimsical manner that is tantamount to lack of
jurisdiction. To be considered "grave," discretion must be exercised in a despotic manner by reason of passion or
personal hostility, and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act at all in contemplation of law.45
In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its findings and the conclusions
reached thereby are not supported by substantial evidence. This requirement of substantial evidence is clearly expressed
in Section 5, Rule 133 of the Rules of Court which provides that "in cases filed before administrative or quasi-judicial
bodies, a fact may be deemed established if it is supported by substantial evidence, or that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion."46
Tested against these considerations, the Court finds that the CA correctly granted respondents certiorari petition before
it, since the NLRC gravely abused its discretion in ruling that petitioners were regular employees of Sykes Asia when the
latter had established by substantial evidence that they were merely project-based.
Article 29447 of the Labor Code,48 as amended, distinguishes a project-based employee from a regular employee as
follows:
Art. 294. Regular and casual employment.The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or where the work or services
to be performed is seasonal in nature and the employment is for the duration of the season.
x x x x (Emphasis and underscoring supplied)
In Omni Hauling Services, Inc. v. Bon,49 the Court extensively discussed how to determine whether an employee may be
properly deemed project-based or regular, to wit:
A project employee is assigned to a project which begins and ends at determined or determinable times.1wphi1 Unlike
regular employees who may only be dismissed for just and/or authorized causes under the Labor Code, the services of
employees who are hired as "project[-based] employees" may be lawfully terminated at the completion of the project.
According to jurisprudence, the principal test for determining whether particular employees are properly characterised
as "project[-based] employees" as distinguished from "regular employees," is whether or not the employees were
assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time
they were engaged for that project. The project could either be (1) a particular job or undertaking that is within the
regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the
other undertakings of the company; or (2) a particular job or undertaking that is not within the regular business of the
corporation. In order to safeguard the rights of workers against the arbitrary use of the word "project" to prevent
employees from attaining a regular status, employers claiming that their workers are project[-based] employees should
not only prove that the duration and scope of the employment was specified at the time they were engaged, but also, that
there was indeed a project.50 (Emphases and underscoring supplied)
Verily, for an employee to be considered project-based, the employer must show compliance with two (2) requisites,
namely that: (a) the employee was assigned to carry out a specific project or undertaking; and (b) the duration and scope
of which were specified at the time they were engaged for such project.
In this case, records reveal that Sykes Asia adequately informed petitioners of their employment status at the time of
their engagement, as evidenced by the latters employment contracts which similarly provide that they were hired in
connection with the Alltel Project, and that their positions were "project-based and as such is co-terminus to the project."
In this light, the CA correctly ruled that petitioners were indeed project-based employees, considering that: (a) they were
hired to carry out a specific undertaking, i.e., the Alltel Project; and (b) the duration and scope of such project were made
known to them at the time of their engagement, i.e., "co-terminus with the project."
As regards the second requisite, the CA correctly stressed that "[t]he law and jurisprudence dictate that the duration of
the undertaking begins and ends at determined or determinable times" while clarifying that "[t]he phrase determinable
times simply means capable of being determined or fixed."51 In this case, Sykes Asia substantially complied with this
requisite when it expressly indicated in petitioners employment contracts that their positions were "co-terminus with
the project." To the mind of the Court, this caveat sufficiently apprised petitioners that their security of tenure with Sykes
Asia would only last as long as the Alltel Project was subsisting. In other words, when the Alltel Project was terminated,
petitioners no longer had any project to work on, and hence, Sykes Asia may validly terminate them from employment.
34
Further, the Court likewise notes the fact that Sykes Asia duly submitted an Establishment Employment Report52 and an
Establishment Termination Report53 to the Department of Labor and Employment Makati-Pasay Field Office regarding
the cessation of the Alltel Project and the list of employees that would be affected by such cessation. As correctly pointed
out by the CA, case law deems such submission as an indication that the employment was indeed project-based.54
In sum, respondents have shown by substantial evidence that petitioners were merely project-based employees, and as
such, their services were lawfully terminated upon the cessation of the Alltel Project.
WHEREFORE, the petition is DENIED. Accordingly, the Decision dated April 29, 2013 and the Resolution dated October 3,
2013 of the Court of Appeals in CA-G.R. SP No. 120433 are hereby AFFIRMED.
SO ORDERED.
Application of Labor Arbiters jurisdiction to employers claim; Clearance as basis to withhold wages; Meaning of
Accountability; Labor Arbiters preliminary determination of property rights in relation to labor dispute
j. Milan vs. NLRC, G.R. No. 202961, February 4, 2015
SECOND DIVISION
G.R. No. 202961 February 4, 2015
EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID, BONIFACIO MATUNDAN, NORA
MENDOZA, et al., Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, SOLID MILLS, INC., and/or PHILIP ANG, Respondents.
DECISION
LEONEN, J.:
An employer is allowed to withhold terminal pay and benefits pending the employee's return of its properties.
Petitioners are respondent Solid Mills, Inc.' s (Solid Mills) employees.1 They are represented by the National Federation
of Labor Unions (NAFLU), their collective bargaining agent.2
As Solid Mills employees, petitionersand their families were allowed to occupy SMI Village, a property owned by Solid
Mills.3 According to Solid Mills, this was "[o]ut of liberality and for the convenience of its employees . . . [and] on the
condition that the employees . . . would vacate the premises anytime the Company deems fit."4
In September 2003, petitioners were informed that effective October 10, 2003, Solid Mills would cease its operations due
to serious business losses.5 NAFLU recognized Solid Mills closure due to serious business losses in the memorandum of
agreement dated September 1, 2003.6 The memorandum of agreement provided for Solid Mills grant of separation pay
less accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th month pay to the employees.7
Pertinent portions of the agreement provide:
WHEREAS, the COMPANYhas incurred substantial financial losses and is currently experiencing further severe financial
losses;
WHEREAS, in view of such irreversible financial losses, the COMPANY will cease its operations on October 10, 2003;
WHEREAS, all employees of the COMPANY on account of irreversible financial losses, will bedismissed from employment
effective October 10, 2003;
In view thereof, the parties agree as follows:
1. That UNION acknowledges that the COMPANY is experiencing severe financial losses and as a consequence of which,
management is constrained to cease the companys operations.
2. The UNION acknowledges that under Article 283 of the Labor Code, separation pay is granted to employees who are
dismissed due to closures or cessation of operations NOT DUE to serious business losses.
3. The UNION acknowledges that in view of the serious business losses the Company has been experiencing as seen in
their audited financial statements, employees ARE NOT granted separation benefits under the law.
The Labor Arbiter ruled in favor of petitioners.21 According to the Labor Arbiter, Solid Mills illegallywithheld petitioners
benefits and separation pay.22 Petitioners right to the payment of their benefits and separation pay was vestedby law
and contract.23 The memorandum of agreement dated September 1, 2003 stated no condition to the effect that
petitioners must vacate SolidMills property before their benefits could be given to them.24 Petitioners possession
should not be construed as petitioners "accountabilities" that must be cleared first before the release of benefits.25 Their
possession "is not by virtue of any employer-employee relationship."26 It is a civil issue, which isoutside the jurisdiction
of the Labor Arbiter.27
The dispositive portion of the Labor Arbiters decision reads:

4. The COMPANY, by way of goodwill and in the spirit of generosity agrees to grant financial assistance less
WHEREFORE, premises considered, judgment is entered ORDERING respondents SOLID MILLS, INC. and/or PHILIP ANG
accountabilities to members of the Union based on length of service to be computed as follows: (Italics in this paragraph
(President), in solido to pay the remaining 21 complainants:
supplied)

Number of days - 12.625 for every year of service
5. In view of the above, the members of the UNION will receive such financial assistance on an equal monthly installments
basis based on the following schedule:
First Check due on January 5, 2004 and every 5th of the month thereafter until December 5, 2004.
6. The COMPANY commits to pay any accrued benefits the Union members are entitled to, specifically those arising from
sick and vacation leave benefits and 13th month pay, less accountabilities based on the following schedule:
One Time Cash Payment to bedistributed anywhere from. . . .
....
8. The foregoing agreement is entered into with full knowledge by the parties of their rights under the law and they
hereby bind themselves not to conduct any concerted action of whatsoever kind, otherwise the grant of financial
assistance as discussed above will be withheld.8 (Emphasis in the original)
Solid Mills filed its Department of Labor and Employment termination report on September 2, 2003.9
Later, Solid Mills, through Alfredo Jingco, sent to petitioners individual notices to vacate SMI Village.10
1) 19 of which, namely EMER MILAN, RAMON MASANGKAY, ALFREDO JAVIER, RONALDO DAVID, BONIFACIO
MATUNDAN, NORA MENDOZA, MYRNA IGCAS, RAUL DE LAS ALAS, RENATO ESTOLANO, REX S. DIMAFELIX, MAURA
MILAN, JESSICA BAYBAYON, ALFREDO MENDOZA, ROBERTO IGCAS, ISMAEL MATA, CARLITO DAMIAN, TEODORA
MAHILOM, MARILOU LINGA, RENATO LINGA their separation pay of 12.625 days pay per year of service, pro-rated 13th
month pay for 2003 and accrued vacation and sick leaves, plus 12% interest p.a. from date of filing of the
leadcase/judicial demand on 12/08/03 until actual payment and/or finality;
2) the remaining 2 of which, complainants CLEOPATRA ZACARIAS, as she already received on 12/19/03 her accrued
13th month pay for 2003, accrued VL/SL total amount of P15,435.16, likewise, complainant Jerry L. Sesma as he already
received his accrued 13th month pay for 2003, SL/VL in the total amount of P10,974.97, shall be paid only their
separation pay of 12.625 days pay per year of service but also with 12% interest p.a. from date of filing of the lead
case/judicial demand on 12/08/03 until actual payment and/or finality, which computation as of date, amount to as
shown in the attached computation sheet.
3) Nine (9) individual complaintsviz., of Maria Agojo, Joey Suarez, Ronaldo Vergara, Ronnie Vergara, Antonio R. Dulo, Sr.,
Bryan D. Durano, Silverio P. Durano, Sr., Elizabeth Duarte and Purificacion Malabanan are DISMISSED WITH PREJUDICE
due to amicable settlement, whereas, that of [RONIE ARANAS], [EMILITO NAVARRO], [NONILON PASCO], [GENOVEVA
PASCO], [OLIMPIO A. PASCO] are DISMISSED WITHOUT PREJUDICE, for lack of interest and/or failure to prosecute.
The Computation and Examination unit is directed to cause the computation of the award in Pars. 2 and 3 above.28
(Emphasis in the original)

Petitioners were no longer allowed to report for work by October 10, 2003.11 They were required to sign a Solid Mills appealed to the National Labor Relations Commission.29 It prayed for, among others, the dismissal of the
memorandum of agreement with release and quitclaim before their vacation and sick leave benefits, 13th month pay, and complaints against it and the reversal of the Labor Arbiters decision.30
separation pay would be released.12 Employees who signed the memorandum of agreement were considered to have
agreed to vacate SMI Village, and to the demolition of the constructed houses inside as condition for the release of their
The National Labor Relations Commission affirmed paragraph 3 of the Labor Arbiters dispositive portion, but reversed
termination benefits and separation pay.13 Petitioners refused to sign the documents and demanded to be paid their
paragraphs 1 and 2. Thus:
benefits and separation pay.14

WHEREFORE, the Decision of Labor Arbiter Renaldo O. Hernandez dated 10/17/05 is AFFIRMED in so far as par. 3
Hence, petitioners filed complaintsbefore the Labor Arbiter for alleged non-payment of separation pay, accrued sick and
thereof is concerned but modified in that paragraphs 1 and 2 thereof are REVERSED and SET ASIDE. Accordingly, the
vacation leaves, and 13th month pay.15 They argued that their accrued benefits and separation pay should not be
following complainants, namely: Emir Milan, Ramon Masangkay, Alfredo Javier, Ronaldo David, Bonifacio Matundan,
withheld becausetheir payment is based on company policy and practice.16 Moreover, the 13th month pay is based on
Nora Mendoza, Myrna Igcas, Raul De Las Alas, Renato Estolano, Rex S. Dimaf[e]lix, Maura Milan, Jessica Baybayon,
law, specifically, Presidential Decree No. 851.17 Their possession of Solid Mills property is not an accountability that is
Alfredo Mendoza, Roberto Igcas, Cleopatra Zacarias and Jerry L. Sesmas monetary claims in the form of separation pay,
subject to clearance procedures.18 They had already turned over to SolidMills their uniforms and equipment when Solid
accrued 13th month pay for 2003, accrued vacation and sick leave pays are held in abeyance pending compliance of their
Mills ceased operations.19
accountabilities to respondent company by turning over the subject lots they respectively occupy at SMI Village Sucat

On the other hand, Solid Mills argued that petitioners complaint was premature because they had not vacated its
Muntinlupa City, Metro Manila to herein respondent company.31
property.20

35
The National Labor Relations Commission noted that complainants Marilou Linga, Renato Linga, IsmaelMata, and Carlito
Damian were already paid their respective separation pays and benefits.32 Meanwhile, Teodora Mahilom already retired
longbefore Solid Mills closure.33 She was already given her retirement benefits.34
The National Labor Relations Commission ruled that because of petitioners failure to vacate Solid Mills property, Solid
Mills was justified in withholding their benefits and separation pay.35 Solid Mills granted the petitioners the privilege to
occupy its property on accountof petitioners employment.36 It had the prerogative toterminate such privilege.37 The
termination of Solid Mills and petitioners employer-employee relationship made it incumbent upon petitioners to turn
over the property to Solid Mills.38
Petitioners filed a motion for partial reconsideration on October 18, 2010,39 but this was denied in the November 30,
2010 resolution.40
Petitioners, thus, filed a petition for certiorari41 before the Court of Appeals to assail the National LaborRelations
Commission decision of August 31, 2010 and resolution of November 30, 2010.42
On January 31, 2012, the Court of Appeals issued a decision dismissing petitioners petition,43 thus:
WHEREFORE, the petition is hereby ordered DISMISSED.44
The Court of Appeals ruled thatSolid Mills act of allowing its employees to make temporary dwellingsin its property was
a liberality on its part. It may be revoked any time at its discretion.45 As a consequence of Solid Mills closure and the
resulting termination of petitioners, the employer-employee relationship between them ceased to exist. There was no
more reason for them to stay in Solid Mills property.46 Moreover, the memorandum of agreement between Solid Mills
and the union representing petitioners provided that Solid Mills payment of employees benefits should be "less
accountabilities."47
On petitioners claim that there was no evidence that Teodora Mahilom already received her retirement pay, the Court of
Appeals ruled that her complaint filed before the Labor Arbiter did not include a claim for retirement pay. The issue was
also raised for the first time on appeal, which is not allowed.48 In any case, she already retired before Solid Mills ceased
its operations.49
The Court of Appeals agreed with the National Labor Relations Commissions deletion of interest since it found that Solid
Mills act of withholding payment of benefits and separation pay was proper. Petitioners terminal benefits and pay were
withheld because of petitioners failure to vacate Solid Mills property.50
Finally, the Court of Appeals noted that Carlito Damian already received his separation pay and benefits.51 Hence, he
should no longer be awarded these claims.52
In the resolution promulgated on July 16, 2012, the Court of Appeals denied petitioners motion for reconsideration.53
Petitioners raise in this petition the following errors:
I Lastly, according to respondents, it would be unjust if Carlito Damian would be allowed to receive monetary benefits
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT RULED THAT
PAYMENT OF THE MONETARY CLAIMS OF PETITIONERS SHOULD BE HELD IN ABEYANCE PENDING COMPLIANCE OF
THEIR ACCOUNTABILITIES TO RESPONDENT SOLID MILLS BY TURNING OVER THE SUBJECT LOTS THEY
RESPECTIVELY OCCUPY AT SMI VILLAGE, SUCAT, MUNTINLUPA CITY.
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT UPHELD THE
RULING OF THE NLRC DELETING THE INTEREST OF 12% PER ANNUM IMPOSED BY THE HONORABLE LABOR ARBITER
36
HERNANDEZ ON THE AMOUNTDUE FROM THE DATE OF FILING OF THE LEAD CASE/JUDICIAL DEMAND ON DECEMBER
8, 2003 UNTIL ACTUAL PAYMENT AND/OR FINALITY.
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT UPHELD THE
RULING OF THE NLRC DENYING THE CLAIM OF TEODORA MAHILOM FOR PAYMENT OF RETIREMENT BENEFITS
DESPITE LACK OF ANY EVIDENCE THAT SHE RECEIVED THE SAME.
IV
WHETHER OR NOT PETITIONER CARLITO DAMIAN IS ENTITLED TO HIS MONETARY BENEFITS FROM RESPONDENT
SOLID MILLS.54
Petitioners argue that respondent Solid Mills and NAFLUs memorandum of agreement has no provision stating that
benefits shall be paid only upon return of the possession of respondent Solid Mills property.55 It only provides that the
benefits shall be "less accountabilities," which should not be interpreted to include such possession.56 The fact that
majority of NAFLUs members were not occupants of respondent Solid Mills property is evidence that possession of the
property was not contemplated in the agreement.57 "Accountabilities" should be interpreted to refer only to
accountabilities that wereincurred by petitioners while they were performing their duties asemployees at the
worksite.58 Moreover, applicable laws, company practice, or policies do not provide that 13th month pay, and sick and
vacation leave pay benefits, may be withheld pending satisfaction of liabilities by the employee.59
Petitioners also point out thatthe National Labor Relations Commission and the Court of Appeals have no jurisdiction to
declare that petitioners act of withholding possession of respondent Solid Mills property is illegal.60 The regular courts
have jurisdiction over this issue.61 It is independent from the issue of payment of petitioners monetary benefits.62
For these reasons, and because, according to petitioners, the amount of monetary award is no longer in question,
petitioners are entitled to 12% interest per annum.63
Petitioners also argue that Teodora Mahilom and Carlito Damian are entitled to their claims. They insistthat Teodora
Mahilom did not receive her retirement benefits and that Carlito Damian did not receive his separation benefits.64
Respondents Solid Mills and Philip Ang,in their joint comment, argue that petitioners failure to turn over
respondentSolid Mills property "constituted an unsatisfied accountability" for which reason "petitioners benefits could
rightfully be withheld."65 The term "accountability" should be given its natural and ordinary meaning.66 Thus, it should
be interpreted as "a state of being liable or responsible," or "obligation."67 Petitioners differentiation between
accountabilities incurred while performing jobs at the worksite and accountabilities incurred outside the worksite is
baseless because the agreement with NAFLUmerely stated "accountabilities," without qualification.68
On the removal of the award of 12% interest per annum, respondents argue that such removal was proper since
respondent Solid Mills was justified in withholding the monetary claims.69 Respondents argue that Teodora Mahilom
had no more cause of action for retirement benefits claim.70 She had already retired more than a decade before Solid
Mills closure. She also already received her retirement benefits in 1991.71 Teodora Mahiloms claim was also not
included in the complaint filed before the Labor Arbiter.It was improper to raise this claim for the first time on appeal. In
any case, Teodora Mahiloms claim was asserted long after the three-year prescriptive period provided in Article 291 of
the Labor Code.72
again, which he, admittedly, already received from Solid Mills.73
I
The National Labor Relations Commission may preliminarily determine issues related to rights arising from an employer-
employee relationship
The National Labor Relations Commission has jurisdiction to determine, preliminarily, the partiesrights over a property, As a general rule, therefore, a claim only needs to be sufficiently connected to the labor issue raisedand must arise from
when it is necessary to determine an issue related to rights or claims arising from an employer-employee relationship. an employeremployee relationship for the labortribunals to have jurisdiction.

Article 217 provides that the Labor Arbiter, in his or her original jurisdiction, and the National Labor Relations
Commission, in its appellate jurisdiction, may determine issues involving claims arising from employeremployee
relations. Thus:
ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. (1) Except as otherwise provided under this
Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide within thirty (30) calendar days
after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes,
the following cases involving workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of
work and other terms and conditions of employment;
In this case, respondent Solid Mills claims that its properties are in petitioners possession by virtue of their status as its
employees. Respondent Solid Mills allowed petitioners to use its property as an act of liberality. Put in other words, it
would not have allowed petitioners to use its property had they not been its employees. The return of its properties in
petitioners possession by virtue of their status as employees is an issue that must be resolved to determine whether
benefits can be released immediately. The issue raised by the employer is, therefore, connected to petitioners claim for
benefits and is sufficiently intertwined with the parties employeremployee relationship. Thus, it is properly within the
labor tribunals jurisdiction.
II
Institution of clearance procedures has legal bases
Requiring clearance before the release of last payments to the employee is a standard procedure among employers,
whether public or private. Clearance procedures are instituted to ensure that the properties, real or personal, belonging
to the employer but are in the possession of the separated employee, are returned tothe employer before the employees
departure.

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
As a general rule, employers are prohibited from withholding wages from employees. The Labor Code provides:

5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and
Art. 116. Withholding of wages and kickbacks prohibited.It shall be unlawful for any person, directly or indirectly, to
lockouts; and
withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth,
intimidation, threat or by any other means whatsoever without the workers consent.
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising
from employer-employee relations including those of persons in domestic or household service, involving an amount
The Labor Code also prohibits the elimination or diminution of benefits. Thus:
exceeding five thousand pesos (P5,000.00), regardless of whether accompanied with a claim for reinstatement.

Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or
(2) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (Emphasis
in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.
supplied)

However, our law supports the employers institution of clearance procedures before the release of wages. As an
Petitioners claim that they have the right to the immediate release of their benefits as employees separated from
exception to the general rule that wages may not be withheld and benefits may not be diminished, the Labor Code
respondent Solid Mills is a question arising from the employer-employee relationship between the parties.
provides:

Claims arising from an employer-employee relationship are not limited to claims by an employee. Employers may also
Art. 113. Wage deduction.No employer, in his own behalf or in behalf of any person, shall make any deduction from the
have claims against the employee, which arise from the same relationship. In Baez v. Valdevilla,74 this court ruled that
wages of his employees, except:
Article 217 of the Labor Code also applies to employers claim for damages, which arises from or is connected with the
labor issue. Thus: Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to
claims for damages filed by employees, we hold that by the designating clause "arising from the employer-employee 1. In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the
relations" Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employer for the amount paid by him as premium on the insurance;
employee, where the basis for the claim arises from or is necessarily connected with the factof termination, and should be
entered as a counterclaim in the illegal dismissal case.75
2. For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer
or authorized in writing by the individual worker concerned; and
Baez was cited in Domondon v. National Labor Relations Commission.76 One of the issues in Domondonis whether the
Labor Arbiter has jurisdiction to decide an issue on the transfer of ownership of a vehicle assigned to the employee. It
3. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.
was argued that only regular courts have jurisdiction to decide the issue.77
(Emphasis supplied)

This court ruled that since the transfer of ownership of the vehicle to the employee was connected to his separation from
The Civil Code provides that the employer is authorized to withhold wages for debts due:
the employer and arose from the employer-employee relationship of the parties, the employers claim fell within the
LaborArbiters jurisdiction.78

37
Article 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.
"Debt" in this case refers to any obligation due from the employee to the employer. It includes any accountability that the
employee may have to the employer. There is no reason to limit its scope to uniforms and equipment, as petitioners
would argue.
More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that the release of
petitioners benefits shall be "less accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. The ordinary meaning of the term "accountability" does
not limit the definition of accountability to those incurred in the worksite. As long as the debt or obligation was incurred
by virtue of the employer-employee relationship, generally, it shall be included in the employees accountabilities that are
subject to clearance procedures.
It may be true that not all employees enjoyed the privilege of staying in respondent Solid Mills property. However, this
alone does not imply that this privilege when enjoyed was not a result of the employer-employee relationship. Those who
did avail of the privilege were employees of respondent Solid Mills. Petitioners possession should, therefore, be included
in the term "accountability."
Accountabilities of employees are personal. They need not be uniform among all employees in order to be included in
accountabilities incurred by virtue of an employer-employee relationship. Petitioners do not categorically deny
respondent Solid Mills ownership of the property, and they do not claim superior right to it. What can be gathered from
the findings ofthe Labor Arbiter, National Labor Relations Commission, and the Court ofAppeals is that respondent Solid
Mills allowed the use of its property for the benefit of petitioners as its employees. Petitioners were merely allowed to
possess and use it out of respondent Solid Mills liberality. The employer may, therefore, demand the property at will.79
The return of the propertys possession became an obligation or liability on the part of the employees when the
employer-employee relationship ceased. Thus, respondent Solid Mills has the right to withhold petitioners wages and
benefitsbecause of this existing debt or liability. In Solas v. Power and Telephone Supply Phils., Inc., et al., this court
recognized this right of the employer when it ruled that the employee in that case was not constructively dismissed.80
Thus:
There was valid reason for respondents withholding of petitioners salary for the month of February 2000. Petitioner
does not deny that he is indebted to his employer in the amount of around 95,000.00. Respondents explained that
petitioners salary for the period of February 1-15, 2000 was applied as partial payment for his debt and for withholding
taxes on his income; while for the period of February 15-28, 2000, petitioner was already on absence without leave,
hence, was not entitled to any pay.81
The law does not sanction a situation where employees who do not even assert any claim over the employers property
are allowed to take all the benefits out of their employment while they simultaneously withhold possession of their
employers property for no rightful reason. Withholding of payment by the employer does not mean that the employer
may renege on its obligation to pay employees their wages, termination payments, and due benefits. The employees
benefits are also not being reduced. It is only subjectedto the condition that the employees return properties properly
belonging to the employer. This is only consistent with the equitable principle that "no one shall be unjustly enriched or
benefited at the expense of another."82
For these reasons, we cannot hold that petitioners are entitled to interest of their withheldseparation benefits. These
benefits were properly withheld by respondent Solid Mills because of their refusal to return its property.
III
38
Mahilom and Damian are not entitled to the benefits claimed
Teodora Mahilom is not entitled to separation benefits.
Both the National Labor Relations Commission and the Court of Appeals found that Teodora Mahilom already retired
long before respondent Solid Mills closure. They found that she already received her retirement benefits. We have no
reason to disturb this finding. This court is not a trier of facts. Findings of the National Labor Relations Commission,
especially when affirmed by the Court of Appeals, are binding upon this court.83
Moreover, Teodora Mahiloms claim for retirement benefits was not included in her complaint filed before the Labor
Arbiter. Hence, it may not be raised in the appeal.
Similarly, the National Labor Relations Commission and the Court of Appeals found that Carlito Damian already received
his terminal benefits. Hence, he may no longer claim terminal benefits. The fact that respondent Solid Mills has not yet
demolished Carlito Damians house in SMI Village is not evidence that he did not receive his benefits. Both the National
Labor Relations Commission and the Court of Appeals found that he executed an affidavit stating that he already received
the benefits.
A bsent any showing that the National Labor Relations Commission and the Court of Appeals misconstrued these facts,
we will not reverse these findings.
Our laws provide for a clear preference for labor. This is in recognition of the asymmetrical power of those with capital
when they are left to negotiate with their workers without the standards and protection of law. In cases such as these, the
collective bargaining unit of workers are able to get more benefits and in exchange, the owners are able to continue with
the program of cutting their losses or wind down their operations due to serious business losses. The company in this
case did all that was required by law.
The preferential treatment given by our law to labor, however, is not a license for abuse.84 It is not a signal to commit
acts of unfairness that will unreasonably infringe on the property rights of the company. Both labor and employer have
social utility, and the law is not so biased that it does not find a middle ground to give each their due.
Clearly, in this case, it is for the workers to return their housing in exchange for the release of their benefits.1wphi1 This
is what they agreed upon. It is what is fair in the premises.
WHEREFORE, the petition is DENIED. The Court of Appeals' decision is AFFIRMED.
Posting of appeal bond to perfect an appeal
k. Balite vs SS Ventures international, Inc., G.R. No. 195109, February 4, 2015
FIRST DIVISION
G.R. No. 195109 February 4, 2015
ANDY D. HALITE, DELFIN M. ANZALDO AND MONALIZA DL. BIHASA, Petitioners,
vs.
SS VENTURES INTERNATIONAL, INC., SUNG SIK LEE AND EVELYN RAYALA, Respondents.
DECISION
PEREZ, J.:
This is a Petition for Review on Certiorari pursuant to Rule 45 of the Revised Rules of Court, assailing the 18 June 2010
Decision1 rendered by the Tenth Division of the Court of Appeals in CA-G.R. SP No. 109589. In its assailed decision, the
appellate court reversed the Resolution of the National Labor Relations Commission (NLRC) which denied the Motion to
Reduce Appeal Bond filed by respondents SS Ventures International, Inc., Sung Sik Lee and Evelyn Rayala
In a Resolution2 dated 30 December 2010, the appellate court refused to reconsider its earlier decision.
The Facts
Respondent SS Ventures International, Inc. is a domestic corporation duly engaged in the business of manufacturing
footwear products for local sales and export abroad. It is represented in this action by respondents Sung Sik Lee and
Evelyn Rayala. Petitioners Andy Balite (Balite), Monaliza Bihasa (Bihasa) and Delfin Anzaldo (Anzaldo) were regular
employees of the respondent company until their employments were severed for violation of various company policies.
For his part, Balite was issued a Show Cause Memorandum by the respondent company on 4 August 2005 charging him
with the following infractions: (1) making false reports, malicious and fraudulent statements and rumor-mongering
against the company; (2) threatening and intimidating co-workers; (3) refusing to cooperate in the conduct of
investigation; and (4) gross negligence in the care and use of the company property resulting in the damage of the
finished products. After respondent found Balites explanation insufficient, he was dismissed from employment, through
a Notice of Termination on 6 September 2005.
Bihasa, on the other hand, was charged with absence without leave on two occasions and with improper behavior,
stubbornness, arrogance and uncooperative attitude towards superiors and employees. Bihasa was likewise terminated
from the service on 5 May 2006 after her explanation in an administrative investigation was found unsatisfactory by the
respondent company.
Anzaldo was also dismissed from employment after purportedly giving him due process. The records of the infractions he
committed as well as the date of his termination, however, are not borne by the records.
Consequently, the three employees charged respondents with illegal dismissal and recovery of backwages, 13th month
pay and attorneys fees before the Labor Arbiter.
In refuting the allegations of the petitioners, respondents averred that petitioners were separated from employment for
just causes and after affording them procedural due process of law.
On 30 December 2007, the Labor Arbiter rendered a Decision3 in favor of petitioners and held that respondents are
liable for illegal dismissal for failing to comply with the procedural and substantive requirements in terminating
employment. The decretal portion of the Labor Arbiter Decision reads:
WHEREFORE, premises considered, [petitioners] are hereby found to have been illegally dismissed even as respondents
are held liable therefore.
Consequently, respondent corporation is hereby ordered to reinstate [petitioners] to their former positions without loss
of seniority rights and other privileges with backwages initially computed at this time and reflected below.
The reinstatement aspect of this decision is immediately executory and thus respondents are hereby required to submit a
report of compliance therewith within ten (10) days from receipt thereof.
Respondent corporation is likewise ordered to pay [petitioners] their 13th month pay and 10% attorneys fees.
Backwages 13th month pay Attorneys fees
1. Andy Balite P162,969.04 P 17,511.00 P 18,048.00
2. Delfin Anzaldo 158,299.44 17,511.00 17,511.00
39
3. Monaliza Bihasa 116,506.62 17,511.00 13,401.75
All other claims are dismissed for lack of factual or legal basis.4
Aggrieved, respondents interposed an appeal by filing a Notice of Appeal and paying the corresponding appeal fee.
However, instead of filing the required appeal bond equivalent to the total amount of the monetary award which is
P490,308.00, respondents filed a Motion to Reduce the Appeal Bond to P100,000.00 and appended therein a managers
check bearing the said amount. Respondents cited financial difficulty as justification for their inability to post the appeal
bond in full owing to the partial shutdown of respondent companys operations.
In a Resolution5 dated 27 November 2008, the NLRC dismissed the appeal filed by the respondents for non-perfection.
The NLRC ruled that posting of an appeal bond equivalent to the monetary award is indispensable for the perfection of
the appeal and the reduction of the appeal bond, absent any showing of meritorious ground to justify the same, is not
warranted in the instant case.
Similarly ill-fated was respondents Motion for Reconsideration which was denied by the NLRC in a Resolution6 dated 30
April 2009.
On certiorari, the Court of Appeals reversed the NLRC Decision and allowed the relaxation of the rule on posting of the
appeal bond. According to the appellate court, there was substantial compliance with the rules for the perfection of an
appeal because respondents seasonably filed their Memorandum of Appeal and posted an appeal bond in the amount of
P100,000.00. While the amount of the appeal bond posted was not equivalent to the monetary award, the Court of
Appeals ruled that respondents were able to sufficiently prove their incapability to post the required amount of bond.7
The Court of Appeals disposed in this wise:
WHEREFORE, premises considered, finding grave abuse of discretion on the part of the [NLRC], the instant petition is
GRANTED. The [NLRCs] Resolutions dated November 27, 2008 and April 30, 2009, respectively, are hereby SET ASIDE.
[The NLRC] is hereby directed to decide petitioners appeal on the merits.8
In a Resolution9 dated 30 December 2010, the Court of Appeals refused to reconsider its earlier decision.
Petitioners are now before this Court via this instant Petition for Review on Certiorari10 praying that the Court of
Appeals Decision and Resolution be reversed and set aside on the ground that:
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ABUSE OFDISCRETION AMOUNTING
TO LACK OR IN EXCESS OF JURISDICTION WHEN IT REVERSED THE RESOLUTION OF THE NLRC DISMISSING
RESPONDENTS APPEAL FOR NON-PERFECTION THEREOF.11
The Courts Ruling
Petitioners, in assailing the appellate courts decision, argue that posting of an appeal bond in full is not only mandatory
but a jurisdictional requirement that must be complied within order to confer jurisdiction upon the NLRC. They posit that
the posting of an insufficient amount of appeal bond, as in this case, resulted to the non-perfection of the appeal
rendering the decision of the Labor Arbiter final and executory.
Banking on the appellate courts decision, respondents, for their part, urge the Court to relax the rules on appeal
underscoring on the so-called "utmost good faith" they demonstrated in filing a Motion to Reduce Appeal Bond and in
posting a cash bond in the amount of P100,000.00. In justifying their inability to post the required appeal bond,
respondents reasoned that respondent company is in dire financial condition due to lack of orders from customers
constraining it to temporarily shut down its operations resulting in significant loss of revenues. Respondents now plea
for the liberal interpretation of the rules so that the case can be threshed out on the merits, and not on technicality.
Time and again we reiterate the established rule that in the exercise of the Supreme Courts power of review, the Court is
not a trier of facts12 and does not routinely undertake the re-examination of the evidence presented by the contending
parties during the trial of the case considering that the findings of facts of labor officials who are deemed to have
acquired expertise in matters within their respective jurisdiction are generally accorded not only respect, but even
finality, and are binding upon this Court, when supported by substantial evidence.13 The NLRC ruled that no appeal had
been perfected on time because of respondents failure to post the required amount of appeal bond. As a result of which,
the decision of the Labor Arbiter has attained finality. The Court of Appeals, on the contrary, allowed the relaxation of the
rules and held that respondents were justified in failing to pay the required appeal bond. Despite the non-posting of the
appeal bond in full, however, the appellate court deemed that respondents were able to seasonably perfect their appeal
before the NLRC, thereby directing the NLRC to resolve the case on the merits.
The pertinent rule on the matter is Article 223 of the Labor Code, as amended, which sets forth the rules on appeal from
the Labor Arbiters monetary award:
ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x x x.
xxxx
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of
a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed from. (Emphases ours).
Implementing the aforestated provisions of the Labor Code are the provisions of Rule VI of the 2011 Rules of Procedure
of the NLRC on perfection of appeals which read:
Section. 1. Periods of Appeal. - Decisions, awards or orders of the Labor Arbiter shall be final and executory unless
appealed to the Commission by any or both parties within ten (10)calendar days from receipt thereof. x x x If the 10th
day or the 5th day, as the case may be, falls on a Saturday, Sunday or holiday, the last day to perfect the appeal shall be
the first working day following such Saturday, Sunday or holiday.
xxxx
Section 4. Requisites for Perfection of Appeal. (a) The appeal shall be:
(1) filed within the reglementary period as provided in Section 1 of this Rule;
(2) verified by the appellant himself/herself in accordance with Section 4, Rule 7 of the Rules of Court ,as
amended;
(3) in the form a of a memorandum of appeal which shall state the grounds relied upon and the arguments in
support thereof; the relief prayed for; and with a statement of the date when the appellant received the
appealed decision, award or order;
(4) in three (3) legibly typewritten or printed copies; and
(5) accompanied by:
i) proof of payment of the required appeal fee and legal research fee;
ii) posting of cash or surety bond as provided in Section 6 of this Rule; and
iii) proof of service upon the other parties.
xxxx
(b) A mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the
period for perfecting an appeal.
xxxx
Section 5. Appeal Fee. - The appellant shall pay the prevailing appeal fee and legal research fee to the Regional
Arbitration Branch or Regional Office of origin, and the official receipt of such payment shall form part of the records of
the case.
Section 6. Bond. - In case the decision of the Labor Arbiter, or the Regional Director involves a monetary award, an appeal
by the employer shall be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or
surety bond equivalent in amount to the monetary award, exclusive of damages and attorneys fees.
40
xxxx
The Commission through the Chairman may on justifiable grounds blacklist a bonding company, notwithstanding its
accreditation by the Supreme Court.
These statutory and regulatory provisions explicitly provide that an appeal from the Labor Arbiter to the NLRC must be
perfected within ten calendar days from receipt of such decisions, awards or orders of the Labor Arbiter. In a judgment
involving a monetary award, the appeal shall be perfected only upon (1) proof of payment of the required appeal fee; (2)
posting of a cash or surety bond issued by a reputable bonding company; and (3) filing of a memorandum of appeal.14
In McBurnie v. Ganzon,15 we harmonized the provision on appeal that its procedures are fairly applied to both the
petitioner and the respondent, assuring by such application that neither one or the other party is unfairly favored. We
pronounced that the posting of a cash or surety bond in an amount equivalent to 10% of the monetary award pending
resolution of the motion to reduce appeal bond shall be deemed sufficient to perfect an appeal, to wit:
It is in this light that the Court finds it necessary to set a parameter for the litigants and the NLRCs guidance on the
amount of bond that shall hereafter be filed with a motion for a bonds reduction. To ensure that the provisions of Section
6, Rule VI of the NLRC Rules of Procedure that give parties the chance to seek a reduction of the appeal bond are
effectively carried out, without however defeating the benefits of the bond requirement in favor of a winning litigant, all
motions to reduce bond that are to be filed with the NLRC shall be accompanied by the posting of a cash or surety bond
equivalent to 10% of the monetary award that is subject of the appeal, which shall provisionally be deemed the
reasonable amount of the bond in the meantime that an appellants motion is pending resolution by the Commission. In
conformity with the NLRC Rules, the monetary award, for the purpose of computing the necessary appeal bond, shall
exclude damages and attorneys fees. Only after the posting of a bond in the required percentage shall anappellants
period to perfect an appeal under the NLRC Rules be deemed suspended.
The rule We set in McBurniewas clarified by the Court in Sara Lee Philippines v. Ermilinda Macatlang.16 Considering the
peculiar circumstances in Sara Lee, We determined what is the reasonable amount of appeal bond. We underscored the
fact that the amount of 10% of the award is not a permissible bond but is only such amount that shall be deemed
reasonable in the meantime that the appellants motion is pending resolution by the Commission.1wphi1 The actual
reasonable amount yet to be determined is necessarily a bigger amount. In an effort to strike a balance between the
constitutional obligation of the state to afford protection to labor on the one hand, and the opportunity afforded to the
employer to appeal on the other, We considered the appeal bond in the amount of P725M which is equivalent to 25% of
the monetary award sufficient to perfect the appeal, viz.:
We sustain the Court of Appeals in so far as it increases the amount of the required appeal bond. But we deem it
reasonable to reduce the amount of the appeal bond to P725 Million. This directive already considers that the award if
not illegal, is extraordinarily huge and that no insurance company would be willing to issue a bond for such big money.
The amount of P725 Million is approximately 25% of the basis above calculated. It is a balancing of the constitutional
obligation of the state to afford protection to labor which, specific to this case, is assurance that in case of affirmance of
the award, recovery is not negated; and on the other end of the spectrum, the opportunity of the employer to appeal.
By reducing the amount of the appeal bond in this case, the employees would still be assured of at least substantial
compensation, in case a judgment award is affirmed. On the other hand, management will not be effectively denied of its
statutory privilege of appeal.
In line with Sara Lee and the objective that the appeal on the merits to be threshed out soonest by the NLRC, the Court
holds that the appeal bond posted by the respondent in the amount of P100,000.00 which is equivalent to around 20% of
the total amount of monetary bond is sufficient to perfect an appeal. With the employer's demonstrated good faith in
filing the motion to reduce the bond on demonstrable grounds coupled with the posting of the appeal bond in the
requested amount, as well as the filing of the memorandum of appeal, the right of the employer to appeal must be upheld.
This is in recognition of the importance of the remedy of appeal, which is an essential part of our judicial system and the
need to ensure that every party litigant is given the amplest opportunity for the proper and just disposition of his cause
freed from the constraints of technicalities.17
WHEREFORE, premises considered, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals
are hereby AFFIRMED.
SO ORDERED.
Requirement of bond for employers appeal on Decision denying motion to quash writ of execution; failure to file
position paper
Toyota Alabang, Inc. vs. Games. G.R. No. 206612, August 17, 2015
FIRST DIVISION
G.R. No. 206612, August 17, 2015
TOYOTA ALABANG, INC., Petitioner, v. EDWIN GAMES, Respondent.
RESOLUTION
SERENO, C.J.:
Remaining at bench is the Motion for Reconsideration1 of petitioner Toyota Alabang, Inc. We had unanimously denied2 its
Petition for Review on Certiorari with Urgent Prayer for Injunctive Relief, 3 which sought the nullity of the Court of
Appeals (CA) Decision and Resolution.4 The CA affirmed the Resolutions5 of the National Labor Relations Commission
(NLRC) dismissing petitioner's appeal for non-perfection and for lack of merit. In effect, the NLRC sustained the ruling 6 of
the labor arbiter (LA) finding that petitioner had illegally dismissed respondent Edwin Games (Games).
In gist, the antecedent facts are as follows:LawlibraryofCRAlaw
Games, who worked as a foreman for petitioner, allegedly stole its vehicle lubricants. Subsequently, it charged him with
qualified theft before the trial court. Two years thereafter, or on 24 August 2007, Games filed a Complainant for illegal
dismissal, nonpayment of benefits, and damages against petitioner. The latter, through counsel, failed to file its Position
Paper on the date set on 15 November 2007.
Several resettings of the hearings ensued. During the 21 December 2007 hearing, petitioner manifested that it had failed
to file its Position Paper because its handling lawyer was no longer connected with the company. Then, in the hearing of
11 January 2008, petitioner failed to appear and even reneged on submitting its pleading. Accordingly, on 25 January
2008, the case was declared submitted for decision.
On 5 February 2008, the LA ruled against petitioner and ordered the latter to pay Games P535,553.07 for his separation
pay, back wages, service incentive leave pay and attorney's fees resulting from his illegal dismissal. Petitioner no longer
filed a motion for reconsideration. As a result, the LA's ruling became final and executory.
The LA issued a Writ of Execution, which petitioner sought to quash. It prayed that the proceedings be reopened,
explaining that it had failed to present evidence because of its counsel's negligence in filing the appropriate pleadings.
The LA denied the claims of petitioner. Aggrieved, the latter appealed before the NLRC.
The appeal of petitioner was denied due course because it had failed to show proof of its security deposit for the appeal
bond under Section 6, Rule VI of the 2005 NLRC Rules of Procedure. According to the NLRC, the bonding company's mere
declaration in the Certification of Security Deposit that the bond was fully secured7 was not tantamount to a faithful
compliance with the rule, because there must first be an accompanying assignment of the employer's bank deposit.
On the merits, the NLRC dismissed the case on the basis of the rule that no appeal may be taken from an order of
execution of a final judgment.8 For the NLRC, petitioner's failure to appeal the LA Decision already made the ruling final
and executory.
Petitioner elevated the case to the CA via a Petition for Certiorari, but the action was dismissed. Firstly, the CA ruled that
the NLRC did not gravely abuse its discretion in denying the appeal, given that petitioner had failed to comply faithfully
with the bond requirement. Secondly, it echoed the ruling of the NLRC that a final judgment is no longer appealable.
Thirdly, the CA found that petitioner's own negligence had caused it to lose its right to appeal.
41
Aggrieved, petitioner filed a Petition for Review on Certiorari with Urgent Prayer for Injunctive Relief before this Court. It
disputed the finding that it did not show proof of its security deposit for the appeal bond. It also insisted that its counsel's
gross negligence justified the reopening of the proceedings below.
By way of a minute Resolution, this Court denied the petition considering that the allegations, issues and arguments
raised by petitioner failed to sufficiently show that the CA had committed any reversible error in the challenged decision
and resolution as to warrant the exercise of this Court's discretionary appellate jurisdiction. Hence, the instant Motion for
Reconsideration.
The determinative issues in this case remain the same. This Court is tasked to review, on reconsideration, whether or not
the CA committed a reversible error in refusing to reopen the proceedings below.
RULING OF THE COURT
To recall, the LA's decision finding that petitioner illegally dismissed respondent was already final and executory because
of petitioner's failure to file a timely appeal. Therefore, the labor dispute between the parties should have been
considered a closed case by then, and no longer subject to appeal. At that point, Games should have already reaped the
benefits of a favorable judgment. Still, petitioner sought the reopening of the case, which the tribunals a quo denied.
This Court maintains that the CA correctly refused to reopen the proceedings below. The reopening of a case is an
extraordinary remedy,9 which, if abused, can make a complete farce of a duly promulgated decision that has long become
final and executory. Hence, there must be good cause on the movant's part before it can be granted.
In this case, petitioner itself was negligent in advancing its case. As found by the appellate court, petitioner was present
during the mandatory conference hearing in which the latter was informed by the LA of the need to file a Position Paper
on 15 November 2007. However, petitioner not only reneged on the submission of its Position Paper, but even failed to
move for the filing of the pleading at any point before the LA resolved the case on 5 February 2008.
Moreover, petitioner had failed to exhibit diligence when it did not attend the hearing on 11 January 2008, or any of the
proceedings thereafter, despite its manifestation that it no longer had any legal representative. Given the instances of
negligence by petitioner itself, the Court finds that the CA justly refused to reopen the case in the former's favor.
Definitely, petitioner cannot now be allowed to claim denial of due process when it was petitioner who was less than
vigilant of its rights.10redarclaw
At this stage of appellate review, Justice Lucas P. Bersamin dissents and votes to remand the case to the LA for the
reception of petitioner's evidence. He posits three reasons as follows:LawlibraryofCRAlaw
First, he states that the NLRC gravely abused its discretion in requiring petitioner to post an appeal bond, because this
requirement does not cover an appeal from a decision of the LA denying a motion to quash a writ of execution.
Second, he writes that in any event, the NLRC erred in requiring petitioner to accompany the appeal bond with proof of a
security deposit or collateral securing the bond. He bases this point on the fact that the bonding company has already
issued a Certificate of Security Deposit declaring that the appeal bond was fully secured by a security deposit equivalent
to the judgment award.
Third, he advances the opinion that there may be merit in the Rule 45 petition filed by petitioner. He cites that it had a
just cause to dismiss respondent after he had allegedly stolen its vehicle lubricants.
Before discussing these points, it is apropos to elucidate that this Court must be faithful to the framework of resolving
labor cases on appellate review before this Court. Universal Robina Sugar Milling Corporation v. Acibo aptly
explains:11redarclaw
This Court's power of review in a Rule 45 pet1t1on is limited to resolving matters pertaining to any perceived legal
errors, which the CA may have committed in issuing the assailed decision. In reviewing the legal correctness of the CA's
Rule 65 decision in a labor case, we examine the CA decision in the context that it determined, i.e., the presence or
absence of grave abuse of discretion in the NLRC decision before it and not on the basis of whether the NLRC
decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA undertook a
Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. (Emphasis supplied)
Based on the foregoing, the task at hand involves a determination of whether or not the CA gravely erred in finding that
the NLRC did not exceed its jurisdiction in refusing to grant petitioner's entreaty to reopen the case. In other words, as
long as the exercise of discretion below is based on well founded factual and legal bases,12 no abuse of discretion
amounting to lack or excess of jurisdiction can be imputed, and we are then justified to deny due course both to the Rule
45 petition and the concomitant Motion for Reconsideration.
The tribunals below gave overwhelming justifications for their rulings. In contrast, the first point espoused in the
dissenting opinion has no basis. The paraphrased proposition that "an appeal bond is not required in appeals from
decisions of the LA denying a motion to quash a writ of execution" lacks any citation sourced from a statute or case law.
Article 223 of the Labor Code and Section 6, Rule VI of the 2011 NLRC Rules of Procedure, uniformly state
thus:LawlibraryofCRAlaw
In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or surety
bond equivalent in amount to the monetary award, exclusive of damages and attorney's fees. (Emphasis supplied)
Evidently, the above rules do not limit the appeal bond requirement only to certain kinds of rulings of the LA. Rather,
these rules generally state that in case the ruling of the LA involves a monetary award, an employer's appeal may be
perfected only upon the posting of a bond. Therefore, absent any qualifying terms, 13 so long as the decision of the LA
involves a monetary award, as in this case,14 that ruling can only be appealed after the employer posts a bond.
Clearly, this construction is but proper considering the avowed purpose of appeal bonds demanded by the law from
employers in labor cases. This matter was discussed by the Court in Computer Innovations Center v. NLRC,15 to
wit:LawlibraryofCRAlaw
As earlier stated, the underlying purpose of the appeal bond is to ensure that the employee has properties on which
he or she can execute upon in the event of a final, providential award. The non payment or woefully insufficient
payment of the appeal bond by the employer frustrates these ends. Respondent Cario alleges in his Comment before this
Court that petitioner Quilos and his wife have since gone abroad, and wonders aloud whether he still would be able to
collect his monetary award considering the circumstances. Petitioners, in their Reply and Memorandum, do not aver
otherwise. Indeed, such eventuality appears plausible considering that Quilos himself did not personally verify the
petition, and had in fact executed a Special Power of Attorney in favor of his counsel, Atty. Bernabe B. Alabastro,
authorizing the filing of cases in his name. ft does not necessarily follow that the absence of Quilos from this country
precludes the execution of the award due Cario. However, if the absence of Quilos from this country proves to render
impossible the execution of judgment in favor of Cario, then the latter's victory may sadly be rendered pyrrhic. The
appeal bond requirement precisely aims to prevent empty or inconsequential victories by the laborer, and it is hoped
that herein petitioners' refusal to post the appropriate legal appeal bond does not frustrate the ends of justice in this
case. (Emphasis supplied)
If we are to construe otherwise, then an aggrieved party may simply seek the quashal of a writ of execution, instead of
going through the normal modes of appeal, to altogether avoid paying for an appeal bond. This ruse will then circumvent
the requirement of both labor rules and jurisprudence16 to post an appeal bond before contesting the LA's grant of
monetary award. Hence, the first point is not only incorrect, but also dangerous.
The second point likewise fails to justify the grant of petitioner's Motion for Reconsideration. This point refers to the
proper construction of Section 6, Rule VI of the 2011 NLRC Rules of Procedure, which demands that an appeal bond must
be accompanied by a "proof of security deposit or collateral securing the bond."
According to the NLRC and the CA, the bonding company's mere declaration in the Certification of Security Deposit that
the bond is fully secured17 is not tantamount to a faithful compliance with the rule, because there must first be an
accompanying assignment of the employer's bank deposit. On the other hand, the dissent sees this declaration as an act
42
that satisfies Section 6, Rule VI of the 2011 NLRC Rules of Procedure. For this reason, he opines that the NLRC should
have entertained the appeal of petitioner.
Notwithstanding this issue, the NLRC has given a well-founded reason for refusing to entertain petitioner's appeal,
namely, no appeal may be taken from an order of execution of a final and executory judgment.
An appeal is not a matter of right, but is a mere statutory privilege. It may be availed of only in the manner provided by
law and the rules.18 Thus, a party who seeks to elevate an action must comply with the requirements of the 2011 NLRC
Rules of Procedure as regards the period, grounds, venue, fees, bonds, and other requisites for a proper appeal before the
NLRC; and in Section 6, Rule VI, the aforesaid rules prohibit appeals from final and executory decisions of the Labor
Arbiter.
In this case, petitioner elevated to the NLRC an already final and executory decision of the LA. To recall, after petitioner
learned of its former counsel's negligence in filing a Position Paper before the LA, it nonetheless failed to file a motion
reconsideration to question the ruling of the LA that it illegally dismissed Games. At that point, the Decision was already
final and executory, so the LA dutifully issued a Writ of Execution. Petitioner sought the quashal of the writ of execution
and the reopening of its case only at that stage; and only after it was rebuffed by the LA did petitioner appeal before the
NLRC. Based on the timeline, therefore, the LA's adverse Decision had become final and executory even prior to
petitioner's appeal before the NLRC contesting the denial of the Motion to Quash the Writ of Execution. Consequently, the
NLRC dismissed the appeal based on its clear prohibition under Section 5, Rule V of the 2011 NLRC Rules of
Procedure.19redarclaw
The NLRC's reasoning that no appeal may be taken from an order of execution of a final and executory judgment is also
rooted in case law. Jurisprudence dictates that a final and executory decision of the LA can no longer be reversed or
modified.20 After all, just as a losing party has the right to file an appeal within the prescribed period, so does the winning
party have the correlative right to enjoy the finality of the resolution of the case. 21 On this basis, theCA did not grievously
err when it concluded that the ruling of the NLRC denying petitioner's appeal was not baseless, arbitrary, whimsical, or
despotic.22redarclaw
Finally, as regards the third point pertaining to the advancement of the merits23 of the case, it may no longer be properly
considered by this Court. To adjudicate on the merits of the instant appeal would require the reopening of the whole case,
a step that all the tribunals below - the LA, the NLRC, and the CA- have already refused to take.
As correctly ruled by the CA, the reopening of a case is, by default, not allowed merely on the ground that the counsel has
been negligent in taking the required steps to protect the interest of the client, such as timely filing a pleading, appearing
during hearings, and perfecting appeals.24 An exception arises only when there is good cause and excusable negligence on
the client's part.25redarclaw
Both the explanation of the CA and the records undeniably show no good cause or excusable negligence on the part of the
client - petitioner Toyota Alabang, Inc. given the totality of the instances of the latter's own negligence in these
proceedings, viz: (1) despite being informed, during the mandatory conference hearing, of the necessity to file a Position
Paper, petitioner reneged on its duty to timely submit its Position Paper to the LA on 15 November 2007; (2) after
manifesting that it no longer had a counsel, petitioner was still absent on 11 January 2008, the date when it could still
have submitted its belated Position Paper; (3) thereafter, it altogether absented itself from all the proceedings before the
LA; (4) at no point before the LA's resolution of the case on 5 February 2008 did petitioner file a Position Paper; and (5)
after allowing the LA Decision to attain finality as a result of its non-submission of an appeal or a motion for
reconsideration, petitioner belatedly sought the quasha1 of the execution of the LA Decision granting compensation to
respondent.
Despite the overwhelming lapses mentioned above, the dissent maintains that petitioner cannot be considered negligent
by any measure. According to the dissent, petitioner could not be faulted for failing to file a position paper because the
filing of pleadings has been entrusted to its counsel. For the dissent, "given the nature and extent of its business and
operations, the petitioner could not be expected to supervise and monitor all the cases it had entrusted to its lawyer."
But, this stance is baseless as can be seen by the lack of legal citation in the dissent.
More importantly, this Court cannot give special treatment to petitioner. In our past cases, this Court already held that
the failure of the counsel to file the required position papers before the LA is not a ground to declare that petitioner had
been deprived of due process; and is not a cause to conclude that the proceedings a quo had been null and void.26 In
Building Care Corporation v. Macaraeg,27 this Court thoroughly explained that:LawlibraryofCRAlaw
It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the client. A departure from this
rule would bring about never-ending suits, so long as lawyers could allege their own fault or negligence to support the
client's case and obtain remedies and reliefs already lost by the operation of law. The only exception would be, where the
lawyer's gross negligence would result in the grave injustice of depriving his client of the due process of law. In this case,
there was no such deprivation of due process. Respondent was able to fully present and argue her case before the Labor
Arbiter. She was accorded the opportunity to be heard.
We have consistently held that the requirements of due process are satisfied when the parties are given the opportunity
to submit position papers wherein they are supposed to attach all the documents that would prove their claim in case it
be decided that no hearing should be conducted or was necessary. 28 Here, petitioner, despite being given several chances
to pass its position paper, did not at all comply. Worse, petitioner also had other instances of negligence. Consequently,
this Court cannot redo the whole proceedings of the Labor Arbiter who had already afforded due process to the former.
Given the foregoing reasons, juxtaposed with the high threshold for resolving appellate reviews in labor cases before this
Court, we rule for the denial of petitioner's Motion for Reconsideration.
WHEREFORE, the Petition for Review with Urgent Prayer for Injunctive Relief filed by Toyota Alabang, Inc. is DENIED
with FINALITY. No further pleadings shall be entertained in this case. Let an Entry of Judgment be issued in due course.
Absence of claims for retirement pay is not included in the award of other benefits
l. Villena vs. Batangas II Electric Cooperative, Inc., G.R. No. 205735
FIRST DIVISION
G.R. No. 205735 February 4, 2015
CONCEPCION A. VILLENA, Petitioner,
vs.
BATANGAS II ELECTRIC COOPERATIVE, INC. and GEORGE A. DIN, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated October 18, 2012 and the Resolution3 dated
February 7, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 120170 which denied the inclusion of retirement pay and
allowances for representation, transportation, and cellular phone usage in the computation of the monetary awards
granted to petitioner Concepcion A. Villena (Villena) as a result of her illegal dismissal.
The Facts
Villena was hired by respondent Batangas II Electric Cooperative, Inc. (BATELEC II) as bookkeeper in 1978. She rose
from the ranks and was promoted as Finance Manager in 1985.In 1994, she was demoted to the position of Auditor,
which caused her to file a complaint for constructive dismissal before the Labor Arbiter (LA), docketed as NLRC NCR Case
No. 12-07073-94-B (NLRC CA No. 016643-98).4
In a Decision dated July 22, 1998, the LA dismissed Villenas complaint, prompting her to seek recourse before the
National Labor Relations Commission (NLRC).5
The ruling of the LA was reversed in a Resolution6 dated January 31, 2000 (January 31, 2000 NLRC Resolution), whereby
the NLRC declared Villena to have been illegally dismissed, and thus, ordered BATELEC II to reinstate her to her former
position as Finance Manager, or its equivalent, and to pay her salary differentials. However, the NLRCs judgment was
silent on the payment of allowances, benefits, and attorneys fees. Hence, Villena moved for reconsideration, but was
denied.7 At odds with the verdict, she elevated the matter to the CA via petition for certiorari, docketed as CA-G.R. SP No.
59073.8
43
In a Decision9 dated August 31, 2001 (August 31, 2001 CA Decision), the CA modified the January 31, 2000 NLRC
Resolution and declared Villena to be "entitled to the difference between the salary of the Finance Manager and that of
the auditor, plus allowances and any other benefits pertaining to the position of Finance Manager at the time she was
removed therefrom up to the date of her actual reinstatement."10 It also granted her attorneys fees in the amount of
10% of the total monetary award. The case was then remanded to the NLRC for the computation of the total amount due
to Villena.11
In the course thereof, the LA declared12 that Villena was entitled only to "salary differentials, 13th month pay, unused
sick leave, leave of absence" amounting to P1,078,890.14,13 excluding from the computation claims for bonus,
representation allowance, transportation benefits, and attorneys fees. Moreover, her claim for separation pay in lieu of
reinstatement was denied.14
While Villena received the amount of P1,078,890.14, she appealed to the NLRC the exclusion of her other benefits as well
as her claim for separation pay.15
Meanwhile, on September 20, 2003, BATELEC II issued Policy No. 03-003,16 which provided for retirement benefits to its
regular employees.
In a Resolution17 dated March 22, 2007 (March 22, 2007 NLRC Resolution), the NLRC granted the appeal of Villena,
holding that since reinstatement was no longer possible, separation pay in lieu of reinstatement was justified. It then
directed BATELEC II "to pay [Villena] her claim for separation pay in lieu of reinstatement equivalent to one (1) month
pay for every year of service from the date of her hiring up to the date of the finality of the judgment, salary differentials
and other benefits[,] from the date of her dismissal up to the date of the payment of her separation pay, and [attorneys]
fees equivalent to ten percent (10%) of the totality of her award."18 BATELEC II moved for reconsideration, but the same
was denied.19
With no further action having been taken by BATELEC II, the March 22, 2007 NLRC Resolution attained finality.20 Thus,
Villena moved for its execution.21
The LA Ruling
Acting on the motion for execution, the Executive Labor Arbiter issued an Order22 dated November 24, 2009 (November
24, 2009 LA Order), finding Villena to be entitled to the following benefits: (a) salary differentials; (b) 13th month pay;
(c) 14th month pay; (d) bonus cash gift; (e) unused sick leave; (f) leave of absence; (g) uniform allowance; (h) separation
pay; (i) representation allowance;23 (j) transportation allowance;24 (k) cellular phone allowance;25 (l) retirement
pay;26 and (m) attorneys fees, in the total amount of P6,294,290.99 net of the amount earlier partially satisfied.27
Insisting that Villena was not entitled to salary differentials, allowances and benefits of a Finance Manager, separation
pay, and allowances for representation, transportation, and cellular phone usage, BATELEC II appealed28 to the NLRC.
The NLRC Ruling
In a Resolution29 dated February 28, 2011 (February 28, 2011 NLRC Resolution), the NLRC partly granted the appeal
and excluded from the computation of monetary awards the sums for representation, transportation, and cellular phone
usage allowances, as well as retirement pay. It found that Villena was not able to prove that she was qualified to receive
representation allowance or that she was authorized to travel.30 The NLRC likewise found no basis for the award of
cellular phone allowance to Villena.31
With the substantial modification, Villena moved for partial reconsideration,32 which the NLRC partly granted in a
Resolution33 dated May 17, 2011 (May 17, 2011 Resolution), deleting the award for separation pay and in lieu thereof,
ordering the payment of retirement pay in the interest of justice and fairness and in order to be consistent with the spirit
of the law on retirement to grant the more beneficial retirement gratuity to the worker, including 15th month pay.34
Dissatisfied, Villena filed a petition for certiorari35 before the CA, docketed as CA-G.R. SP No. 120170.
The CA Ruling
In a Decision36 dated October 18, 2012, the CA reversed and set aside the ruling of the NLRC, pointing out that the earlier
August 31, 2001 CA Decision finding Villena to have been illegally dismissed and the March 22, 2007 NLRC Resolution
ordering the payment of separation pay in lieu of reinstatement had both become final and executory and, thus,
immutable and unalterable.37 As the NLRC, in its May 17, 2011 Resolution, awarded retirement pay instead of separation
pay, the CA found that the NLRC acted beyond its authority in modifying the aforesaid final and executory judgments.38
The CA, however, affirmed the February 28, 2011 NLRC Resolution disallowing the inclusion of allowances for
representation, transportation, and cellular phone usage as Villena did not perform her duties as Finance Manager not
being a certified public accountant which is a required qualification for such position.39
Contesting the exclusions, Villena filed the present petition.
The Issue Before the Court
The issue for the Courts resolution is whether or not (a) retirement pay, and (b) representation, transportation, and
cellular phone usage allowances should be awarded in favor of Villena.
The Courts Ruling
The petition is partly meritorious.
"contemporaneous"44 claim for retirement pay on the execution phase of these proceedings. In fine, the plea to include
retirement pay in the execution of the final and executory August 31, 2001 CA Decision and March 22, 2007 NLRC
Resolution, under the phrase "other benefits," cannot be granted.
B. ON TRANSPORTATION, REPRESENTATION, AND CELLULAR PHONE USAGE ALLOWANCES.
Meanwhile, on the matter of the claimed allowances, it is clear from BATELEC IIs pleadings and submissions that
representation allowance,45 transportation allowance,46 and cellular phone usage allowance47 are given to the Finance
Manager/Department Manager as part of their benefits,48 unlike the separate entitlement to retirement pay which may
be recovered only upon a meritorious subsequent application when the employee decides to retire. Consequently, these
allowances ought to be included in the "other benefits pertaining to the position of Finance Manager" to which Villena is
entitled to and which were awarded to her under the final and executory CA Decision and NLRC Resolution.
With the award of the "other benefits pertaining to the position of Finance Manager" made by the CA in its August 31,
2001 Decision lapsing into finality, the same had already become immutable and unalterable;49 this means that they may
no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law.50 Thus, it was an error on the part of the CA to still consider, rule upon, and vary the previous
CA Ruling, i.e., August 31, 2001 CA Decision, on the entitlement of Villena to the benefits of representation,
transportation, and cellular phone usage allowances. On this score, therefore, the claim of Villena is granted.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated October 18, 2012 and the Resolution dated February
7, 2013 of the Court of Appeals in CA-G.R. SP No. 120170 are hereby AFFIRMED with MODIFICATION ordering the
payment of representation, transportation, and cellular phone usage allowances to petitioner Concepcion A. Villena, in
accordance with the Order dated November 24, 2009 of the Executive Labor Arbiter.
SO ORDERED.
Some issues covered/resolved- Criteria for fixed-term employment;stare decisis et non quieta
movers;Retrenchment; Submissio of FS that is still subject to adjustment

m. Basan vs. Coca-Cola Bottlers Philippines, G.R. No. 174365-66, February 4, 2015
Retirement pay as well as representation, transportation, and cellular phone usage allowances were not specifically
THIRD DIVISION
mentioned in the final and executory August 31, 2001 CA Decision40 and March 22, 2007 NLRC Resolution.41 On its face,
G.R. Nos. 174365-66 February 4, 2015
both issuances only mention that Villena is entitled to "other benefits," hence, the Courts task is to render a proper
ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, JR., ROBERTO DELA RAMA, JR., RICKY S. NICOLAS, CRISPULO
interpretation.
D. DONOR, GALO FALGUERA, and NATIONAL LABOR RELATIONS COMMISSION, Petitioners,
vs.
A. ON RETIREMENT PAY. COCA-COLA BOTTLERS PHILIPPINES,* Respondent.
DECISION
PERALTA, J.:
As the Court sees it, the "other benefits" mentioned in these rulings cannot be construed to include retirement pay for the
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside
primary reason that they adjudged awards relative to Villenas illegal dismissal complaint, which remains barren of a
the Decision1 dated August 31, 2005 and Resolution2 dated August 24, 2006 of the Court of Appeals (CA) in CA-G.R. SP
specific cause of action for retirement pay. In order for her retirement pay claim to be considered, Villenas complaint
Nos. 80977 & 87071, which reversed the Resolutions dated January 30, 20033 and September 24, 20034 of the National
should have contained substantial allegations which would show that she (a) had applied for the same, and (b) her
Labor Relations Commission (NLRC) in NLRC 00-02-01419-97.
application squares with the requirements of entitlement under the terms of the companys retirement plan, i.e., Policy
No. 03-003, which, in fact, was issued on September 20, 2003, or after the August 31, 2001 CA Decision had already
attained finality.1wphi1 However, based on the records, what she sought for in her illegal dismissal complaint were the The factual antecedents are as follows.
reliefs of reinstatement, payment of salary differentials, all benefits and allowances that she may have received as
Finance Manager, attorneys fees, and damages.42 Thus, as the matter left for determination is whether or not the
On February 18, 1997, petitioners Romeo Basan, Danilo Dizon, Jaime L. Tumabiao, Jr., Roberto Dela Rama,Jr., Ricky S.
aforesaid rulings, when executed, should include retirement pay and representation, transportation, and cellular phone
Nicolas, Crispulo D. Donor, Galo Falguera filed a complaint for illegal dismissal with money claims against respondent
usage allowances, the Court will harken back only to the context of the illegal dismissal complaint from which such
Coca-Cola Bottlers Philippines, alleging that respondent dismissed them without just cause and prior written notice
awards of "other benefits" stemmed from.
required by law. In their position paper, petitioners provided for the following material dates:5

Verily, the Court is not unaware of its rulings wherein it pronounced that retirement pay and separation pay are not
mutually exclusive (unless there is a specific prohibition in the collective bargaining agreement or retirement plan Name of Petitioner Date of Hiring Date of Dismissal
against the payment of both benefits);43 however, with Villenas entitlement to retirement pay not included as an issue
in an illegal dismissal case which had already been finally decided, it is quite absurd for Villena to submit a
44
Dela Rama November 16, 1995 February 13, 1997
Dizon October 1988 December 15, 1996
Tumabiao February 2, 1992 February 13, 1997
Basan July 13, 1996 January 31, 1997
Donor September 16, 1995 February 13, 1997
Nicolas May 10, 1996 January 30, 1997
Falguera January 15, 1991 April 1996
Respondent corporation, however, countered that it hired petitioners as temporary route helpers to act as substitutes for
its absent regular route helpers merely for a fixed period in anticipation of the high volume of work in its plants or sales
offices.6 As such, petitioners claims have no basis for they knew that their assignment as route helpers was temporary in
duration.
On August 21, 1998, the Labor Arbiter ruled in favor of petitioners and found that since they were performing activities
necessary and desirable to the usual business of petitioner for more than the period for regularization, petitioners are
considered as regular employees, and thus, their dismissal was done contrary to law in the absence of just cause and
prior written notice.7 Thus, it ordered respondent to reinstate petitioners with full backwages from the time their
salaries were withheld until their actual reinstatement and to pay their lump sum increase extended to them in their
collective bargaining agreement, their accrued vacation and sick leave benefits, as well as monetary awards and
attorneys fees.8
On January 30, 2003, the NLRC affirmed the Labor Arbiters decision and rejected respondents contention that
petitioners were merely employed for a specific project or undertaking the completion or termination of which has been
determined at the time of their engagement. It stressed that nowhere in the records of the case was it shown that
petitioners were hired as project or seasonal employees, respondent having failed to submit any contract of project or
other similar proof thereof.9 It also noted that neither can petitioners be considered as probationary employees for the
fact that they had performed their services for more than six (6) months. In addition, the NLRC upheld the Labor
Arbiters ruling that petitioners, as route helpers, performed work directly connected or necessary and desirable in
respondents ordinary business of manufacturing and distributing its softdrink products. Thus, respondent failed to
overcome petitioners assertion that they were regular employees. As such, their employment could only be terminated
with just cause and after the observance of the required due process. Thereafter, the subsequent motion for
reconsideration filed by respondent was further denied by the NLRC on September 24, 2003.
On December 9, 2003, respondent filed a petition for certiorari10 with the CA alleging grave abuse of discretion on the
part of the NLRC in finding that petitioners were regular employees. In the meantime, petitioners filed before the Labor
Arbiter a Motion for Issuance of a Writ of Execution11 dated December 15, 2003, to which respondent filed a
Manifestation and Motion with attached Opposition.12 On March 25, 2004, the Labor Arbiter ordered that the Writ of
Execution be issued, which was affirmed by the NLRC on June 21, 2004. Consequently, respondent filed another petition
for Certiorari13 on October 22, 2004, claiming that the NLRC committed grave abuse of discretion in directing the
execution of a judgment, the propriety and validity of which was still under determination of the appellate court.
45
In its Decision dated August 31, 2005, the CA consolidated respondents two (2) petitions for certiorari and reversed the
rulings of the NLRC and the Labor Arbiter in the following wise:
That the respondents "performed duties which are necessary or desirable in the usual trade or business of Coca-Cola," is
of no moment. This is not the only standard for determining the status of ones employment. Such fact does not prevent
them from being considered as fixed term employees of Coca-Cola whose engagement was "fixed" for a specific period.
The respondents repeated hiring for various periods (ranging from more than six months for private respondent Basan
to eight years in the case of private respondent Dizon) would not automatically categorize them as REGULAR
EMPLOYEES.
xxxx
It being supported by facts on record and there being no showing that the employment terms were foisted on the
employees through circumstances vitiating or diminishing their consent, following Brent School, Inc. vs. Zamora(G.R. No.
48494, Feb. 5, 1990), the respondents must be considered as fixed term employees whose "seasonal employment" or
employment for a "period" have been "set down." After all, as conceded by Brent, fixed term employment continues to be
allowed and enforceable in this jurisdiction. Not being permanent regular employees, it must be held that the
respondents are not entitled to reinstatement and payment of full backwages.14
Petitioners sought a reconsideration of the CAs Decision on procedural and substantive grounds. On the procedural, they
alleged that respondent, in filing its appeal of the Labor Arbiters August 21, 1998 decision with the NLRC only on
December 20, 1998, rendered the Decision of the Labor Arbiter final and executory, and thus, deprived the CA of
jurisdiction to alter the final judgment.15 They also claimed that the Resolutions of the NLRC have become final and
executory in view of the Entries of Judgment dated December 16, 2003 and September 16, 2004 issued by the NLRC. As
to the substantial matter, petitioners assert that they are regular employees entitled to security of tenure.
On August 24, 2006, the CA denied petitioners motion for reconsideration in saying that it is no longer necessary to
discuss whether respondent was able to timely appeal the Labor Arbiters decision to the NLRC, in view of the fact that
the latter had already given due course to said appeal by deciding the case on the merits and, more importantly,
petitioners failure to raise the alleged infirmity before the NLRC in opposition to respondents appeal.
Hence, the instant petition invoking the following grounds:
I.
THE HONORABLE COURT OF APPEALS SERIOUSLY AND PATENTLY ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO THE LACK OR EXCESS OF JURISDICTION IN RULING THAT THE PETITIONERS WERE NOT
REGULAR EMPLOYEES.
II.
THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN THE CHALLENGED DECISIONS AS TO
WARRANT THE EXERCISE OF THE COURTS DISCRETIONARY APPELLATE JURISDICTION.
Petitioners essentially maintain that contrary to the findings of the CA, they were continuously hired by respondent
company to perform duties necessary and desirable in the usual trade or business and are, therefore, regular employees.
They allege that if their services had really been engaged for fixed specific periods, respondent should have at least
provided the contracts of employment evidencing the same.
For its part, respondent contends that the petition should be denied due course for its verification and certification of
non-forum shopping was signed by only one of the petitioners. It alleges that even assuming the validity of the same, it
 should still be dismissed for the appellate court aptly found that petitioners were fixed-term employees who were hired petition have been made in good faith or are true and correct.16 Similarly, this Court has consistently held that when
intermittently. Respondent also asserts that petitioners failed to completely substantiate their claims, for during the under reasonable or justifiable circumstances, as when all the petitioners share a common interest and invoke a common
hearing conducted before the Labor Arbiter on March 11, 1998, the payslips presented by petitioners merely established cause of action or defense, as in this case, the signature of only one of them in the certification against forum shopping
the following employment terms: substantially complies with the certification requirement.17 Thus, the fact that the petition was signed only by petitioner
Basan does not necessarily result in its outright dismissal for it is more in accord with substantial justice to overlook
petitioners procedural lapses.18 Indeed, the application of technical rules of procedure may be relaxed in labor cases to
Name of Petitioner Length of Service Dates serve the demand of justice.19

Dela Rama 5 months, 4 months Between November 30, 1995 As for the primordial issue in this case, it must be noted that the same has already been resolved in Magsalin v. National
And March 31, 1996 Organization of Working Men,20 wherein this Court has categorically declared that the nature of work of route helpers
hired by Coca Cola Bottlers Philippines, Inc. is necessary and desirable in its usual business or trade thereby qualifying
them as regular employees, to wit:
Dizon 4 months In 1993
2 months In 1994
Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the country. Respondent
9 months In 1996 workers have long been in the service of petitioner company. Respondent workers, when hired, would go with route
salesmen on board delivery trucks and undertake the laborious task of loading and unloading softdrink products of
Tumabiao 3 months From November 15, 1996 petitioner company to its various delivery points.
To January 31, 1997
Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a
"regular" worker's security of tenure, however, can hardly be doubted. In determining whether an employment should be
Basan 6.5 months From May 15, 1996 considered regular or non-regular, the applicable test is the reasonable connection between the particular activity
1 month To December 31, 1996 performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by the law
From January 15, 1997 itself, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that
To January 31, 1997 can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which
the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from
the normal activities required in carrying on the particular business or trade. But, although the work to be performed is
Donor 1 month From February 15, 1996 only for a specific projector seasonal, where a person thus engaged has been performing the job for at least one year,
To March 15, 1996 even if the performance is not continuous or is merely intermittent, the law deems the repeated and continuing need for
1 month From December 15, 1996 its performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the
To January 15, 1997 employer. The employment of such person is also then deemed to be regular with respect to such activity and while such
activity exists.
Nicolas 8.5 months In 1996 and 1997
The argument of petitioner that its usual business or trade is softdrink manufacturing and that the work assigned to
respondent workers as sales route helpers so involves merely "postproduction activities," one which is not indispensable
Falguera 6 months From 1992 in the manufacture of its products, scarcely can be persuasive. If, as so argued by petitioner company, only those whose
To 1997 work are directly involved in the production of softdrinks may be held performing functions necessary and desirable in
its usual business or trade, there would have then been no need for it to even maintain regular truck sales route
helpers.1wphi1 The nature of the work performed must be viewed from a perspective of the business or trade in its
entirety and not on a confined scope.
Considering that the evidence presented showed that petitioners merely rendered their services for periods of less than a
year, respondent claims that petitioners could not have attained regular employment status. It added that its failure to
present petitioners employment contracts was due to a fire that destroyed its Manila Plant where said contracts were The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity or
kept. Nevertheless, respondent persistently asserts that where a fixed period of employment was agreed upon knowingly desirability of their services in the regular conduct of the business or trade of petitioner company. The Court of Appeals
and voluntarily by the petitioners, the duration of which was made known to them at the time of their engagement, has found each of respondents to have worked for at least one year with petitioner company. While this Court, in Brent
petitioners cannot now claim otherwise. In addition, it disagrees with the contention that petitioners, as route helpers, School, Inc. vs. Zamora, has upheld the legality of a fixed-term employment, it has done so, however, with a stern
were performing functions necessary or desirable to its business. admonition that where from the circumstances it is apparent that the period has been imposed to preclude the
acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good
customs, public order and public policy. The pernicious practice of having employees, workers and laborers, engaged for
The petition is impressed with merit. a fixed period of few months, short of the normal six-month probationary period of employment, and, thereafter, to be
hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be countenanced. The fact that
On the procedural issue, We hold that while the general rule is that the verification and certification of non-forum respondent workers have agreed to be employed on such basis and to forego the protection given to them on their
shopping must be signed by all the petitioners in a case, the signature of only one of them, petitioner Basan in this case, security of tenure, demonstrate nothing more than the serious problem of impoverishment of so many of our people and
appearing thereon may be deemed substantial compliance with the procedural requirement. Jurisprudence is replete the resulting unevenness between labor and capital. A contract of employment is impressed with public interest. The
with rulings that the rule on verification is deemed substantially complied with when one who has ample knowledge to provisions of applicable statutes are deemed written into the contract, and "the parties are not at liberty to insulate
swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the
46
themselves and their relationships from the impact of labor laws and regulations by simply contracting with each
other."21
In fact, in Pacquing, et. al. v. Coca-Cola Philippines, Inc.,22 this Court applied the ruling cited above under the principle of
stare decisis et non quieta movere (follow past precedents and do not disturb what has been settled). It was held therein
that since petitioners, as route helpers, were performing the same functions as the employees in Magsalin, which are
necessary and desirable in the usual business or trade of Coca Cola Philippines, Inc., they are considered as regular
employees entitled to security of tenure.
Here, respondent, in its position paper, expressly admitted that petitioners were employed as route helpers in
anticipation of the high volume of work in its plants and sales offices.23 As such, respondents contention that petitioners
could not have attained regular employment status for they merely rendered services for periods of less than a year
cannot be sustained in view of the Magsalin doctrine previously cited. Indeed, the "pernicious practice" of engaging
employees for a fixed period short of the six-month probationary period of employment, and again, on a day-to-day basis
thereafter, mocks the law.
At this point, it is worth recalling that Article 280 of the Labor Code, as amended, provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific projector undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee or where the work or services
to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall continue
while such activity exists. Thus, pursuant to the Article quoted above, there are two kinds of regular employees, namely:
(1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of
the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect
to the activities in which they are employed.24 Simply stated, regular employees are classified into: (1) regular
employees by nature of work; and (2) regular employees by years of service. The former refers to those employees who
perform a particular activity which is necessary or desirable in the usual business or trade of the employer, regardless of
their length of service; while the latter refers to those employees who have been performing the job, regardless of the
nature thereof, for at least a year.25
Petitioners, in this case, fall under the first kind of regular employee above. As route helpers who are engaged in the
service of loading and unloading softdrink products of respondent company to its various delivery points, which is
necessary or desirable in its usual business or trade, petitioners are considered as regular employees. That they merely
rendered services for periods of less than a year is of no moment since for as long as they were performing activities
necessary to the business of respondent, they are deemed as regular employees under the Labor Code, irrespective of the
length of their service.
Nevertheless, respondent, as in Magsalin, also asserts that even assuming that petitioners were performing activities
which are usually necessary or desirable in its usual business or trade, they were employed not as regular employees but
only for a fixed period, which is well within the boundaries of the law, as ruled in Brent School, Inc. v. Zamora,26 viz.:
There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity and
propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on the freedom of the
parties to fix the duration of a contract, whatever its object, be it specie, goods or services, except the general admonition
against stipulations contrary to law, morals, good customs, public order or public policy. Under the Civil Code, therefore,
and as a general proposition, fixed-term employment contracts are not limited, as they are under the present Labor Code,
47
to those by nature seasonal or for specific projects with pre-determined dates of completion; they also include those to
which the parties by free choice have assigned a specific date of termination.
xxxx
Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of
the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be
secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil
that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no
application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter.
Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its
framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended
consequences.27
Thus, under the above Brent doctrine, while it was not expressly mentioned in the Labor Code, this Court has recognized
a fixed-term type of employment embodied in a contract specifying that the services of the employee shall be engaged
only for a definite period, the termination of which occurs upon the expiration of said period irrespective of the existence
of just cause and regardless of the activity the employee is called upon to perform.28 Considering, however, the
possibility of abuse by employers in the utilization of fixed-term employment contracts, this Court, in Brent, laid down
the following criteria to prevent the circumvention of the employees security of tenure:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress,
or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent;
or
2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no
moral dominance exercised by the former or the latter.29 Unfortunately, however, the records of this case is bereft of any
proof which will show that petitioners freely entered into agreements with respondent to perform services for a
specified length of time. In fact, there is nothing in the records to show that there was any agreement at all, the contracts
of employment not having been presented. While respondent company persistently asserted that petitioners knowingly
agreed upon a fixed period of employment and repeatedly made reference to their contracts of employment, the
expiration thereof being made known to petitioners at the time of their engagement, respondent failed to present the
same in spite of all the opportunities to do so. Notably, it was only at the stage of its appeal to the CA that respondent
provided an explanation as to why it failed to submit the contracts they repeatedly spoke of.30 Even granting that the
contracts of employment were destroyed by fire, respondent could have easily submitted other pertinent files, records,
remittances, and other similar documents which would show the fixed period of employment voluntarily agreed upon by
the parties. They did not, however, aid this Court with any kind of proof which might tend to show that petitioners were
truly engaged for specified periods, seemingly content with the convenient excuse that the contracts were destroyed by
fire. Indeed, respondents failure to submit the necessary documents, which as employers are in their possession, gives
rise to the presumption that their presentation is prejudicial to its cause.31
While fixed term employment is not per se illegal or against public policy, the criteria above must first be established to
the satisfaction of this Court. Yet, the records of this case reveal that for years, petitioners were repeatedly engaged to
perform functions necessary to respondents business for fixed periods short of the six-month probationary period of
employment. If there was really no intent to circumvent security of tenure, respondent should have made it clear to
petitioners that they were being hired only for fixed periods in an agreement freely entered into by the parties. To this
Court, respondents act of hiring and re-hiring petitioners for periods short of the legal probationary period evidences its
intent to thwart petitioners security of tenure, especially in view of an awareness that ordinary workers, such as
petitioners herein, are never on equal terms with their employers.32 It is rather unjustifiable to allow respondent to hire
and rehire petitioners on fixed terms, never attaining regular status.33 Hence, in the absence of proof showing that
petitioners knowingly agreed upon a fixed term of employment, We uphold the findings of the Labor Arbiter and the
NLRC and so rule that petitioners are, indeed, regular employees, entitled to security of tenure. Consequently, for lack of
any clear, valid, and just or authorized cause in terminating petitioners' employment, We find respondent guilty of illegal
dismissal.
WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision dated August 31, 2005 and
Resolution dated August 24, 2006 of the Court of Appeals in CA-G.R. SP Nos. 80977 & 87071 are SET ASIDE. The
Resolutions dated January 30, 2003 and September 24, 2003 of the NLRC in NLRC 00-02-01419-97, affirming in toto the
Decision dated August 21, 1998 of the Labor Arbiter are REINSTATED with MODIFICATION. Taking into account
petitioners' reinstatement in 199934 and petitioner Falguera's receipt of P792,815.64 separation pay,35 respondent is
hereby ORDERED to pay petitioners the following: (1) backwages computed from the date their salaries were withheld
from them until their actual reinstatement; (2) allowances and other benefits, or their monetary equivalent, at the time of
their dismissal; (3) attorney's fees equivalent to ten percent ( 10%) of the monetary awards; and (4) interest at six
percent ( 6%) per annum of the total monetary awards, computed from the finality of this Decision until their full
satisfaction. For this purpose, the records of this case are hereby REMANDED to the Labor Arbiter for proper
computation of said awards, deducting amounts already received. Costs against petitioner.
SO ORDERED.
n. Cabaobas vs. Pepsi-Cola Products Philippines, Inc. G.R.No. 176908, March 25, 2015
THIRD DIVISION
November 11, 2015
G.R. No. 176908
PURISIMO M. CABA OBAS, EXUPERIO C. MOLINA, GILBERTO V. OPINION, VICENTE R. LAURON, RAMON M. DE PAZ,
JR., ZACARIAS E. CARBO, JULITO G. ABARRACOSO, DOMINGO B. GLORIA, and FRANCISCO P. CUMPIO, Petitioners,
vs.
PEPSI-COLA PRODUCTS, PHILIPPINES, INC., Respondents.
RESOLUTION
PERALTA, J.:
For resolution is petitioners' Motion for Reconsideration of the Court's Decision dated March 25, 2015 with Motion to
Refer Case to the [Court] En Banc, stating that:
WITH ALL DUE RESPECT, THIS MATTER IS PROPER FOR RESOLUTION BY THIS HONORABLE COURT, EN BANC.1
WITH ALL DUE RESPECT, THIS CASE HAS TO BE DECIDED ON THE BASIS OF ITS OWN PECULIAR FACTUAL SETTING
AND NOT ON THE BASIS OF THE FACTS PROVED AND EXISTING IN THE CASE OF MOLON.2
RESPONDENT FAILED TO PROVE COMPLIANCE WITH ALL OF THE REQUISITES OF A VALID RETRENCHMENT
PROGRAM AND THE DECISIONS OF THE HONORABLE COURT OF APPEALS AND NLRC ARE BEREFT OF ANY DISCUSSION
OR CONCLUSION THAT RESPONDENT COMPLIED WITH THE THIRD, FOURTH AND FIFTH REQUISITES.3
Petitioners contend that the principle of stare decisis is not applicable becaifse the factual circumstances of this case and
those in the case of PepsiCo/ a Products, Inc. v. Molon,4are divergent. According to petitioners, records in Molon show that
both the Court of Appeals (CA) and the National Labor Relations Commission (NLRC) had already determined that Pepsi
complied with the requirements of substantial loss and due notice to both the DOLE and the workers to be retrenched,
and that the requisite separation pay had already been paid as evidenced by the September 1999 quitclaims. In contrast,
petitioners point out that a few days after service of their notices of termination, four (4) employees5 were regularized,
and replacements to the forty-seven (47) dismissed employees were also hired, and that they have not yet received their
separation pay. Petitioners conclude that respondent Pepsi-Cola Products, Inc. (PCPI) failed to prove the fourth and the
fifth requisites of a valid retrenchment program,6 as the CA and the NLRC were silent on the matter.
Petitioners' motion for reconsideration with motion to refer the case to the Court en bane is denied for lack of merit.
48
Contrary to petitioners' contention, the factual circumstances of this case and those in Molon are not divergent, hence, the
principle of stare decisis is applicable. As held in the Court's Decision dated March 25, 2015:
x x x the issues, subject matters and causes of action between the parties in Pepsi-Cola Products Philippines, Inc. v. Molon
and the present case are identical, namely, the validity of PCPPI's retrenchment program, and the legality of its
employees' termination. There is also substantial identity of parties because there is a community of interest between the
parties in the first case and the parties in the second case, even if the latter was not impleaded in the first case. The
respondents in Pepsi-Cola Products Philippines, Inc. vs. Molon are petitioners' former co-employees and co-union
members of LEPCEU-ALU who were also terminated pursuant to the PCPPI's retrenchment program. The only difference
between the two cases is the date of the employees' termination, i.e., Molon, et al., belong to the first batch of employees
retrenched on July 31, 1999, while petitioners belong to the second batch retrenched on February 15, 2000. That the
validity of the same PCPPI retrenchment program had already been passed upon and, thereafter, sustained in the related
case of
Pepsi-Cola Products Philippines, Inc. v. Molon, albeit involving different parties, impels the Court to accord a similar
disposition and uphold the legality of same program.xx x7
On petitioners' claim that after they were served notices of termination, 4 employees were regularized, and replacements
to the 47 dismissed employees were also hired, the Court has resolved the same in the Decision dated March 25, 2015,
thus:
On PCPPI's alleged failure to explain its acts of regularizing four (4) employees and hiring of sixty (63) replacements and
additional workers, the Court upholds the NLRC's correct ruling thereon, viz.:
Let Us squarely tackle this issue of replacements in the cases of the complainant in this case. We bear in mind that
replacements refer to the regular workers subjected to retrenchment, occupying regular positions in the company
structure.1wphi1 Artemio Kempis, a filer mechanic with a salary of P9,366.00 was replaced by Rogelio Castil. Rogelio
Castil was hired through an agency named Helpmate Janitorial Services. Castil's employer is Helpmate Janitorial Services.
How can a janitorial service employee perform the function of a filer mechanic? How much does Pepsi Cola pay Helpmate
Janitorial Services for the contract of service? These questions immediately come to mind. Being , not a regular employee
of Pepsi Cola, he is not a replacement of Kempis. The idea of rightsizing is to reduce the number of workers and related
functions and trim clown, streamline, or simplify the structure of the organization to the level of utmost efficiency and
productivity in order to realize profit and survive. After the CRP shall have been implemented, the desired size of the
corporation is attained. Engaging the services of service contractors does not expand the size of the corporate structure.
In this sense, the retrenched workers were not replaced.
The same is true in the case of Exuperio C. Molina who was allegedly replaced by Eddie Piamonte, an employee of, again,
Helpmate Janitorial Services; of Gilberto V. Opinion who was allegedly replaced by Norlito Ulahay, an employee of Nestor
Ortiga General Services; of Purisimo M. Caba[o]bas who was allegedly replaced by Christopher Albadrigo, an employee of
Helpmate Janitorial Services; of Vicente R. Lauran who was allegedly replaced by Wendylen Bron, an employee of Double
"N" General Services; of Ramos M. de Paz, who was disabled, and replaced by Alex Dieta, an employee of Nestor Ortiga
General Services; and of Zacarias E. Carbo who was allegedly replaced by an employee of Double "N" General Services. x x
x8
There is also no merit in petitioners' claim that PCPI failed to comply with the third requisite of a valid retrenchment
program, since they have not yet been paid their separation pay.
In their Consolidated Posi_tion Paper, petitioners only sought for reinstatement without loss of seniority rights and other
privileges, payment of backwages, damages and attorney's fees on account of their unlawful retrenchment. PCPI, on the
other hand, alleged in its position paper that it had offered to pay petitioners separation package equivalent to 150% or
1.5 months for every year of service, and that they were served individual notices advising them to claim their separation
pay. In its Decision dated December 15, 2000, the Labor Arbiter ruled that it was duly established that the last two (2)
requisites for a valid retrenchment under Article 283 of the Labor Code, were complied with by PCPPI,9 namely, written
notices to employees and to the Department of Labor and Employment, and the payment of separation pay. On appeal,
the NLRC ruled in its September 11, 2002 Decision that having been validly retrenched, petitioners were not entitled to
reinstatement with full backwages. However, in ordering PCPI to pay petitioners' separation benefits of 1 Y2 month
salary for every year of service, plus commutation of all vacation and sick leave credits, the NLRC noted that the
corresponding length of petitioners' services with PCPI are different from what they had erroneously alleged.10
Meanwhile, the CA held in its Decision dated July 31, 2006 that the requisite for the payment of separation pay was
evidenced by the notices sent by PCPI to petitioners.11 Clearly, PCPI cannot be faulted for petitioners' failure to receive
their separation pay.
Likewise without merit is petitioners' contention that PCPI failed to establish the fourth and fifth requisites of a valid
retrenchment program, i.e., that the employer exercised its prerogative in good faith for the advancement of its interest
and not to defeat or circumvent the employees' right to security of tenure, and it used fair and reasonable criteria in
ascertaining who would be dismissed and who would be retained.
It bears emphasis that petitioners are raising such issue only for the first time in this motion for reconsideration, and that
explains why the NLRC and the CA did not discuss such issue in the first place. Notably, petitioners' main contention in
their petition for review on certiorari is that PCPI' s retrenchment program and their consequent dismissal from
employment were both unlawful because it failed to prove financial losses and to explain its act of hiring replacement
and additional workers, and its true motive was to prevent their union, LEPCEU-ALU, from becoming the certified
bargaining agent. Suffice it to state that, as a rule, no question will be entertained on appeal unless it has been raised in
the proceedings below. "Points of law, theories, issues and arguments not brought to the attention of the lower court,
administrative agency or quasi-judicial body, need not be considered by a reviewing court, as they cannot be raised for
the first time at that late stage. Basic considerations of fairness and due process impel this rule. Any issue raised for the
first time on appeal is barred by estoppel. "12
In view of the foregoing discussion, the Court finds that this case cannot be considered as one of those cases under the
Internal Rules of the Supreme Court13 (A.M. No. 10-4-20-SC) that shall be acted upon by the Court En Banc.
WHEREFORE, petitioners' Motion for Reconsideration of the Court's March 25, 2015 Decision with Motion to Refer Case
to the [Court] En Banc is DENIED.
SO ORDERED.
Self-serving email cannot prove validity of dismissal
o. MAERSK-Filipinas Crewing, Inc. vs Avestruz, G.R. No. 207010, February 18, 2015
FIRST DIVISION
G.R. No. 207010 February 18, 2015
MAERSK-FILIPINAS CREWING, INC., A.P. MOLLER SINGAPORE PTE. LIMITED, and JESUS AGBAYANI, Petitioners,
vs.
TORIBIO C. A VESTRUZ,* Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated January 4, 2013 and the Resolution3 dated
April 16, 2013 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 125773 which reversed and set aside the
Decision4 dated April 26, 2012 and the Resolution5 dated June 18, 2012 of the National Labor Relations Commission
(NLRC) in NLRC NCR Case No. (M) 07-10704-11 [NLRC LAC No. (OFW-M)-01-000123-12] dismissing the illegal dismissal
complaint filed by respondent Toribio C. Avestruz (Avestruz) and awarding him nominal damages.
The Facts
On April 28, 2011, petitioner Maersk-Filipinas Crewing, Inc. (Maersk), on behalf of its foreign principal, petitioner A.P.
Moller Singapore Pte. Ltd. (A.P. Moller), hired Avestruz as Chief Cook on board the vessel M/V Nedlloyd Drake for a
period of six (6) months, with a basic monthly salary of US$698.00.6 Avestruz boarded the vessel on May 4, 2011.7
49
On June 22, 2011, in the course of the weekly inspection of the vessels galley, Captain Charles C. Woodward (Captain
Woodward) noticed that the cover of the garbage bin in the kitchen near the washing area was oily. As part of Avestruzs
job was to ensure the cleanliness of the galley, Captain Woodward called Avestruz and asked him to stand near the
garbage bin where the former took the latters right hand and swiped it on the oily cover of the garbage bin, telling
Avestruz to feel it. Shocked, Avestruz remarked, "Sir if you are looking for [dirt], you can find it[;] the ship is big. Tell us if
you want to clean and we will clean it." Captain Woodward replied by shoving Avestruzs chest, to which the latter
complained and said, "Dont touch me," causing an argument to ensue between them.8
Later that afternoon, Captain Woodward summoned and required9 Avestruz to state in writing what transpired in the
galley that morning. Avestruz complied and submitted his written statement10 on that same day. Captain Woodward
likewise asked Messman Jomilyn P. Kong (Kong) to submit his own written statement regarding the incident, to which
the latter immediately complied.11 On the very same day, Captain Woodward informed Avestruz that he would be
dismissed from service and be disembarked in India. On July 3,2011, Avestruz was disembarked in Colombo, Sri Lanka
and arrived in the Philippines on July 4, 2011.12 Subsequently, he filed a complaint13 for illegal dismissal, payment for
the unexpired portion of his contract, damages, and attorneys fees against Maersk, A.P. Moller, and Jesus Agbayani
(Agbayani), an officer14 of Maersk.15 He alleged that no investigation or hearing was conducted nor was he given the
chance to defend himself before he was dismissed, and that Captain Woodward failed to observe the provisions under
Section 17 of the Philippine Overseas Employment Administration (POEA) Standard Employment Contract (POEA-SEC)
on disciplinary procedures. Also, he averred that he was not given any notice stating the ground for his dismissal.16
Additionally, he claimed that the cost of his airfare in the amount of US$606.15 was deducted from his wages.17
Furthermore, Avestruz prayed for the award of the following amounts: (a) US$5,372.00 representing his basic wages,
guaranteed overtime, and vacation leave; (b) on board allowance of US$1,936.00; (c) ship maintenance bonus of
US$292.00; (d) hardship allowance of US$8,760.00; (e) 300,000.00 as moral damages, (f) 200,000.00 as exemplary
damages; and (g) attorneys fees of ten percent (10%) of the total monetary award.18
In their defense,19 Maersk, A.P. Moller, and Agbayani (petitioners) claimed that during his stint on the vessel, Avestruz
failed to attend to his tasks, specifically to maintain the cleanliness of the galley, which prompted Captain Woodward to
issue weekly reminders.20 Unfortunately, despite the reminders, Avestruz still failed to perform his duties properly.21
On June 22, 2011, when again asked to comply with the aforesaid duty, Avestruz became angry and snapped, retorting
that he did not have time to do all the tasks required of him. As a result, Captain Woodward initiated disciplinary
proceedings and informed Avestruz during the hearing of the offenses he committed, i.e., his repeated failure to follow
directives pertaining to his duty to maintain the cleanliness of the galley, as well as his act of insulting an officer.22
Thereafter, he was informed of his dismissal from service due to insubordination.23 Relative thereto, Captain Woodward
sent two (2) electronic mail messages24 (e-mails) to Maersk explaining the decision to terminate Avestruzs employment
and requesting for Avestruzs replacement. Avestruz was discharged from the vessel and arrived in the Philippines on
July 4, 2011.25 Petitioners maintained that Avestruz was dismissed for a just and valid cause and is, therefore, not
entitled to recover his salary for the unexpired portion of his contract.26 They likewise claimed that they were justified
in deducting his airfare from his salary, and that the latter was not entitled to moral and exemplary damages and
attorneys fees.27 Hence, they prayed that the complaint be dismissed for lack of merit.28
The LA Ruling
In a Decision29 dated November 29, 2011, the Labor Arbiter (LA) dismissed Avestruzs complaint for lack of merit. The
LA found that he failed to perform his duty of maintaining cleanliness in the galley, and that he also repeatedly failed to
obey the directives of his superior, which was tantamount to insubordination.30 In support of its finding, the LA cited the
Collective Bargaining Agreement31 (CBA) between the parties which considers the act of insulting a superior officer by
words or deed as an act of insubordination.32
Aggrieved, Avestruz appealed33 to the NLRC.
The NLRC Ruling
In a Decision34 dated April 26, 2012, the NLRC sustained the validity of Avestruzs dismissal but found that petitioners
failed to observe the procedures laid down in Section 17 of the POEA-SEC,35 which states:
SECTION 17. DISCIPLINARY PROCEDURES.
The Master shall comply with the following disciplinary procedures against an erring seafarer:
A. The Master shall furnish the seafarer with a written notice containing the following:
1. Grounds for the charges as listed in Section 33 of this Contract or analogous act constituting the
same.
2. Date, time and place for a formal investigation of the charges against the seafarer concerned. B.
The Master or his authorized representative shall conduct the investigation or hearing, giving the
seafarer the opportunity to explain or defend himself against the charges. These procedures must be
duly documented and entered into the ships logbook.
C. If after the investigation or hearing, the Master is convinced that imposition of a penalty is justified, the
Master shall issue a written notice of penalty and the reasons for it to the seafarer, with copies furnished to the
Philippine agent.
D. Dismissal for just cause may be effected by the Master without furnishing the seafarer with a notice of
dismissal if there is a clear and existing danger to the safety of the crew or the vessel. The Master shall send a
complete report to the manning agency substantiated by witnesses, testimonies and any other documents in
support thereof. (Emphases supplied)
As the records are bereft of evidence showing compliance with the foregoing rules, the NLRC held petitioners jointly and
severally liable to pay Avestruz the amount of 30,000.00 by way of nominal damages.36 Avestruz moved for
reconsideration37 of the aforesaid Decision, which was denied in the Resolution38 dated June 18, 2012. Dissatisfied, he
elevated the matter to the CA via petition for certiorari.39
The CA Ruling
In a Decision40 dated January 4, 2013, the CA reversed and set aside the rulings of the NLRC and instead, found Avestruz
to have been illegally dismissed. Consequently, it directed petitioners to pay him, jointly and severally, the full amount of
his placement fee and deductions made, with interest at twelve percent (12%) per annum, as well as his salaries for the
unexpired portion of his contract, and attorneys fees of ten percent (10%) of the total award. All other money claims
were denied for lack of merit.41
In so ruling, the CA found that the conclusion of the NLRC, which affirmed that of the LA, that Avestruz was lawfully
dismissed, was not supported by substantial evidence, there being no factual basis for the charge of insubordination
which petitioners claimed was the ground for Avestruzs dismissal. It found that petitioners, as employers, were unable
to discharge the burden of proof required of them to establish that Avestruz was guilty of insubordination, which
necessitates the occurrence of two (2) conditions as a just cause for dismissal: (1) the employees assailed conduct must
have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been
reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.
The CA found that, contrary to the rulings of the labor tribunals, there was no evidence on record to bolster petitioners
claims that Avestruz willfully failed to comply with his duties as Chief Cook and that he displayed a perverse and
wrongful attitude.42
50
Moreover, it gave more credence to Avestruzs account of the incident in the galley on June 22, 2011, being supported in
part by the statement43 of Kong, who witnessed the incident. On the other hand, the e-mails sent by Captain Woodward
to Maersk were uncorroborated. On this score, the CA observed the absence of any logbook entries to support
petitioners stance.44 Similarly, the CA found that petitioners failed to accord procedural due process to Avestruz, there
being no compliance with the requirements of Section 17 of the POEA-SEC as above-quoted, or the "two-notice rule." It
held that the statement45 Captain Woodward issued to Avestruz neither contained the grounds for which he was being
charged nor the date, time, and place for the conduct of a formal investigation. Likewise, Captain Woodward failed to give
Avestruz any notice of penalty and the reasons for its imposition, with copies thereof furnished to the Philippine
Agent.46
In arriving at the monetary awards given to Avestruz, the CA considered the provisions of Section 7 of Republic Act No.
(RA) 10022,47 amending RA 8042,48 which grants upon the illegally dismissed overseas worker "the full reimbursement
[of] his placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract." However, with respect to Avestruzs claims for overtime and leave pay,
the same were denied for failure to show entitlement thereto. All other monetary claims were likewise denied in the
absence of substantial evidence to prove the same. Finally, the CA awarded attorneys fees of ten percent (10%) of the
total monetary award in accordance with Article 11149 of the Labor Code.50
Petitioners moved for reconsideration,51 which the CA denied in its Resolution52 dated April 16, 2013, hence, this
petition.
The Issue Before the Court
The sole issue advanced for the Courts resolution is whether or not the CA erred when it reversed and set aside the
ruling of the NLRC finding that Avestruz was legally dismissed and accordingly, dismissing the complaint, albeit with
payment of nominal damages for violation of procedural due process.
The Courts Ruling
The petition is devoid of merit.
Generally, a re-examination of factual findings cannot be done by the Court acting on a petition for review on certiorari
because the Court is not a trier of facts but reviews only questions of law.53 Thus, in petitions for review on certiorari,
only questions of law may generally be put into issue. This rule, however, admits of certain exceptions.54 In this case,
considering that the factual findings of the LA and the NLRC, on the one hand, and the CA, on the other hand, are
contradictory, the general rule that only legal issues may be raised in a petition for review on certiorari under Rule 45 of
the Rules of Court does not apply,55 and the Court retains the authority to pass upon the evidence presented and draw
conclusions therefrom.56
It is well-settled that the burden of proving that the termination of an employee was for a just or authorized cause lies
with the employer. If the employer fails to meet this burden, the conclusion would be that the dismissal was unjustified
and, therefore, illegal.57 In order to discharge this burden, the employer must present substantial evidence, which is
defined as that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion,58
and not based on mere surmises or conjectures.59
After a punctilious examination of the evidence on record, the Court finds that the CA did not err in reversing and setting
aside the factual conclusions of the labor tribunals that Avestruzs dismissal was lawful. Instead, the Court finds that
there was no just or valid cause for his dismissal, hence, he was illegally dismissed.
Petitioners maintain that Avestruz was dismissed on the ground of insubordination, consisting of his "repeated failure to
obey his superiors order to maintain cleanliness in the galley of the vessel" as well as his act of "insulting a superior
officer by words or deeds."60 In support of this contention, petitioners presented as evidence the e-mails sent by Captain
Woodward, both dated June 22, 2011, and time-stamped 10:07 a.m. and 11:40 a.m., respectively, which they claim
chronicled the relevant circumstances that eventually led to Avestruzs dismissal.
The Court, however, finds these e-mails to be uncorroborated and self-serving, and therefore, do not satisfy the
requirement of substantial evidence as would sufficiently discharge the burden of proving that Avestruz was legally
dismissed. On the contrary, petitioners failed to prove that he committed acts of insubordination which would warrant
his dismissal.
Insubordination, as a just cause for the dismissal of an employee, necessitates the concurrence of at least two requisites:
(1) the employees assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude;
and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the
duties which he had been engaged to discharge.61
In this case, the contents of Captain Woodwards e-mails do not establish that Avestruzs conduct had been willful, or
characterized by a wrongful and perverse attitude. The Court concurs with the CAs observation that Avestruzs
statement62 regarding the incident in the galley deserves more credence, being corroborated63 by Kong, a messman
who witnessed the same.
Conversely, apart from Captain Woodwards e-mails, no other evidence was presented by the petitioners to support their
claims. While rules of evidence are not strictly observed in proceedings before administrative bodies,64 petitioners
should have offered additional proof to corroborate the statements65 described therein. Thus, in Ranises v. NLRC66
which involved a seafarer who was repatriated to the Philippines for allegedly committing illegal acts amounting to a
breach of trust, as based on a telex dispatch by the Master of the vessel, the Court impugned and eventually vetoed the
credence given by the NLRC upon the telex, to wit: Unfortunately, the veracity of the allegations contained in the
aforecited telex was never proven by respondent employer. Neither was it shown that respondent employer exerted any
effort to even verify the truthfulness of Capt. Sonodas report and establish petitioners culpability for his alleged illegal
acts. Worse, no other evidence was submitted to corroborate the charges against petitioner.67
Likewise, in Skippers United Pacific, Inc. v. NLRC,68 the Court ruled that the lone evidence offered by the employer to
justify the seafarers dismissal, i.e., the telexed Chief Engineers Report which contained the causes for said dismissal, did
not suffice to discharge the onus required of the employer to show that the termination of an employees service was
valid.69 The same doctrine was enunciated in Pacific Maritime Services, Inc. v. Ranay,70 where the Court held that the
telefax transmission purportedly executed and signed by a person on board the vessel is insufficient evidence to prove
the commission of the acts constituting the grounds for the dismissal of two seafarers, being uncorroborated evidence.71
As in this case, it was incumbent upon the petitioners to present other substantial evidence to bolster their claim that
Avestruz committed acts that constitute insubordination aswould warrant his dismissal. At the least, they could have
offered in evidence entries in the ships official logbook showing the infractions or acts of insubordination purportedly
committed by Avestruz, the ships logbook being the official repository of the day-to-day transactions and occurrences on
board the vessel.72 Having failed to do so, their position that Avestruz was lawfully dismissed cannot be sustained.
Similarly, the Court affirms the finding of the CA that Avestruz was not accorded procedural due process, there being no
compliance with the provisions of Section 17 of the POEA-SEC as above-cited, which requires the "two-notice rule." As
explained in Skippers Pacific, Inc. v. Mira:73 An erring seaman is given a written notice of the charge against him and is
afforded an opportunity to explain or defend himself. Should sanctions be imposed, then a written notice of penalty and
the reasons for it shall be furnished the erring seafarer. It is only in the exceptional case of clear and existing danger to
the safety of the crew or vessel that the required notices are dispensed with; but just the same, a complete report should
be sent to the manning agency, supported by substantial evidence of the findings.74
In this case, there is dearth of evidence to show that Avestruz had been given a written notice of the charge against him,
or that he was given the opportunity to explain or defend himself. The statement75 given by Captain Woodward
requiring him to explain in writing the events that transpired at the galley in the morning of June 22, 2011 hardly
qualifies as a written notice of the charge against him, nor was it an opportunity for Avestruz to explain or defend
51
himself. While Captain Woodward claimed in his e-mail76 that he conducted a "disciplinary hearing" informing Avestruz
of his inefficiency, no evidence was presented to support the same.
Neither was Avestruz given a written notice of penalty and the reasons for its imposition.1wphi1 Instead, Captain
Woodward verbally informed him that he was dismissed from service and would be disembarked from the vessel. It
bears stressing that only in the exceptional case of clear and existing danger to the safety of the crew or vessel that the
required notices may be dispensed with, and, once again, records are bereft of evidence showing that such was the
situation when Avestruz was dismissed.
Finally, with respect to the monetary awards given to Avestruz, the Court finds the same to be in consonance with Section
10 of RA 8042, as amended by RA 10022, which reads:
Section 10. Money claims. x x x.
xxxx
In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or
any unauthorized deductions from the migrant workers salary, the worker shall be entitled to the full reimbursement of
his placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is
less.76
xxxx
Similarly, the Court affirms the grant of attorney's fees of ten percent (10%) of the total award. All other monetary
awards are denied for lack of merit.
WHEREFORE, the petition is DENIED. The Decision dated January 4, 2013 and the Resolution dated April 16, 2013
rendered by the Court of Appeals in CA-G.R. SP No. 125773 are hereby AFFIRMED.
SO ORDERED.
Regular seasonal employees;One year service rule applies only to casual employment;involuntary retirement is
treated as discharge;interpretation of fraction of at least 6 months
p. Paz vs. Northern Tobacco Redrying Co. Inc., G.R.No.199554, February 18, 2015
SECOND DIVISION
G.R. No. 199554, February 18, 2015
ZENAIDA PAZ, Petitioner, v. NORTHERN TOBACCO REDRYING CO., INC., AND/OR ANGELO ANG, Respondents.
DECISION
LEONEN, J.:
Zenaida Paz filed this Petition1 praying that the computation of Petitioners Retirement Pay as determined by the
National Labor Relations Commission in its Decision dated 08 December 2008 be reinstated.2cralawred
Northern Tobacco Redrying Co., Inc. (NTRCI), a flue-curing and redrying of tobacco leaves business,3 employs
approximately 100 employees with seasonal workers tasked to sort, process, store and transport tobacco leaves during
the tobacco season of March to September.4cralawred
NTRCI hired Zenaida Paz (Paz) sometime in 1974 as a seasonal sorter, paid P185.00 daily. NTRCI regularly re-hired her
every tobacco season since then. She signed a seasonal job contract at the start of her employment and a pro-forma
application letter prepared by NTRCI in order to qualify for the next season. 5cralawred
On May 18, 2003,6 Paz was 63 years old when NTRCI informed her that she was considered retired under company
policy.7 A year later, NTRCI told her she would receive P12,000.00 as retirement pay. 8cralawred
Paz, with two other complainants, filed a Complaint for illegal dismissal against NTRCI on March 4, 2004. 9 She amended
her Complaint on April 27, 2004 into a Complaint for payment of retirement benefits, damages, and attorneys fees 10 as
P12,000.00 seemed inadequate for her 29 years of service.11 The Complaint impleaded NTRCIs Plant Manager, Angelo
Ang, as respondent.12 The Complaint was part of the consolidated Complaints of 17 NTRCI workers.13cralawred
NTRCI countered that no Collective Bargaining Agreement (CBA) existed between NTRCI and its workers. Thus, it
computed the retirement pay of its seasonal workers based on Article 287 of the Labor Code.14cralawred

NTRCI raised the requirement of at least six months of service a year for that year to be considered in the retirement pay
computation. It claimed that Paz only worked for at least six months in 1995, 1999, and 2000 out of the 29 years she
rendered service. Thus, Pazs retirement pay amounted to P12,487.50 after multiplying her ?185.00 daily salary by 22
working days in a month, for three years.15cralawred
The Labor Arbiter in his Decision16 dated July 26, 2005 [c]onfirm[ed] that the correct retirement pay of Zenaida M. Paz
[was] ?12,487.50.17cralawred
The National Labor Relations Commission in its Decision18 dated December 8, 2008 modified the Labor Arbiters
Decision. It likewise denied reconsideration. The Decisions dispositive portion reads:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the decision of the labor arbiter is hereby MODIFIED. Complainant
Appellant Zenaida Paz[s] retirement pay should be computed pursuant to RA 7641 and that all the months she
was engaged to work for respondent for the last twenty eight (28) years should be added and divide[d] by six
(for a fraction of six months is considered as one year) to get the number of years [for] her retirement
pay[.] Complainant Teresa Lopez is hereby entitled to her separation pay computed at one half month pay for
every year of service, a fraction of six months shall be considered as one year, plus backwages from the time
she was illegally dismissed up to the filing of her complaint.
The rest of the decision stays.
SO ORDERED.19cralawlawlibrary
The Court of Appeals in its Decision20 dated May 25, 2011 dismissed the Petition and modified the National Labor
Relations Commissions Decision in that financial assistance is awarded to . . . Zenaida Paz in the amount of
P60,356.25:21cralawred
WHEREFORE, the Petition is hereby DISMISSED. The Decision dated 8 December 2008 and Resolution dated
16 September 2009 of the National Labor Relations Commission in NLRC CA No. 046642-05(5) are MODIFIED
in that (1) financial assistance is awarded to private respondent Zenaida Paz in the amount of P60,356.25; and
(2) the dismissal of private respondent Teresa Lopez is declared illegal, and thus, she is awarded backwages
and separation pay, in accordance with the foregoing discussion.
SO ORDERED.22cralawlawlibrary
The Court of Appeals found that while applying the clear text of Article 287 resulted in the amount of P12,487.50 as
retirement pay, this amount [was] so meager that it could hardly support . . . Paz, now that she is weak and old, unable to
find employment.23 It discussed jurisprudence on financial assistance and deemed it appropriate to apply the
formula: One-half-month pay multiplied by 29 years of service divided by two yielded P60,356.25 as Pazs retirement
pay.24cralawred
Paz comes before this court seeking to reinstate the National Labor Relations Commissions computation.25 NTRCI filed
its Comment,26 and this court deemed waived the filing of a Reply.27cralawred
Petitioner Paz contends that respondent NTRCI failed to prove the alleged company policy on compulsory retirement for
employees who reached 60 years of age or who rendered 30 years of service, whichever came first. 28 Consequently,
Article 287, as amended by Republic Act No. 7641,29 applies and entitles her to retirement pay . . . equivalent to [at least]
one-half month salary for every year of service, a fraction of at least six (6) months being considered as one whole
year.30 She adds that she was then 63 years old, and while one may opt to retire at 60 years old, the compulsory
retirement age is 65 years old under Article 287, as amended.31cralawred
Petitioner Paz then argues respondent NTRCIs misplaced reliance on Philippine Tobacco Flue-Curing & Redrying Corp. v.
National Labor Relations Commission32 as that case involved separation pay computation.33cralawred
Lastly, petitioner Paz contends lack of legal basis that an employee should have at least worked for six (6) months for a
52
particular season for that season to be included in the computation of retirement pay[.] 34 She submits that regular
seasonal employees are still considered employees during off-season, and length of service determination should be
applied in retirees favor.35cralawred
Respondent NTRCI counters that in retirement pay computation this court should consider its ruling in Philippine
Tobacco on computing separation pay of seasonal employees. It submits that the proviso a fraction of at least six (6)
months being considered as one (1) whole year appears in both Article 287 on retirement pay and Articles 283 and 284
on separation pay.36cralawred
Respondent NTRCI argues that unlike regular employees, seasonal workers like petitioner Paz can offer their services to
other employers during off-season. Thus, the six-month rule avoids the situation where seasonal workers receive
retirement pay twice an even more favorable position compared with regular employees. 37cralawred
Both parties appear to agree on petitioner Pazs entitlement to retirement pay. The issue before this court involves its
proper computation. We also resolve whether there was illegal dismissal.
We affirm the Court of Appeals decision with modification.
Regular seasonal employees
Article 28038 of the Labor Code and jurisprudence identified three types of employees, namely: (1) regular employees or
those who have been engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer; (2) project employees or those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the engagement of the employee
or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season;
and (3) casual employees or those who are neither regular nor project employees.39cralawred
Jurisprudence also recognizes the status of regular seasonal employees.40cralawred
Mercado, Sr. v. National Labor Relations Commission41 did not consider as regular employees the rice and sugar farmland
workers who were paid with daily wages. This was anchored on the Labor Arbiters findings that petitioners were
required to perform phases of agricultural work for a definite period, after which their services [were] available to any
farm owner.42cralawred
This court explained that the proviso in the second paragraph of Article 280 in that any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall be considered a regular employee applies
only to casual employees and not project and regular employees in the first paragraph of Article 280. 43cralawred
On the other hand, the workers of La Union Tobacco Redrying Corporation in Abasolo v. National Labor Relations
Commission44 were considered regular seasonal employees since they performed services necessary and indispensable to
the business for over 20 years, even if their work was only during tobacco season. 45 This court applied the test laid down
in De Leon v. National Labor Relations Commission46 for determining regular employment
status:chanRoblesvirtualLawlibrary
[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in
which this Court held:
The primary standard, therefore, of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or business
of the employer. The test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by considering the nature of
the work performed and its relation to the scheme of the particular business or trade in its
entirety. Also if the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of that activity
to the business. Hence, the employment is considered regular, but only with respect to such activity,
and while such activity exists.
Thus, the nature of ones employment does not depend solely on the will or word of the employer. Nor on the
procedure for hiring and the manner of designating the employee, but on the nature of the activities to be
performed by the employee, considering the employer's nature of business and the duration and scope of work
to be done.
In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners
have served the company for many years, some for over 20 years, performing services necessary and
indispensable to LUTORCOs business, serve as badges of regular employment. Moreover, the fact that
petitioners do not work continuously for one whole year but only for the duration of the tobacco season
does not detract from considering them in regular employment since in a litany of cases this Court has
already settled that seasonal workers who are called to work from time to time and are temporarily laid off
during off-season are not separated from service in said period, but are merely considered on leave until re-
employed.
Private respondent's reliance on the case of Mercado v. NLRC is misplaced considering that since in said case of
Mercado, although the respondent company therein consistently availed of the services of the petitioners
therein from year to year, it was clear that petitioners therein were not in respondent company's regular
employ. Petitioners therein performed different phases of agricultural work in a given year. However, during
that period, they were free to contract their services to work for other farm owners, as in fact they did. Thus,
the Court ruled in that case that their employment would naturally end upon the completion of each project or
phase of farm work for which they have been contracted.47 (Emphasis supplied, citations
omitted)cralawlawlibrary
The sugarcane workers in Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade48 were
also considered as regular employees since they performed the same tasks every season for several
years:chanRoblesvirtualLawlibrary
For respondents to be excluded from those classified as regular employees, it is not enough that they perform
work or services that are seasonal in nature. They must have also been employed only for the duration of one
season. . . . Evidently, petitioners employed respondents for more than one season. Therefore, the general rule
of regular employment is applicable.
....
The CA did not err when it ruled that Mercado v. NLRC was not applicable to the case at bar. In the earlier case,
the workers were required to perform phases of agricultural work for a definite period of time, after which
their services would be available to any other farm owner. They were not hired regularly and repeatedly for
the same phase/s of agricultural work, but on and off for any single phase thereof. On the other hand, herein
respondents, having performed the same tasks for petitioners every season for several years, are
considered the latters regular employees for their respective tasks. Petitioners eventual refusal to use
their services even if they were ready, able and willing to perform their usual duties whenever these were
available and hiring of other workers to perform the tasks originally assigned to respondents amounted to
illegal dismissal of the latter.49 (Emphasis supplied, citation omitted)cralawlawlibrary
Respondent NTRCI engaged the services of petitioner Paz as a seasonal sorter 50 and had been regularly rehired from
1974,51 until she was informed in 2003 that she was being retired under company policy. 52cralawred
The services petitioner Paz performed as a sorter were necessary and indispensable to respondent NTRCIs business of
flue-curing and redrying tobacco leaves. She was also regularly rehired as a sorter during the tobacco seasons for 29
years since 1974. These considerations taken together allowed the conclusion that petitioner Paz was a regular seasonal
employee, entitled to rights under Article 27953 of the Labor Code:chanRoblesvirtualLawlibrary
Art. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges
53
and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.cralawlawlibrary
Illegal dismissal and backwages
Petitioner Paz initially filed a Complaint for illegal dismissal seeking separation pay, but later amended her Complaint
into one for payment of retirement pay.54 Despite the amendment, she maintained in her subsequent pleadings that she
had been made to retire even before she reached the compulsory retirement age of 65 under Article 287, as
amended.55cralawred
Petitioner Paz alleged that respondent NTRCI required her to report on March 18, 2003 for the 2003 tobacco season, but
she suffered a mild stroke sometime in April. Nevertheless, respondent NTRCI extended her employment contract until
May 18, 2003 when she was informed that she was retired under company policy. 56cralawred
Since petitioner Paz was unlearned and not knowledgeable in law, [she] just accepted such fact and waited to be paid
her separation/retirement benefit as promised by . . . NTRCI.57 Unfortunately, after a year of waiting, respondent NTRCI
only offered her around P12,000.00 for all her services since 1974.58cralawred
The National Labor Relations Commission recognized that like the other complainants against respondent NTRCI,
petitioner Paz was at a loss in what cause of action to take whether illegal dismissal or payment of retirement
pay.59cralawred
Petitioner Pazs amendment of her Complaint was not fatal to her cause of action for illegal dismissal.
First, petitioner Paz never abandoned her argument that she had not reached the compulsory retirement age of 65
pursuant to Article 287, as amended, when respondent NTRCI made her retire on May 18, 2003.
Second, the National Labor Relations Commission found that respondent NTRCI failed to prove a valid company
retirement policy, yet it required its workers to retire after they had reached the age of 60. 60 The Court of Appeals also
discussed that while respondent NTRCI produced guidelines on its retirement policy for seasonal employees, it never
submitted a copy of its Collective Bargaining Agreement and even alleged in its Position Paper that none
existed.61cralawred
Petitioner Paz was only 63 years old on May 18, 2003 with two more years remaining before she would reach the
compulsory retirement age of 65.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee
whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former.62 Article 287, as
amended, allows for optional retirement at the age of at least 60 years old.
Consequently, if the intent to retire is not clearly established or if the retirement is involuntary, it is to be treated as a
discharge.63cralawred
The National Labor Relations Commission considered petitioner Pazs amendment of her Complaint on April 27, 2004
akin to an optional retirement when it determined her as illegally dismissed from May 18, 2003 to April 27, 2004, thus
being entitled to full backwages from May 19, 2003 until April 26, 2004.64cralawred
Again, petitioner Paz never abandoned her argument of illegal dismissal despite the amendment of her Complaint. This
implied lack of intent to retire until she reached the compulsory age of 65. Thus, she should be considered as illegally
dismissed from May 18, 2003 until she reached the compulsory retirement age of 65 in 2005 and should be entitled to
full backwages for this period.
An award of full backwages is inclusive of allowances and other benefits or their monetary equivalent, from the time
their actual compensation was withheld. . . .65cralawred
Backwages, considered as actual damages,66 requires proof of the loss suffered. The Court of Appeals found no positive
proof of the total number of months that she actually rendered work.67 Nevertheless, petitioner Pazs daily pay of
P185.00 was established. She also alleged that her employment periods ranged from three to seven months. 68cralawred
Since the exact number of days petitioner Paz would have worked between May 18, 2003 until she would turn 65 in 2005
could not be determined with specificity, this court thus awards full backwages in the amount of P22,200.00 computed
by multiplying P185.00 by 20 days, then by three months, then by two years.
Due process and nominal damages
The Labor Code requires employers to comply with both procedural and substantive due process in dismissing
employees. Agabon v. National Labor Relations Commission69 discussed these rules and enumerated the four possible
situations considering these rules:chanRoblesvirtualLawlibrary
Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals
based on authorized causes involve grounds under the Labor Code which allow the employer to terminate
employees. A termination for an authorized cause requires payment of separation pay. When the termination
of employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If
reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the
employee two written notices and a hearing or opportunity to be heard if requested by the employee before
terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and
(2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his
separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under
Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article
284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was
observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the
dismissal is for just or authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.
In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is
entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed from the time the compensation was
not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the
procedural requirements of due process.70 (Emphasis in the original)cralawlawlibrary
Agabon focused on the fourth situation when dismissal was for just or authorized cause, but due process was not
observed.71 Agabon involved a dismissal for just cause, and this court awarded P30,000.00 as nominal damages for the
employers non-compliance with statutory due process.72 Jaka Food Processing Corporation v. Pacot73 involved a
dismissal for authorized cause, and this court awarded P50,000.00 as nominal damages for the employers non-
compliance with statutory due process.74 The difference in amounts is based on the difference in dismissal
ground.75 Nevertheless, this court has sound discretion in determining the amount based on the relevant
circumstances.76 In De Jesus v. Aquino,77 this court awarded P50,000.00 as nominal damages albeit the dismissal was for
just cause.78cralawred
Petitioner Pazs case does not fall under the fourth situation but under the third situation on illegal dismissal for having
no just or authorized cause and violation of due process.
54
Respondent NTRCI had considered petitioner Paz retired at the age of 63 before she reached the compulsory age of
65. This does not fall under the just causes for termination in Article 282 of the Labor Code, the authorized causes for
termination in Article 283, or disease as a ground for termination in Article 284.
As regards due process, the Omnibus Rules Implementing the Labor Code provides:chanRoblesvirtualLawlibrary
Section 2. Standard of due process: requirements of notice. In all cases of termination of employment, the
following standards of due process shall be substantially observed.
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his
side;ChanRoblesVirtualawlibrary
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if
the employee so desires, is given opportunity to respond to the charge, present his evidence or
rebut the evidence presented against him; and
(c) A written notice [of] termination served on the employee indicating that upon due consideration
of all the circumstance, grounds have been established to justify his termination. . . .79
There was no showing that respondent NTRCI complied with these due process requisites. Thus, consistent with
jurisprudence,80 petitioner Paz should be awarded P30,000.00 as nominal damages.
Retirement pay
An employer may provide for retirement benefits in an agreement with its employees such as in a Collective Bargaining
Agreement. Otherwise, Article 287 of the Labor Code, as amended, governs.
Since respondent NTRCI failed to present a copy of a Collective Bargaining Agreement on the alleged retirement policy,81
we apply Article 287 of the Labor Code, as amended by Republic Act No. 7641. This provides for the proper computation
of retirement benefits in the absence of a retirement plan or agreement: 82cralawred
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the
said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6) months being considered as one whole
year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days
of service incentive leaves.83 (Emphasis supplied)cralawlawlibrary
Respondent NTRCI followed the formula in Article 287 and offered petitioner Paz the amount of P12,487.50 84 as
retirement pay based on the three years she worked for at least six months in 1995, 1999, and 2000. 85cralawred
The Labor Arbiter agreed with respondent NTRCIs computation based on these three years and reached the same
amount as petitioner Pazs retirement pay.86cralawred
On appeal, the National Labor Relations Commission found that petitioner Paz became a regular seasonal employee by
virtue of her long years of service and the repetitive hiring of her services by respondent NTRCI every season. 87 It then
considered her as having worked for every tobacco season from 1974 to 2003 or for a total of 29 years.88cralawred
The National Labor Relations Commission discussed that [i]t would be a great injustice if [petitioner Pazs] services
which did not last long for six months be disregarded in computing her retirement pay especially so that it is upon the
sole discretion of the respondent company on how long her services for a given season was required. 89 Thus, it
explained that Zenaida Pazs retirement pay should be computed pursuant to RA 7641 and that all the months she was
engaged to work for respondent for the last twenty eight (28) years should be added and divide[d] by six (for a fraction
of six months is considered as one year) to get the number of years her retirement pay should be computed. 90cralawred
The National Labor Relations Commission also discussed that applying the computation of separation pay in Philippine
Tobacco to this case would render nugatory the very purpose of RA 7641, which seeks to reward employees of their long
and dedicated service to their employer, as well as its humanitarian purpose to provide for the retirees sustenance and
hopefully even comfort, when he no longer has the stamina to continue earning his livelihood. 91cralawred
This court in Philippine Tobacco explained its computation of separation pay as follows:chanRoblesvirtualLawlibrary
The amount of separation pay is based on two factors: the amount of monthly salary and the number of years
of service. Although the Labor Code provides different definitions as to what constitutes one year of service,
Book Six does not specifically define one year of service for purposes of computing separation pay. However,
Articles 283 and 284 both state in connection with separation pay that a fraction of at least six months shall be
considered one whole year. Applying this to the case at bar, we hold that the amount of separation pay which
respondent members of the Lubat and Luris groups should receive is one-half (1/2) their respective average
monthly pay during the last season they worked multiplied by the number of years they actually rendered
service, provided that they worked for at least six months during a given year.
The formula that petitioner proposes, wherein a year of work is equivalent to actual work rendered for 303
days, is both unfair and inapplicable, considering that Articles 283 and 284 provide that in connection with
separation pay, a fraction of at least six months shall be considered one whole year. Under these provisions, an
employee who worked for only six months in a given year which is certainly less than 303 days is
considered to have worked for one whole year.
. . . . Finally, Manila Hotel Company v. CIR did not rule that seasonal workers are considered at work during off-
season with regard to the computation of separation pay. Said case merely held that, in regard to seasonal
workers, the employer-employee relationship is not severed during off-season but merely
suspended.92 (Citations omitted)cralawlawlibrary
Philippine Tobacco considered Articles 283 and 284 of the Labor Code on separation pay, and these articles include the
proviso a fraction of at least six (6) months shall be considered one (1) whole year.
While the present case involves retirement pay and not separation pay, Article 287 of the Labor Code on retirement pay
similarly provides that a fraction of at least six (6) months being considered as one whole year.
Thus, this courts reading of this proviso in the Labor Code in Philippine Tobacco applies in this case. An employee must
have rendered at least six months in a year for said year to be considered in the computation.
Petitions for review pursuant to Rule 45 of the Rules of Court can raise only questions of law. 93 Generally, this court
accords great respect for factual findings by quasi-judicial bodies, even according such findings with finality when
supported by substantial evidence.94cralawred
The Court of Appeals found no positive proof o[n] the total number of months [petitioner Paz] actually rendered work
[for respondent NTRCI].95 On the other hand, both the Labor Arbiter and the Court of Appeals established from the
records that she rendered at least six months of service for 1995, 1999, and 2000 only. 96cralawred
Based on these factual findings, retirement pay pursuant to Article 287 of the Labor Code was correctly computed at
P12,487.50 and was awarded to petitioner Paz.
Financial assistance
In addition, this court agrees with the Court of Appeals award of financial assistance in the amount of P60,356.25 97 by
applying the following formula: one-half-month pay98 multiplied by 29 years in service and then divided by 2.99cralawred
55
The amount of P12,487.50 is indeed too meager to support petitioner Paz who has become old, weak, and unable to find
employment.100cralawred
Republic Act No. 7641 is a social legislation101 with the purpose of provid[ing] for the retirees sustenance and hopefully
even comfort, when he [or she] no longer has the stamina to continue earning his [or her] livelihood. 102cralawred
The Court of Appeals recognized and emphasized petitioner Pazs three decades of hard work and service with
respondent NTRCI. However, it disagreed with the National Labor Relations Commissions retirement pay computation
for lack of factual basis:chanRoblesvirtualLawlibrary
Private respondent Paz rendered almost three decades of dedicated service to petitioner, and to that, she gave
away the prime of her life. In those long years of hard work, not a single transgression or malfeasance of any
company rule or regulation was ever reported against her. Old age and infirmity now weaken her chances of
employment. Veritably, We can call upon the same social and compassionate justice allowing financial
assistance in special circumstances. These circumstances indubitably merit equitable concessions, via the
principle of compassionate justice for the working class.
In awarding retirement benefits, the NLRC deemed it proper to add all the months of service rendered by
private respondent Paz, then divide it by six to arrive at the number of years of service. We cannot,
however, subscribe to this computation because there is no positive proof of the total number of months
that she actually rendered work.103 (Emphasis supplied, citations omitted)cralawlawlibrary
At most, the Petition alleges that [p]etitioner [was] regularly hired every season by respondents, her employment
periods ranging from three (3) to seven (7) months.104 None of the lower courts, not even the National Labor Relations
Commission that proposed the formula, made a factual determination on the total number of months petitioner Paz
rendered actual service.
In any event, this court has awarded financial assistance as a measure of social justice [in] exceptional circumstances,
and as an equitable concession.105cralawred
In Eastern Shipping Lines, Inc. v. Sedan,106 Sedan was granted equitable assistance equal to one-half-month pay for each
year of his 23 years of service with no derogatory record.107 This court discussed jurisprudence on the grant of financial
assistance:chanRoblesvirtualLawlibrary
We are not unmindful of the rule that financial assistance is allowed only in instances where the employee is
validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Neither
are we unmindful of this Courts pronouncements in Arc-Men Food Industries Corporation v. NLRC, and Lemery
Savings and Loan Bank v. NLRC, where the Court ruled that when there is no dismissal to speak of, an award of
financial assistance is not in order.
But we must stress that this Court did allow, in several instances, the grant of financial assistance. In the
words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be allowed as a measure of social
justice and exceptional circumstances, and as an equitable concession. The instant case equally calls for
balancing the interests of the employer with those of the worker, if only to approximate what Justice Laurel
calls justice in its secular sense.
In this instance, our attention has been called to the following circumstances: that private respondent joined
the company when he was a young man of 25 years and stayed on until he was 48 years old; that he had given
to the company the best years of his youth, working on board ship for almost 24 years; that in those years
there was not a single report of him transgressing any of the company rules and regulations; that he applied
for optional retirement under the companys non-contributory plan when his daughter died and for his own
health reasons; and that it would appear that he had served the company well, since even the company said
that the reason it refused his application for optional retirement was that it still needed his services; that he
denies receiving the telegram asking him to report back to work; but that considering his age and health, he
preferred to stay home rather than risk further working in a ship at sea.cralawlawlibrary

In our view, with these special circumstances, we can call upon the same social and compassionate justice cited in
several cases allowing financial assistance. These circumstances indubitably merit equitable concessions, via the
principle of compassionate justice for the working class. Thus, we agree with the Court of Appeals to grant financial
assistance to private respondent.108 (Citations omitted)
We agree with the Court of Appeals that petitioner Pazs circumstances indubitably merit equitable concessions, via the
principle of compassionate justice for the working class.109cralawred
Petitioner Paz worked for respondent NTRCI for close to three decades. She had no record of any malfeasance or
violation of company rules in her long years of service.110 Her advanced age has rendered her weak and lessened her
employment opportunities.
Eastern Shipping Lines awarded Sedan with financial assistance equal to one-half-month pay for every year of
service. Sedan was hired as a 3rd marine engineer and oiler from 1973 until his last voyage in 1997.111 On the other
hand, petitioner Paz was a seasonal employee who worked for periods ranging from three to seven months a
year.112 This court thus finds the following Court of Appeals formula for financial assistance as equitable: one-half-month
pay multiplied by 29 years in service and then divided by 2.
This court has discussed that labor law determinations are not only secundum rationem but also secundum
caritatem.113 The award of P60,356.25 as financial assistance will serve its purpose in providing petitioner Paz
sustenance and comfort after her long years of service.
Finally, legal interest of 6% per annum shall be imposed on the award of full backwages beginning May 18, 2003 when
petitioner Paz was deemed retired, until 2005 when she reached compulsory retirement age, in the amount of
P2,664.00114 Legal interest of 6% per annum shall also be imposed on the award of retirement pay beginning 2005 until
full satisfaction.
WHEREFORE, the Court of Appeals Decision is AFFIRMED with MODIFICATION in that respondent Northern Tobacco
Redrying Co., Inc. is hereby ordered to pay petitioner Zenaida Paz the following:
(1) P22,200.00 as full backwages;ChanRoblesVirtualawlibrary
(2) P30,000.00 as nominal damages for non-compliance with due process;ChanRoblesVirtualawlibrary
(3) P12,487.50 as retirement pay;ChanRoblesVirtualawlibrary
(4) P60,356.25 as financial assistance; and
(5) P2,664.00 as legal interest for the award of full backwages, and legal interest of 6% per annum for the award of
retirement pay beginning 2005 until full satisfaction.
SO ORDERED.
Some issues covered/resolved-Off-detail;constructive dismissal vs. abandonment;Abandonment of work
q. Tatel vs JLFP Investigation Security Agency, Inc., G.R.No. 206942, February 25, 2015
FIRST DIVISION
G.R. No. 206942 February 25, 2015
VICENTE C. TATEL, Petitioner,
vs.
JLFP INVESTIGATION SECURITY AGENCY, INC., JOSE LUIS F. PAMINTUAN, and/or PAOLO C. TURNO, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated November 14, 2012 and the Resolution3 dated
April 22, 2013 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 119997 which reversed and set aside the
Decision4 dated February 9, 2011 and the Resolution5 dated March 31, 2011 of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 10-002496-10 and instead, reinstated the Decision6 dated September 20, 2010 of the Labor
Arbiter (LA) in NLRC NCR Case No. 05-06196-10, dismissing petitioner Vicente C. Tatel's (Tatel) labor complaint for lack
of merit.
The Facts
On March 14, 1998, respondent JLFP Investigation Security Agency, Inc. (JLFP), a business engaged as a security agency,
hired Tatel as one of its security guards.7
56
Tatel alleged that he was last posted at BaggerWerken Decloedt En Zoon (BaggerWerken) located at the Port Area in
Manila.8 He was required to work twelve (12) hours everyday from Mondays through Sundays and received only
Pl2,400.00 as monthly salary.9 On October 14, 2009, Tatel filed a complaint10 before the NLRC against JLFP and its
officer, respondent Jose Luis F. Pamintuan11 (Pamintuan), as well as SKI Group of Companies (SKI) and its officer,
Joselito Dueas,12 for underpayment of salaries and wages, non-payment of other benefits, 13th month pay, and
attorney's fees (underpayment case).13
On October 24, 2009, Tatel was placed on "floating status";14 thus, on May 4, 2010, or after the lapse of six (6) months
therefrom, without having been given any assignments, he filed another complaint15 against JLFP and its officers,
respondent Paolo C. Turno16 (Turno) and Jose Luis Fabella,17 for illegal dismissal, reinstatement, backwages, refund of
cash bond deposit amounting to P25,400.00, attorney's fees, and other money claims (illegal dismissal case).18
In their defense,19 respondents JLFP, Pamintuan, and Turno (respondents) denied that Tatel was dismissed and averred
that they removed the latter from his post at BaggerWerken on August 24, 2009 because of several infractions he
committed while on duty. Thereafter, he was reassigned at SKI from September 16, 2009 to October 12, 2009, and last
posted at IPVG20 from October 21to23, 2009.21
Notwithstanding the pendency of the underpayment case, respondents sent a Memorandum22 dated November 26, 2009
(November 26, 2009 Memorandum) directing Tatel to report back to work, noting that the latter last reported to the
office on October 26, 2009. However, despite receipt of the said memorandum, respondents averred that Tatel ignored
the same and failed to appear; hence, he was deemed to have abandoned his work.23 Moreover, respondents pointed out
that Tatel made inconsistent statements when he declared in the underpayment case that he was employed in March
1997 with a salary of Pl2,400.00 per month and dismissed on October 13, 2009, while declaring in the illegal dismissal
case that his date of employment was March 14, 1998, with a salary of P6,200.00 per month, and that he was dismissed
on October 24, 2009.24
In his reply,25 Tatel admitted having received on December 11, 2009 the November 26, 2009 Memorandum directing
him to report back to work for reassignment. However, when he went to the JLFP office, he was merely advised to "wait
for possible posting."26 He repeatedly went back to the office for reassignment, but to no avail. He likewise refuted
respondents' claim that he abandoned his work, insisting that after working for JLFP for more than eleven (11) years, it
was illogical for him to refuse any assignments, more so, to abandon his work and security of tenure without justifiable
reasons.27
The LA Ruling
In a Decision28 dated September 20, 2010, the LA dismissed Tatel's illegal dismissal complaint for lack of merit.29 The
LA did not give credence to Tatel' s allegation of dismissal in light of the inconsistent statements he made under oath in
the two (2) labor complaints he had filed against the respondents. The LA noted that said inconsistent statements "relate
not only to the dates that he was hired and supposedly fired but, more glaringly, to the amount of his monthly
salaries."30 It also observed that Tatel failed to explain said inconsistencies. Aggrieved, Tatel appealed31 to the NLRC.
The NLRC Ruling
In a Decision32 dated February 9, 2011, the NLRC reversed and set aside the LA's Decision and found Tatel to have been
illegally dismissed. Consequently, it directed respondents to reinstate him to his last position without loss of seniority or
diminution of salary and other benefits, as well as to pay him the following: (a) backwages from the time of his illegal
dismissal on August 24, 2009 until finality of the Decision; (b) underpaid wages computed for a period of three (3) years
prior to the filing of the complaint until finality; (c) cash bond deposit refund amounting to P25,400.00; and (d)
attorney's fees equivalent to ten percent (10%) of the total award. It likewise ruled that if reinstatement was no longer
viable due to the strained relationship between the parties, respondents are liable for separation pay equivalent to one
(1) month's salary for every year of service computed from the time of Tatel's employment on March 14, 1998 until
finality of the Decision. All other claims were denied for lack of merit.33
In so ruling, the NLRC rejected respondents' defense that Tatel abandoned his work, finding no rational explanation as to
why an employee, who had worked for more than ten (10) years for his employer, would just abandon his work and
forego whatever benefits were due him for the length of his service.34 Similarly, it debunked the claim of abandonment
for failure of respondents to prove by substantial evidence the elements thereof, i.e., (a) that the employee must have
failed to report for work or must have been absent without valid or justifiable reason, and ( b) there must have been a
clear intention to sever the employer-employee relationship as manifested by overt acts.35
Moreover, the NLRC ruled that Tatel's dismissal was not constructive but actual, and considered his being pulled out
from his post on August 24, 2009 as the operative act of his dismissal. It likewise found no just and valid ground for
Tatel's dismissal; neither was procedural due process complied with to effectuate the same.36
Respondents' motion for reconsideration37 was denied in a Resolution38 dated March 31, 2011. Dissatisfied, they
elevated the case to the CA via petition for certiorari39 on June 10, 2011. Meanwhile, pre-execution conferences were
held at the NLRC,40 and on July 29, 2011, respondents filed a Motion for Computation,41 alleging that Tatel failed to
report back to work despite the Return-to-Work Order42 dated February 22, 2011, claiming "strained relations" with
respondents and manifesting that he was already employed with another company at the time he received the aforesaid
order.43
The CA Ruling
In a Decision44 dated November 14, 2012, the CA reversed and set aside the NLRC's February 9, 2011 Decision and
reinstated the LA's September 20, 2010 Decision dismissing the illegal dismissal complaint filed by Tatel.45 Finding
grave abuse of discretion on the part of the NLRC in rendering its assailed Decision, the CA instead concurred with the
stance of the LA that Tatel' s inconsistent statements cannot be given weight vis-a-vis the evidence presented by the
respondents.46 In this regard, the CA declared that if Tatel could not be truthful about the most basic information or
explain such inconsistencies, the same may hold true for his claim for illegal dismissal.47
Further, the CA rejected the NLRC's finding that the operative act of Tatel's dismissal was the act of pulling him out from
his assignment on August 24, 2009 when in the complaint sheets of both the illegal dismissal case and the underpayment
case, Tatel claimed that he was dismissed on October 13, 2009 and October 24, 2009, respectively.48 It noted that the
NLRC failed to consider that Tatel was subsequently reassigned to SKI from September 16, 2009 to October 12, 2009, and
thereafter, to IPVG from October 21 to 23, 2009, which Tatel never disputed nor denied.49
Corollary thereto, the CA found that Tatel ignored the November 26, 2009 Memorandum directing him to report to work
for possible reassignment signifying that he abandoned his work and that, consequently, there was no dismissal to begin
with.50 That he was given subsequent postings clearly manifest that there was no intention to dismiss him, hence, he
could not have been illegally dismissed.51
Tatel moved for reconsideration,52 which was denied in a Resolution53 dated April 22, 2013; hence, this petition.
T he Issue Before The Court
The sole issue for the Court's resolution is whether or not the CA erred in ruling that the NLRC gravely abused its
discretion in finding Tatel to have been illegally dismissed.
The Court's Ruling
The petition is meritorious.
It is a well-settled rule in this jurisdiction that only questions of law may be raised in a petition for review on certiorari
under Rule 45 of the Rules of Court, this Court being bound by the findings of fact made by the appellate court.54 The
Court's jurisdiction is limited to reviewing errors of law that may have been committed by the lower court.55 The rule,
however, is not without exception. In New City Builders, Inc. v. NLRC,56 the Court recognized the following exceptions to
the general rule, to wit: ( 1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when
the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when
the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its
findings the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant
and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set forth in the petition, as well as in the
57
petitioner's main and reply briefs, are not disputed by the respondent; (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record; and (11) when the CA manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.57
The exception, rather than the general rule, applies in the present case.1wphi1 When the findings of fact of the CA are
contrary to those of the NLRC, whose findings also diverge from those of the LA, the Court retains its authority to pass
upon the evidence and, perforce, make its own factual findings based thereon.58
At the core of this petition is Tatel' s insistence that he was illegally dismissed when, after he was put on "floating status"
on October 24, 2009, respondents no longer gave him assignments or postings, and the period therefor had lasted for
more than six ( 6) months. On the other hand, respondents maintained that Tatel abandoned his work, and that his
inconsistent statements before the labor tribunals regarding his work details rendered his claim of illegal dismissal
suspect.
After a judicious perusal of the records, the Court is convinced that Tatel was constructively, not actually, dismissed after
having been placed on "floating status" for more than six ( 6) months, reckoned from October 24, 2009, the day following
his removal from his last assignment with IPVG on October 23, 2009, and not on August 24, 2009 as erroneously held by
the NLRC.
In Superstar Security Agency, Inc. and/or Col. Andrada v. NLRC,59 the Court ruled that placing an employee on
temporary "off-detail" is not equivalent to dismissal provided that such temporary inactivity should continue only for a
period of six (6) months.60 In security agency parlance, being placed "off-detail" or on "floating status" means "waiting to
be posted."61 In Salvaloza v. NLRC,62 the Court further explained the nature of the "floating status," to wit: Temporary
"off-detail" or "floating status" is the period of time when security guards are in between assignments or when they are
made to wait after being relieved from a previous post until they are transferred to a new one. It takes place when the
security agency's clients decide not to renew their contracts with the agency, resulting in a situation where the available
posts under its existing contracts are less than the number of guards in its roster. It also happens in instances where
contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned
to it even for want of cause, such that the replaced security guard may be placed on temporary "off-detail" if there are no
available posts under the agency's existing contracts. During such time, the security guard does not receive any salary or
any financial assistance provided by law. It does not constitute a dismissal, as the assignments primarily depend on the
contracts entered into by the security agencies with third parties, so long as such status does not continue beyond a
reasonable time. When such a "floating status" lasts for more than six (6) months, the employee may be considered to
have been constructively dismissed.63 (Emphasis supplied)
Relative thereto, constructive dismissal exists when an act of clear discrimination, insensibility, or disdain, on the part of
the employer has become so unbearable as to leave an employee with no choice but to forego continued employment,64
or when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as
an offer involving a demotion in rank and a diminution in pay.65
In this case, respondents themselves claimed that after having removed Tatel from his post at BaggerWerken on August
24, 2009 due to several infractions committed thereat, they subsequently reassigned him to SKI from September 16,
2009 to October 12, 2009 and then to IPVG from October 21 to 23, 2009. Thereafter, and until Tatel filed the instant
complaint for illegal dismissal six (6) months later, or on May 4, 2010, he was not given any other postings or
assignments. While it may be true that respondents summoned him back to work through the November 26, 2009
Memorandum, which Tatel acknowledged to have received on December 11, 2009, records are bereft of evidence to show
that he was given another detail or assignment. As the "off-detail" period had already lasted for more than six ( 6)
months, Tatel is therefore deemed to have been constructively dismissed.
In this regard, the Court concurs with the finding of the NLRC that respondents failed to establish that Tatel abandoned
his work. To constitute abandonment, two elements must concur: (a) the failure to report for work or absence without
valid or justifiable reason, and (b) a clear intention to sever the employer-employee relationship, with the second
element as the more determinative factor and being manifested by some overt acts. Mere absence is not sufficient. The
employer has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment
without any intention of returning.66 Abandonment is incompatible with constructive dismissal.67
The charge of abandonment in this case is belied by the high improbability of Tatel intentionally abandoning his work,
taking into consideration his length of service and, concomitantly, his security of tenure with JLFP. As the NLRC had
opined, no rational explanation exists as to why an employee who had worked for his employer for more than ten (10)
years would just abandon his work and forego whatever benefits he may be entitled to as a consequence thereof.68 As
such, respondents failed to sufficiently establish a deliberate and unjustified refusal on the part of Tatel to resume his
employment, which therefore leads to the logical conclusion that the latter had no such intention to abandon his work.
Moreover, Tatel refuted respondents' allegation that he did not heed their directive to return to work following his
receipt of the November 26, 2009 Memorandum. The Court finds no compelling reason not to give credence to such
rebuff, especially in light of the filing of the instant complaint for illegal dismissal. An employee who forthwith takes steps
to protest his layoff cannot, as a general rule, be said to have abandoned his work, and the filing of the complaint is proof
enough of his desire to return to work, thus negating any suggestion of abandonment.69 As the Court sees it, it is simply
incongruent for Tatel to refuse any offer of an assignment and thereafter, seek redress by filing a case for illegal
dismissal.
That Tatel made inconsistent statements pertaining to his work details in the underpayment case and the instant illegal
dismissal case does not affect the Court's conclusion that he was constructively dismissed. In his petition, he explained
that he was hired by JLFP in March 1997 but became a regular employee on March 14, 1998.70 In this regard,
respondents themselves have stated that they hired Tatel on March 14, 1998,71 which effectively puts the issue to rest.
Similarly, Tatel clarified the discrepancy in his declared salaries, stating that Pl2,400.00 was the amount of his monthly
salary, which therefore translates to P6,200.00 every fifteen (15) days. Such explanation is reasonable and is not far-
fetched; hence, the Court accepts the same. Likewise, Tatel explained that he was constructively dismissed on October 13,
2009, after he had filed the underpayment case against respondents on October 11, 2009, and believed that he was
actually dismissed on October 24, 2009. On this score, the Court finds that he was constructively dismissed on October
24, 2009, as adverted to elsewhere, considering that he was still given a last detail at the IPVG from October 21 to 23,
2009. In any case, six (6) months have already lapsed since Tatel was last given any assignment, hence, he is deemed to
have already been constructively dismissed when he filed the instant case.
For all the foregoing reasons, the CA therefore erred in ascribing grave abuse of discretion on the part of the NLRC which,
in fact, correctly found Tatel to have been illegally dismissed. Verily, an act of a court or tribunal can only be considered
to be tainted with grave abuse of discretion when such act is done in a capricious or whimsical exercise of judgment as is
equivalent to lack of jurisdiction;72 this is clearly not the case with respect to the pronouncement of the NLRC here. In
consequence of the foregoing, Tatel is entitled to reinstatement and back wages. However, as reinstatement is no longer
feasible in this case because of the strained relations between the parties and the fact that Tatel had since been employed
with another company, separation pay is awarded in lieu of reinstatement.73 On the matter of the computation of the
monetary awards, the Court delegates and defers the same to the NLRC, being a matter falling within its expertise.74
WHEREFORE, the petition is GRANTED. The Decision dated November 14, 2012 and the Resolution dated April 22, 2013
rendered by the Court of Appeals in CA-G.R. SP No. 119997 are hereby REVERSED and SET ASIDE. The Decision dated
February 9, 2011 and the Resolution dated March 31, 2011 of the National Labor Relations Commission (NLRC) are
REINSTATED with MODIFICATION reckoning the computation of back wages from the date of petitioner's constructive
dismissal on October 24, 2009 until finality hereof, computed at P12,400.00 per month. The rest of the NLRC Decision
stands.
SO ORDERED.
r. Litex Glass and Aluminum Supply vs. Sanchez,G.R.No.198465, April 22, 2015
SECOND DIVISION
G.R. No. 198465 April 22, 2015
LITEX GLASS AND ALUMINUM SUPPLY AND/OR RONALD ONG-SITCO, Petitioners,
vs.
DOMINADOR B. SANCHEZ, Respondent.
58
DECISION
DEL CASTILLO, J.:
Before us is a Petition for Review on Certiorari1 seeking to set aside the May 11, 2011 Decision2 of the Court of Appeals
(CA) in CA-G.R. SP No. 113840, which dismissed the petition for certiorari filed therewith and affirmed the October 30,
20093 and February 18, 20104 Resolutions of the National Labor Relations Commission (NLRC), which in turn, affirmed
in toto the June 18, 2009 Decision5 of the Labor Arbiter declaring respondent Dominador B. Sanchez (Sanchez) to have
been illegally dismissed from employment by petitioners Litex Glass and Aluminum Supply (Litex) and Ronald Ong-Sitco
(Ong-Sitco ). Likewise assailed is the August 31, 2011 Resolution6 of the CA denying petitioners' Motion for
Reconsideration.7
Antecedent Facts
This case arose from a Complaint8 for illegal dismissal and non-payment of holiday pay, premium for holiday pay, service
incentive leave pay and attorneys fees filed by Sanchez against petitioners on February 18, 2009 before the Labor
Arbiter, docketed as NLRC NCR Case No. 02-02975-09.
Sanchez alleged that since 1994, he was employed as driver and aluminum installer in several companies owned and
managed by Ong-Sitco, the last of which was with Litex. Since February 1996, Ong-Sitco had been remitting his Social
Security System (SSS) monthly contributions.9 Sanchez averred that he has no record of any work related offense for
which he has been reprimanded, suspended or warned and that for the past 15 years, he has been diligently serving his
employer. He was thus surprised when on December 23, 2008, Ong-Sitco and his wife scolded and threw insulting words
and invectives upon him and then ordered him to go on indefinite leave. Due to the incident, he decided to just leave the
work premises with the hope that the animosity between him and his employer would eventually subside. On December
28,2008, he went back to the office to talk to Ong-Sitco, but the latter just ignored him. He again returned on January 2,
2009 to purportedly discuss his employment status, but Ong-Sitco was again unwilling to talk to him. The same thing
happened after he went back a week later. These, thus, led Sanchez to file a case for illegal dismissal and non-payment of
benefits against petitioners.
Subsequent to the filing of the said complaint, Sanchez received two memorandum-letters from petitioners. The first one
was dated January 7, 200910 but mailed on February 23, 2009,11 and received by Sanchez on February 26, 2009. It
contained a directive for Sanchez to report for work and to explain his continued absence from December 22, 2008 to
January 7, 2009, after he was allegedly given verbal warning for committing the following infractions: 1) going home
early without justification on December 3, 2008; 2) exhibiting erratic behavior and threatening to file a case against
petitioners after being summoned to explain his unjustified leave from work on December 9, 2008; and, 3) unauthorized
use of company vehicle for personal benefit on December 20, 2008. The second memorandum-letter12 dated January 22,
2009 which was sent on March 10, 2009,13 and received by Sanchez on March 22, 2009, contained a warning that his
refusal to follow the earlier directive to report and explain his continued absence within 24 hours would constitute
abandonment of work on his part.
Sanchezs legal counsel, Atty. Osias M. Merioles, Jr., on the other hand, wrote petitioners a letter14 dated March 20, 2009
informing them that his client would not report for work as the first memorandum-letter was a mere afterthought to
cover up their act of illegal termination. Petitioners, on the other hand, negated all of Sanchezs claims. They denied
having employed him in 1994 since, according to them, Litex was only registered on April 5, 2002.15 Petitioners also
denied having dismissed Sanchez. They averred that it was Sanchez who abandoned his job by not reporting for work.
Petitioners then presented their own version of the facts. They averred that based on company records, the January 7,
2009 memorandum-letter was sent on January 8, 2009 and not on February 23, 2009 to Sanchezs last known address.
The same, however, was returned to sender. On the other hand, the January 22, 2009 memorandum-letter was sent to
Sanchez on January 23, 2009 and not on March 10, 2009. These memorandum-letters are not termination letters as
claimed by Sanchez, but notices for him to report for work and to explain several infractions that he committed on
December 3, 9 and 20,2009. But instead of complying, Sanchez refused to go to work as evidenced by his counsels letter.
To petitioners, this intimated Sanchezs lack of interest to work. Petitioners further averred that they have no reason to
terminate Sanchez especially since the latter has pending obligations with the company consisting of P39,449.20 worth of
materials and money amounting to P6,500.00.
 Ruling of the Labor Arbiter sent after the complaint was filed; (4) there was already antagonism between the parties that warranted the award of
separation pay; (5) Sanchez was under the employ of Ong-Sitcos several companies for the past 15 years; (6) the alleged
accountabilities of Sanchez were not fully substantiated and cannot be offset against his monetary awards since they
In a Decision16 dated June 18, 2009,the Labor Arbiter declared Sanchez to have been illegally dismissed by petitioners.
sprung from a different contractual relation; (7) Sanchez is entitled to attorneys fees since he was constrained to litigate
This was after he found Sanchezs version of facts more credible. He observed that the original copies of the registry
and incur expenses to protect his interests; and, (8) the award of backwages should be computed from the date of
receipts which were attached to the envelopes of the January 7 and January 22, 2009 memorandum-letters show that
dismissal on December 23, 2008 until finality of the judgment and not only until March 20, 2009 because Sanchezs
they were mailed only on February 23, 2009 and March 10, 2009, respectively, or after the filing of the complaint for
refusal to return to work was justified, it being predicated on the reasonable belief that compliance with petitioners
illegal dismissal on February 18, 2009. Thus, said memorandum-letters were made and sent by petitioners "to evade the
memorandum-letters would only serve the latters apparent purpose of evading their responsibility in illegally
consequences of illegal termination by showing seeming compliance with the notice requirement and likewise to
terminating him.
demonstrate the absence of dismissal."17 Moreover, the Labor Arbiter pointed out that the alleged infractions imputed
against Sanchez are not sufficient grounds to warrant his dismissal.
Petitioners filed a Motion for Reconsideration which was likewise denied in the CA Resolution24 of August 31, 2011.
For having been illegally dismissed, Sanchez was awarded separation pay computed from the date of hiring in 1994 up to
the finality of the Decision, and full backwages computed from the date of dismissal also up to the finality of the Hence, this Petition.
Decision.18 He was also granted his claims for holiday pay, service incentive leave pay and attorneys fees. Thus:
Issues
WHEREFORE, premises considered, judgment is hereby rendered finding Complainant to have been illegally dismissed
and, in conformity therewith, holding Respondents jointly and severally liable to pay Complainant his separation pay and
WHETHER X X X IT IS MISLEADING ON THE PART OF THE PRIVATE RESPONDENT TO PRAY FOR REINSTATEMENT
full backwages counted from date of dismissal until finality of this Decision, including the awards [for] holiday pay and
WHEN IN FACT IT IS HIS POSITION THAT HE WILL NOT REPORT FOR WORK ANYMORE.
service incentive leave pay, as currently contained in Computation and Examination Units schedule of computation
herein adopted and marked as Annex "A", plus attorneys fee equivalent to 10% of the judgment award.
WHETHER X X X THE AWARD OF SEPARATION PAY MAY BE SUSTAINED DESPITE THE FACT THAT THE SAME IS
NEITHER PRAYED FOR BY THE PRIVATE RESPONDENT [NOR] SUPPORTED BY ALLEGATIONS OF STRAINED
All other claims are dismissed for lack of merit.
RELATIONSHIP IN THE PLEADINGS SUBMITTED BY THE PARTIES NOR WAS THERE ANY ALLEGATION THERETO IN
THE QUESTIONED DECISION ITSELF.
SO ORDERED.19
WHETHER X X X MERE SELF-SERVING ALLEGATIONS OF THE PRIVATE RESPONDENT [ARE] SUFFICIENT TO PROVE
Ruling of the National Labor Relations Commission THE ALLEGED DISMISSAL.

On appeal with the NLRC, petitioners averred that the Labor Arbiter erred in: (1) not ruling that Sanchez abandoned his WHETHER X X X PRIVATE RESPONDENT IS ENTITLED TO THE PAYMENT OF HIS MONEY CLAIMS.25
work; (2) awarding separation pay even if not sought in the complaint and despite the absence of strained relations; (3)
computing separation pay based on Sanchezs length of service of 15 years despite the fact that he was only hired in
Petitioners maintain that Sanchez is not entitled to the monetary awards as no dismissal, in fact, took place. In particular,
2002; (4) not ruling on Sanchez indebtedness to petitioners in the total sum of P45,494.20; and, (5) awarding attorneys
they question the award of separation pay since it was not prayed for in the complaint, never discussed or raised in the
fees despite the absence of bad faith on their part.
proceedings before the Labor Arbiter, and no strained relations exists between them and Sanchez. Besides, even
assuming that Sanchez is entitled to separation pay, petitioners contend that the computation thereof should only be
In a Resolution20 dated October 30, 2009, the NLRC dismissed the appeal and affirmed the Labor Arbiters judgment. It: from 2002 when Sanchez commenced working for them and not in 1994. Moreover, the award of attorneys fees is
(1) ruled that Sanchez cannot be said to have abandoned his job as there is no showing of an intention to resign or forego improper since there is no bad faith on their part.
with his employment; (2) upheld the grant of separation pay and other monetary awards; and, (3) sustained the Labor
Arbiter in not deducting from Sanchezs monetary awards his alleged obligations to petitioners on the ground that the
Our Ruling
said liabilities were not fully substantiated and that they arose from a different contractual relation.

The Petition is partly meritorious.

Petitioners filed a motion for reconsideration reiterating their previous arguments and adding that the award of
backwages should be computed only until March 20, 2009 when Sanchez manifested his refusal to report for work. This
motion was, however, denied in the NLRC Resolution21 of February 18, 2010. Sanchez did not abandon his work but
was illegally dismissed.
Petitioners next recourse was a Petition for Certiorari22 with the CA.
Seeking to absolve themselves from the charge of illegal dismissal by denying the fact of dismissal, petitioners contend
that Sanchez abandoned his job. To support this, they highlighted the fact that they sent him "show-cause" letters which
Ruling of the Court of Appeals
were made in good faith, in order to give him an opportunity to answer the infractions imputed against him and to
likewise give notice for him to return to work. They insist that the two memorandum-letters were mailed on January 8
In a Decision23 dated May 11, 2011, the CA dismissed the Petition for Certiorari and affirmed the afore-mentioned NLRC and 23, 2009, respectively, or before the filing of the complaint, and that said letters were presumed to have been
Resolutions. It agreed with the findings of the labor tribunals that: (1) Sanchez was dismissed without valid grounds; (2) received by Sanchez in the regular course of mail absent any proof to the contrary.
he is not guilty of abandonment of work as he immediately filed a case after his efforts to return to work proved futile;
(3) the memorandum-letters were mere afterthought as togive semblance of validity to the dismissal, they having been
59
Suffice it to say, however, that the issue of whether Sanchez was dismissed from employment is essentially a question of
fact26 which cannot be raised in this petition for review on certiorari. Besides, we see no compelling reason to deviate
from the finding of fact of the CA, which is in absolute agreement with those of the NLRC and the Labor Arbiter, that
Sanchez was dismissed from employment. "[F]actual findings of agencies exercising quasi-judicial functions are accorded
not only respect but even finality"27 by this Court when supported by substantial evidence and especially when affirmed
by the CA.28 Here, the Labor Arbiter, the NLRC and the CA were unanimous in finding Sanchezs narration of the
circumstances surrounding his illegal dismissal credible.
Moreover, this Court is not inclined to disturb findings which conform to evidentiary facts. Aside from the fact that Ong-
Sitco did not dispute Sanchezs claim that the two of them had an altercation on December 23,2008, the former also
admitted that the latter subsequently went back to his office to clear his employment status but was ignored by him.
After two similar attempts from Sanchez, Ong-Sitco still refused to entertain Sanchezs requests and queries regarding his
employment status. It was only in the two memorandum-letters dated January 7 and January 22, 2009, which were
likewise unanimously found by the labor tribunals and the CA to have been sent to Sanchez after the filing of the
complaint, that petitioners warned Sanchez of his continued absence and directed him to report for work to explain said
absences and answer the infractions he allegedly committed.
From the above factual scenario, the Court is not convinced that Sanchez abandoned his work. To constitute
abandonment, it is essential that an employee failed to report for work without any valid and justifiable reason and that
he had a clear intention to sever the employment relationship by some overt act.29 Mere failure to report for work after
notice to return does not constitute abandonment.30 As mentioned, Sanchez reported back to Ong-Sitco several times to
ask about his employment status but was not entertained. Oddly, while Ong-Sitco did not deny this, he never bothered to
explain why during these instances, he did not warn Sanchez about his continued absence or ask him to return to work, if
only to bolster the claim that he was not dismissed. Instead, Ong-Sitco just ignored him and this, under the circumstances,
only shows his intention not to retain him. This is further bolstered by the fact, as shown by the records, that the two
memorandum-letters were sent to Sanchez after he filed a complaint against petitioners. Clearly, Sanchez cannot be said
to have unjustifiably refused to return to work. He cannot be faulted from reasonably concluding that the memorandum
letters were merely made in order to give semblance of validity to his termination. In addition and as aptly observed by
the CA, Sanchezs immediate filing of the complaint is proof of his desire to return to work. It has been held that the filing
of a complaint negates any intention of abandoning foregoing employment.31
Anent Sanchez dismissal, the Court finds that there is no valid ground for the same. No substantial evidence but only
mere allegations were proffered in support of the claim that Sanchez committed infractions, to wit: 1) going home early
without presenting any justification on December 3, 2008; 2) exhibiting erratic behavior and threatening to file a case
against petitioners after being summoned to explain his unjustifiable leave from work on December 9, 2008; and 3)
unauthorized use of company vehicle for personal benefit on December 20, 2008.
In view of the above discussion, the Court affirms the CAs finding that Sanchez was illegally dismissed. As such, he is
entitled to reinstatement without loss of seniority rights, full backwages inclusive of allowances, and other benefits or
their monetary equivalent, computed from the time compensation was withheld up to the time of actual reinstatement
pursuant to Article 27932 of the Labor Code, as amended by Republic Act No. 6715.
The award of separation pay is proper.
However, the computation of the same
should be reckoned from April 2002.
As stated, "an illegally dismissed employee is entitled to reinstatement as a matter of right."33 But when an atmosphere
of antipathy and antagonism has already strained the relations between the employer and employee, separation pay is to
be awarded as reinstatement can no longer be equitably effected.34
We agree with the CA when it held that the Labor Arbiters award of separation pay is an equitable disposition. Although
petitioners correctly pointed out that separation pay was not prayed for in the complaint, Sanchez is deemed to have
60
accepted the separation pay awarded by the Labor Arbiter since he never questioned the same. The Court has ruled that
separation pay may be awarded if the employee decides not to be reinstated.35 Besides, the altercation that transpired
between Sanchez and Ong-Sitco is enough basis to conclude that there exists an apparent strained relationship between
them. This strained relationship is also very evident from petitioners refusal to retain Sanchez under their employ.36
While petitioners contend that their act of sending Sanchez memorandum-letters directing him to report for work
exhibits their willingness to retain him, the same hardly convinces. We have already concluded earlier that the said
memorandum-letters were mere afterthought made only to cover-up petitioners act of illegally dismissing Sanchez. For
obvious reasons, they cannot be viewed as a sign of petitioners sincere willingness to reinstate Sanchez. Further, even if
the issue of strained relations was not raised in the proceedings before the Labor Arbiter, it was nonetheless discussed
and argued by the parties in their respective pleadings submitted to the NLRC when the case was brought on appeal.
Clearly, there is sufficient basis for the grant of seperation pay in lieu of reinstatement in this case.
We, however, hold that the labor tribunals and the CA erred in reckoning the employment of Sanchez from 1994 for the
purpose of computing his separation pay. In affirming the decision of the NLRC and the Labor Arbiter, the CA relied on
the SSS Certification37 and gave weight to Sanchezs claim that Ong-Sitco has been remitting his SSS contributions since
1996.
In L.C. Ordoez Construction v. Nicdao,38 the Court reiterated the basic rule on evidence that the burden of proof lies on
the party who makes the allegation and must prove his claim by competent evidence. There, respondent Nicdao was
claiming entitlement to separation pay and other employee benefits computed from 1985, the date of her alleged
employment. The Court, however, denied her claim as she made inconsistent statements in her pleadings concerning her
date of employment.
In this case, it is incumbent upon Sanchez to prove that he was in the employ of petitioners since 1994. Unfortunately, he
failed to discharge this onus. The SSS Certification submitted merely states that his coverage under the SSS started in
1996 and that his latest employer as of the date of the issuance of the certification is Ong-Sitco. As correctly argued by
petitioners, there is nothing in the said certification which shows that Sanchez was in the employ of petitioners since
1994 or even since 1996. Neither is there any other competent evidence presented to substantiate the claim that he
worked in several companies owned and managed by Ong-Sitco since 1994.
Since the only persuasive evidence on record regarding Sanchezs date of employment with petitioners is the latters
admission that they employed him in April 2002, the date Litex was registered with the Department of Trade and
Industry, Sanchez is deemed employed by petitioners beginning on such date. Hence, the reckoning point for the
computation of the separation pay in lieu of reinstatement awarded to Sanchez shall be the year 2002 and not 1994.
Attorney's fees was correctly awarded
We affirm the CA's award as well as its basis in granting attorney's fees in favor of Sanchez. "An award of attorney's fees
is proper if one was forced to litigate and incur expenses to protect one's rights and interest by reason of an unjustified
act or omission on the part of the party from whom the award is sought."39 This is clearly obtaining in this case.
WHEREFORE, the Petition is PARTLY GRANTED. The assailed May 11, 2011 Decision and August 31, 2011 Resolution of
the Court of Appeals in CA-G.R. SP No. 113840, are AFFIRMED with the modification that petitioners Litex Glass and
Aluminum Supply and/or Ronald Ong-Sitco are ordered to pay respondent Dominador B. Sanchez's separation pay
computed at one-month pay for every year of service, with years of service reckoned from April 2002 until the finality of
this Decision.
SO ORDERED.
Recomputation of award does not constitute alteration of Decision;Legal interest per BSP Circular 799
s. Metroguards Security Agency Corporation vs. Hilongo, G.R.No. 215630, March 9, 2015
THIRD DIVISION
March 9, 2015
G.R. No. 215630
METROGUARDS SECURITY AGENCY CORPORATION (FORMERLY KNOWN AS BEEGUARDS CORPORATION) and MS. that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue to add on until full
MILAGROS T. CHAN,Petitioners , satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of the consequences of illegal
vs. dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being
ALBERTO N. HILONGO, Respondent. implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is
RESOLUTION affected and this is not a violation of the principle of immutability of final judgments.16
VILLARAMA, JR., J.:
Before us is a petition for review of the Decision1 dated July 22, 2014 and Resolution2 dated November 18, 2014 of the
After the corresponding entry of judgment was issued on June 11, 2013, the case was remanded to the Labor Arbiter. On
Court of Appeals (CA) in CA-G.R. SP No. 134501.
July 9, 2013, respondent Hilongo filed a motion for issuance of writ of execution alleging that the June 11, 2013 CA
Resolution had confirmed that the amount of P170,520.31 awarded by the Labor Arbiter is not sufficient, and that there
The facts follow: is a need to compute additional monetary awards reckoned from May 1, 2010 up to April 26, 2013 or the date Hilongo
presumed as the date of finality of the decision.17
In his Decision3 dated April 30, 2010 in NLRC NCR-10-14411-09, entitled Alberto Hilongo v. Bee Guards Corp./Milagros
Chan, the Labor Arbiter ruled that herein respondent Alberto N. Hilongo was illegally dismissed, to wit: In an Order18 dated October 29, 2013, the Labor Arbiter directed the issuance of a writ of execution and ruled that the
award of P170,520.31 as stated in the Labor Arbiters Decision dated April 30, 2010 prevails.
WHEREFORE, premises considered, judgment is rendered finding the dismissal of complainant [Hilongo] as illegal and
ordering the respondents [herein petitioners] to pay complainant [Hilongo] his backwages from the date of dismissal to Hilongo filed a petition for extraordinary remedy before the NLRC which dismissed the petition in its Decision19 dated
the date of this decision and separation pay of one month pay per year of service, plus 10% thereof as attorneys fees as November 29, 2013. The NLRC also denied Hilongos motion for reconsideration in its Resolution20 dated January 16,
all P382 x 26 x 7.83 2014.
B. 13th Month Pay
P 77,767.56/12 6,480.63
Hence, Hilongo filed a petition for certiorari before the CA.
C. Service Incentive Leave 1,246.27 P85,494.46
II. Separation Pay
10/25/01 4/30/10 = 7 yrs. In the assailed Decision dated July 22, 2014, the CA granted Hilongos petition and set aside the NLRC Decision dated
P382 x 26 x 7 years P 69,524.00 November 29, 2013 and Resolution dated January 16, 2014. The CA ordered the Labor Arbiter to re-compute Hilongos
P155,018.46 monetary awards, to wit:
III. 10% Attorneys fees 15,501.85
P170,520.31
WHEREFORE, in view of the foregoing, the petition is GRANTED. The Decision dated November 29, 2013 and Resolution
SO ORDERED.4
dated January 16, 2014 of public respondent National Labor Relations Commission, Second Division, in NLRC LER N[o].
11-322-13/NLRC LAC N[o]. 07-001-485-10 (NLRC NCR-10-14411-09) are hereby REVERSED and SET ASIDE.
On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the Labor Arbiter in its Decision5
dated September 30, 2010 and Resolution dated November 23, 2010.6
The case is hereby REMANDED to the Labor Arbiter for the RE- COMPUTATION of the total monetary benefits due to
petitioner [Hilongo].1wphi1 The Labor Arbiter is further DIRECTED to incorporate the following in the re-computation:
Aggrieved, Hilongo filed a petition for certiorari before the CA, docketed as CA-G.R. SP No. 117891.7 In its Decision8
dated September 7, 2012, the CA reversed the NLRC decision and reinstated the Labor Arbiters Decision dated April 30,
(1) Additional backwages and separation pay from May 1, 2010 to June 11, 2013, or the date when the April 30, 2010
2010.9 Petitioners motion for reconsideration was denied by the CA in its Resolution10 dated March 26, 2013.
Decision of Labor Arbiter Macam became final and executory;
Petitioners no longer appealed to this Court.11

(2) Interest of twelve percent (12%) per annum of the total monetary awards, computed from June 11, 2013 to June 30,
Hilongo then filed a motion for entry of judgment and a motion for clarification of Decision/Resolution praying that the
2013 and six percent x x x (6%) per annum from July 1, 2013 until their full satisfaction.
CAs March 26, 2013 Resolution be clarified and interpreted to include the amount of the award as stated in the Labor
Arbiters Decision dated April 30, 2010 and additional award computed from May 1, 2010 to March 26, 2013, or the date
the CA denied petitioners motion for reconsideration.12 SO ORDERED.21

In its Resolution13 dated June 11, 2013, the CA granted the motion for entry of judgment and noted Hilongos motion for
clarification of Decision/Resolution.1wphi1 The CA held that when an appellate court affirms the Labor Arbiters ruling,
it is understood that awards due to the illegally dismissed employee shall be recomputed in order to account for the
period of time that has lapsed from the rendition of the Labor Arbiters decision up to its finality. The CA quoted this
Courts ruling in Session Delights Ice Cream and Fast Foods v. Court of Appeals,14 and Gonzales v. Solid Cement
Corporation15 :
Consistent with what we discussed above, we hold that under the terms of the decision under execution, no essential
change is made by a re- computation as this step is a necessary consequence that flows from the nature of the illegality of
dismissal declared in that decision. A re- computation (or an original computation, if no previous computation has been
made) is a part of the law specifically, Article 279 of the Labor Code and the established jurisprudence on this provision
61
The CA held that it is already settled that the computation of the monetary awards due to the illegally dismissed
employee must continue to run until the final termination of the case on appeal. The CA ruled that the Labor Arbiter
should have been guided by the CA Resolution dated June 11, 2013 which had clarified that a re-computation of Hilongos
award is necessary.22 The CA also ruled that the re-computation of the monetary awards is a necessary consequence that
flows from the nature of the illegality of Hilongos dismissal. The CA further noted that since the Labor Arbiters Decision
dated April 30, 2010 had ordered the payment of separation pay, in lieu of reinstatement, the finality of said decision on
June 11, 2013 effectively declares that Hilongos employment relationship with petitioners has ended on said date.
Hence, separation pay and back wages must be computed up to that point to account for the time the illegally dismissed
employee should have been paid his salary and benefit entitlements.23
Hence, this petition.
The issue for our consideration is whether the CA erred in ordering the re-computation of Hilongos monetary awards.
We rule in the negative.
The issue is not novel. In Nacar v. Gallery Frames,24 we have held that:
x x x no essential change is made by a recomputation as this step is a necessary consequence that flows from the nature
of the illegality of dismissal declared by the Labor Arbiter in that decision. A recomputation (or an original computation,
if no previous computation has been made) is a part of the law specifically, Article 279 of the Labor Code and the
established jurisprudence on this provision that is read into the decision. By the nature of an illegal dismissal case, the
reliefs continue to add up until full satisfaction, as expressed under Article 279 of the Labor Code. The recomputation of
the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of
the final decision being implemented. The illegal dismissal ruling stands; only the computation of monetary
consequences of this dismissal is affected, and this is not a violation of the principle of immutability of final judgments.
Nacar reiterated the Courts ruling in the earlier cases of Session Delights and Gonzales.
We thus cannot agree with petitioners contention that a decision that has acquired finality becomes immutable and
unalterable.25 The re-computation of the consequences of illegal dismissal upon execution of the decision does not
constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only
the computation of monetary consequences of this dismissal is affected, and this is not a violation of the principle of
immutability of final judgments.
Likewise without merit is petitioners contention that "[i]t may very well be argued that the NLRCs final decision
reversing the Labor Arbiter is in fact the final decision that effectively declared the employment relationship between
Hilongo and [petitioners] as ended on which date the computation of the separation pay and backwages awarded by the
Labor Arbiter ultimately ceased."26 We note that the CA, in its Decision dated September 7, 2012, had reversed the NLRC
Decision dated September 30, 2010 and Resolution dated November 23, 2010, and reinstated the Labor Arbiters
Decision dated April 30, 2010. Thus, petitioners cannot claim that the NLRC decision which was set aside with finality is
"the NLRCs final decision" and "the final decision" that effectively declared the employment relationship between the
parties as ended.
Said CA Decision dated September 7, 2012 became final and executory on April 26, 2013.27 Thus, the April 30, 2010
Decision of the Labor Arbiter which ordered the payment of separation pay in lieu of reinstatement, effectively ended the
employment relationship of the parties on April 26, 2013, the date the CA decision became final. Since the Labor Arbiters
computation of Hilongos monetary award was up to the date of his April 30, 2010 Decision only, the CA properly decreed
the computation of additional back wages and separation pay.
However, the CA incorrectly concluded that the April 30, 2010 Decision of the Labor Arbiter became final on June 11,
2013,28 contrary to its own finding that it became final and executory on April 26, 2013.29 This led to its erroneous
computation of the additional back wages and separation pay of Hilongo, as well as reckoning the date of the 12% legal
interest. Following the teaching of Nacar v. Gallery Frames30 that the computation of the monetary consequences (back
wages and separation pay) of the illegal dismissal decision should be reckoned from its finality, the additional back wages
and separation pay of Hilongo should be computed from May 1, 2010 to April 26, 2013. Further, the payment of legal
interest of 12% per annum should also be from April 26, 2013 up to June 30, 2013. Thereafter, in accordance with
Bangko Sentral ng Pilipinas Monetary Boards Circular No. 799,31 series of 2013, the legal interest computed from July 1,
2013 until the monetary awards were fully satisfied will be 6% per annum.
WHEREFORE, we DENY the instant petition and AFFIRM with MODIFICATION the Decision dated July 22, 2014 and
Resolution dated November 18, 2014 of the Court of Appeals in CA-G.R. SP No. 134501. The dispositive portion of the
Decision dated July 22, 2014 of the Court of Appeals in CA-G.R. SP No. 134501 shall read as follows:
62
WHEREFORE, in view of the foregoing, the petition is GRANTED. The Decision dated November 29, 2013 and Resolution
dated January 16, 2014 of public respondent National Labor Relations Commission, Second Division, in NLRC LER N[o].
11-322-13/NLRC LAC N[o]. 07-001-485-10 (NLRC NCR-10-14411-09) are hereby REVERSED and SET ASIDE.
The case is hereby REMANDED to the Labor Arbiter for the RE- COMPUTATION of the total monetary benefits due to
petitioner[Hilongo]. The Labor Arbiter is further DIRECTED to incorporate the following in the re-computation:
(1)Additional backwages and separation pay from May 1, 2010 to April 26, 2013, or the date when the April 30, 2010
Decision of Labor Arbiter Macam became final and executory;
(2)Interest of twelve percent (12%) per annum of the total monetary awards, computed from April 26, 2013 to June 30,
2013 and six percent xx x (6%) per annum from July 1, 2013 until their full satisfaction.
SO ORDERED.
Some issues covered/resolved-Willful disobedience;non-filing of criminal charges by employer; illegal
dismissal;Theft;Criminal conviction not necessary to justify termination;Finding of the prosecutor not binding
on labor tribunal
t. St. Lukes Medical Center, Inc. vs. Sanches, G.R.No.212054, March 11, 2015
FIRST DIVISION
G.R. No. 212054, March 11, 2015
ST. LUKES MEDICAL CENTER, INC., Petitioner, v. MARIA THERESA V. SANCHEZ, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated November 21, 2013 and the Resolution3 dated
April 4, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 129108 which affirmed the Decision4 dated November 19,
2012 and the Resolution5 dated January 14, 2013 of the National Labor Relations Commission (NLRC) in NLRC LAC No.
06-001858-12, declaring the dismissal of respondent Maria Theresa V. Sanchez (Sanchez)
illegal.chanroblesvirtuallawlibrary
The Facts
On June 29, 2009, Sanchez was hired by petitioner St. Lukes Medical Center, Inc. (SLMC) as a Staff Nurse, and was
eventually assigned at SLMC, Quezon Citys Pediatric Unit until her termination on July 6, 2011 for her purported
violation of SLMCs Code of Discipline, particularly Section 1, Rule 1 on Acts of Dishonesty, i.e., Robbery, Theft, Pilferage,
and Misappropriation of Funds. 6cralawred
Records reveal that at the end of her shift on May 29, 2011, Sanchez passed through the SLMC Centralization
Entrance/Exit where she was subjected to the standard inspection procedure by the security personnel. In the course
thereof, the Security Guard on-duty, Jaime Manzanade (SG Manzanade), noticed a pouch in her bag and asked her to open
the same.7 When opened, said pouch contained the following assortment of medical stocks which were subsequently
confiscated: (a) Syringe 10cl [4 pieces]; (b) Syringe 5cl [3 pieces]; (c) Syringe 3cl [3 pieces]; (d) Micropore [1 piece]; (e)
Cotton Balls [1 pack]; (f) Neoflon g26 [1 piece]; (g) Venofix 25 [2 pieces]; and (h) Gloves [4 pieces] (questioned items). 8
Sanchez asked SG Manzanade if she could just return the pouch inside the treatment room; however, she was not allowed
to do so.9 Instead, she was brought to the SLMC In-House Security Department (IHSD) where she was directed to write an
Incident Report explaining why she had the questioned items in her possession. 10 She complied11 with the directive and
also submitted an undated handwritten letter of apology 12 (handwritten letter) which reads as
follows:chanRoblesvirtualLawlibrary
To In-House Security,
I am very sorry for bringing things from [SLMC] inside my bag. Pasensya na po. Taos-puso po akong humihingi
ng tawad sa aking pagkakasala, Alam ko po na ako ay nagkamali. Hindi ko po dapat dinala yung mga gamit sa
hospital. Hindi ko po alam kung [paano] ako magsisimulang humingi ng patawad. Kahit alam kong bawal ay
nagawa kong makapag uwi ng gamit. Marami pang gamit dahil sa naipon po. Paisa-isa nagagawa kong
makakuha pag nakakalimutan kong isoli. Hindi ko na po naiwan sa nurse station dahil naisip kong magagamit
ko rin po pag minsang nagkakaubusan ng stocks at talagang may kailangan.
 the taking of hospital/medical items as evidenced by her handwritten letter, 36 but nonetheless committed the said
Humihingi po ako ng tawad sa aking ginawa. Isinakripisyo ko ang hindi pagiging toxic sa pagkuha ng gamit misconduct. Finally, the LA pointed out that SLMCs non-filing of a criminal case against Sanchez did not preclude a
para sa bagay na alam kong mali. Inaamin ko na akoy naging madamot, pasuway at makasalanan. Inuna ko ang determination of her serious misconduct, considering that the filing of a criminal case is entirely separate and distinct
comfort ko keysa gumawa ng tama. Manikluhod po akong humihingi ng tawad. from the determination of just cause for termination of employment. 37cralawred

Sorry po. Sorry po. Sorry po talaga.13cralawlawlibrary Aggrieved, Sanchez appealed38 to the NLRC.chanroblesvirtuallawlibrary
The NLRC Ruling
In a Decision39 dated November 19, 2012, the NLRC reversed and set aside the LA ruling, and held that Sanchez was
In a memorandum14 of even date, the IHSD, Customer Affairs Division, through Duty Officer Hernani R. Janayon, apprised
illegally dismissed.
SLMC of the incident, highlighting that Sanchez expressly admitted that she intentionally brought out the questioned
items.
The NLRC declared that the alleged violation of Sanchez was a unique case, considering that keeping excess hospital
stocks or hoarding was an admitted practice amongst nurses in the Pediatric Unit which had been tolerated by SLMC
An initial investigation was also conducted by the SLMC Division of Nursing15 which thereafter served Sanchez a notice to
management for a long time.40 The NLRC held that while Sanchez expressed remorse for her misconduct in her
explain.16cralawred
handwritten letter, she manifested that she only hoarded the questioned items for future use in case their medical
supplies are depleted, and not for her personal benefit. 41 It further held that SLMC failed to establish that Sanchez was
On May 31, 2011, Sanchez submitted an Incident Report Addendum 17 (May 31, 2011 letter), explaining that the
motivated by ill-will when she brought out the questioned items, noting: (a) the testimony of SG Manzanade during the
questioned items came from the medication drawers of patients who had already been discharged, and, as similarly
conference before the ELRD of Sanchezs demeanor when she was apprehended, i.e., [d]i naman siya masyado
practiced by the other staff members, she started saving these items as excess stocks in her pouch, along with other basic
nataranta,42 and her consequent offer to return the pouch;43 and (b) that the said pouch was not hidden underneath the
items that she uses during her shift.18 She then put the pouch inside the lowest drawer of the bedside table in the
bag.44 Finally, the NLRC concluded that the punishment of dismissal was too harsh and the one (1) month preventive
treatment room for use in immediate procedures in case replenishment of stocks gets delayed. However, on the day of
suspension already imposed on and served by Sanchez was the appropriate penalty. 45 Accordingly, the NLRC ordered her
the incident, she failed to return the pouch inside the medication drawer upon getting her tri-colored pen and calculator
reinstatement, and the payment of backwages, other benefits, and attorneys fees. 46cralawred
and, instead, placed it inside her bag. Eventually, she forgot about the same as she got caught up in work, until it was
noticed by the guard on duty on her way out of SMLCs premises.
Unconvinced, SLMC moved for reconsideration47 which was, however, denied in a Resolution48 dated January 14, 2013.
Thus, it filed a petition for certiorari49 before the CA.chanroblesvirtuallawlibrary
Consequently, Sanchez was placed under preventive suspension effective June 3, 2011 until the conclusion of the
The CA Ruling
investigation by SLMCs Employee and Labor Relations Department (ELRD) 19 which, thereafter, required her to explain
In a Decision50 dated November 21, 2013, the CA upheld the NLRC, ruling that the latter did not gravely abuse its
why she should not be terminated from service for acts of dishonesty due to her possession of the questioned items in
discretion in finding that Sanchez was illegally dismissed.
violation of Section 1, Rule I of the SLMC Code of Discipline. 20 In response, she submitted a letter21 dated June 13, 2011,
which merely reiterated her claims in her previous May 31, 2011 letter. She likewise requested for a case conference, 22
It ruled that Sanchezs offense did not qualify as serious misconduct, given that: (a) the questioned items found in her
which SLMC granted.23 After hearing her side, SLMC, on July 4, 2011, informed Sanchez of its decision to terminate her
possession were not SLMC property since said items were paid for by discharged patients, thus discounting any material
employment effective closing hours of July 6, 2011. 24 This prompted her to file a complaint for illegal dismissal before
or economic damage on SLMCs part; (b) the retention of excess medical supplies was an admitted practice amongst
the NLRC, docketed as NLRC NCR Case No. 07-11042-11.
nurses in the Pediatric Unit which was tolerated by SLMC; (c) it was illogical for Sanchez to leave the pouch in her bag
since she would be subjected to a routine inspection; (d) Sanchezs lack of intention to bring out the pouch was
In her position paper,25 Sanchez maintained her innocence, claiming that she had no intention of bringing outside the
manifested by her composed demeanor upon apprehension and offer to return the pouch to the treatment room; and (e)
SLMCs premises the questioned items since she merely inadvertently left the pouch containing them in her bag as she
had SLMC honestly believed that Sanchez committed theft or pilferage, it should have filed the appropriate criminal case,
got caught up in work that day. She further asserted that she could not be found guilty of pilferage since the questioned
but failed to do so.51 Moreover, while the CA recognized that SLMC had the management prerogative to discipline its
items found in her possession were neither SLMCs nor its employees property. She also stressed the fact that SLMC did
erring employees, it, however, declared that such right must be exercised humanely. As such, SLMC should only impose
not file any criminal charges against her. Anent her supposed admission in her handwritten letter, she claimed that she
penalties commensurate with the degree of infraction. Considering that there was no indication that Sanchezs actions
was unassisted by counsel when she executed the same and, thus, was inadmissible for being
were perpetrated for self-interest or for an unlawful objective, the penalty of dismissal imposed on her was grossly
unconstitutional.26cralawred
oppressive and disproportionate to her offense.52cralawred
For its part,27 SLMC contended that Sanchez was validly dismissed for just cause as she had committed theft in violation
Dissatisfied, SLMC sought for reconsideration,53 but was denied in a Resolution54 dated April 4, 2014, hence, this
of Section 1,28 Rule I of the SLMC Code of Discipline,29 which punishes acts of dishonesty, i.e., robbery, theft, pilferage, and
petition.chanroblesvirtuallawlibrary
misappropriation of funds, with termination from service.chanroblesvirtuallawlibrary
The Issue Before the Court
The LA Ruling
The core issue to be resolved is whether or not Sanchez was illegally dismissed by SLMC.chanroblesvirtuallawlibrary
The Courts Ruling
In a Decision30 dated May 27, 2012, the Labor Arbiter (LA) ruled that Sanchez was validly dismissed31 for intentionally
The petition is meritorious.
taking the property of SLMCs clients for her own personal benefit, 32 which constitutes an act of dishonesty as provided
under SLMCs Code of Discipline.
The right of an employer to regulate all aspects of employment, aptly called management prerogative, gives employers
the freedom to regulate, according to their discretion and best judgment, all aspects of employment, including work
According to the LA, Sanchezs act of theft was evinced by her attempt to bring the questioned items that did not belong
assignment, working methods, processes to be followed, working regulations, transfer of employees, work
to her out of SLMCs premises; this was found to be analogous to serious misconduct which is a just cause to dismiss
supervision, lay-off of workers and the discipline, dismissal and recall of workers. 55 In this light, courts often decline to
her.33 The fact that the items she took were neither SLMCs nor her co-employees property was not found by the LA to be
interfere in legitimate business decisions of employers. In fact, labor laws discourage interference in employers
material since the SLMC Code of Discipline clearly provides that acts of dishonesty committed to SLMC, its doctors, its
judgment concerning the conduct of their business.56cralawred
employees, as well as its customers, are punishable by a penalty of termination from service. 34 To this, the LA opined that
[i]t is rather illogical to distinguish the persons with whom the [said] acts may be committed as SLMC is also answerable
Among the employers management prerogatives is the right to prescribe reasonable rules and regulations necessary or
to the properties of its patients.35 Moreover, the LA observed that Sanchez was aware of SLMCs strict policy regarding
proper for the conduct of its business or concern, to provide certain disciplinary measures to implement said rules and to
63
assure that the same would be complied with. At the same time, the employee has the corollary duty to obey all
reasonable rules, orders, and instructions of the employer; and willful or intentional disobedience thereto, as a general
rule, justifies termination of the contract of service and the dismissal of the employee. 57 Article 296 (formerly Article
282) of the Labor Code provides:58cralawred
Article 296. Termination by Employer. - An employer may terminate an employment for any of the following
causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
his representative in connection with his work;ChanRoblesVirtualawlibrary
x x x xcralawlawlibrary
Note that for an employee to be validly dismissed on this ground, the employers orders, regulations, or instructions must
be: (1) reasonable and lawful, (2) sufficiently known to the employee, and (3) in connection with the duties which
the employee has been engaged to discharge.59cralawred
Tested against the foregoing, the Court finds that Sanchez was validly dismissed by SLMC for her willful disregard and
disobedience of Section 1, Rule I of the SLMC Code of Discipline, which reasonably punishes acts of dishonesty, i.e., theft,
pilferage of hospital or co-employee property, x x x or its attempt in any form or manner from the hospital, co-employees,
doctors, visitors, [and] customers (external and internal) with termination from employment. 60 Such act is obviously
connected with Sanchezs work, who, as a staff nurse, is tasked with the proper stewardship of medical supplies.
Significantly, records show that Sanchez made a categorical admission61 in her handwritten letter62 i.e., [k]ahit alam
kong bawal ay nagawa kong [makapag-uwi] ng gamit63 that despite her knowledge of its express prohibition under the
SLMC Code of Discipline, she still knowingly brought out the subject medical items with her. It is apt to clarify that SLMC
cannot be faulted in construing the taking of the questioned items as an act of dishonesty (particularly, as theft, pilferage,
or its attempt in any form or manner) considering that the intent to gain may be reasonably presumed from the furtive
taking of useful property appertaining to another.64 Note that Section 1, Rule 1 of the SLMC Code of Discipline is further
supplemented by the company policy requiring the turn-over of excess medical supplies/items for proper handling65 and
providing a restriction on taking and bringing such items out of the SLMC premises without the proper authorization or
pass from the official concerned,66 which Sanchez was equally aware thereof.67 Nevertheless, Sanchez failed to turn-
over the questioned items and, instead, hoarded them, as purportedly practiced by the other staff members in the
Pediatric Unit. As it is clear that the company policies subject of this case are reasonable and lawful, sufficiently known to
the employee, and evidently connected with the latters work, the Court concludes that SLMC dismissed Sanchez for a just
cause.
On a related point, the Court observes that there lies no competent basis to support the common observation of the NLRC
and the CA that the retention of excess medical supplies was a tolerated practice among the nurses at the Pediatric Unit.
While there were previous incidents of hoarding, it appears that such acts were in similar fashion furtively made
and the items secretly kept, as any excess items found in the concerned nurses possession would have to be
confiscated.68 Hence, the fact that no one was caught and/or sanctioned for transgressing the prohibition therefor does
not mean that the so-called hoarding practice was tolerated by SLMC. Besides, whatever maybe the justification behind
the violation of the company rules regarding excess medical supplies is immaterial since it has been established that an
infraction was deliberately committed.69 Doubtless, the deliberate disregard or disobedience of rules by the employee
cannot be countenanced as it may encourage him or her to do even worse and will render a mockery of the rules of
discipline that employees are required to observe.70cralawred
Finally, the Court finds it inconsequential that SLMC has not suffered any actual damage. While damage aggravates the
charge, its absence does not mitigate nor negate the employees liability. 71 Neither is SLMCs non-filing of the appropriate
criminal charges relevant to this analysis. An employees guilt or innocence in a criminal case is not determinative of the
existence of a just or authorized cause for his or her dismissal. 72 It is well-settled that conviction in a criminal case is not
necessary to find just cause for termination of employment, 73 as in this case. Criminal and labor cases involving an
employee arising from the same infraction are separate and distinct proceedings which should not arrest any judgment
from one to the other.
As it stands, the Court thus holds that the dismissal of Sanchez was for a just cause, supported by substantial evidence,
and is therefore in order. By declaring otherwise, bereft of any substantial bases, the NLRC issued a patently and grossly
erroneous ruling tantamount to grave abuse of discretion, which, in turn, means that the CA erred when it affirmed the
same. In consequence, the grant of the present petition is warranted.
64
WHEREFORE, the petition is GRANTED. The Decision dated November 21, 2013 and the Resolution dated April 4, 2014
of the Court of Appeals in CA-G.R. SP No. 129108 are REVERSED and SET ASIDE. The Labor Arbiters Decision dated May
27, 2012 in NLRC Case No. NCR 07-11042-11 finding respondent Maria Theresa V. Sanchez to have been validly
dismissed by petitioner St. Lukes Medical Center, Inc. is hereby REINSTATED.
SO ORDERED.cralawlawlibrary
u. Copy Central Digital Copy Solution vs. Dominique, G.R. No. 193219. July 27, 2015
THIRD DIVISION
G.R. No. 193219 July 17, 2015
COPY CENTRAL DIGITAL COPY SOLUTION and/or VIRGILIO MONTANO, Petitioners,
vs.
MARILYN DOMRIQUE and CARINA LEAO, Respondents.
DECISION
PERALTA, J.:
Assailed in the present petition for review on certiorari under Rule 45 of the Rules of Court are the Decision1 of the Court
of Appeals (CA), dated February 16, 2010 and its Resolution2 dated July 20, 2010 in CA-G.R. SP No. 110614.
The pertinent facts of the case, as summarized by the CA, are as follows:
[Respondents] Marilyn Domrique and Carina Leao started working for [petitioners] as [photocopy] machine operators
on February 21, 1993 and January 1996, respectively. They were assigned at [petitioners'] branch located at Brgy. 10,
A.G. Tupaz Ave., Laoag City. [Respondent] Domrique received a salary of P145.00 per day or P200.00 per day [which
includes an allowance of P55.00], while [respondent] Leao received [a salary of] P120.00 per day. They also earn 7% of
the total earnings of the branch per month and were provided with free board by [petitioners]. [Respondent Domrique]
was assigned to handle one (1) liquid and one (1) powder photocopying machine. She was also tasked as the custodian of
photocopying materials such as bond papers and toners. [Respondent] Leao, on the other hand, handled one (1) liquid
photo copier and was assigned to keep the money collected from the customers for the period covering October 1 -31,
2005.
On October 12, 2005, [respondent] Leao, together with another employee, Grace Lorenzo, sent a formal letter to the
Regional Director of the Department of Labor and Employment (DOLE), San Fernando City, La Union complaining about
the alleged labor standards violations committed by [petitioners]. Consequently, on October 18, 2005, the Labor
Inspector of the DOLE conducted an inspection of the company premises and based on his inspection report, there were
certain labor standards violations committed by [petitioners, among which are underpayment of wages, 13th month pay,
overtime pay, holiday pay and service incentive leaves].
On November 2, 2005, Susana Montano, the manager of the establishment and the wife of [herein petitioner] Virgilio
Montano, ordered an audit of their branch in Laoag City. As the manager of [petitioner] Copy Central, she makes
routinary check up and inspections of its branches to check the meter readings attached to the phototopying machines.
Such meter readings indicate the number of documents being copied at the rate of P1.00 per powder-type copy and P.50
per liquid-type copy. It was claimed that after the said audit of the meter readings done by a certain Cliezelle Jane "Kleng"
Jacinto, it was discovered that there were discrepancies in the reading reports that were submitted by [respondents]
Domrique and Leao. Susana Montano then concluded that the [respondents] conspired with each other to cheat on the
meter readings in order to pocket the difference [between] their ending report and the actual meter reading. Based on
the report of Jacinto and another technician by the name of Albert Alviz, from October 1-30, 2005, [respondent]
Domrique allegedly pocketed P31,472.50, while [respondent] Leao pocketed P3,501.00. On November 3, 2005, Susana
Montano proceeded to the police station to have the incident recorded in the police blotter. Also, on the same day,
[respondents] were each required to execute a document in the Iloco dialect entitled "Naiget Nga Kari", which literally
means Solemn Promise.
On November 4, 2005, Susana Montano issued a termination letter to [respondent] Domrique. The letter states that the
company had lost its trust and confidence on [respondent] Domrique who was found to have defrauded the company by
making a false meter reading report thereby incurring deficit in the amount of P15,059,.00. She was also accused of
having misappropriated 195 reams of bond paper. Susana Montano likewise issued on November 4, 2005, a termination
letter to [respondent] Leao informing the latter of her dismissal from employment on the ground that she also
defrauded the company by making a false meter reading report thereby incurring deficit amounting to P3,501,00.
On November 9, 2005, [respondents] Domrique and Leao filed separate complaints for illegal dismissal and money
claims against [petitioners] before the Arbitration Branch of the NLRC, claiming to have been dismissed from
employment, without just cause and without affording them due process.
On February 12, 2008, the NLRC promulgated its Decision5 denying petitioners' appeal and affirming the assailed
Decision of the LA.
The NLRC held that: there is nothing in the document entitled as "Naiget Nga Kari" to show that respondents
misappropriated any amount due to petitioners; the mere fact that a criminal information for theft was filed against
respondents does not justify their dismissal from employment; respondents were dismissed before they were afforded
their right to explain their side.

[Respondents] essentially denied having misappropriated sums of money belonging to the company. They claimed that Petitioners moved for the reconsideration of the NLRC Decision.
there was an allowed arrangement in their company that they could render photocopying services to deserving school
employees wherein the payments are collected only on a weekly or monthly basis. When Susana Montano conducted an
On May 29, 2009, the NLRC rendered a new Decision6 granting petitioners' motion for reconsideration. The NLRC
audit of their branch on November 2, 2005, it was a declared non-working holiday. As such, [respondents] still have
reversed and set aside its earlier Decision dated February 12, 2008 and dismissed the complaint against herein
receivables from their customers and they could not yet remit the said amounts for the same reason that it was a non-
petitioners. This time, the NLRC ruled that the document entitled "Naiget Nga Kari," which was executed by respondents,
working holiday. Also, the meter readings which they submitted on October 31, 2005 necessarily resulted in
and their subsequent acts of paying petitioners are construed as admission on their part that they have committed the
discrepancies on the meter readings taken at the end of the day on November 2, 2005 because they still performed
alleged illegal acts which they were accused of having perpetrated and this is sufficient basis to dismiss respondents from
photocopying jobs in the afternoon of October 31, 2005 and on November 1-2, 2005. At any rate, they agreed to sign a
their employment for loss of trust and confidence.
document entitled "Naiget Nga Kari" wherein they promised to remit the amount of their receivables in order to put an
end to the controversy. Pursuant to such promise, [respondents] Domrique and Leao delivered to [petitioners] on
November 8, 2005, the amounts of P17,000.00 and Pl,600.00, respectively, which they collected from their customers. Respondents filed a motion for reconsideration, but the NLRC denied it in its Resolution7 dated August 14, 2009.
Despite compliance with their promise, [petitioners] failed to reinstate [respondents] to their positions. They were also
dismissed without having been given the chance to explain their side of the controversy.
Respondents then filed a petition for certiorari with the CA.

In their traverse, [petitioners] contended that [respondents] were dismissed from employment for loss of trust and
On February 16, 2010, the CA promulgated its assailed Decision, the dispositive portion of which reads as follows:
confidence after it was discovered that they defrauded the company by making false meter reading report with the
intention of pocketing the payments made by their clients. [Respondent] Domrique was also found to have
misappropriated several reams of bond paper. The matter was duly reported to the Laoag City Police Station and a WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated May 29, 2009 and Resolution dated August
complaint for qualified theft was filed against [respondents] which is now pending before the Regional Trial Court, 14, 2009 of public respondent National Labor Relations Commission are hereby SET ASIDE. Accordingly, the Decision
Branch 16, Laoag City. [Respondents] only made partial payments on November 8, 2005 but their balance remained dated February 28, 2006 of the Labor Arbiter is REINSTATED.
unpaid. It was only after a thorough investigation and notices to [respondents] informing them of their infractions that
[petitioners] decided to dismiss them from their employment. [Petitioners] also pointed out that [respondent] Domrique
SO ORDERED.8
had already defrauded the company in the year 2001 but out of compassion, [petitioners] allowed her to continue with
her employment.3
The CA held that there is insufficient evidence to prove the validity of respondents' dismissal from employment, both on
the substantive and procedural aspects of the case.
On February 28, 2006, the Labor Arbiter (LA) assigned to the case rendered a Decision in favor of respondents. The
dispositive portion of the said Decision reads, thus:
Petitioners filed a Motion for Reconsideration, but the CA denied it in its Resolution dated July 20, 2010.
IN VIEW THEREOF, judgment is hereby rendered declaring that the complainants were illegally dismissed. Consequently,
respondent VIRGILIO MONTANO and COPY CENTRAL DIGITAL COPY SOLUTION [are] hereby directed to pay in solidum Hence, the instant petition based on the following assignment of errors:
the complainants Domrique and Leao the total amount of TWO HUNDRED FORTYTHREE THOUSAND SIX HUNDRED &
76/100 (P243,600.76), representing the underpayment of their wages, backwages and separation pay, plus 10% of the
1. THE COURT FACTS, LAW CONCLUDING OF APPEALS ERRED AND MISAPPRECIATED AND ESTABLISHED
award as attorney's fees.
JURISPRUDENCE IN THAT RESPONDENTS WERE ILLEGALLY DISMISSED FROM THEIR EMPLOYMENT AS
THERE WAS NO JUST CAUSE AS PROVIDED FOR BY THE LABOR LAW WHICH WOULD WARRANT THEIR
SO ORDERED.4 DISMISSAL.

The LA ruled that: petitioners failed to afford respondents due process because the latter were not given notice of the
charges against them as well as the opportunity to explain their side before they were dismissed from their employment;
the statements of petitioners' alleged witnesses who reported that respondents were involved in illegal activities are
mere hearsay because they did not execute sworn statements to confirm their allegations; even respondents' written
acknowledgment of their indebtedness and their separate undertakings to return the amounts due to petitioners is not
substantial evidence to justify their dismissal from employment.
Herein petitioners appealed the Decision of the LA before the NLRC.
65
2. THE COURT OF APPEALS ERRED AND MISAPPRECIATED FACTS, LAW AND ESTABLISHED JURISPRUDENCE
IN REINSTATING THE DECISION OF THE LABOR ARBITER DATED FEBRUARY 28, 2006 DESPITE THE
PRESENCE OF JUST CAUSE WHICH WOULD WARRANT THE DISMISSAL OF HEREIN RESPONDENTS, THUS,
NOT ENTITLED FOR WAGE DIFFERENTIALS, BACKWAGES, SEPARATION PAY AND ATTORNEY'S FEES.9
Petitioners' basic contention is that respondents are guilty of theft in misappropriating the income from the
photocopying machines under their care and custody and that these acts of misappropriation constitute serious
misconduct and fraud or willful breach of the trust reposed in them by petitioners which are just causes for termination
of employment under Article 282 of the Labor Code.
Petitioners likewise argue that they informed respondents of the nature and cause of their dismissal and have afforded
them the opportunity to answer the charges hurled against them. The petition lacks merits.
The Court finds no cogent reason to depart from the findings of the CA that petitioners failed to present substantial
evidence to prove their allegation that respondents are guilty of theft.
Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides: Section 2. Standard of due
process: requirements of notice. - In all cases of termination of employment, the following standards of due process shall
be substantially observed.
I. For termination of employment based on just causes as defined in Article 282 of the Labor Code:

To support their contention, petitioners rely primarily on the documents both entitled "Naiget nga Kari"10 which were (a) A written notice served on the employee specifying the ground or grounds for termination, and giving to
executed by respondents. Petitioners argue that, through the said documents, respondents have admitted guilt of their said employee reasonable opportunity within which to explain his side;
supposed infraction.
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the
The Court is not convinced. employee so desires, is given opportunity to respond to the charge, present his evidence, or rebut the evidence
presented against him; and
A meticulous examination of the above documents would show that nothing therein would prove that respondents
admitted having committed theft against petitioners and that, as a consequence of such theft, they have made partial (c) A written notice [of] termination served on the employee indicating that upon due consideration of all the
restitution of the amount they allegedly embezzled. On the contrary, respondents simply promised to return the amounts circumstances, grounds have been established to justify his termination.
stated in the document which they have acknowledged as having been entrusted to them by petitioners, without
admitting that they took the same. There was neither any admission by respondents of any wrongdoing which they have
Jurisprudence has expounded on the guarantee of due process, requiring the employer to furnish the employee with two
allegedly committed in 2001.
written notices before termination of employment can be effected: a first written notice that informs the employee of the
particular acts or omissions for which his or her dismissal is sought, and a second written notice which informs the
Neither were the subsequent payments made by respondents sufficient evidence to prove that they are guilty of theft. As employee of the employer's decision to dismiss him.17 In considering whether the charge in the first notice is sufficient
correctly pointed out by the CA, the acknowledgment receipts executed by the representative of petitioners merely to warrant dismissal under the second notice, the employer must afford the employee ample opportunity to be heard.18
stated that the amounts separately paid by respondents represent receivables and collectibles for photocopying
services.11 This is consistent with respondents' claims that, at the time that they were made to account for the income of
In the present case, how could petitioners' claim that they afforded respondents their right to procedural due process
the photocopying machines which they were operating, there were still outstanding accounts from their customers which
when records show that petitioners' letters, dated November 4, 2005, which apprised respondents of the charges against
were yet to be collected. The acknowledgment receipts neither show that the payments made by respondents were
them, were the same letters which informed them of their dismissal from employment.19 Moreover, petitioners allege
intended as restitution for the company funds which they allegedly misappropriated.
that, in the same letters, they gave respondents the opportunity to explain their side. However, a careful reading of these
letters would show that there is no statement therein which gives respondents the chance to refute petitioners'
Moreover, the fact that the Assitant City Prosecutor of Laoag found probable cause to indict respondents for the crime of allegations.20 On the contrary, the letter merely stated the conclusions already drawn by petitioners after their alleged
qualified theft does not necessarily mean that there exists a valid ground for their termination from employment. investigation of the supposed infractions committed by respondents. Neither was there any other evidence to prove that
respondents were, in fact, given the opportunity to be heard.
Citing the case of Nicolas v. National Labor Relations Commission,12 this Court held in Lynvil Fishing Enterprises, Inc. v.
Arriola, et al.,13 that a criminal conviction is not necessary to find just cause for employment termination. Otherwise WHEREFORE, The Decision of the Court of Appeals, dated February 16, 2010 and its Resolution dated July 20, 2010 in
stated, an employee's acquittal in a criminal case, especially one that is grounded on the existence of reasonable doubt, CA-G.R. SP No. 110614, are AFFIRMED.
will not preclude a determination in a labor case that he is guilty of acts inimical to the employer's interests.14 In the
reverse, the finding of probable cause is not followed by automatic adoption of such finding by the labor tribunals.15 In
other words, whichever way the public prosecutor disposes of a complaint, the finding does not bind the labor
tribunal.16

In the instant case, petitioners cannot argue that, since the Assistant City Prosecutor found probable cause for qualified
theft and subsequently filed criminal information against respondents, the LA must follow the finding as a valid reason
for their termination from employment. The proof required for purposes that differ from one and the other are likewise
different.

Hence, aside from the allegation of theft which was not substantiated, absent any other ground for petitioners to lose
trust and confidence in respondents, the Court agrees with the LA and the CA that respondents' termination from
employment is illegal.

As to the procedural aspect of the case, the Court likewise agrees with the findings of both the LA and the CA that
petitioners failed to observe the proper procedure in terminating respondents' services.1wphi1

66