1. Innodata Knowledge Services, Inc. (IKSI) v. Inting (G.R. No.

211892,
December 6, 2017)
2. Dizon v. CCBPI, G.R. No. 174365-66, February 4, 2015
3. Oyster Plaza Hotel v. Melivo, (G.R. No. 217455, October 5, 2016)
4. Duncan v. Glaxo, G.R. No. 162994, September 17, 2004
5. Star Paper Corporation v. Simbol, G.R. No. 164774, April 12, 2006
6. Alegria v. Duque, A.M. No. RTJ-06-2019, April 4, 2007
7. Domingo v. Rayala, G.R. No. 155831, February 18, 2008
8. Evelyn Chua-Qua v. Clave, G.R. No. 49549, August 30, 1990
9. Cheryll Santos Leus v. St. Scholastica’s College Westgrove, G.R. No.
187226, January 28, 2015
10. Yrasuegui v. Philippine Airlines, Inc., G.R. No. 168081, October 17, 2008
11. Imasen v. Alcon G.R. No. 194884, October 22, 2014
12. ICT v. Sales, G.R. No. 202090, September 9, 2015
13. Hechanova v. Matorre, G.R. No. 198261, October 16, 2013
14. SPI Technologies v. Mapua, G.R. No. 191154, April 7, 2014
15. Mangagawa v. PLDT, G.R. No. 190389, April 19, 2017

1
 16.
December 6, 2017
G.R. No. 211892
INNODATA KNOWLEDGE SERVICES, INC., Petitioner
vs.
SOCORRO D'MARIE T. INTING, ISMAEL R. GARAYGAY,
EDSON S. SOLIS, MICHAEL A. REBATO, JAMES HORACE
BALONDA, STEPHEN C. OLINGAY, DENNIS C. RIZON,
JUNETH A. RENTUMA, HERNAN ED NOEL I. DE LEON, JR.,
JESS VINCENT A. DELA PENA, RONAN V. ALAMILLO,
ENNOH CHENTIS R. FERNANDEZ, FRITZ J. SEMBRINO,
DAX MATTHEW M. QUIJANO, RODOLFO M. VASQUEZ,
MA. NAZELLE B. MIRALLES, MICHAEL RAY B. MOLDE,
WENDELL B. QUIBAN, ALDRIN O. TORRENTIRA, and
CARL HERMES CARSKIT, Respondents
DECISION
PERALTA, J.:
This is a petition for review seeking the reversal of the
Decision1 of the Court of Appeals (CA), Cebu, Twentieth (20th)
Division, dated August 30, 2013 and its Resolution2 dated
March 12, 2014 in CA-G.R. CEB-SP No. 06443 which reversed
and set aside Decision3 of the National Labor Relations
Commission (NLRC) on May 31, 2011.
The factual and procedural antecedents, as evidenced by the
records of the case, are the following:
2
Petitioner Innodata Knowledge Services, Inc. (IKSI) is a
company engaged in data processing, encoding, indexing,
abstracting, typesetting, imaging, and other processes in the
capture, conversion, and storage of data and information. At
one time, Applied Computer Technologies (ACT), a company
based in the United States of America, hired IKSI to review
various litigation documents. Due to the nature of the job, ACT
required IKSI to hire lawyers, or at least, law graduates, to
review various litigation documents, classify said documents
into the prescribed categories, and ensure that outputs are
delivered on time. For this purpose, IKSI engaged the services
of respondents Socorro D’Marie Inting, Ismael R. Garaygay,
Edson S. Solis, Michael A. Rebato, James Horace Balonda,
Stephen C. Olingay, Dennis C. Rizon, Juneth A. Rentuma,
Hernan Ed Noel I. de Leon, Jr., Jess Vincent A. dela Pefia,
Ronan V. Alamillo, Ennoh Chentis R. Fernandez, Wendell B.
Quiban, Aldrin 0. Torrentira, Michael Ray B. Molde, Fritz J.
Sembrino, Dax Matthew M. Quijano, Rodolfo M. Vasquez, Ma.
Nazelle B. Miralles and Carl Hennes Carskit as senior and
junior reviewers with a contract duration of five (5) years.
On January 7, 2010, however, respondents received a Notice
of Forced Leave from IKSI informing them that they shall be
placed on indefinite forced leave effective that same day due
to changes in business conditions, client requirements, and
specifications. Hence, respondents filed a complaint for illegal
dismissal, reinstatement or payment of separation pay,
backwages, and damages against IKSI.
Subsequently, IKSI sent respondents separate notices dated
May 27, 2010 informing them that due to the unavailability of
new work related to the product stream and uncertainties
pertaining to the arrival of new workloads, their project
employment contracts would have to be terminated.
On November 10, 2010, the Labor Arbiter (LA), in the
consolidated cases of NLRC RAB VII Case No. 01-0159-10,
NLRC RAB VII Case No. O 1-0182-10, and NLRC RAB VII Case
No. 02-0301-10, declared that there was no illegal dismissal,
thus:
WHEREFORE, in view of the foregoing, a decision is hereby
rendered declaring that complainants were not constructively
dismissed but were placed on forced leave as a cost-saving
measure. Consequently, herein respondents are directed to
recall complainants back to work as soon as work becomes
available. Complainants are likewise directed to report back to
work within ten (10) days from receipt of the order of
respondents to report back to work, otherwise, their failure to
do so would be construed as an abandonment. In the event
that reinstatement is no longer feasible, in lieu thereof,
separation pay is granted equivalent to one (1) month salary
for every year of service, a fraction of six (6) months is
considered as one (1) whole year, sans backwages.
The claim for moral and exemplary damages as well as
attorney’s fees are DISMISSED for lack of merit.
SO ORDERED.4
WHEREFORE, the Decision of the Labor Arbiter is hereby
AFFIRMED WITH MODIFICATION, in that in lieu of
reinstatement, to pay the twelve (12) complainants-appellants
namely: Michael A. Rebato, Hernan Ed Noel L. de Leon, Jr.,
3
Wendell B. Quiban, Fritz Sembrino, Ismael R. Garaygay III,
Edson S. Solis, Stephen Olingay, Ronan Alamillo, Jess Vincent
A. dela Pena, Dax Matthew M. Quijano, Juneth A. Rentuma
and Socorro D'Marie T. Inting, the total amount of
Php563,500.00.
SO ORDERED.5
Undaunted, the employees elevated the matter to the CA
Cebu, alleging grave abuse of discretion on the NLRC’s part.
On August 30, 2013, the CA granted their petition and
reversed the assailed NLRC ruling, thus:
WHEREFORE, premises considered, this petition
is GRANTED. The assailed Decision dated May 31, 2011
and Resolution dated August 26, 2011 of public respondent in
NLRC Case No. VAC-01-000042-2011 are REVERSED and
SET ASIDE. Petitioners Socorro D'Marie Inting, Ismael R.
Garaygay, Edson S. Solis, Michael A. Rebato, James Horace
Balonda, Stephen C. Olingay, Dennis C. Rizon, Juneth A.
Rentuma, Hernan Ed Noel I. de Leon, Jr., Jess Vincent A. dela
Pena, Ronan V. Alamillo, Ennoh Chentis R. Fernandez, Wendell
B. Quiban, Aldrin 0. Torrentira, Michael Ray B. Molde, Fritz J.
Sembrino, Dax Matthew M. Quijano, Rodolfo M. Vasquez, Ma.
Nazelle B. Miralles and Carl Hermes Carskit are declared to
have been illegally dismissed by Innodata and hence, each of
them is entitled to the payment of the following:
(a) Backwages reckoned from the start of their
employment up to the finality of this Decision with
interest as six percent (6%) per annum, and 12% legal
interest thereafter until fully paid;
 (b) Separation pay equivalent to one (1) month salary
for every year of service, with a fraction of at least six
(6) months to be considered as one (1) whole year, to be
computed from the date of their employment up to the
finality of this decision;
(c) Moral damages of Php50,000 and exemplary
damages of Php25,000; and
(d) Attorney's fees equivalent to 10 percent (10%) of the
total award.
The case is hereby ordered REMANDED to the labor arbiter
for the computation of the amounts due each petitioner.
Costs on private respondent Innodata.
SO ORDERED.6
IKSI then filed a Motion for Reconsideration, but the same was
denied in a Resolution dated March 12, 2014. Hence, the
instant petition.
The main issue in this case is whether or not the CA
committed an error when it reversed the NLRC, which declared
that respondent employees, as mere project employees, were
validly placed on floating status and, therefore, were not
illegally dismissed.
The Court rules in the negative.
Substantive Issues
4
Nature of respondents’ employment contracts
It is true that factual findings of administrative or quasi-
judicial bodies which are deemed to have acquired expertise in
matters within their respective jurisdictions are generally
accorded, not only respect, but even finality, and bind the
Court when supp011ed by substantial evidence. However, the
Court may take cognizance of factual issues when the findings
of fact and conclusions of law of the LA and/or the NLRC are
inconsistent with those of the CA,7 as in the case at bar.
Here, the NLRC ruled that respondents were project
employees. It ratiocinated that their contracts specifically
indicated that they were to hold their positions for the duration
of the project which was expected to be completed after a
maximum of five (5) years, or on or before July 2, 2013. 8 But
the CA found that respondents' employment contracts are
fixed-term, which are contrary to the Constitution and labor
laws. It then cited several cases9 that supposedly involved
IKSI itself and would reveal that its fixed-term employment
contracts have been consistently held as a form of
circumvention to prevent employees from acquiring tenurial
rights and benefits.
The employment status of a person is defined and prescribed
by law and not by what the parties say it should be. Equally
important to consider is that a contract of employment is
impressed with public interest such that labor contracts must
yield to the common good. Thus, provisions of applicable
statutes are deemed written into the contract, and the parties
are never at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by
simply entering into contracts with each other.10
Article 29511 of the Labor Code provides the distinction
between a regular and a project employment:
Art. 295. 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 service 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.
The aforecited provision contemplates four (4) kinds of
employees: (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
5
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; (3) seasonal employees or
those who work or perform services which are seasonal in
nature, and the employment is for the duration of the season;
and (4) casual employees or those who are not regular,
project, or seasonal employees. Jurisprudence later added a
fifth (5th) kind, the fixed-term employee. Based on Article 295,
the law determines the nature of the employment, regardless
of any agreement expressing otherwise. The supremacy of the
law over the nomenclature of the contract and its pacts and
conditions is to bring life to the policy enshrined in the
Constitution to afford full protection to labor. Thus, labor
contracts are placed on a higher plane than ordinary contracts
since these are imbued with public interest and, therefore,
subject to the police power of the State.12
Project employment contracts, which fix the employment for a
specific project or undertaking, are valid under the law. By
entering into such a contract, an employee is deemed to
understand that his employment is coterminous with the
project. He may no longer be employed after the completion of
the project for which he was hired. But project employment
contracts are not lopsided agreements in favor of only one
party. The employer's interest is equally important as that of
the employees'. While it may be true that it is the employer
who drafts project employment contracts with its business
interest as overriding consideration, such contracts must not
prejudice the employee.13
As stated in IKSI’s petition itself, the following are the basic
provisions of the employment contracts which respondents
signed with the company:
(a) the contracts are entitled "Project-Based Employment
Contracts";
(b) the first Whereas clause states "the Company [IKSI]
desires the services of a Project Employee for the Content
Supply Chain Project";
(c) Clause 1 on Term of Employment provides:
The Employee shall hold the position of [Junior/Senior]
Reviewer and shall perform the duties and
responsibilities of such for the duration of the
Project, which is expected to be completed after a
maximum of five (5) years, or on or
before___________, (the "Term").
. . . Further, the Employee is granted one Saturday-off per
month on a scheduled basis for the duration of this PROJECT-
BASED EMPLOYMENT CONTRACT ...
(d) The second paragraph of Clause 2 on Work
Description provides:
The Employee shall render work in accordance with the
schedule and/or program to which he/she may be assigned or
reassigned from time to time, in accordance with the
operational requirements for the completion of the
Project. In addition, the Employee shall perform such
other duties, functions, and services related or
6
incidental to the Project which, for purposes of expediency,
convenience, economy, customer interest, may be assigned by
the Company.
(e) Clause 5 on Termination of Employment provides:
At any time during the Term of this Contract, or any extension
thereof, the Company may terminate this Contract, upon thirty
(30) days' prior notice to the Employee...in the following
instances:
a. the services contracted for by the Company
under the Project is completed prior to the agreed
upon completion date; or
b. the specific phase of the Project requiring the
Employee’s services is sooner completed; or
c. substantial decrease in the volume of work for
the Project; or
d. the contract for the Project is cancelled,
indefinitely suspended or terminated;
(e) the first paragraph of Clause 6 on Compensation and
Benefits provides:
The Employee shall receive a gross salary of ... In addition to
his/her basic pay, Management may grant an additional
incentive pay should the Employee exceed the Project
quota.14
IKSI argued that based on the contract, it is undeniable that
respondents’ employment was fixed for a specific project or
undertaking, with its completion or termination clearly
determined at the time of the employee’s engagement.
Indeed, records would disclose that respondents signed
employment contracts specifically indicating the Content
Supply Chain Project,15 also known as the ACT Project, as the
project for which they were being hired, which was expected
to be completed after a maximum of five (5) years. However,
sometime in November 2008, IKSI required respondents to
work on another project called "Bloomberg," which was not
included in the original contracts that they signed and without
entering into a new project employment contracts. Such fact
was never refuted by IKSI. During that time, respondents
were required to read and review decided cases in the United
States of America and they were no longer called Senior or
Junior Reviewers, but referred to as Case Classifiers.
Respondents initially opposed working on said project but
eventually agreed, in fear of losing their employment
altogether. Months later, they were again required to work on
the ACT Project and reverted to their previous designation as
Document Reviewers.16
In the case of ALU-TUCP v. NLRC, 17the Court made a
pronouncement on the two (2) categories of project
employees. The project for which project employees are hired
would ordinarily have some relationship to the usual business
of the employer. There should be no difficulty in distinguishing
the employees for a certain project from ordinary or regular
employees, as long as the duration and scope of the project
were determined or specified at the time of engagement of
said project employees.18
7
In order to safeguard the rights of workers against the
arbitrary use of the word "project" which prevents them from
attaining regular status, employers claiming that their workers
are project employees have the burden of showing that: (a)
the duration and scope of the employment was specified at the
time they were engaged; and (b) there was indeed a
project.19 Therefore, as evident in Article 295, the litmus test
for determining whether particular employees are properly
characterized as project 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 the
employees were engaged for that project.20
Here, while IKSI was able to show the presence of a specific
project, the ACT Project, in the contract and the alleged
duration of the same, it failed to prove, however, that
respondents were in reality made to work only for that specific
project indicated in their employment documents and that it
adequately informed them of the duration and scope of said
project at the time their services were engaged. It is well
settled that a party alleging a critical fact must support his
allegation with substantial evidence, as allegation is not
evidence. The fact is IKSI actually hired respondents to work,
not only on the ACT Project, but on other similar projects such
as the Bloomberg. When respondents were required to work
on the Bloomberg project, without signing a new contract for
that purpose, it was already outside of the scope of the
particular undertaking for which they were hired; it was
beyond the scope of their employment contracts. The fact that
the same happened only once is inconsequential. What
matters is that IKSI required respondents to work on a project
which was separate and distinct from the one they had signed May 12,
up for. This act by IKSI indubitably brought respondents Wendell B. Quiban May 11, ‘13
’08
outside the realm of the project employees category.
May 12,
Fritz J. Sembrino May 11, ‘13
IKSI likewise fell short in proving that the duration of the ’08
project was reasonably determinable at the time respondents
were hired. As earlier mentioned, the employment contracts May 12,
Edson S. Solis May 11, ‘13
provided for "the duration of the Project, which is expected to ’08
be completed after a maximum of five (5) years, or on or May 12,
before______ ."The NLRC upheld the same, finding that the Rodolfo M. Vasquez, Jr. May 11, ‘13
’08
contracts clearly provided for the duration of the project which
was expected to end after a maximum of five (5) years, or on May 16,
Stephen C. Olingay May 15, ‘13
or before July 2, 2013. It is interesting to note, however, that ’08
the five (5)-year period is not actually the duration of the
project but merely that of the employment contract. Naturally, May 19,
Michael A. Rebato May 18, ‘13
therefore, not all of respondents' employment would end on ’08
July 2, 2013, as the completion of the five (5)-year period May 21,
would depend on when each employee was employed, thus:21 Ma. Nazelle B. Miralles May 20, ‘13
’08

Hiring Completion Dennis C. Rizon July 3, ’08 July 2, ‘13

Date Date July 10,
Ronan V. Alamillo July 9, ‘13
Nov. 1, ’08
Carl Hermes R. Carskit May 31,’12
’07 July 17,
Juneth A. Rentuma July16,’13
Ismael R. Garaygay III Mar. 5, ’08 Mar. 4, ‘13 ’08

Socorro D’ Marie T. Aug. 12,

Apr. 7, ’08 Apr. 6, ‘13 Jess Vincent A. Dela Peña Aug. 11, ‘13
Inting ’08

May 12, Nov. 17,

James Horace A. Balonda May 11, ‘13 Dax Matthew M. Quijano Nov. 16, ‘13
’08 ’08
Michael Ray B. Molde May 18, May 17, ‘14
8
 ’09 The Court has previously recognized the validity of fixed-term
employment contracts, but it has consistently held that this is
May 25, more of an exception rather than the general rule. Aware of
Aldrin O. Torrentira May24, ‘14
’09 the possibility of abuse in the utilization of fixed-term
employment contracts, the Court has declared that where
Ennoh Chentis R. May 28,
May 27, ‘14 from the circumstances it is apparent that the periods have
Fernandez ’09
been imposed to preclude acquisition of tenurial security by
Hernan Ed Noel L. De June 3, the employee, they should be struck down as contrary to
June 2, ‘14 public policy or morals.23
Leon, Jr. ’09

It is evident that IKSI’s contracts of employment are suspect

This is precisely the reason why IKSI originally left a blank for
for being highly ambiguous. In effect, it sought to alternatively
the termination date because it varied for each employee. If
avail of project employment and employment for a fixed term
respondents were truly project employees, as IKSI claims and
so as to preclude the regularization of respondents' status.
as found by the NLRC, then the termination date would have
The fact that respondents were lawyers or law graduates who
been uniform for all of them.
freely and with full knowledge entered into an agreement with
the company is inconsequential. The utter disregard of public
Thus, while the CA erred in simply relying on the Court's
policy by the subject contracts negates any argument that the
rulings on previous cases involving Innodata Phils., Inc. since
agreement is the law between the parties24 and that the fixed
there is no substantial proof that Innodata Phils., Inc. and
period was knowingly and voluntarily agreed upon by the
herein petitioner, IKSI, are one and the same entity, it would
parties. In the interpretation of contracts, obscure words and
appear, however, that respondents indeed entered into fixed-
provisions shall not favor the party that caused the obscurity.
term employment contracts with IKSI, contracts with a fixed
Consequently, the terms of the present contract should be
period of five (5) years. But project employment and fixed-
construed strictly against the employer, for being the party
term employment are not the same. While the former requires
who prepared it.25 Verily, the private agreement of the parties
a particular project, the duration of a fixed-term employment
can never prevail over Article 1700 of the Civil Code, which
agreed upon by the parties may be any day certain, which is
states:
understood to be "that which must necessarily come although
it may not be known when." The decisive determinant in fixed-
Art. 1700. The relation between capital and labor are not
term employment is not the activity that the employee is
merely contractual. They are so impressed with public interest
called upon to perform but the day certain agreed upon by the
that labor contracts must yield to the common good.
parties for the commencement and termination of the
Therefore, such contracts are subject to special laws on labor
employment relationship.22
9
unions, collective bargaining, strikes and lockouts, closed
shops, wages, working conditions, hours of labor and similar
subjects.
Thus, there were no valid fixed-term or project contracts and
respondents were IKSI’s regular employees who could not be
dismissed except for just or authorized causes. Any ambiguity
in said contracts must be resolved against the company,
especially because under Article 1702 of the Civil Code, in case
of doubt, all labor contracts shall be construed in favor of the
worker. The Court cannot simply allow IKSI to construe
otherwise what appears to be clear from the wordings of the
contract itself. The interpretation which IKSI seeks to conjure
is wholly unacceptable, as it would result in the violation of
respondents' right to security of tenure guaranteed in Section
3 of Article XIII of the Constitution and in Article 294 26 of the
Labor Code.27
Presence of Just or Authorized Causes
for Termination of Employment
Here, IKSI placed respondents on forced leave, temporary lay-
off, or floating status in January 2010 for the alleged decline in
the volume of work in the product stream where they were
assigned. When respondents filed a complaint for illegal
dismissal, the LA dismissed the same for having been filed
prematurely, since placing employees on forced leave or
floating status is a valid exercise of management prerogative
and IKSI never really had an intention to terminate their
employment. It relied on the memoranda28 which IKSI issued
to respondents, the tenor of which would show the intention to
recall the affected employees back to work once the
10
company's condition improves. The NLRC affirmed the LA’s
ruling and declared that the fact of dismissal, whether legal or
illegal, is absent in this case.
Among the authorized causes for termination under Article
29829 of the Labor Code is retrenchment, or what is sometimes
referred to as a layoff, thus:
Art. 298. Closure of Establishment and Reduction of Personnel.
The employer may also terminate the employment of any
employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or
to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (112)
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.
Retrenchment is the severance of employment, through no
fault of and without prejudice to the employee, which
management resorts to during the periods of business
recession, industrial depression, or seasonal fluctuations, or
during lulls caused by lack of orders, shortage of materials,
conversion of the plant to a new production program or the
introduction of new methods or more efficient machinery, or of
automation. In other words, lay-off is an act of the employer
of dismissing employees because of losses in the operation,
lack of work, and considerable reduction on the volume of its
business. However, a lay-off would amount to dismissal only if
it is permanent. When it is only temporary, the employment
status of the employee is not deemed terminated, but merely
suspended.30
Article 298, however, speaks of permanent retrenchment as
opposed to temporary lay-off, as in the present
case.1âwphi1There is no specific provision of law which treats
of a temporary retrenchment or lay-off and provides for the
requisites in effecting it or a specific period or
duration.31 Notably, in both permanent and temporary lay-offs,
the employer must act in good faith - that is, one which is
intended for the advancement of the employer's interest and
not for the purpose of defeating or circumventing the rights of
the employees under the law or under valid agreements. 32
Certainly, the employees cannot forever be temporarily laid-
off. Hence, in order to remedy this situation or fill the hiatus,
Article 30133 may be applied to set a specific period wherein
employees may remain temporarily laid-off or in floating
status.34 Article 301 states:
Art. 301. When Employment not Deemed Terminated.
The bona-fide suspension of the operation of a business or
11
undertaking for a period not exceeding six (6) months, or the
fulfillment by the employee of a military or civic duty shall not
terminate employment. In all such cases, the employer shall
reinstate the employee to his former position without loss of
seniority rights if he indicates his desire to resume his work
not later than one (1) month from the resumption of
operations of his employer or from his relief from the military
or civic duty.
The law set six (6) months as the period where the operation
of a business or undertaking may be suspended, thereby also
suspending the employment of the employees concerned. The
resulting temporary lay-off, wherein the employees likewise
cease to work, should also not last longer than six (6) months.
After the period of six (6) months, the employees should
either then be recalled to work or permanently retrenched
following the requirements of the law. Failure to comply with
this requirement would be tantamount to dismissing the
employees, making the employer responsible for such
dismissal.35 Elsewise stated, an employer may validly put its
employees on forced leave or floating status upon bona
fide suspension of the operation of its business for a period not
exceeding six (6) months. In such a case, there is no
termination of the employment of the employees, but only a
temporary displacement. When the suspension of the business
operations, however, exceeds six (6) months, then the
employment of the employees would be deemed
terminated,36 and the employer would be held liable for the
same.
Indeed, closure or suspension of operations for economic
reasons is recognized as a valid exercise of management
prerogative. But the burden of proving, with sufficient and
convincing evidence, that said closure or suspension is bona
fide falls upon the employer. In the instant case, IKSI claims
that its act of placing respondents on forced leave after a
decrease in work volume, subject to recall upon availability of
work, was a valid exercise of its right to lay-off, as an
essential component of its management prerogatives. The
Court agrees with the LA's pronouncement that requiring
employees on forced leave is one of the cost-saving measures
adopted by the management in order to prevent further
losses. However, IKSI failed to discharge the burden of proof
vested upon it. Having the right should not be confused with
the manner in which that right is exercised; the employer
cannot use it as a subterfuge to run afoul of the employees'
guaranteed right to security of tenure. The records are bereft
of any evidence of actual suspension of IKSI's business
operations or even of the ACT Project alone. In fact, while IKSI
cited Article 301 to support the temporary lay-off of its
employees, it never alleged that it had actually suspended the
subject undertaking to justify such lay-off. It merely indicated
changes in business conditions and client requirements and
specifications as its basis for the implemented forced
leave/lay-off.37
In light of the well-entrenched rule that the burden to prove
the validity and legality of the termination of employment falls
on the employer, IKSI should have established the bona
fide suspension of its business operations or undertaking that
could legitimately lead to the temporary layoff of its
employees for a period not exceeding six (6) months, in
accordance with Article 301.38 The LA severely erred when it
sustained respondents' temporary retrenchment simply
12
because the volume of their work would sometimes decline,
thus, several employees at the ACT Project stream
experienced unproductive time.39 Considering the grave
consequences occasioned by retrenchment, whether
permanent or temporary, on the livelihood of the employees to
be dismissed, and the avowed policy of the State to afford full
protection to labor and to assure the employee's right to enjoy
security of tenure, the Court stresses that not every loss
incurred or expected to be incurred by a company will justify
retrenchment. The losses must be substantial and the
retrenchment must be reasonably necessary to avert such
losses. The employer bears the burden of proving this
allegation of the existence or imminence of substantial losses,
which by its nature is an affirmative defense. It is the
employer’s duty to prove with clear and satisfactory evidence
that legitimate business reasons exist in actuality to justify
any retrenchment. Failure to do so would inevitably result in a
finding that the dismissal is unjustified. Otherwise, such
ground for termination would be susceptible to abuse by
scheming employers who might be merely feigning business
losses or reverses in their business ventures to dispose of their
employees.40
Here, IKSI never offered any evidence that would indicate the
presence of a bona fide suspension of its business operations
or undertaking. IKSI’s paramount consideration should be the
dire exigency of its business that compelled it to put some of
its employees temporarily out of work. This means that it
should be able to prove that it faced a clear and compelling
economic reason which reasonably constrained it to
temporarily shut down its business operations or that of the
ACT Project, incidentally resulting in the temporary lay-off of
its employees assigned to said particular undertaking. Due to
the grim economic repercussions to the employees, IKSI must
likewise bear the burden of proving that there were no other
available posts to which the employees temporarily put out of
work could be possibly assigned.41 Unfortunately, IKSI was not
able to fulfill any of the aforementioned duties. IKSI cannot
simply rely solely on the alleged decline in the volume of work
for the ACT Project to support the temporary retrenchment of
respondents. Businesses, by their very nature, exist and thrive
depending on the continued patronage of their clients. Thus,
to some degree, they are subject to the whims of clients who
may suddenly decide to discontinue patronizing their services
for a variety of reasons. Being inherent in any enterprise,
employers should not be allowed to take advantage of this
entrepreneurial risk and use it in a scheme to circumvent labor
laws. Otherwise, no worker could ever attain regular
employment status.42 In fact, IKSI still continued its operations
and retained several employees who were also working on the
ACT Project even after the implementation of the January
2010 forced leave. Much worse, it continued to hire new
employees, with the same qualifications as some of
respondents, through paid advertisements and placements
in Suns tar Cebu, 43 a local newspaper, dated February 24,
2010 and March 7, 2010. The placing of an employee on
floating status presupposes, among others, that there is less
work than there are employees. But if IKSI continued to hire
new employees then it can reasonably be assumed that there
was a surplus of work available for its existing employees.
Hence, placing respondents on floating status was
unnecessary. If any, respondents - with their experience,
knowledge, and familiarity with the workings of the company -
13
should be preferred to be given new projects and not new
hires who have little or no experience working for IKSI.44
There being no valid suspension of business operations, IKSI’s
act amounted to constructive dismissal of respondents since it
could not validly put the latter on forced leave or floating
status pursuant to Article 301. And even assuming, without
admitting, that there was indeed suspension of operations,
IKSI did not recall the employees back to work or place them
on valid permanent retrenchment after the period of six (6)
months, as required of them by law. IKSI could not even use
the completion of the duration of the alleged project as an
excuse for causing the termination of respondents’
employment. It must be pointed out that the termination was
made in 2010 and the expected completion of the project in
respondents' contracts was still in 2012 to 2014. Also, if the
Court would rely on IKSI’s own Notice of Partial Appeal and
Memorandum on Partial Appeal45 before the NLRC dated
December 10, 2010, respondents might even had been put on
floating status for a period exceeding the required maximum
of six (6) months. Evidence reveal that the assailed forced
leave took effect on January 7, 2010 and IKSI eventually sent
its termination letters four (4) months after, or on May 27,
2010, with the effectivity of said termination being on July 7,
2010. But as of December 10, 2010, IKSI was still insisting
that respondents were never dismissed and were merely
placed on forced leave. It was only in its Comment on
Complainants’ Motion for Reconsideration dated August 3,
2011 did IKSI admit the fact of dismissal when it appended its
own termination letters dated May 27, 2010.
But even on May 27, 2010, there was still no basis for IKSI to
finally make the retrenchment permanent. While it
acknowledged the fact that respondents could not be placed
on an indefinite floating status, it still failed to present any
proof of a bona fide closing or cessation of operations or
undertaking to warrant the termination of respondents'
employment. The termination letter46 reads:
As you are probably already been aware by now, our Product
Stream ACTDR of Project CSP, have been experiencing a
considerably downward trend in terms of workload. The
Company has undertaken every effort to obtain new
commitments from its clients abroad in order to proceed with
the expected volume of work under the same product stream.
Unfortunately, however, it has become evident that despite
said efforts being exerted by the Company, the prospect of
new work related to the product stream coming in, remains
uncertain at this point. Management has already utilized all
available options, which include placing its project employees
on forced leave. This, however, cannot go on indefinitely.
It is therefore, with deep regret, that we inform you that in
view of the unavailability of work of the aforementioned
product stream as well as the uncertainties pertaining
to the arrival of new worldoads thereof, we are
constrained to terminate your Project Employment
Contract in accordance with the terms and conditions
stated under the Termination of Employment of your
Project Employment Contract, effective 7/7/2010.
xxx
14
It bears to point out that said termination letter did not even
state any of the following valid grounds under the law as
anchor for the dismissal:
Art. 297. Termination by Employer. An employer may
terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee against
the person of his employer or any immediate member of his
family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.47
Art. 298. Closure of Establishment and Reduction of Personnel.
The employer may also terminate the employment of any
employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or
to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year.
The NLRC likewise committed a grave error when it held that
there was no basis for respondents' reliance on the case
of Bontia v. NLRc48 on the sole ground that, in the present
case, the employees were neither actually nor constructively
dismissed. The Court affirms respondents’ contention that
when IKSI feigned suspension of operations and placed
respondents on forced leave, the same had already amounted
to constructive dismissal. And when IKSI sent letters informing
them that they would be terminated effective July 7, 2010,
respondents then had been actually dismissed. In Bontia, the
manner by which the employer severed its relationship with its
employees was remarkably similar to the one in the case at
bar, which was held to be an underhanded circumvention of
the law. Consolidated Plywood Industries summarily required
its employees to sign applications for forced leave deliberately
crafted to be without an expiration date, like in this case. This
consequently created an uncertain situation which necessarily
discouraged, if not altogether prevented, the employees from
reporting, or determining when or whether to report for work.
The Court further ruled that even assuming that the company
15
had a valid reason to suspend operations and had filed the
necessary notice with the Department of Labor and
Employment (DOLE), it still would not be a legitimate excuse
to cursorily dismiss employees without properly informing
them of their rights and status or paying their separation pay
in case they were eventually laid off. Under the Labor Code,
separation pay is payable to an employee whose services are
validly terminated as a result of retrenchment, suspension,
closure of business or disease. Thus, the Court held that
Consolidated Plywood's employees should, at the very least,
have been given separation pay and properly informed of their
status so as not to leave them in a quandary as to how they
would properly respond to such a situation.49 Similarly,
respondents never received any separation pay when they
were terminated in July of 2010 since IKSI had been denying
the existence of a dismissal, whether actual or constructive.
Withal, in both permanent and temporary lay-offs,
jurisprudence dictates that the one (1)-month notice rule to
both the DOLE and the employee under Article 298 is
mandatory.50 Here, both the DOLE and respondents did not
receive any prior notice of the temporary lay-off. The DOLE
Region VII Office was only informed on January 11, 2010 51 or
four (4) days after the forced leave had already taken effect.
On the other hand, respondents received the notice52 of forced
leave on January 7, 2010, after the business day of which the
same forced leave was to take effect. Respondents also
pointed out that when they received said notice, they were
told to no longer report starting the next day, made to
completely vacate their workstations and surrender their
company identification cards, and were not even allowed to
use their remaining unused leave credits, which gave them the
impression that they would never be returning to the company
ever again.
Since dismissal is the ultimate penalty that can be meted to an
employee, the requisites for a valid dismissal from
employment must always be met, namely: (1) it must be for a
just or authorized cause; and (2) the employee must be
afforded due process,53 meaning, he is notified of the cause of
his dismissal and given an adequate opportunity to be heard
and to defend himself. Our rules require that the employer be
able to prove that said requisites for a valid dismissal have
been duly complied with. Indubitably, IKSI’s intent was not
merely to put respondents' employment on hold pending the
existence of the unfavorable business conditions and call them
back once the same improves, but really to sever the
employer-employee relationship with respondents right from
the very start. The Court cannot just turn a blind eye to IKSI’s
manifest bad faith in terminating respondents under the guise
of placing them on a simple floating status. It is positively
aware of the unpleasant practice of some employers of
violating the employees' right to security of tenure under the
pretense of a seemingly valid employment contract and/or
valid termination. We must abate the culture of employers
bestowing security of tenure to employees, not on the basis of
the latter's performance on the job, but on their ability to toe
the line.54 Unfortunately for IKSI, they chanced upon
respondents who, unlike the ordinary workingman who always
plays an easy prey to these perfidious companies, are fully
aware of their rights under the law and simply refuse to ignore
and endure in silence the flagrant irruption of their rights,
zealously safeguarded by the Constitution and our labor laws.
16
Procedural Issues
Tested against the above-discussed considerations, the Court
finds that the CA correctly granted
respondents’ certiorari petition before it, since the NLRC
gravely abused its discretion in ruling that respondents were
merely IKSI’s project employees and that they were validly
put on floating status as part of management prerogative,
when they had satisfactorily established by substantial
evidence that they had become regular employees and had
been constructively dismissed.55 Grave abuse of discretion
connotes judgment exercised in a capricious and whimsical
manner that is tantamount to lack of jurisdiction. 56 In labor
disputes, grave abuse of discretion may be ascribed to the
NLRC when, inter alia, its findings and conclusions, as in the
case at bar, are not supported by substantial evidence, or that
amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.57
In the NLRC’s Decision, only the following petitioners were
included: Michael A. Rebato, Hernan Ed Noel L. de Leon, Jr.,
Wendell B. Quiban, Fritz Sembrino, Ismael R. Garaygay III,
Edson S. Solis, Stephen Olingay, Ronan Alamillo, Jess Vincent
A. dela Pefia, Dax Matthew M. Quijano, Juneth A. Rentuma
and Socorro D'Marie T. Inting. On the other hand, James
Horace Balonda, Dennis C. Rizon, Ennoh Chentis R. Fernandez,
Aldrin 0. Torrentira, Michael Ray B. Molde, Rodolfo M.
Vasquez, Ma. Nazelle B. Miralles, and Carl Hermes Carskit
were excluded. IKSI argued that those eight (8) who were
excluded did not sign the required Verification and Certification
of Non-Forum Shopping of the Appeal Memorandum before the
NLRC, and some of them also failed to execute the Verification
in the Petition for Certiorari before the CA.
The Court has previously set the guidelines pertaining to non-
compliance with the requirements on, or submission of
defective, verification and certification against forum
shopping:58
1) A distinction must be made between non-compliance with
the requirement on or submission of defective verification, and
noncompliance with the requirement on or submission of
defective certification against forum shopping;
2) As to verification, non-compliance therewith or a defect
therein does not necessarily render the pleading fatally
defective. The court may order its submission or correction, or
act on the pleading if the attending circumstances are such
that strict compliance with the Rule may be dispensed with in
order that the ends of justice may be served;
3) Verification 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 been made in
good faith or are true and correct;
4) As to certification against forum shopping, non-compliance
therewith or a defect therein, unlike in verification, is generally
not curable by its subsequent submission or correction
thereof, unless there is a need to relax the Rule on the ground
of substantial compliance or the presence of special
circumstances or compelling reasons;
17
5) The certification against forum shopping must be signed by
all the plaintiffs or petitioners in a case; otherwise, those who
did not sign will be dropped as parties to the case. Under
reasonable or justifiable circumstances, however, as when all
the plaintiffs or petitioners share a common interest and
invoke a common cause of action or defense, the signature of
only one of them in the certification against forum shopping
substantially complies with the Rule; and
6) Finally, the certification against forum shopping must be
executed by the party-pleader, not by his counsel.1âwphi1 If,
however, for reasonable or justifiable reasons, the party-
pleader is unable to sign, he must execute a Special Power of
Attorney designating his counsel of record to sign on his
behalf.
In the case at hand, only twelve (12) of respondents were able
to sign the Verification and Certification Against Forum
Shopping since they were only given ten (10) days from the
receipt of the LA's decision to perfect an appeal. Some of them
were even no longer based in Cebu City. But it does not mean
that those who failed to sign were no longer interested in
pursuing their case.
In view of the circumstances of this case and the substantive
issues raised by respondents, the Court finds justification to
liberally apply the rules of procedure to the present case.
Rules of procedure should be viewed as mere tools designed to
facilitate the attainment of justice; their strict and rigid
application, which would result in technicalities that tend to
frustrate rather than promote substantial justice, must always
be eschewed.59
In a similar case, the Court found that the signing of the
Verification by only 11 out of the 59 petitioners already
sufficiently assured the Court that the allegations in the
pleading were true and correct and not the product of the
imagination or a matter of speculation; that the pleading was
filed in good faith; and that the signatories were
unquestionably real parties-in-interest who undoubtedly had
sufficient knowledge and belief to swear to the truth of the
allegations in the petition.60 In the same vein, the twelve (12)
respondents who signed the Verification in the instant case
had adequate knowledge to swear to the truth of the
allegations in their pleadings, attesting that the matters
alleged therein have been made in good faith or are true and
correct. With respect to the failure of some of respondents to
sign the Certification Against Forum Shopping, IKSI cited the
case of Altres, et al. v. Empleo61 which ruled that the non-
signing petitioners were dropped as parties to the case.
However, the reason of the Court for removing said petitioners
from the case was not because of the failure to sign per
se, but actually because of the fact that they could no longer
be contacted or were indeed no longer interested in pursuing
the case.62 Here, as mentioned earlier, those who failed to sign
the certification against forum shopping will not be dropped as
parties to the case since reasonable or justifiable
circumstances are extant, as all respondents share a common
interest and invoke a common cause of action or defense; the
signatures of some or even only one of them substantially
complies with the Rule.
The Court previously held that the signature of only one of the
petitioners substantially complied with the Rules if all the
petitioners share a common interest and invoke a common
18
cause of action or defense. In cases, therefore, where it is
highly impractical to require all the plaintiffs to sign the
certificate of non-forum shopping, it is sufficient, in order not
to defeat the ends of justice, for one of the plaintiffs, acting as
representative, to sign the certificate, provided that the
plaintiffs share a common interest in the subject matter of the
case or filed the case as a "collective" raising only one
common cause of action or defense.63 Thus, when respondents
appealed their case to the NLRC and the CA, they pursued the
same as a collective body, raising only one argument in
support of their rights against the illegal dismissal allegedly
committed by IKSI. There was sufficient basis, therefore, for
the twelve (12) respondents to speak and file the Appeal
Memorandum before the NLRC and the petition in the CA for
and in behalf of their co-respondents.
Clearly, verification, like in most cases required by the rules of
procedure, is a formal requirement, not jurisdictional.64 Such
requirement is simply a condition affecting the form of
pleading, the non-compliance of which does not necessarily
render the pleading fatally defective.65 It is mainly intended to
secure an assurance that matters which are alleged are done
in good faith or are true and correct and not of mere
speculation. Thus, when circumstances so warrant, as in this
case, the court may simply order the correction of the
unverified pleadings or act on it and waive strict compliance
with the rules in order that the ends of justice may be
served.66 Moreover, no less than the Labor Code directs labor
officials to use all reasonable means to ascertain the facts
speedily and objectively, with little regard to technicalities or
formalities, while Section 10, Rule VII of the New Rules of
Procedure of the NLRC provides that technical rules are not
binding. Indeed, the application of technical rules of procedure
may be relaxed in labor cases to serve the demand of
substantial justice. Labor cases must be decided according to
justice and equity and the substantial merits of the
controversy. After all, the policy of our judicial system is to
encourage full adjudication of the merits of an appeal.
Procedural niceties should be avoided in labor cases in which
the provisions of the Rules of Court are applied only in
suppletory manner. Indeed, rules of procedure may be relaxed
to relieve a part of an injustice not commensurate with the
degree of non-compliance with the process required. For this
reason, the Court cannot indulge IKSI in its tendency to
nitpick on trivial technicalities to boost its self-serving
arguments.67
The CA, however, erred when it still considered Atty. Ennoh
Chentis Fernandez as one of the petitioners before it and
included him in the dispositive portion of its decision. It must
be noted that Fernandez was one of those who filed the Motion
for Execution of Decision68 dated May 28, 2012, which prayed
for the issuance of a writ of execution of the LA and NLRC’s
rulings. The movants likewise admitted therein that while
some of them elevated the case to the NLRC, they, however,
did not. Corollarily, Fernandez should have been dropped as
one of the parties to the case before the CA since the rulings
of the labor tribunals had already attained finality with respect
to him.
Award of Damages
Inasmuch as IKSI failed to adduce clear and convincing
evidence to support the legality of respondents' dismissal, the
19
latter is entitled to reinstatement without loss of seniority
rights and backwages computed from the time compensation
was withheld up to the date of actual reinstatement, as a
necessary consequence. However, reinstatement is no longer
feasible in this case because of the palpable strained relations
between the parties and the possibility that the positions
previously held by respondents are already being occupied by
new hires. Thus, separation pay equivalent to one (1) month
salary for every year of service should be awarded in lieu of
reinstatement.69
The Court sustains the CA’s award of moral and exemplary
damages. Award of moral and exemplary damages for an
illegally dismissed employee is proper where the employee
had been harassed and arbitrarily terminated by the employer.
Moral damages may be awarded to compensate one for
diverse injuries such as mental anguish, besmirched
reputation, wounded feelings, and social humiliation
occasioned by the unreasonable dismissal. The Court has
consistently accorded the working class a right to recover
damages for unjust dismissals tainted with bad faith, where
the motive of the employer in dismissing the employee is far
from noble. The award of such damages is based, not on the
Labor Code, but on Article 2220 of the Civil Code. In line with
recent jurisprudence, the Court finds the amount of
₱50,000.00 for each of moral and exemplary damages
adequate.70
The award of attorney's fees is likewise due and appropriate
since respondents incurred legal expenses after they were
forced to file an action to protect their rights. 71 The rate of
interest, however, has been changed to 6% starting July 1,
2013, pursuant to the Bangko Sentral ng Pilipinas Circular No. d) Attorney’s fees equivalent to ten percent (10%) of the
799, Series of 2013.72 total awards; and

WHEREFORE, IN VIEW OF THE FOREGOING, the e) Legal interest of twelve percent (12%) per annum of
Court DISMISSES the petition, the total monetary awards computed from January 8,
and AFFIRMS with MODIFICATIONS the Decision of the 2010 up to June 30, 2013 and six percent (6%) per
Court of Appeals Cebu, Twentieth (20th) Division, dated annum from July 1, 2013 until their full satisfaction.
August 30, 2013 and Resolution dated March 12, 2014 in CA-
G.R. CEB-SP No. 06443. Respondents Socorro D'Marie Inting, The case is hereby ordered REMANDED to the labor arbiter
Ismael R. Garaygay, Edson S. Solis, Michael A. Rebato, James for the computation of the amounts due each respondent.
Horace Balonda, Stephen C. Olingay, Dennis C. Rizon, Juneth
A. Rentuma, Hernan Ed Noel I. de Leon, Jr., Jess Vincent A. Costs on petitioner Innodata Knowledge Services, Inc.
dela Pefia, Ronan V. Alamillo, Wendell B. Quiban, Aldrin 0.
Torrentira, Michael Ray B. Molde, Fritz J. Sembrino, Dax SO ORDERED.
Matthew M. Quijano, Rodolfo M. Vasquez, Ma. Nazelle B.
Miralles and Carl Hermes Carskit are declared to have been
illegally dismissed by petitioner Innodata Knowledge Services,
Inc. and hence, the latter is hereby ORDERED to PAY each of
them the following:

a) Backwages and all other benefits from the time

compensation was withheld on January 8, 2010 until
finality of this Decision;

b) Separation pay equivalent to one (1) month salary for

every year of service, with a fraction of at least six (6)
months to be considered as one (1) whole year, to be
computed from the date of their employment up to the
finality of this Decision;

c) Moral and exemplary damages, each in the amount of

₱50,000.00;

20
G.R. Nos. 174365-66 February 4, 2015 Name of Petitioner Date of Hiring Date of Dismissal
ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, Dela Rama November 16, 1995 February 13, 1997
JR., ROBERTO DELA RAMA, JR., RICKY S. NICOLAS,
CRISPULO D. DONOR, GALO FALGUERA, and NATIONAL Dizon October 1988 December 15, 1996
LABOR RELATIONS COMMISSION,Petitioners, Tumabiao February 2, 1992 February 13, 1997
vs.
COCA-COLA BOTTLERS PHILIPPINES,* Respondent. Basan July 13, 1996 January 31, 1997

DECISION Donor September 16, 1995 February 13, 1997

Nicolas
PERALTA, J.:
Falguera
Before the Court is a petition for review on certiorari under
Rule 45 of the Rules of Court seeking to reverse and set aside
the Decision1 dated August 31, 2005 and Resolution2 dated
August 24, 2006 of the Court of Appeals (CA) in CA-G.R. SP
Nos. 80977 & 87071, which reversed the Resolutions dated
January 30, 20033 and September 24, 20034 of the National
Labor Relations Commission (NLRC) in NLRC 00-02-01419-97.
The factual antecedents are as follows.
On February 18, 1997, petitioners Romeo Basan, Danilo Dizon,
Jaime L. Tumabiao, Jr., Roberto Dela Rama,Jr., Ricky S.
Nicolas, Crispulo D. Donor, Galo Falguera filed a complaint for
illegal dismissal with money claims against respondent Coca-
Cola Bottlers Philippines, alleging that respondent dismissed
them without just cause and prior written notice required by
law. In their position paper, petitioners provided for the
following material dates:5
21
May 10, 1996 January 30, 1997
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 attorney’s
fees.8
On January 30, 2003, the NLRC affirmed the Labor Arbiter’s
decision and rejected respondent’s 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 Arbiter’s ruling that
petitioners, as route helpers, performed work directly
connected or necessary and desirable in respondent’s 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
22
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.
In its Decision dated August 31, 2005, the CA consolidated
respondent’s 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 one’s 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
respondent’s 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 CA’s Decision on
procedural and substantive grounds. On the procedural, they
alleged that respondent, in filing its appeal of the Labor
Arbiter’s 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 Arbiter’s 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 respondent’s appeal.
Hence, the instant petition invoking the following grounds:
23
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 COURT’S
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
intermittently. Respondent also asserts that petitioners failed
to completely substantiate their claims, for during the hearing
conducted before the Labor Arbiter on March 11, 1998, the
 payslips presented by petitioners merely established the than a year, respondent claims that petitioners could not have
following employment terms: attained regular employment status. It added that its failure to
present petitioners’ employment contracts was due to a fire
Name of Length of Service Dates that destroyed its Manila Plant where said contracts were kept.
Petitioner Nevertheless, respondent persistently asserts that where a
fixed period of employment was agreed upon knowingly and
Dela Rama 5 months, 4 Between November 30, voluntarily by the petitioners, the duration of which was made
months 1995 known to them at the time of their engagement, petitioners
And March 31, 1996 cannot now claim otherwise. In addition, it disagrees with the
contention that petitioners, as route helpers, were performing
Dizon 4 months In 1993
functions necessary or desirable to its business.
2 months In 1994
9 months In 1996
The petition is impressed with merit.
Tumabiao 3 months From November 15, 1996
To January 31, 1997 On the procedural issue, We hold that while the general rule is
that the verification and certification of non-forum shopping
Basan 6.5 months From May 15, 1996 must be signed by all the petitioners in a case, the signature
1 month To December 31, 1996 of only one of them, petitioner Basan in this case, appearing
From January 15, 1997 thereon may be deemed substantial compliance with the
To January 31, 1997 procedural requirement. Jurisprudence is replete with rulings
that the rule on verification is deemed substantially complied
Donor 1 month From February 15, 1996 with when one who has ample knowledge to swear to the truth
To March 15, 1996 of the allegations in the complaint or petition signs the
1 month From December 15, 1996 verification, and when matters alleged in the petition have
To January 15, 1997 been made in good faith or are true and correct.16 Similarly,
Nicolas 8.5 months In 1996 and 1997 this Court has consistently held that when under reasonable or
justifiable circumstances, as when all the petitioners share a
Falguera 6 months From 1992 common interest and invoke a common cause of action or
To 1997 defense, as in this case, the signature of only one of them in
the certification against forum shopping substantially complies
Considering that the evidence presented showed that with the certification requirement.17 Thus, the fact that the
petitioners merely rendered their services for periods of less petition was signed only by petitioner Basan does not
24
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 serve the
demand of justice.19
As for the primordial issue in this case, it must be noted that
the same has already been resolved in Magsalin v. National
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:
Coca-Cola Bottlers Phils., Inc., is one of the leading and
largest manufacturers of softdrinks in the country. Respondent
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 petitioner
company to its various delivery points.
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
considered regular or non-regular, the applicable test is the
reasonable connection between the particular activity
performed by the employee in relation to the usual business or
trade of the employer. The standard, supplied by the law
itself, is whether the work undertaken is necessary or
desirable in the usual business or trade of the employer, a fact
25
that 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
only for a specific projector seasonal, where a person thus
engaged has been performing the job for at least one year,
even if the performance is not continuous or is merely
intermittent, the law deems the repeated and continuing need
for its performance as being sufficient to indicate the necessity
or desirability of that activity to the business or trade of the
employer. The employment of such person is also then
deemed to be regular with respect to such activity and while
such activity exists.
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 in
the manufacture of its products, scarcely can be persuasive.
If, as so argued by petitioner company, only those whose 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.1âwphi1 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.
The repeated rehiring of respondent workers and the
continuing need for their services clearly attest to the
necessity or desirability of their services in the regular conduct
of the business or trade of petitioner company. The Court of
Appeals has found each of respondents to have worked for at
least one year with petitioner company. While this Court, in
Brent School, Inc. vs. Zamora, has upheld the legality of a
fixed-term employment, it has done so, however, with a stern
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 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 respondent workers
have agreed to be employed on such basis and to forego the
protection given to them on their security of tenure,
demonstrate nothing more than the serious problem of
impoverishment of so many of our people and the resulting
unevenness between labor and capital. A contract of
employment is impressed with public interest. The provisions
of applicable statutes are deemed written into the contract,
and "the parties are not at liberty to insulate 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
26
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, respondent’s 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
27
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, 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.28Considering, 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
employee’s security of tenure:
28
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, respondent’s 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 respondent’s 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, respondent’s act of
hiring and re-hiring petitioners for periods short of the legal
probationary period evidences its intent to thwart petitioner’s
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.
29
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 ₱792,815.64 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.
 G.R. No. 217455, October 05, 2016
OYSTER PLAZA HOTEL, ROLITO GO, AND JENNIFER
AMPEL, Petitioners, v. ERROL O. MELIVO, Respondent.
DECISION
MENDOZA, J.:
This Petition for Review on Certiorari seeks to reverse and set
aside the April 30, 2014 Decision1 and the March 12, 2015
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
122767, which affirmed the June 21, 2011 Decision 3 of the
National Labor Relations Commission (NLRC) in NLRC NCR
Case No. 10-14771-09, a case for illegal dismissal.
The Antecedents:
On October 22, 2009, respondent Errol O. Melivo (Melivo) filed
before the NLRC a Complaint4 for illegal dismissal with prayers
for reinstatement and payment of back wages, holiday pay,
overtime pay, service incentive leave, and, 13 th month pay
against petitioners Oyster Plaza Hotel (Oyster Plaza), Rolito
Go (Go), and Jennifer Ampel (Ampel).
The Summons,5 dated October 26, 2009, together with a copy
of the complaint, was served on the petitioners thru registered
mail. The said summons ordered the petitioners to appear
before the Labor Arbiter (LA) for mandatory
conciliation/mediation conferences on November 23, 2009 and
December 1, 2009. The registry return receipt,6 dated
November 27, 2009, showed that the summons and the copy
of the complaint were duly served. The petitioners, however,
failed to appear during the scheduled conferences. Thereafter,
30
the case was set for formal hearing on January 14, 2010 and a
notice of hearing7 was sent to the petitioners, requiring them
to appear before the LA and file their position paper, with a
warning that failure to appear therein would be construed as a
waiver of the opportunity to be heard. The notice, however,
was returned unserved as there was no one to receive the
same.8 The formal hearing was, thus, reset to February 17,
2010, and a notice of hearing9 was again sent to the
petitioners, wherein they were reminded to file their position
paper. The registry return receipt10 showed that the said notice
was received by a certain Charlie Miraña (Miraña) on January
25, 2010. At the February 17, 2010 hearing, however, only
Melivo appeared.
On even date, Melivo filed his Position Paper,11 alleging the
following: that Oyster Plaza was a business entity engaged in
the business of hotel operation, under the
ownership/management of Go and Ampel; that in August
2008, Oyster Plaza hired him as a trainee room boy; that in
November 2008, Oyster Plaza hired him as a probationary
room boy and he was made to sign an employment contract
but he was not furnished a copy, that the said contract expired
in March 2009 and his work ended; that on April 7, 2009,
Oyster Plaza hired him again as a room boy, but without any
employment contract or document; and that in September
2009, his supervisor Ampel verbally told him that his contract
was expiring, thus, he must stop reporting for work.
For the last time, another notice of hearing12 for the March 24,
2010, was again sent to the petitioners with a directive to file
their position paper, but it was again returned
unserved.13 Hence, the case was submitted for decision ex
parte.14
The LA Ruling
In its Decision,15 dated April 20, 2010, the LA ruled that Melivo
was illegally dismissed. Considering that Melivo had already
rendered six (6) months of service for Oyster Plaza, the LA
held that he had become a regular employee by operation of
law. The LA stated that having attained the regular
employment status, he could only be terminated for a valid
cause; and because the petitioners failed to present
countervailing evidence to justify Melivo's dismissal, there
could be no other conclusion except that the dismissal was
illegal.
The LA, however, found that there was no underpayment as
Melivo was receiving the basic wage plus cost of living
allowance as mandated by law; that he was not entitled to
service incentive leave because he had not rendered at least
one (1) year of service; and that there was no underpayment
of holiday pay and overtime pay because he failed to adduce
evidence to support these claims.
In the end, the LA ordered Oyster Plaza to reinstate Melivo to
his previous position and to pay him back wages reckoned
from his dismissal on September 15, 2009 until the finality of
its decision; his proportionate 13th month pay; and attorney's
fees in the amount equivalent to 10% of the total money
claims awarded. The dispositive portion of the LA decision
reads:chanRoblesvirtualLawlibrary
CONFORMABLY WITH THE FOREGOING, judgment is hereby
rendered finding complainant illegally dismissed.
31
Consequently, respondents must reinstate complainant to his
former work as room boy within ten (10) days from receipt of
this decision and pay him, in solidum, the following
amounts:cralawlawlibrary
a) P57,572.00, as backwages as of March 19, 2010 and to
accrue further until finality of this
decision;ChanRoblesVirtualawlibrary
b) P6,631.33, as proportionate 13th month pay; and
c) 10% of the money awards as attorney's fees.
SO ORDERED.16
chanrobleslaw
Thereafter, Melivo filed his Motion to Implement Order of
Reinstatement.17 Acting thereon, the LA issued the Writ of
Execution18 on September 21, 2010.
On October 21, 2010, the petitioners filed their Motion to
Quash (Writ of Execution, dated September 1, 2010)19 arguing
that they did not receive the summons, the notices of hearings
and the copy of the LA decision. The petitioners averred that
they were only able to secure copies of the records on October
14, 2010.
Without awaiting the LA's action on their motion to quash, the
petitioners filed an Appeal before the NLRC In their Appeal
Memorandum,20 the petitioners argued that none of them was
served with summons and notices of the November 23, 2009
and December 1, 2009 hearings; that the registry return
receipt, dated November 27, 2009, did not bear a legibly
written name to determine who received the summons; that
the notice for the February 17, 2010 hearing was received by
Miraña, a security guard who was not its employee but merely
assigned to it by VICAR Security Agency; that "Oyster Plaza
Hotel" was only a name and business style of its owner,
Martyniuk Development Corporation (MDC) and, hence, could
not be sued because it had no legal personality; that Go was
not a stockholder, officer, or director of, and had no
connection with, Oyster Plaza and MDC; that Ampel, whose
real name was Jennilyn not Jennifer, was a mere assistant
desk officer of Oyster Plaza; and that assuming there was
valid service of summons, Melivo was not illegally dismissed
because he was merely employed for a fixed term, which term
already expired. The petitioners also submitted Melivo's
Contract of Employment21 as an attachment to their
memorandum.
The NLRC Ruling
On June 21, 2011, the NLRC affirmed the April 20, 2010
Decision of the LA. It observed that the summons and the
complaint, which were addressed to "Oyster Plaza Hotel, et
al.," were served upon the petitioners by registered mail and
received by them on November 27, 2009. Thus, it was prudent
for them to verify the status of the case with the LA. It further
explained that the petitioners' assertion that they had no
knowledge on who received the subject processes and
pleading did not render the service ineffectual; and that the
Rules of Procedure of the NLRC did not specify any person
upon whom summons must be served in the event that the
respondent was a juridical entity. Thus, Oyster Plaza was
32
bound by its employee's receipt of the summons.
The NLRC was of the view that the petitioners' denial of illegal
dismissal did not deserve any consideration. It posited that the
contract of employment failed to reveal the specific project or
any phase of it where he was employed; and that the
petitioners failed to submit a report of his termination to the
nearest public employment office, as required under
Department Order (D.O.) No, 19. The failure to file a
termination report upon the alleged cessation of Melivo's
employment was an indication that he was not a project
employee, but a regular employee. Thus, for want of valid
cause for his severance, the NLRC concluded that Melivo was
illegally dismissed.
The petitioners moved for reconsideration, but their motion
was denied by the NLRC in its Resolution,22dated September
26, 2011.
Aggrieved, the petitioners elevated the case to the CA.
The CA Ruling
In its assailed decision, dated April 30, 2014, the CA dismissed
the petition for lack of merit and affirmed the June 21, 2011
NLRC Decision. The appellate court held that the failure to
implead MDC in the proceedings before the LA and the NLRC
was merely a procedural error which did not affect the
jurisdiction of the labor tribunals. The CA observed that the
petitioners failed to raise a valid argument, much less present
sufficient evidence to show that there was irregularity in the
service of summons. It emphasized that the petitioners'
alternative argument that Ampel was not authorized to receive
the summons bolstered the findings that she indeed received
the said summons. It also opined that the provisions of the
Rules of Court only had suppletory application to labor cases
and, thus, not strictly applied thereto. Finally, it stated that
petitioners failed to produce sufficient evidence, such as the
company's General Information Sheet, to show that Go was no
longer connected with either MDC or Oyster Plaza.
ISSUES
I
WHETHER OR NOT THE PETITIONERS WERE DEPRIVED
OF THEIR RIGHT TO DUE PROCESS OF LAW AS THEY
WERE NOT PROPERLY SERVED WITH SUMMONS

As to the issue of Melivo's illegal dismissal, the CA held that II

the petitioners failed to adduce adequate evidence to the
contrary. It noted that the petitioners barely argued on the
nature of Melivo's employment and they miserably failed to WHETHER OR NOT THE COURT OF APPEALS ERRED IN
point specific acts by the NLRC which amounted to grave HOLDING THAT MELIVO WAS ILLEGALLY DISMISSED
abuse of discretion. The CA stated that a perusal of the
III
assailed NLRC decision would readily show that the same was
arrived at after considering the evidence presented and
arguments raised by the parties. The fallo of the CA decision
WHETHER THE COURT OF APPEALS ERRED IN FINDING
reads:chanRoblesvirtualLawlibrary
PETITIONERS GO AND AMPEL SOLIDARILY LIABLE
WHEREFORE, the instant Petition is hereby DENIED for lack of
WITH OYSTER PLAZA/MDC]
merit. The assailed Decision of the NLRC dated 21 June 2011
chanrobleslaw
is AFFIRMED.
The petitioners argue, first, that the service of summons was
defective leaving the proceedings before the LA and the NLRC,
SO ORDERED.23
and the decisions they rendered, void; that neither Miraña nor
chanrobleslaw
Ampel was authorized to receive the summons for Oyster
The petitioners filed their motion for reconsideration, but the
Plaza/MDC because they were not its president, manager,
same was denied by the CA in its assailed Resolution, dated
secretary, cashier, agent, director, corporate secretary, or in-
March 12, 2015.
house counsel; that Ampel did not receive any summons; that
Go never received any summons in the New Bilibid Prisons in
Hence, this petition, raising the
Muntinlupa City, where he was serving his sentence; that
following:chanRoblesvirtualLawlibrary
Oyster Plaza, being a mere name and business style, could not

33
be sued because it had no legal personality; and that the
summons and notices addressed to Oyster Plaza could not
bind MDC.
Second, on the assumption that the summons was validly
served, the petitioners argue that Melivo was not illegally
dismissed because he was not a regular employee but merely
a fixed-term employee. Lastly, assuming that Oyster Plaza
was liable, Go could not be made solidarity liable because he
was no longer connected with the hotel Neither could Ampel
be held solidarity liable as there was no proof that she acted in
bad faith.
In his Comment,24 dated October 23, 2015, Melivo refuted the
petitioners' arguments. He countered that in quasi-judicial
proceedings before the NLRC and its arbitration branch,
procedural rules governing service of summons were not
strictly construed; that the service of summons and notices
substantially complied with the requirements of the 2005
Revised NLRC Rules of Procedure; that the non-inclusion of the
corporate name of MDC was a mere procedural error which did
not affect the jurisdiction of the labor tribunals; that Go and
Ampel were responsible officers of Oyster Plaza; and that
Melivo's dismissal was done in bad faith because he was
verbally and arbitrarily dismissed.
In their Reply,25 dated March 23, 2016, the petitioners merely
reiterated the arguments they raised in their petition.
The Court's Ruling
34
The petition is partly meritorious.
Petitioners were Not Deprived of their
Right to Due Process
In quasi-judicial proceedings before the NLRC and its
arbitration branch, procedural rules governing service of
summons are not strictly construed. Substantial compliance
thereof is sufficient. The constitutional requirement of due
process with respect to service of summons only exacts that
the service of summons be such as may reasonably be
expected to give the notice desired. Once the service provided
by the rules reasonably accomplishes that end, the
requirement of justice is answered, the traditional notion of
fair play is satisfied, and due process is served. 26
In Scenarios, Inc. vs. Vinluan,27 the Court considered as
substantial compliance the service of summons by registered
mail at the respondent's place of business. The Court
explained therein that technical rules of procedure were not
strictly applied in quasi-judicial proceedings and only
substantial compliance was required; and that the notation in
the registry receipt that "a registered article must not be
delivered to anyone but the addressee, or upon the
addressee's written order" creates the presumption that the
persons who received the summons and notice were
presumably able to present a written authorization to receive
them and, therefore, the notices were presumed to be duly
received in the ordinary course of events.
Similarly, in this case, the summons and notices were served
by registered mail at the petitioners' place of business. Thus,
the person who received the same was presumed authorized
to do so. Consequently, the summons and notices were
presumed to be duly served. The burden of proving the
irregularity in the service of summons and notices, if any, is
on the part of the petitioners. In this case, the petitioners
clearly failed to discharge that burden.
The Court concurs with the CA that the failure to implead MDC
in the proceedings before the LA and the NLRC was merely a
procedural error which did not divest the labor tribunals of
their jurisdiction. In Pison-Arceo Agricultural Development
Corp. vs. NLRC (Pison-Arceo),28 which involved the resolution
of substantially the same issue, the Court held
that:chanRoblesvirtualLawlibrary
X x x. There is no dispute that Hacienda Lanutan, which was
owned SOLELY by petitioner, was impleaded and was heard. If
at all, the non-inclusion of the corporate name of
petitioner in the case before the executive labor arbiter was a
mere procedural error which did not at all affect the
jurisdiction of the labor tribunals.29 [Emphasis supplied]
chanrobleslaw
By the petitioners' own admission, Oyster Plaza was owned
and operated by MDC. This was further underscored in the
petitioners' Verification/Certification,30 dated December 8,
2011, attached to their petition before the CA. It was stated
therein that "Elsa Go is the authorized representative of
petitioner Oyster Plaza Hotel/Martyniuk Development
Corporation." Applying the pronouncement in Pison-Arceo, the
failure to include MDC's corporate name in the complaint did
not necessarily result in the loss of the labor tribunals'
jurisdiction over the former. The said failure was but a
procedural blunder which did not render the labor proceedings
35
void, so long as the dictates of justice were substantially
complied with.
Further, the essence of due process is simply an opportunity
to be heard or, as applied to administrative proceedings, an
opportunity to explain one's side or to seek a reconsideration
of the action or ruling complained of. What the law prohibits is
the absolute absence of the opportunity to be heard; hence, a
party cannot feign denial of due process where he had been
afforded the opportunity to present his side.31
The Court notes that even though the petitioners failed to
participate in the proceedings before the LA, they were able to
argue their case before the NLRC. The petitioners, through
their pleadings, were able to argue their position and submit
evidence in support of their position that they did not receive
the summons and notices from the LA; and that Melivo was
not illegally dismissed.
Evidently, the petitioners' contention that they were denied
due process is devoid of any merit.
Melivo was Illegally Dismissed
Anent the issue of illegal dismissal, the CA correctly affirmed
the ruling of the NLRC.
Probation is the period during which the employer may
determine if the employee is qualified for possible inclusion in
the regular force.32 The employer has the right or is at liberty
to choose who will be hired and who will be denied
employment. In that sense, it is within the exercise of the
right to select his employees that the employer may set or fix
a probationary period within which the latter may test and
observe the conduct of the former before hiring him
permanently.33 An employee allowed to work beyond the
probationary period is deemed a regular employee.34
In Holiday Inn Manila vs. NLRC (Holiday Inn),35 the Court
considered therein complainant's 3-week on-the-job
training (OJT) period as her probationary employment period.
The Court explained that the complainant was certainly under
observation during her 3-week OJT such that if her services
proved unsatisfactory, she could have been dropped anytime
during said period. On the other hand, when her services were
continued after her training, the employer in effect recognized
that she had passed probation and was qualified to be a
regular employee. Thus, the Court ruled that the complainant
therein attained regular employment status when she was
formally placed under probation after her OJT.
The present case involves substantially the same factual
considerations as that of Holiday Inn. In this case, Melivo was
first hired as a trainee in August 2008. His training lasted for
three (3) months. As a room boy, his performance was
certainly under observation. Thus, it can be reasonably
deduced that Melivo's probationary employment actually
started in August 2008, at the same time he started working
as a trainee. Therefore, when he was re-hired as room boy
after his training period sometime in November 2008 he
attained regular employment status.
Assuming arguendo that the 3-month training period could be
considered a probationary period, the conclusion would still be
36
the same. It should be remembered that Melivo was again
employed as a room boy in November 2008 under
probationary status for five (5) months or until March 2009.
Records would show that Melivo had completed his
probationary employment. Thus, when Oyster Plaza re-hired
him for the third time on April 7, 2009, he became its regular
employee thereof.
The petitioners' contention that Melivo was hired as a project
employee is untenable. Under Article 280 of the Labor Code,
as amended, a project employee is one 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. Here, the
contract of employment failed to indicate the specific project
or undertaking for which Oyster Plaza sought Melivo's services.
Moreover, as correctly noted by the NLRC, the petitioners
failed to submit a report of Melivo's termination to the nearest
public employment office, as required under Section 2 of D.O.
No. 19.
As a regular employee, Melivo could only be dismissed for just
or authorized causes after affording him the procedural
requirement of notice and hearing. The petitioners failed to
adduce evidence that Melivo's dismissal was for a just or
authorized cause, or that he was sufficiently notified and given
opportunity to be heard why his employment should not be
terminated. Hence, Melivo's dismissal was illegal.
Go and Ampel cannot be held Solidarity
Liable with Oyster Plaza/MDC
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 but the
direct accountabilities of the corporation they
represent.36 Pursuant to this principle, a director, officer or
employee of a corporation is generally not held personally
liable for obligations incurred by the corporation; it is only in
exceptional circumstances that solidary liability will attach to
them.37 Thus, in labor cases, corporate directors and officers
are held solidarity liable with the corporation for the
employee's termination only when the same is done with
malice or in bad faith.38
In the present case, there is nothing substantial on record
which can justify Go and Ampel's solidary liability with Oyster
Plaza or MDC. As to Ampel, records reveal that her
participation in the illegal dismissal was her verbally informing
Melivo that his services were being terminated; and the said
act could hardly be considered malicious enough to make
Ampel solidarity liable with Oyster Plaza or MDC.
With regard to Go, aside from the assertion that he was the
owner of Oyster Plaza, no other act, relating to Melivo's illegal
dismissal, was ever averred against him. Besides, Go's relation
with Oyster Plaza or MDC was only based from the bare
allegations of Melivo who failed to provide substantial evidence
to prove them. It is of no moment that Go failed to produce
evidence to show that he was no longer connected with MDC
or Oyster Plaza. Melivo should have relied on the strength of
his evidence and not on the weakness of the defense offered
by the petitioners.39 Clearly, without any participation in the
illegal dismissal of Melivo, no malice or bad faith can be
37
attributed to Go to justify his solidary liability with Oyster
Plaza. In fine, the petition must be partially granted to the
effect that only Oyster Plaza/MDC should be adjudged liable to
Melivo.
Finally, pursuant to Nacar v. Gallery Frames,40 this Court finds
that the award of the CA should be modified in that the total
monetary awards shall earn interest at the rate of 12% per
annum from the date Melivo was terminated from work until
June 30, 2013, and 6% per annum from July 1, 2013 until
their full satisfaction.
WHEREFORE, the petition is PARTIALLY GRANTED. The
April 30, 2014 Decision of the Court of Appeals in CA-G.R. SP
No. 122767 is AFFIRMED with MODIFICATION in that only
Oyster Plaza Hotel/Martyniuk Development Corporation
is ORDERED to reinstate Melivo to his former position without
loss of seniority rights; and to pay Melivo his backwages,
proportionate 13th month pay, and attorney's fees equivalent
to 10% of the monetary awards.
The total monetary awards shall earn interest at the rate of
12% per annum from the date that Melivo was illegally
terminated from work until June 30, 2013, and 6% per annum
from July 1, 2013 until their full satisfaction.
SO ORDERED.ChanRoblesVirtualawlibrary
G.R. No. 162994 September 17, 2004
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and
PEDRO A. TECSON, petitioners,
vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.
RESOLUTION
TINGA, J.:
Confronting the Court in this petition is a novel question, with
constitutional overtones, involving the validity of the policy of
a pharmaceutical company prohibiting its employees from
marrying employees of any competitor company.
This is a Petition for Review on Certiorari assailing
the Decision1 dated May 19, 2003 and the Resolution dated
March 26, 2004 of the Court of Appeals in CA-G.R. SP No.
62434.2
Petitioner Pedro A. Tecson (Tecson) was hired by respondent
Glaxo Wellcome Philippines, Inc. (Glaxo) as medical
representative on October 24, 1995, after Tecson had
undergone training and orientation.
Thereafter, Tecson signed a contract of employment which
stipulates, among others, that he agrees to study and abide by
existing company rules; to disclose to management any
existing or future relationship by consanguinity or affinity with
co-employees or employees of competing drug companies and
should management find that such relationship poses a
possible conflict of interest, to resign from the company.
38
The Employee Code of Conduct of Glaxo similarly provides that
an employee is expected to inform management of any
existing or future relationship by consanguinity or affinity with
co-employees or employees of competing drug companies. If
management perceives a conflict of interest or a potential
conflict between such relationship and the employee’s
employment with the company, the management and the
employee will explore the possibility of a "transfer to another
department in a non-counterchecking position" or preparation
for employment outside the company after six months.
Tecson was initially assigned to market Glaxo’s products in the
Camarines Sur-Camarines Norte sales area.
Subsequently, Tecson entered into a romantic relationship
with Bettsy, an employee of Astra Pharmaceuticals3(Astra), a
competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in
Albay. She supervised the district managers and medical
representatives of her company and prepared marketing
strategies for Astra in that area.
Even before they got married, Tecson received several
reminders from his District Manager regarding the conflict of
interest which his relationship with Bettsy might engender.
Still, love prevailed, and Tecson married Bettsy in September
1998.
In January 1999, Tecson’s superiors informed him that his
marriage to Bettsy gave rise to a conflict of interest. Tecson’s
superiors reminded him that he and Bettsy should decide
which one of them would resign from their jobs, although they
told him that they wanted to retain him as much as possible
because he was performing his job well.
Tecson requested for time to comply with the company policy
against entering into a relationship with an employee of a
competitor company. He explained that Astra, Bettsy’s
employer, was planning to merge with Zeneca, another drug
company; and Bettsy was planning to avail of the redundancy
package to be offered by Astra. With Bettsy’s separation from
her company, the potential conflict of interest would be
eliminated. At the same time, they would be able to avail of
the attractive redundancy package from Astra.
In August 1999, Tecson again requested for more time resolve
the problem. In September 1999, Tecson applied for a transfer
in Glaxo’s milk division, thinking that since Astra did not have
a milk division, the potential conflict of interest would be
eliminated. His application was denied in view of Glaxo’s
"least-movement-possible" policy.
In November 1999, Glaxo transferred Tecson to the Butuan
City-Surigao City-Agusan del Sur sales area. Tecson asked
Glaxo to reconsider its decision, but his request was denied.
Tecson sought Glaxo’s reconsideration regarding his transfer
and brought the matter to Glaxo’s Grievance Committee.
Glaxo, however, remained firm in its decision and gave Tescon
until February 7, 2000 to comply with the transfer order.
Tecson defied the transfer order and continued acting as
medical representative in the Camarines Sur-Camarines Norte
sales area.
39
During the pendency of the grievance proceedings, Tecson
was paid his salary, but was not issued samples of products
which were competing with similar products manufactured by
Astra. He was also not included in product conferences
regarding such products.
Because the parties failed to resolve the issue at the grievance
machinery level, they submitted the matter for voluntary
arbitration. Glaxo offered Tecson a separation pay of one-half
(½) month pay for every year of service, or a total of
₱50,000.00 but he declined the offer. On November 15, 2000,
the National Conciliation and Mediation Board (NCMB)
rendered its Decision declaring as valid Glaxo’s policy on
relationships between its employees and persons employed
with competitor companies, and affirming Glaxo’s right to
transfer Tecson to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of
Appeals assailing the NCMB Decision.
On May 19, 2003, the Court of Appeals promulgated
its Decision denying the Petition for Review on the ground that
the NCMB did not err in rendering its Decision. The appellate
court held that Glaxo’s policy prohibiting its employees from
having personal relationships with employees of competitor
companies is a valid exercise of its management prerogatives.4
Tecson filed a Motion for Reconsideration of the appellate
court’s Decision, but the motion was denied by the appellate
court in its Resolution dated March 26, 2004.5
Petitioners filed the instant petition, arguing therein that (i)
the Court of Appeals erred in affirming the NCMB’s finding that
the Glaxo’s policy prohibiting its employees from marrying an
employee of a competitor company is valid; and (ii) the Court
of Appeals also erred in not finding that Tecson was
constructively dismissed when he was transferred to a new
sales territory, and deprived of the opportunity to attend
products seminars and training sessions.6
Petitioners contend that Glaxo’s policy against employees
marrying employees of competitor companies violates the
equal protection clause of the Constitution because it creates
invalid distinctions among employees on account only of
marriage. They claim that the policy restricts the employees’
right to marry.7
They also argue that Tecson was constructively dismissed as
shown by the following circumstances: (1) he was transferred
from the Camarines Sur-Camarines Norte sales area to the
Butuan-Surigao-Agusan sales area, (2) he suffered a
diminution in pay, (3) he was excluded from attending
seminars and training sessions for medical representatives,
and (4) he was prohibited from promoting respondent’s
products which were competing with Astra’s products. 8
In its Comment on the petition, Glaxo argues that the
company policy prohibiting its employees from having a
relationship with and/or marrying an employee of a competitor
company is a valid exercise of its management prerogatives
and does not violate the equal protection clause; and that
Tecson’s reassignment from the Camarines Norte-Camarines
40
Sur sales area to the Butuan City-Surigao City and Agusan del
Sur sales area does not amount to constructive dismissal.9
Glaxo insists that as a company engaged in the promotion and
sale of pharmaceutical products, it has a genuine interest in
ensuring that its employees avoid any activity, relationship or
interest that may conflict with their responsibilities to the
company. Thus, it expects its employees to avoid having
personal or family interests in any competitor company which
may influence their actions and decisions and consequently
deprive Glaxo of legitimate profits. The policy is also aimed at
preventing a competitor company from gaining access to its
secrets, procedures and policies.10
It likewise asserts that the policy does not prohibit
marriage per se but only proscribes existing or future
relationships with employees of competitor companies, and is
therefore not violative of the equal protection clause. It
maintains that considering the nature of its business, the
prohibition is based on valid grounds.11
According to Glaxo, Tecson’s marriage to Bettsy, an employee
of Astra, posed a real and potential conflict of interest. Astra’s
products were in direct competition with 67% of the products
sold by Glaxo. Hence, Glaxo’s enforcement of the foregoing
policy in Tecson’s case was a valid exercise of its management
prerogatives.12 In any case, Tecson was given several months
to remedy the situation, and was even encouraged not to
resign but to ask his wife to resign form Astra instead.13
Glaxo also points out that Tecson can no longer question the
assailed company policy because when he signed his contract
of employment, he was aware that such policy was stipulated
therein. In said contract, he also agreed to resign from
respondent if the management finds that his relationship with
an employee of a competitor company would be detrimental to
the interests of Glaxo.14
Glaxo likewise insists that Tecson’s reassignment to another
sales area and his exclusion from seminars regarding
respondent’s new products did not amount to constructive
dismissal.
It claims that in view of Tecson’s refusal to resign, he was
relocated from the Camarines Sur-Camarines Norte sales area
to the Butuan City-Surigao City and Agusan del Sur sales area.
Glaxo asserts that in effecting the reassignment, it also
considered the welfare of Tecson’s family. Since Tecson’s
hometown was in Agusan del Sur and his wife traces her roots
to Butuan City, Glaxo assumed that his transfer from the Bicol
region to the Butuan City sales area would be favorable to him
and his family as he would be relocating to a familiar territory
and minimizing his travel expenses.15
In addition, Glaxo avers that Tecson’s exclusion from the
seminar concerning the new anti-asthma drug was due to the
fact that said product was in direct competition with a drug
which was soon to be sold by Astra, and hence, would pose a
potential conflict of interest for him. Lastly, the delay in
Tecson’s receipt of his sales paraphernalia was due to the mix-
up created by his refusal to transfer to the Butuan City sales
area (his paraphernalia was delivered to his new sales area
instead of Naga City because the supplier thought he already
transferred to Butuan).16
41
The Court is tasked to resolve the following issues: (1)
Whether the Court of Appeals erred in ruling that Glaxo’s
policy against its employees marrying employees from
competitor companies is valid, and in not holding that said
policy violates the equal protection clause of the Constitution;
(2) Whether Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecson’s contract of employment with Glaxo
being questioned by petitioners provides:
…
10. You agree to disclose to management any existing or
future relationship you may have, either by
consanguinity or affinity with co-employees or employees
of competing drug companies. Should it pose a possible
conflict of interest in management discretion, you agree
to resign voluntarily from the Company as a matter of
Company policy.
…17
The same contract also stipulates that Tescon agrees to abide
by the existing company rules of Glaxo, and to study and
become acquainted with such policies.18 In this regard, the
Employee Handbook of Glaxo expressly informs its employees
of its rules regarding conflict of interest:
1. Conflict of Interest
 Employees should avoid any activity, investment
relationship, or interest that may run counter to the
responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest,
financial or otherwise, in any competitor supplier or
other businesses which may consciously or
unconsciously influence their actions or decisions
and thus deprive Glaxo Wellcome of legitimate
profit.
b. To refrain from using their position in Glaxo
Wellcome or knowledge of Company plans to
advance their outside personal interests, that of
their relatives, friends and other businesses.
c. To avoid outside employment or other interests
for income which would impair their effective job
performance.
d. To consult with Management on such activities or
relationships that may lead to conflict of interest.
1.1. Employee Relationships
Employees with existing or future relationships either by
consanguinity or affinity with co-employees of competing
drug companies are expected to disclose such
relationship to the Management. If management
perceives a conflict or potential conflict of interest, every
effort shall be made, together by management and the
employee, to arrive at a solution within six (6) months,
either by transfer to another department in a non-
counter checking position, or by career preparation
toward outside employment after Glaxo Wellcome.
Employees must be prepared for possible resignation
within six (6) months, if no other solution is feasible. 19
42
No reversible error can be ascribed to the Court of Appeals
when it ruled that Glaxo’s policy prohibiting an employee from
having a relationship with an employee of a competitor
company is a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing
formulas, marketing strategies and other confidential
programs and information from competitors, especially so that
it and Astra are rival companies in the highly competitive
pharmaceutical industry.
The prohibition against personal or marital relationships with
employees of competitor companies upon Glaxo’s employees is
reasonable under the circumstances because relationships of
that nature might compromise the interests of the company.
In laying down the assailed company policy, Glaxo only aims
to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic
interests cannot be denied. No less than the Constitution
recognizes the right of enterprises to adopt and enforce such a
policy to protect its right to reasonable returns on investments
and to expansion and growth.20 Indeed, while our laws
endeavor to give life to the constitutional policy on social
justice and the protection of labor, it does not mean that every
labor dispute will be decided in favor of the workers. The law
also recognizes that management has rights which are also
entitled to respect and enforcement in the interest of fair
play.21
As held in a Georgia, U.S.A case,22 it is a legitimate business
practice to guard business confidentiality and protect a
competitive position by even-handedly disqualifying from jobs
male and female applicants or employees who are married to
a competitor. Consequently, the court ruled than an employer
that discharged an employee who was married to an employee
of an active competitor did not violate Title VII of the Civil
Rights Act of 1964.23 The Court pointed out that the policy was
applied to men and women equally, and noted that the
employer’s business was highly competitive and that gaining
inside information would constitute a competitive advantage.
The challenged company policy does not violate the equal
protection clause of the Constitution as petitioners erroneously
suggest. It is a settled principle that the commands of the
equal protection clause are addressed only to the state or
those acting under color of its authority.24 Corollarily, it has
been held in a long array of U.S. Supreme Court decisions that
the equal protection clause erects no shield against merely
private conduct, however, discriminatory or wrongful. 25 The
only exception occurs when the state29 in any of its
manifestations or actions has been found to have become
entwined or involved in the wrongful private
conduct.27 Obviously, however, the exception is not present in
this case. Significantly, the company actually enforced the
policy after repeated requests to the employee to comply with
the policy. Indeed, the application of the policy was made in
an impartial and even-handed manner, with due regard for the
lot of the employee.
In any event, from the wordings of the contractual provision
and the policy in its employee handbook, it is clear that Glaxo
43
does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its
employees are free to cultivate relationships with and marry
persons of their own choosing. What the company merely
seeks to avoid is a conflict of interest between the employee
and the company that may arise out of such relationships. As
succinctly explained by the appellate court, thus:
The policy being questioned is not a policy against
marriage. An employee of the company remains free to
marry anyone of his or her choosing. The policy is not
aimed at restricting a personal prerogative that belongs
only to the individual. However, an employee’s personal
decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and
business success. . .28
The Court of Appeals also correctly noted that the assailed
company policy which forms part of respondent’s Employee
Code of Conduct and of its contracts with its employees, such
as that signed by Tescon, was made known to him prior to his
employment. Tecson, therefore, was aware of that restriction
when he signed his employment contract and when he entered
into a relationship with Bettsy. Since Tecson knowingly and
voluntarily entered into a contract of employment with Glaxo,
the stipulations therein have the force of law between them
and, thus, should be complied with in good faith."29 He is
therefore estopped from questioning said policy.
The Court finds no merit in petitioners’ contention that Tescon
was constructively dismissed when he was transferred from
the Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City-Agusan del Sur sales area, and when he was
excluded from attending the company’s seminar on new
products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a
quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable, or
unlikely; when there is a demotion in rank or diminution in
pay; or when a clear discrimination, insensibility or disdain by
an employer becomes unbearable to the employee.30 None of
these conditions are present in the instant case. The record
does not show that Tescon was demoted or unduly
discriminated upon by reason of such transfer. As found by the
appellate court, Glaxo properly exercised its management
prerogative in reassigning Tecson to the Butuan City sales
area:
. . . In this case, petitioner’s transfer to another place of
assignment was merely in keeping with the policy of the
company in avoidance of conflict of interest, and thus
valid…Note that [Tecson’s] wife holds a sensitive
supervisory position as Branch Coordinator in her
employer-company which requires her to work in close
coordination with District Managers and Medical
Representatives. Her duties include monitoring sales of
Astra products, conducting sales drives, establishing and
furthering relationship with customers, collection,
monitoring and managing Astra’s inventory…she
therefore takes an active participation in the market war
characterized as it is by stiff competition among
pharmaceutical companies. Moreover, and this is
significant, petitioner’s sales territory covers Camarines
Sur and Camarines Norte while his wife is supervising a
44
branch of her employer in Albay. The proximity of their
areas of responsibility, all in the same Bicol Region,
renders the conflict of interest not only possible, but
actual, as learning by one spouse of the other’s market
strategies in the region would be inevitable.
[Management’s] appreciation of a conflict of interest is
therefore not merely illusory and wanting in factual
basis…31
In Abbott Laboratories (Phils.), Inc. v. National Labor
Relations Commission,32 which involved a complaint filed by a
medical representative against his employer drug company for
illegal dismissal for allegedly terminating his employment
when he refused to accept his reassignment to a new area, the
Court upheld the right of the drug company to transfer or
reassign its employee in accordance with its operational
demands and requirements. The ruling of the Court therein,
quoted hereunder, also finds application in the instant case:
By the very nature of his employment, a drug salesman
or medical representative is expected to travel. He
should anticipate reassignment according to the
demands of their business. It would be a poor drug
corporation which cannot even assign its representatives
or detail men to new markets calling for opening or
expansion or to areas where the need for pushing its
products is great. More so if such reassignments are part
of the employment contract.33
As noted earlier, the challenged policy has been implemented
by Glaxo impartially and disinterestedly for a long period of
time. In the case at bar, the record shows that Glaxo gave
Tecson several chances to eliminate the conflict of interest
brought about by his relationship with Bettsy. When their
relationship was still in its initial stage, Tecson’s supervisors at
Glaxo constantly reminded him about its effects on his
employment with the company and on the company’s
interests. After Tecson married Bettsy, Glaxo gave him time to
resolve the conflict by either resigning from the company or
asking his wife to resign from Astra. Glaxo even expressed its
desire to retain Tecson in its employ because of his
satisfactory performance and suggested that he ask Bettsy to
resign from her company instead. Glaxo likewise acceded to
his repeated requests for more time to resolve the conflict of
interest. When the problem could not be resolved after several
years of waiting, Glaxo was constrained to reassign Tecson to
a sales area different from that handled by his wife for Astra.
Notably, the Court did not terminate Tecson from employment
but only reassigned him to another area where his home
province, Agusan del Sur, was included. In effecting Tecson’s
transfer, Glaxo even considered the welfare of Tecson’s family.
Clearly, the foregoing dispels any suspicion of unfairness and
bad faith on the part of Glaxo.34

WHEREFORE, the Petition is DENIED for lack of merit. Costs

against petitioners.

SO ORDERED.

45
G.R. No. 164774 April 12, 2006
STAR PAPER CORPORATION, JOSEPHINE ONGSITCO &
SEBASTIAN CHUA, Petitioners,
vs.
RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E.
ESTRELLA, Respondents.
DECISION
PUNO, J.:
We are called to decide an issue of first impression: whether
the policy of the employer banning spouses from working in
the same company violates the rights of the employee under
the Constitution and the Labor Code or is a valid exercise of
management prerogative.
At bar is a Petition for Review on Certiorari of the Decision of
the Court of Appeals dated August 3, 2004 in CA-G.R. SP No.
73477 reversing the decision of the National Labor Relations
Commission (NLRC) which affirmed the ruling of the Labor
Arbiter.
Petitioner Star Paper Corporation (the company) is a
corporation engaged in trading – principally of paper products.
Josephine Ongsitco is its Manager of the Personnel and
Administration Department while Sebastian Chua is its
Managing Director.
The evidence for the petitioners show that respondents
Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and
46
Lorna E. Estrella (Estrella) were all regular employees of the
company.1
Simbol was employed by the company on October 27, 1993.
He met Alma Dayrit, also an employee of the company, whom
he married on June 27, 1998. Prior to the marriage, Ongsitco
advised the couple that should they decide to get married, one
of them should resign pursuant to a company policy
promulgated in 1995,2 viz.:
1. New applicants will not be allowed to be hired if in
case he/she has [a] relative, up to [the] 3rd degree of
relationship, already employed by the company.
2. In case of two of our employees (both singles [sic],
one male and another female) developed a friendly
relationship during the course of their employment and
then decided to get married, one of them should resign
to preserve the policy stated above.3
Simbol resigned on June 20, 1998 pursuant to the company
policy.4
Comia was hired by the company on February 5, 1997. She
met Howard Comia, a co-employee, whom she married on
June 1, 2000. Ongsitco likewise reminded them that pursuant
to company policy, one must resign should they decide to get
married. Comia resigned on June 30, 2000.5
Estrella was hired on July 29, 1994. She met Luisito Zuñiga
(Zuñiga), also a co-worker. Petitioners stated that Zuñiga, a
married man, got Estrella pregnant. The company allegedly
could have terminated her services due to immorality but she
opted to resign on December 21, 1999.6
The respondents each signed a Release and Confirmation
Agreement. They stated therein that they have no money and
property accountabilities in the company and that they release
the latter of any claim or demand of whatever nature.7
Respondents offer a different version of their dismissal. Simbol
and Comia allege that they did not resign voluntarily; they
were compelled to resign in view of an illegal company policy.
As to respondent Estrella, she alleges that she had a
relationship with co-worker Zuñiga who misrepresented
himself as a married but separated man. After he got her
pregnant, she discovered that he was not separated. Thus, she
severed her relationship with him to avoid dismissal due to the
company policy. On November 30, 1999, she met an accident
and was advised by the doctor at the Orthopedic Hospital to
recuperate for twenty-one (21) days. She returned to work on
December 21, 1999 but she found out that her name was on-
hold at the gate. She was denied entry. She was directed to
proceed to the personnel office where one of the staff handed
her a memorandum. The memorandum stated that she was
being dismissed for immoral conduct. She refused to sign the
memorandum because she was on leave for twenty-one (21)
days and has not been given a chance to explain. The
management asked her to write an explanation. However,
after submission of the explanation, she was nonetheless
dismissed by the company. Due to her urgent need for money,
she later submitted a letter of resignation in exchange for her
thirteenth month pay.8
47
Respondents later filed a complaint for unfair labor practice,
constructive dismissal, separation pay and attorney’s fees.
They averred that the aforementioned company policy is illegal
and contravenes Article 136 of the Labor Code. They also
contended that they were dismissed due to their union
membership.
On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario
dismissed the complaint for lack of merit, viz.:
[T]his company policy was decreed pursuant to what the
respondent corporation perceived as management prerogative.
This management prerogative is quite broad and
encompassing for it covers hiring, work assignment, working
method, time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of
workers and the discipline, dismissal and recall of workers.
Except as provided for or limited by special law, an employer
is free to regulate, according to his own discretion and
judgment all the aspects of employment.9 (Citations omitted.)
On appeal to the NLRC, the Commission affirmed the decision
of the Labor Arbiter on January 11, 2002. 10
Respondents filed a Motion for Reconsideration but was denied
by the NLRC in a Resolution11 dated August 8, 2002. They
appealed to respondent court via Petition for Certiorari.
In its assailed Decision dated August 3, 2004, the Court of
Appeals reversed the NLRC decision, viz.:
WHEREFORE, premises considered, the May 31, 2002
(sic)12 Decision of the National Labor Relations Commission is
hereby REVERSED and SET ASIDE and a new one is entered as
follows:
(1) Declaring illegal, the petitioners’ dismissal from
employment and ordering private respondents to
reinstate petitioners to their former positions without loss
of seniority rights with full backwages from the time of
their dismissal until actual reinstatement; and
(2) Ordering private respondents to pay petitioners
attorney’s fees amounting to 10% of the award and the
cost of this suit.13
On appeal to this Court, petitioners contend that the Court of
Appeals erred in holding that:
1. x x x the subject 1995 policy/regulation is violative of
the constitutional rights towards marriage and the family
of employees and of Article 136 of the Labor Code; and
2. x x x respondents’ resignations were far from
voluntary.14
We affirm.
The 1987 Constitution15 states our policy towards the
protection of labor under the following provisions, viz.:
Article II, Section 18. The State affirms labor as a primary
social economic force. It shall protect the rights of workers
and promote their welfare.
48
xxx
Article XIII, Sec. 3. The State shall afford full protection to
labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy
and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility
between workers and employers, recognizing the right of labor
to its just share in the fruits of production and the right of
enterprises to reasonable returns on investments, and to
expansion and growth.
The Civil Code likewise protects labor with the following
provisions:
Art. 1700. The 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.
Therefore, such contracts are subject to the special laws on
labor unions, collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor and similar
subjects.
Art. 1702. In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent
living for the laborer.
The Labor Code is the most comprehensive piece of legislation
protecting labor. The case at bar involves Article 136 of the
Labor Code which provides:
Art. 136. It shall be unlawful for an employer to require as a
condition of employment or continuation of employment that a
woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married a woman
employee shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of her
marriage.
Respondents submit that their dismissal violates the above
provision. Petitioners allege that its policy "may appear to be
contrary to Article 136 of the Labor Code" but it assumes a
new meaning if read together with the first paragraph of the
rule. The rule does not require the woman employee to resign.
The employee spouses have the right to choose who between
them should resign. Further, they are free to marry persons
other than co-employees. Hence, it is not the marital status of
the employee, per se, that is being discriminated. It is only
intended to carry out its no-employment-for-relatives-within-
the-third-degree-policy which is within the ambit of the
prerogatives of management.16
It is true that the policy of petitioners prohibiting close
relatives from working in the same company takes the nature
49
of an anti-nepotism employment policy. Companies adopt
these policies to prevent the hiring of unqualified persons
based on their status as a relative, rather than upon their
ability.17 These policies focus upon the potential employment
problems arising from the perception of favoritism exhibited
towards relatives.
With more women entering the workforce, employers are also
enacting employment policies specifically prohibiting spouses
from working for the same company. We note that two types
of employment policies involve spouses: policies banning only
spouses from working in the same company (no-spouse
employment policies), and those banning all immediate
family members, including spouses, from working in the same
company (anti-nepotism employment policies).18
Unlike in our jurisdiction where there is no express prohibition
on marital discrimination,19 there are twenty state statutes20 in
the United States prohibiting marital discrimination. Some
state courts21 have been confronted with the issue of whether
no-spouse policies violate their laws prohibiting both marital
status and sex discrimination.
In challenging the anti-nepotism employment policies in the
United States, complainants utilize two theories of
employment discrimination: the disparate treatment and
the disparate impact. Under the disparate treatment
analysis, the plaintiff must prove that an employment policy
is discriminatory on its face. No-spouse employment policies
requiring an employee of a particular sex to either quit,
transfer, or be fired are facially discriminatory. For example,
an employment policy prohibiting the employer from hiring
wives of male employees, but not husbands of female
employees, is discriminatory on its face.22
On the other hand, to establish disparate impact, the
complainants must prove that a facially neutral policy has a
disproportionate effect on a particular class. For example,
although most employment policies do not expressly indicate
which spouse will be required to transfer or leave the
company, the policy often disproportionately affects one sex. 23
The state courts’ rulings on the issue depend on their
interpretation of the scope of marital status discrimination
within the meaning of their respective civil rights acts. Though
they agree that the term "marital status" encompasses
discrimination based on a person's status as either married,
single, divorced, or widowed, they are divided on whether the
term has a broader meaning. Thus, their decisions vary.24
The courts narrowly25 interpreting marital status to refer only
to a person's status as married, single, divorced, or widowed
reason that if the legislature intended a broader definition it
would have either chosen different language or specified its
intent. They hold that the relevant inquiry is if one is married
rather than to whom one is married. They construe marital
status discrimination to include only whether a person is
single, married, divorced, or widowed and not the "identity,
occupation, and place of employment of one's spouse." These
courts have upheld the questioned policies and ruled that they
did not violate the marital status discrimination provision of
their respective state statutes.
50
The courts that have broadly26 construed the term "marital
status" rule that it encompassed the identity, occupation and
employment of one's spouse. They strike down the no-spouse
employment policies based on the broad legislative intent of
the state statute. They reason that the no-spouse employment
policy violate the marital status provision because it arbitrarily
discriminates against all spouses of present employees without
regard to the actual effect on the individual's qualifications or
work performance.27 These courts also find the no-spouse
employment policy invalid for failure of the employer to
present any evidence of business necessity other than the
general perception that spouses in the same workplace might
adversely affect the business.28 They hold that the absence of
such a bona fide occupational qualification29 invalidates a
rule denying employment to one spouse due to the current
employment of the other spouse in the same office.30 Thus,
they rule that unless the employer can prove that the
reasonable demands of the business require a distinction
based on marital status and there is no better available or
acceptable policy which would better accomplish the business
purpose, an employer may not discriminate against an
employee based on the identity of the employee’s
spouse.31 This is known as the bona fide occupational
qualification exception.
We note that since the finding of a bona fide occupational
qualification justifies an employer’s no-spouse rule, the
exception is interpreted strictly and narrowly by these state
courts. There must be a compelling business necessity for
which no alternative exists other than the discriminatory
practice.32 To justify a bona fide occupational qualification, the
employer must prove two factors: (1) that the employment
qualification is reasonably related to the essential operation of
the job involved; and, (2) that there is a factual basis for
believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of
the job.33
The concept of a bona fide occupational qualification is not
foreign in our jurisdiction. We employ the standard
of reasonableness of the company policy which is parallel to
the bona fide occupational qualification requirement. In the
recent case of Duncan Association of Detailman-PTGWO
and Pedro Tecson v. Glaxo Wellcome Philippines,
Inc.,34 we passed on the validity of the policy of a
pharmaceutical company prohibiting its employees from
marrying employees of any competitor company. We held that
Glaxo has a right to guard its trade secrets, manufacturing
formulas, marketing strategies and other confidential
programs and information from competitors. We considered
the prohibition against personal or marital relationships with
employees of competitor companies upon Glaxo’s
employees reasonable under the circumstances because
relationships of that nature might compromise the interests of
Glaxo. In laying down the assailed company policy, we
recognized that Glaxo only aims to protect its interests against
the possibility that a competitor company will gain access to
its secrets and procedures.35
The requirement that a company policy must
be reasonable under the circumstances to qualify as a valid
exercise of management prerogative was also at issue in the
1997 case of Philippine Telegraph and Telephone
Company v. NLRC.36 In said case, the employee was
51
dismissed in violation of petitioner’s policy of disqualifying
from work any woman worker who contracts marriage. We
held that the company policy violates the right against
discrimination afforded all women workers under Article 136 of
the Labor Code, but established a permissible exception, viz.:
[A] requirement that a woman employee must remain
unmarried could be justified as a "bona fide occupational
qualification," or BFOQ, where the particular requirements of
the job would justify the same, but not on the ground of a
general principle, such as the desirability of spreading work in
the workplace. A requirement of that nature would be valid
provided it reflects an inherent quality reasonably
necessary for satisfactory job performance.37(Emphases
supplied.)
The cases of Duncan and PT&T instruct us that the
requirement of reasonableness must be clearly established to
uphold the questioned employment policy. The employer has
the burden to prove the existence of a reasonable business
necessity. The burden was successfully discharged in Duncan
but not in PT&T.
We do not find a reasonable business necessity in the case at
bar.
Petitioners’ sole contention that "the company did not just
want to have two (2) or more of its employees related
between the third degree by affinity and/or consanguinity"38 is
lame. That the second paragraph was meant to give teeth to
the first paragraph of the questioned rule39 is evidently not the
valid reasonable business necessity required by the law.
It is significant to note that in the case at bar, respondents
were hired after they were found fit for the job, but were
asked to resign when they married a co-employee. Petitioners
failed to show how the marriage of Simbol, then a Sheeting
Machine Operator, to Alma Dayrit, then an employee of the
Repacking Section, could be detrimental to its business
operations. Neither did petitioners explain how this detriment
will happen in the case of Wilfreda Comia, then a Production
Helper in the Selecting Department, who married Howard
Comia, then a helper in the cutter-machine. The policy is
premised on the mere fear that employees married to each
other will be less efficient. If we uphold the questioned rule
without valid justification, the employer can create policies
based on an unproven presumption of a perceived danger at
the expense of an employee’s right to security of tenure.
Petitioners contend that their policy will apply only when one
employee marries a co-employee, but they are free to marry
persons other than co-employees. The questioned policy may
not facially violate Article 136 of the Labor Code but it creates
a disproportionate effect and under the disparate impact
theory, the only way it could pass judicial scrutiny is a showing
that it is reasonable despite the discriminatory, albeit
disproportionate, effect. The failure of petitioners to prove a
legitimate business concern in imposing the questioned policy
cannot prejudice the employee’s right to be free from arbitrary
discrimination based upon stereotypes of married persons
working together in one company.40
Lastly, the absence of a statute expressly prohibiting marital
discrimination in our jurisdiction cannot benefit the petitioners.
The protection given to labor in our jurisdiction is vast and
52
extensive that we cannot prudently draw inferences from the
legislature’s silence41 that married persons are not protected
under our Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of petitioners to
present undisputed proof of a reasonable business necessity,
we rule that the questioned policy is an invalid exercise of
management prerogative. Corollarily, the issue as to whether
respondents Simbol and Comia resigned voluntarily has
become moot and academic.
As to respondent Estrella, the Labor Arbiter and the NLRC
based their ruling on the singular fact that her resignation
letter was written in her own handwriting. Both ruled that her
resignation was voluntary and thus valid. The respondent
court failed to categorically rule whether Estrella voluntarily
resigned but ordered that she be reinstated along with Simbol
and Comia.
Estrella claims that she was pressured to submit a resignation
letter because she was in dire need of money. We examined
the records of the case and find Estrella’s contention to be
more in accord with the evidence. While findings of fact by
administrative tribunals like the NLRC are generally given not
only respect but, at times, finality, this rule admits of
exceptions,42 as in the case at bar.
Estrella avers that she went back to work on December 21,
1999 but was dismissed due to her alleged immoral conduct.
At first, she did not want to sign the termination papers but
she was forced to tender her resignation letter in exchange for
her thirteenth month pay.
The contention of petitioners that Estrella was pressured to
resign because she got impregnated by a married man and
she could not stand being looked upon or talked about as
immoral43 is incredulous. If she really wanted to avoid
embarrassment and humiliation, she would not have gone
back to work at all. Nor would she have filed a suit for illegal
dismissal and pleaded for reinstatement. We have held that in
voluntary resignation, the employee is compelled by personal
reason(s) to dissociate himself from employment. It is done
with the intention of relinquishing an office, accompanied by
the act of abandonment. 44 Thus, it is illogical for Estrella to
resign and then file a complaint for illegal dismissal. Given the
lack of sufficient evidence on the part of petitioners that the
resignation was voluntary, Estrella’s dismissal is declared
illegal.

IN VIEW WHEREOF, the Decision of the Court of Appeals in

CA-G.R. SP No. 73477 dated August 3, 2004
is AFFIRMED.1avvphil.net

SO ORDERED.

53
A.M. No. RTJ-06-2019 April 4, 2007
[Formerly A.M. No. 06-7-418-RTC]
SHARON S. ALEGRIA, Complainant,
vs.
JUDGE MANUEL N. DUQUE, RTC, Branch 197, Las Piñas
City, Respondent.
RESOLUTION
TINGA, J.:
It is well to remind judges that this Court has adopted a zero-
tolerance policy towards erring members of the judiciary as
part of its effort to cleanse its ranks and improve the
administration of justice.1 In the implementation of this policy,
however, the Court ensures that the requirements of due
process are observed, such that substantial evidence is
required to prove the charge against a judge. Side by side
with the observance of due process is this Court’s bestowal of
bounden respect for the sensibilities of complainant. All these
considered, the Court will not hesitate to do its duty to
discipline a judge or even dismiss him from the service when
his guilt is proven by the required quantum of evidence.
Conversely, this Court is bound to absolve a judge when the
charge against him is baseless or otherwise does not meet the
substantial evidence standard.
On 27 July 2005, Sharon Sanson-Alegria (complainant) then
Clerk III, Regional Trial Court (RTC), Br. 197, Las Piñas City,
filed with the Office of the Clerk of Court, RTC, Las Piñas City,
an Affidavit-Complaint2 charging Judge Manuel N. Duque
54
(respondent) for "commit[ting] acts insulting to and belittling
[her] morals and decency." On 28 July 2005, Zandra T. Bato,
Clerk of Court VI, forwarded to Joselito dj. Vibandor, Executive
Judge, RTC, Las Piñas City, said Affidavit-Complaint.3
The Committee on Decorum and Investigation (Committee)
took cognizance of the case and docketed it as Case No. LP-
05-002. Finding the complaint sufficient in form and
substance, the Committee directed respondent to file an
answer under oath.4 On 8 August 2005, respondent filed his
Answer.5
A pre-hearing conference was conducted on 7 March 2006,
after which the Committee issued a Pre-Hearing
Order6containing the stipulation of facts, issue, and list of the
pre-marked exhibits for the parties.
On 14 March 2006, complainant filed an Urgent Motion to
order the preventive suspension of respondent and his
inhibition from the criminal cases being handled by
complainant’s counsel and tried by respondent.7 On 4 April
2006, respondent filed his comment to this motion by
complainant. On the same day, the Committee issued an
Order directing the parties to submit their respective position
papers with the affidavits of their witnesses. 8 Before the
Committee could take any further action in the case, on 8 May
2006, it forwarded the records of the case to the Office of the
Court Administrator pursuant to this Court’s Resolution dated
7 March 2006 (A.M. No. 05-12-757-RTC) excluding
"complaints for sexual harassment against Judges of
Regular and Special Courts and Justices of the Court of
Appeals, the Sandiganbayan and the Court of Tax Appeals"
from the jurisdiction of the Committee.9
In a Memorandum dated 26 June 2006, Court Administrator
Christopher O. Lock recommended that the complaint against
respondent judge be docketed as a regular administrative case
and that the same be referred to one of the consultants of his
office for investigation, report and recommendation within
sixty (60) days from receipt of the records. 10 On 6 September
2006, the Court noted the Memorandum of the Court
Administrator and adopted his recommendations.11 The
complaint was re-docketed as an administrative case against
respondent and the same was referred to a consultant for
investigation, report and recommendation.
Despite four (4) resettings,12 complainant and her counsel
failed to appear at the 16 January 2007 scheduled hearing.
Respondent judge, on the other hand, appeared and submitted
an "Opposition to Postponement and Consider this Case
Submitted for Resolution."13 Thus, Hearing Officer Designate
Romulo S. Quimbo issued an Order considering the case
submitted for resolution.14
The version of complaint as found by the Hearing Officer
Designate is as follows:
In her complaint[,] complainant averred that in early February
2005, she went on leave for one week. She had notified Atty.
Jeanette Tolentino, the Branch Clerk of RTC Branch 197. She
had gone on leave because of a personal problem which was
affecting her work. When she returned to work, she was told
55
that respondent Judge wanted to talk to her. When the latter
arrived, he called for her. Before she went to respondent’s
office, she was warned by her office mates to distance herself
from the respondent because the latter had earlier kissed Atty.
Ma. Jeanette Baccay-Tolentino on the lips. Complainant said
that she did not think the respondent Judge would do the
same to her considering that he knew her father who was a
chief of police.
Upon entering the respondent’s office, complainant alleged
that she sat on the chair facing him. Respondent asked
complainant to relate her problem and not to be ashamed
because he treated as a daughter. She averred that she cried
and because she related her problem in a rather loud voice,
the respondent Judge told her to keep her voice low so as not
to be heard outside. Respondent Judge then stood up and
locked the door to his office so that no one would disturb their
conversation. Respondent Judge then sat down beside her and
because she was covering her mouth with her two hands while
she was crying, respondent Judge took her hands away
because according to him he could not understand what she
was saying. Immediately after he had removed her hands
from covering her mouth, he kissed her on the lips with his
tongue out. This surprised her. Respondent Judge then
repeated his act of kissing her with his tongue out. That was
when complainant regained her composure and she told him
that his son is outside. Before she left, the respondent Judge
said "I love you" and told her not to relate what happened to
anyone. She did not mind what he said because she was then
crying.
According to the complainant, she went down to the office of
her "daddy" who saw her crying. He asked her why she was
crying, she told him that her husband did not come home. She
did this to prevent any untoward incident and she thought the
incident with the respondent Judge would not be repeated.
From her daddy’s office she returned to the court but she was
at a loss as to what she would do. During lunch at the
canteen, she met their branch sheriff who noticed that she had
been crying. The latter asked her why she was weeping, she
related to him what had happened but she asked him to keep
the story to himself.1a\^/phi1.net
During the last week of February 2005, the complainant
declared that she was asked by respondent Judge to bring
certain folders for his study. As she gave the folders to him,
the respondent immediately embraced her. She pushed him
away and respondent took hold of his "baril." He asked her if
they could go out on a date. Because of her fear, complainant
said that she agreed to the respondent’s invitation. He set it
for 08 March but she demurred because it was her birthday.
Respondent suggested 10 March and complainant agreed.
After that she went back to her office.
Complainant further declared that respondent Judge called her
at the office to remind her of their date. They tried to record
the call by using the cell phone of her officemate but it did not
work. On 09 March, the day after her birthday, complainant
did not report to her office. Ronaldo Esguerra, a nephew of the
respondent Judge, sent her a text message that the
respondent was calling for her. She called the respondent who
asked her why she was absent. She replied that she had
overslept. He reminded her of their date the next day. He
56
suggested that they meet at "Citimotors" after the raffle
because he was the duty judge. She said yes and the
respondent warned her that if she will not appear, she better
not return to the office ever at the same time banging the
phone. For this reason complainant stated that she did not
report to the office anymore because she knew that she will be
the recipient of a series of memoranda because that is what
happens when the respondent Judge does not get what he
wants. This same thing had happened to her office mates who
do not want to talk for fear of losing their jobs. Because of his
several memoranda her salary and other benefits were
withheld. That is the reason she could not immediately filed
her complaint. Moreover, she realized that she was the
underdog because respondent Judge knew many high and
mighty people.15
In his Answer,16 respondent denies the averments in the
affidavit-complaint and refuted in detail the alleged act of
sexual harassment. According to respondent, sometime in
February 2005, after he learned that complainant had reported
back for work after a prolonged absence, he talked to her over
the phone that he wanted to see and talk to her about her
neglected work as civil case clerk-in-charge. Complainant
came to his office already trembling, crying and appeared
hysterical. The door to respondent’s chamber was only half-
closed with respondent’s son standing by the door.17
Complainant confessed that her husband, who had already
become a drug addict, had another woman, no longer reported
for work, and was no longer coming home. Complainant
further informed respondent that her own father was likewise
estranged from her mother and was also living with another
woman. To this revelation, respondent merely advised
complainant to work punctually everyday and to take an
interest in her work for her to forget her family problems.
Complainant allegedly apologized and promised not to repeat
being absent.181ªvvphi1.nét
A few days later, on 8 March 2005, complainant called
respondent asking permission for her to be absent as it was
her birthday. Respondent told her that it was her privilege but
that she had to notify the Branch Clerk of Court.19
With respect to the other incident, respondent asserts that at
the time complainant delivered the voluminous folders and
records of three cases, she was accompanied by Ronaldo
Esguerra, the process server who carried the said records and
waited with complainant in respondent’s chambers while the
latter went over the said records. Complainant and Esguerra
thereafter left together.20
In addition to his denial and refutation of the alleged acts of
sexual harassment, respondent further stated other matters
with respect to complainant’s appointment, performance, and
efficiency as Clerk of his court. Respondent states that
complainant was appointed to the position of Clerk in Branch
197 upon his recommendation.21 Despite this, he criticizes her
performance as docket clerk. According to respondent, several
memoranda were issued by the Branch Clerk of Court relative
to complainant’s performance of her duties, to wit: (1)
Memorandum22 dated 17 April 2002 directing complainant to
immediately submit all pleadings, motions, memoranda, and
other papers to avoid delay and adverse consequences, (2)
Memorandum23 dated 19 April 2002 directing complainant to
57
attach the registry receipts and return cards to the records of
the case to which they pertained, (3) Memorandum24 dated 9
February 2005, requiring complainant to explain why she did
not furnish the parties with copies of the decision dated 5
November 2004 in Civil Case No. 01-0148, and (4)
Memorandum25 dated 2 December 2004 ordering complainant
to explain her failure to prepare the order in LRC LP-04-0097.
Complainant also frequently absented herself from September
to February 2005, seriously neglecting her work to the
detriment and prejudice of the service.26 On at least three
occasions too, complainant failed to follow respondent’s
instructions with respect to the release of orders or decisions
in various cases assigned to him,27 as well as to properly keep
case records.28 The Branch Clerk of Court also found further
irregularities in complainant’s performance of her duties in
four more cases and informed respondent about
these.29 Complainant, in response to the Memorandum dated 2
December 2004, admitted that she had a domestic problem
that consumed all her time and effort and which also wore her
down due to stress.30
According to respondent, complainant was no longer reporting
for work since 9 March 2005 and that they have not received
any notice or information as to the reason for her prolonged
absence.31 Because of these prolonged absences, the Branch
Clerk of Court wrote the Leave Division, Office of the Court
Administrator on 1 July 2005, requesting for the immediate
dropping of complainant from the roll of employees so that her
position can be declared vacant for the Court to indorse a new
employee in her place.32 Another letter was addressed to the
Office of the Clerk of Court, RTC, Las Piñas City requesting
said office to hold all checks payable to complainant
representing salaries, benefits and other remunerations.33
On 29 June 2005, Caridad A. Pabello, Officer-in-Charge,
Administrative Services, Office of the Court Administrator,
wrote complainant requiring her to explain her unauthorized
absences within five (5) days from receipt of the letter,
favorably endorsed by the Presiding/Executive Judge
otherwise they will be constrained to recommend that
complainant be dropped from the rolls.34
Respondent surmises that it was because of this letter that
complainant filed the instant administrative complaint against
him, dragging the names of the other personnel of the branch.
The malicious prosecution against respondent was also
designed to cover up her misfeasance which had been
discovered.35
On 22 February 2007, the Hearing Officer Designate
transmitted to this Court, through the Office of the Court
Administrator, five (5) copies of his Report, recommending the
dismissal of the case. In making his recommendations, the
Hearing Officer Designate took note of the following
circumstances:36
1. Several months (from February) passed before the
complainant filed this case on 27 July 2005.
2. Complainant’s father was then Chief of Police of Las
Piñas and his office and respondent’s office were on the
same building. Immediately after she was assaulted,
complainant left respondent’s chambers and proceeded
58
to her father’s. Why then did she not immediately
confide in him what had happened to her[?] On the other
hand[,] she rather freely told their branch sheriff whom
she met at the canteen.
3. Complainant stated that before she went in the
chambers of the respondent when she was called in early
February, she was warned by her office mates not to be
too close to respondent as he had earlier kissed Atty.
Tolentino. Complainant had conveniently omitted to
mention who were these office mates who had warned
her.
4. The complainant had been a habitual absentee even
before the alleged sexual harassment. The respondent
had sought her removal from his court. To this end, his
Branch Clerk of Court had written the Court
Administrator, through the leave section, to report
complainant’s delinquency and asking that her name be
dropped from the roll of employees.
5. Respondent also took steps to prevent complainant
from collecting her salary for the periods she was absent.
To this end, letters were written to the Court
Administrator and to the Clerk of Court for the Las Piñas
Regional Trial Court to withhold any check or other
benefit that would accrue to the complainant.
6. It was not until these letters were written that the
complaint for sexual harassment surfaced.
After reviewing the records of the instant administrative case,
we find the above observations and conclusions of the Hearing
Officer Designate to be well-taken as they are adequately
substantiated by evidence and are anchored on applicable law
and jurisprudence.
Sexual harassment in the workplace is not about a man taking
advantage of a woman by reason of sexual desire – it is about
power being exercised by a superior over his women
subordinates. That power emanates from the fact that he can
remove them if they refuse his amorous advances.37 Under
Sec. 3 of A.M. No. 03-03-13-SC (Re: Rule on Administrative
Procedure in Sexual Harassment Cases and Guidelines on
Proper Work Decorum in the Judiciary), work-related sexual
harassment is committed by an official or employee in the
Judiciary who, having authority, influence or moral ascendancy
over another in a work environment, demands, requests or
otherwise requires any sexual favor from the other, regardless
of whether the demand, request or requirement for submission
is accepted by the latter. It is committed when "the sexual
favor is made as a condition in the hiring or in the
employment, re-employment or continued employment of said
individual, or in granting said individual favorable
compensation, terms, conditions, promotions, or privileges; or
the refusal to grant the sexual favor results in limiting,
segregating or classifying the employee which in any way
would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee." 38
In the case at bar, while it is true that the element of moral
ascendancy is present, respondent being the person who
recommended complainant to her present position,
59
complainant has failed to prove the alleged sexual advances
by evidence other than her bare allegations in the affidavit-
complaint. Even her own actions or omissions operate to cast
doubt on her claim.
With no witnesses presented to prove or refute the allegations
of the complaint, the case becomes a battle of complainant’s
word against respondent’s.
It should be remembered that the case was referred to a
Hearing Officer who is not connected with the Las Piñas court
but with the Office of the Court Administrator affording a more
neutral venue for both parties. However, despite four (4)
resettings39 of the hearing, complainant and her counsel failed
to appear at the 16 January 2007 scheduled hearing, thereby
denying the Hearing Officer the opportunity to question her
and validate her accusation against respondent. Her
dereliction enfeebles her allegations.
With respect to respondent judge, his version of the events is
not totally implausible. Crucially, he does not admit to having
committed any positive act that can be construed as an
untoward sexual advance. All told, there is no inherent
weakness in the version he proffers.
Most damaging to complainant’s cause is that, based on the
records and contemporaneous circumstances, there appears to
be a strong motive on her part to make up charges against
respondent judge. It should be remembered that even before
the alleged incident, complainant was already in hot water,
being the recipient of at least four memoranda from the
Branch Clerk of Court, all of which called her to task for her
poor performance as clerk in charge of civil cases. In addition,
a month before complainant filed the instant case, the Office
of the Court Administrator had directed complainant to explain
her unauthorized absences and to include in said explanation a
favorable endorsement from the Presiding/Executive Judge.
Complainant was further warned that upon her failure to
comply with these directives will constrain said office to
recommend her dropping from the rolls.

The circumstances being as they are, it is easy to engender

the belief that the filing of the administrative case against
respondent was a belated, vain, and futile attempt by
complainant to cover up for her own misfeasance, i.e.,
prolonged leave of absence without official leave, among
others, and a chance to get back at respondent judge for
initiating the administrative inquiry against her which resulted
in the withholding of her salaries and benefits as well as the
rise of the

possibility of her being dropped from the rolls.40 Considering

that complainant has failed to substantiate her allegations,
failing even to attest to her claims before the investigator
appointed by this Court, elementary justice dictates
respondent’s exoneration of the charge.

WHEREFORE, premises considered, the Court resolves

to DISMISS the instant administrative case against Judge
Manuel N. Duque, Regional Trial Court, Branch 197, Las Piñas
City for lack of merit.

SO ORDERED.

60
G.R. No. 155831 February 18, 2008 NACHURA, J.:

MA. LOURDES T. DOMINGO, petitioner, Sexual harassment is an imposition of misplaced "superiority"

vs.
ROGELIO I. RAYALA, respondent.
x-------------------------x
G.R. No. 155840 February 18, 2008
ROGELIO I. RAYALA, petitioner,
vs.
OFFICE OF THE PRESIDENT; RONALDO V. ZAMORA, in
his capacity as Executive Secretary; ROY V. SENERES, in
his capacity as Chairman of the National Labor Relations
Commission (in lieu of RAUL T. AQUINO, in his capacity
as Acting Chairman of the National labor Relations
Commission); and MA. LOURDES T.
DOMINGO, respondents.
x-------------------------x
G.R. No. 158700 February 18, 2008
The REPUBLIC OF THE PHILIPPINES, represented by the
OFFICE OF THE PRESIDENT; and ALBERTO G. ROMULO,
in his capacity as Executive Secretary, petitioners,
vs.
ROGELIO I. RAYALA, respondent.
DECISION
which is enough to dampen an employee’s spirit and her
capacity for advancement. It affects her sense of judgment; it
changes her life.1
Before this Court are three Petitions for Review
on Certiorari assailing the October 18, 2002 Resolution of the
CA’s Former Ninth Division2 in CA-G.R. SP No. 61026. The
Resolution modified the December 14, 2001 Decision3 of the
Court of Appeals’ Eleventh Division, which had affirmed the
Decision of the Office of the President (OP) dismissing from
the service then National Labor Relations Commission (NLRC)
Chairman Rogelio I. Rayala (Rayala) for disgraceful and
immoral conduct.
All three petitions stem from the same factual antecedents.
On November 16, 1998, Ma. Lourdes T. Domingo (Domingo),
then Stenographic Reporter III at the NLRC, filed a Complaint
for sexual harassment against Rayala before Secretary
Bienvenido Laguesma of the Department of Labor and
Employment (DOLE).
To support the Complaint, Domingo executed an Affidavit
narrating the incidences of sexual harassment complained of,
thus:
xxxx

61
 4. Sa simula ay pabulong na sinasabihan lang ako ni
Chairman Rayala ng mga salitang "Lot, gumaganda ka
yata?"
5. Sa ibang mga pagkakataon nilalapitan na ako ni
Chairman at hahawakan ang aking balikat sabay pisil sa
mga ito habang ako ay nagta-type at habang nagbibigay
siya ng diktasyon. Sa mga pagkakataong ito,
kinakabahan ako. Natatakot na baka mangyari sa akin
ang mga napapabalitang insidente na nangyari na noon
tungkol sa mga sekretarya niyang nagbitiw gawa ng mga
mahahalay na panghihipo ni Chairman.
6. Noong ika-10 ng Setyembre, 1998, nang ako ay nasa
8th Floor, may nagsabi sa akin na kailangan akong
bumaba sa 7th Floor kung nasaan ang aming opisina dahil
sa may koreksyon daw na gagawin sa mga papel na
tinayp ko. Bumaba naman ako para gawin ito. Habang
ginagawa ko ito, lumabas si Chairman Rayala sa silid ni
Mr. Alex Lopez. Inutusan ako ni Chairman na sumunod
sa kaniyang silid. Nang nasa silid na kami, sinabi niya sa
akin:
Chairman: Lot, I like you a lot. Naiiba ka sa lahat.
At pagkatapos ako ay kaniyang inusisa tungkol sa mga
personal na bagay sa aking buhay. Ang ilan dito ay
tungkol sa aking mga magulang, kapatid, pag-aaral at
kung may boyfriend na raw ba ako.
Chairman: May boyfriend ka na ba?
Lourdes: Dati nagkaroon po.
62
Chairman: Nasaan na siya?
Lourdes: Nag-asawa na ho.
Chairman: Bakit hindi kayo nagkatuluyan?
Lourdes: Nainip po.
Chairman: Pagkatapos mo ng kurso mo ay kumuha
ka ng Law at ako ang bahala sa iyo, hanggang ako
pa ang Chairman dito.
Pagkatapos ay kumuha siya ng pera sa kaniyang
amerikana at inaabot sa akin.
Chairman: Kuhanin mo ito.
Lourdes: Huwag na ho hindi ko kailangan.
Chairman: Hindi sige, kuhanin mo. Ayusin mo ang
dapat ayusin.
Tinanggap ko po ang pera ng may pag-aalinlangan.
Natatakot at kinakabahan na kapag hindi ko tinanggap
ang pera ay baka siya magagalit kasabay na rito ang
pagtapon sa akin kung saan-saan opisina o kaya ay
tanggalin ako sa posisyon.
Chairman: Paglabas mo itago mo ang pera. Ayaw
ko ng may makaka-alam nito. Just the two of us.
Lourdes: Bakit naman, Sir?
 Chairman: Basta. Maraming tsismosa diyan sa
labas. But I don’t give them a damn. Hindi ako
mamatay sa kanila.
Tumayo na ako at lumabas. Pumanhik na ako ng 8th Floor
at pumunta ako sa officemate ko na si Agnes Magdaet.
Ikinwento ko ang nangyari sa akin sa opisina ni
Chairman. Habang kinikwento ko ito kay Agnes ay
binilang namin ang pera na nagkakahalaga ng tatlong
libong piso (PHP 3,000). Sinabi ni Agnes na isauli ko raw
ang pera, pero ang sabi ko ay natatakot ako baka
magalit si Sir. Nagsabi agad kami kay EC Perlita Velasco
at sinalaysay ko ang nangyari. Sinabi niya na isauli ko
ang pera at noong araw ding iyon ay nagpasiya akong
isauli na nga ito ngunit hindi ako nagkaroon ng
pagkakataon dahil marami siyang naging bisita. Isinauli
ko nga ang pera noong Lunes, Setyembre 14, 1998.
7. Noong huling linggo ng Setyembre, 1998, ay may
tinanong din sa akin si Chairman Rayala na hindi ko
masikmura, at sa aking palagay at tahasang
pambabastos sa akin.
Chairman: Lot, may ka live-in ka ba?
Lourdes: Sir, wala po.
Chairman: Bakit malaki ang balakang mo?
Lourdes: Kayo, Sir ha! Masama sa amin ang may
ka live-in.
Chairman: Bakit, ano ba ang relihiyon ninyo?
63
Lourdes: Catholic, Sir. Kailangan ikasal muna.
Chairman: Bakit ako, hindi kasal.
Lourdes: Sir, di magpakasal kayo.
Chairman: Huh. Ibahin na nga natin ang usapan.
8. Noong Oktubre 29, 1998, ako ay pumasok sa kwarto
ni Chairman Rayala. Ito ay sa kadahilanang ang fax
machine ay nasa loob ng kaniyang kwarto. Ang nag-
aasikaso nito, si Riza Ocampo, ay naka-leave kaya ako
ang nag-asikaso nito noong araw na iyon. Nang
mabigyan ko na ng fax tone yung kausap ko, pagharap
ko sa kanan ay nakaharang sa dadaanan ko si Chairman
Rayala. Tinitingnan ako sa mata at ang titig niya ay
umuusad mula ulo hanggang dibdib tapos ay ngumiti na
may mahalay na pakahulugan.
9. Noong hapon naman ng pareho pa ring petsa, may
nag-aapply na sekretarya sa opisina, sinabi ko ito kay
Chairman Rayala:
Lourdes: Sir, si Pinky po yung applicant, mag-
papainterview po yata sa inyo.
Chairman: Sabihin mo magpa-pap smear muna
siya
Chairman: O sige, i-refer mo kay Alex. (Alex Lopez,
Chief of Staff).
 10. Noong Nobyembre 9, 1998, ako ay tinawag ni
Chairman Rayala sa kaniyang opisina upang kuhanin ko
ang diktasyon niya para kay ELA Oscar Uy. Hindi pa kami
nakakatapos ng unang talata, may pumasok na bisita si
Chairman, si Baby Pangilinan na sinamahan ni Riza
Ocampo. Pinalabas muna ako ni Chairman. Nang maka-
alis na si Ms. Pangilinan, pinapasok na niya ako ulit.
Umupo ako. Lumapit sa likuran ko si Chairman,
hinawakan ang kaliwang balikat ko na pinipisil ng kanang
kamay niya at sinabi:
Chairman: Saan na ba tayo natapos?
Palakad-lakad siya sa aking likuran habang nag-didikta.
Huminto siya pagkatapos, at nilagay niya ang kanang
kamay niya sa aking kanang balikat at pinisil-pisil ito
pagkatapos ay pinagapang niya ito sa kanang bahagi ng
aking leeg, at pinagapang hanggang kanang tenga at
saka kiniliti. Dito ko inalis ang kaniyang kamay sa
pamamagitan ng aking kaliwang kamay. At saka ko
sinabi:
Lourdes: Sir, yung kamay ninyo alisin niyo!
Natapos ko rin ang liham na pinagagawa niya pero halos
hindi ko na maintindihan ang na-isulat ko dahil sa takot
at inis na nararamdaman ko.4
After the last incident narrated, Domingo filed for leave of
absence and asked to be immediately transferred. Thereafter,
she filed the Complaint for sexual harassment on the basis of
Administrative Order No. 250, the Rules and Regulations
64
Implementing RA 7877 in the Department of Labor and
Employment.
Upon receipt of the Complaint, the DOLE Secretary referred
the Complaint to the OP, Rayala being a presidential
appointee. The OP, through then Executive Secretary Ronaldo
Zamora, ordered Secretary Laguesma to investigate the
allegations in the Complaint and create a committee for such
purpose. On December 4, 1998, Secretary Laguesma issued
Administrative Order (AO) No. 280, Series of
1998,5 constituting a Committee on Decorum and
Investigation (Committee) in accordance with Republic Act
(RA) 7877, the Anti-Sexual Harassment Act of 1995.6
The Committee heard the parties and received their respective
evidence. On March 2, 2000, the Committee submitted its
report and recommendation to Secretary Laguesma. It found
Rayala guilty of the offense charged and recommended the
imposition of the minimum penalty provided under AO 250,
which it erroneously stated as suspension for six (6) months.
The following day, Secretary Laguesma submitted a copy of
the Committee Report and Recommendation to the OP, but
with the recommendation that the penalty should be
suspension for six (6) months and one (1) day, in accordance
with AO 250.
On May 8, 2000, the OP, through Executive Secretary Zamora,
issued AO 119,7 the pertinent portions of which read:
Upon a careful scrutiny of the evidence on record, I
concur with the findings of the Committee as to the
 culpability of the respondent [Rayala], the same having
been established by clear and convincing evidence.
However, I disagree with the recommendation that
respondent be meted only the penalty of suspension for
six (6) months and one (1) day considering the
circumstances of the case.
What aggravates respondent’s situation is the undeniable
circumstance that he took advantage of his position as
the superior of the complainant. Respondent occupies
the highest position in the NLRC, being its Chairman. As
head of said office, it was incumbent upon respondent to
set an example to the others as to how they should
conduct themselves in public office, to see to it that his
subordinates work efficiently in accordance with Civil
Service Rules and Regulations, and to provide them with
healthy working atmosphere wherein co-workers treat
each other with respect, courtesy and cooperation, so
that in the end the public interest will be benefited (City
Mayor of Zamboanga vs. Court of Appeals, 182 SCRA
785 [1990]).
What is more, public service requires the utmost
integrity and strictest discipline (Gano vs. Leonen, 232
SCRA 99 [1994]). Thus, a public servant must exhibit at
all times the highest sense of honesty and integrity, and
"utmost devotion and dedication to duty" (Sec. 4 (g), RA
6713), respect the rights of others and shall refrain from
doing acts contrary to law, and good morals (Sec. 4(c)).
No less than the Constitution sanctifies the principle that
a public office is a public trust, and enjoins all public
officers and employees to serve with the highest degree
65
of responsibility, integrity, loyalty and efficiency (Section
1, Article XI, 1987 Constitution).
Given these established standards, I see respondent’s
acts not just [as] a failure to give due courtesy and
respect to his co-employees (subordinates) or to
maintain good conduct and behavior but defiance of the
basic norms or virtues which a government official must
at all times uphold, one that is contrary to law and
"public sense of morality." Otherwise stated, respondent
– to whom stricter standards must apply being the
highest official [of] the NLRC – had shown an attitude, a
frame of mind, a disgraceful conduct, which renders him
unfit to remain in the service.
WHEREFORE, in view of the foregoing, respondent
Rogelio I. Rayala, Chairman, National Labor Relations
Commission, is found guilty of the grave offense of
disgraceful and immoral conduct and is
hereby DISMISSED from the service effective upon
receipt of this Order.
SO ORDER[ED].
Rayala filed a Motion for Reconsideration, which the OP denied
in a Resolution8 dated May 24, 2000. He then filed a Petition
for Certiorari and Prohibition with Prayer for Temporary
Restraining Order under Rule 65 of the Revised Rules on Civil
Procedure before this Court on June 14, 2000.9 However, the
same was dismissed in a Resolution dated June 26, 2000 for
disregarding the hierarchy of courts.10 Rayala filed a Motion for
Reconsideration11 on August 15, 2000. In its Resolution12 dated
September 4, 2000, the Court recalled its June 26 Resolution
and referred the petition to the Court of Appeals (CA) for
appropriate action.
The CA rendered its Decision13 on December 14, 2001. It held
that there was sufficient evidence on record to create moral
certainty that Rayala committed the acts he was charged with.
It said:
The complainant narrated her story complete with
details. Her straightforward and uninhibited testimony
was not emasculated by the declarations of
Commissioner Rayala or his witnesses. x x x
Moreover, Commissioner Rayala has not proven any
vicious motive for Domingo and her witnesses to invent
their stories. It is very unlikely that they would perjure
themselves only to accommodate the alleged conspiracy
to oust petitioner from office. Save for his empty
conjectures and speculations, Rayala failed to
substantiate his contrived conspiracy. It is a hornbook
doctrine that conspiracy must be proved by positive and
convincing evidence (People v. Noroña, 329 SCRA 502
[2000]). Besides, it is improbable that the complainant
would concoct a story of sexual harassment against the
highest official of the NLRC and thereby expose herself to
the possibility of losing her job, or be the subject of
reprisal from her superiors and perhaps public ridicule if
she was not telling the truth.
66
It also held that Rayala’s dismissal was proper. The CA pointed
out that Rayala was dismissed for disgraceful and immoral
conduct in violation of RA 6713, the Code of Conduct and
Ethical Standards for Public Officials and Employees. It held
that the OP was correct in concluding that Rayala’s acts
violated RA 6713:
Indeed, [Rayala] was a public official, holding the
Chairmanship of the National Labor Relations
Commission, entrusted with the sacred duty of
administering justice. Occupying as he does such an
exalted position, Commissioner Rayala must pay a high
price for the honor bestowed upon him. He must comport
himself at all times in such a manner that the conduct of
his everyday life should be beyond reproach and free
from any impropriety. That the acts complained of were
committed within the sanctuary of [his] office
compounded the objectionable nature of his wrongdoing.
By daring to violate the complainant within the solitude
of his chambers, Commissioner Rayala placed the
integrity of his office in disrepute. His disgraceful and
immoral conduct warrants his removal from office.14
Thus, it dismissed the petition, to wit:
IN VIEW OF ALL THE FOREGOING, the instant petition is
hereby DISMISSED and Administrative Order No. 119 as
well [as] the Resolution of the Office of the President in
O.P. Case No. 00-E-9118 dated May 24, 2000 are
AFFIRMED IN TOTO. No cost.
SO ORDERED.15
Rayala timely filed a Motion for Reconsideration. Justices
Vasquez and Tolentino voted to affirm the December 14
Decision. However, Justice Reyes dissented mainly because AO
250 states that the penalty imposable is suspension for six (6)
months and one (1) day.16 Pursuant to the internal rules of the
CA, a Special Division of Five was constituted. 17 In its October
18, 2002 Resolution, the CA modified its earlier Decision:
ACCORDINGLY, the Decision dated December [14], 2001
is MODIFIED to the effect that the penalty of dismissal is
DELETED and instead the penalty of suspension from
service for the maximum period of one (1) year is
HEREBY IMPOSED upon the petitioner. The rest of the
challenged decision stands.
SO ORDERED.
Domingo filed a Petition for Review18 before this Court, which
we denied in our February 19, 2003 Resolution for having a
defective verification. She filed a Motion for Reconsideration,
which the Court granted; hence, the petition was reinstated.
19
Rayala likewise filed a Petition for Review with this Court
essentially arguing that he is not guilty of any act of sexual
harassment.
Meanwhile, the Republic filed a Motion for Reconsideration of
the CA’s October 18, 2002 Resolution. The CA denied the
same in its June 3, 2003 Resolution, the dispositive portion of
which reads:
SO ORDERED.
The Republic then filed its own Petition for Review. 20
On June 28, 2004, the Court directed the consolidation of the
three (3) petitions.
G.R. No. 155831
Domingo assails the CA’s resolution modifying the penalty
imposed by the Office of the President. She raises this issue:
The Court of Appeals erred in modifying the penalty for
the respondent from dismissal to suspension from
service for the maximum period of one year. The
President has the prerogative to determine the proper
penalty to be imposed on an erring Presidential
appointee. The President was well within his power when
he fittingly used that prerogative in deciding to dismiss
the respondent from the service.21
She argues that the power to remove Rayala, a presidential
appointee, is lodged with the President who has control of the
entire Executive Department, its bureaus and offices. The OP’s
decision was arrived at after affording Rayala due process.
Hence, his dismissal from the service is a prerogative that is
entirely with the President.22

ACCORDINGLY, by a majority vote, public respondents’

Motion for Reconsideration, (sic) is DENIED.
67
As to the applicability of AO No. 250, she argues that the
same was not intended to cover cases against presidential
appointees. AO No. 250 refers only to the instances wherein
the DOLE Secretary is the disciplining authority, and thus, the
AO does not circumscribe the power of the President to
dismiss an erring presidential appointee.
G.R. No. 155840
In his petition, Rayala raises the following issues:
I. CONTRARY TO THE FINDINGS OF THE COURT OF
APPEALS, THE ACTS OF HEREIN PETITIONER DO
NOT CONSTITUTE SEXUAL HARASSMENT AS LAID
DOWN BY THE En Banc RULING IN THE CASE
OF AQUINO vs. ACOSTA, ibid., AS WELL AS IN THE
APPLICATION OF EXISTING LAWS.
II. CONTRARY TO THE FINDINGS OF THE
HONORABLE COURT OF APPEALS, INTENT IS AN
INDISPENSABLE ELEMENT IN A CASE FOR SEXUAL
HARASSMENT. THE HONORABLE COURT ERRED IN
ITS FINDING THAT IT IS AN OFFENSE THAT IS
MALUM PROHIBITUM.
III. THE INVESTIGATION COMMITTEE, THE OFFICE
OF THE PRESIDENT, AND NOW, THE HONORABLE
COURT OF APPEALS, HAS MISAPPLIED AND
EXPANDED THE DEFINITION OF SEXUAL
HARASSMENT IN THE WORKPLACE UNDER R.A. No.
7877, BY APPLYING DOLE A.O. 250, WHICH RUNS
68
COUNTER TO THE RECENT PRONOUNCEMENTS OF
THIS HONORABLE SUPREME COURT.23
Invoking Aquino v. Acosta,24 Rayala argues that the case is the
definitive ruling on what constitutes sexual harassment. Thus,
he posits that for sexual harassment to exist under RA 7877,
there must be: (a) demand, request, or requirement of a
sexual favor; (b) the same is made a pre-condition to hiring,
re-employment, or continued employment; or (c) the denial
thereof results in discrimination against the employee.
Rayala asserts that Domingo has failed to allege and establish
any sexual favor, demand, or request from petitioner in
exchange for her continued employment or for her promotion.
According to Rayala, the acts imputed to him are without
malice or ulterior motive. It was merely Domingo’s perception
of malice in his alleged acts – a "product of her own
imagination"25 – that led her to file the sexual harassment
complaint.
Likewise, Rayala assails the OP’s interpretation, as upheld by
the CA, that RA 7877 is malum prohibitum such that the
defense of absence of malice is unavailing. He argues that
sexual harassment is considered an offense against a
particular person, not against society as a whole. Thus, he
claims that intent is an essential element of the offense
because the law requires as a conditio sine qua non that a
sexual favor be first sought by the offender in order to achieve
certain specific results. Sexual harassment is committed with
the perpetrator’s deliberate intent to commit the offense. 26
Rayala next argues that AO 250 expands the acts proscribed
in RA 7877. In particular, he assails the definition of the forms
of sexual harassment:
Rule IV
FORMS OF SEXUAL HARASSMENT
Section 1. Forms of Sexual Harassment. – Sexual
harassment may be committed in any of the following
forms:
a) Overt sexual advances;
b) Unwelcome or improper gestures of affection;
c) Request or demand for sexual favors including but not
limited to going out on dates, outings or the like for the
same purpose;
d) Any other act or conduct of a sexual nature or for
purposes of sexual gratification which is generally
annoying, disgusting or offensive to the victim. 27
He posits that these acts alone without corresponding
demand, request, or requirement do not constitute sexual
harassment as contemplated by the law.28 He alleges that the
rule-making power granted to the employer in Section 4(a) of
RA 7877 is limited only to procedural matters. The law did not
delegate to the employer the power to promulgate rules which
would provide other or additional forms of sexual harassment,
or to come up with its own definition of sexual harassment. 29
69
G.R. No. 158700
The Republic raises this issue:
Whether or not the President of the Philippines
may validly dismiss respondent Rayala as
Chairman of the NLRC for committing acts of
sexual harassment.30
The Republic argues that Rayala’s acts constitute sexual
harassment under AO 250. His acts constitute unwelcome or
improper gestures of affection and are acts or conduct of a
sexual nature, which are generally annoying or offensive to
the victim.31
It also contends that there is no legal basis for the CA’s
reduction of the penalty imposed by the OP. Rayala’s dismissal
is valid and warranted under the circumstances. The power to
remove the NLRC Chairman solely rests upon the President,
limited only by the requirements under the law and the due
process clause.
The Republic further claims that, although AO 250 provides
only a one (1) year suspension, it will not prevent the OP from
validly imposing the penalty of dismissal on Rayala. It argues
that even though Rayala is a presidential appointee, he is still
subject to the Civil Service Law. Under the Civil Service Law,
disgraceful and immoral conduct, the acts imputed to Rayala,
constitute grave misconduct punishable by dismissal from the
service.32 The Republic adds that Rayala’s position is invested
with public trust and his acts violated that trust; thus, he
should be dismissed from the service.
This argument, according to the Republic, is also supported by
Article 215 of the Labor Code, which states that the Chairman
of the NLRC holds office until he reaches the age of 65 only
during good behavior.33 Since Rayala’s security of tenure is
conditioned upon his good behavior, he may be removed from
office if it is proven that he has failed to live up to this
standard.
All the issues raised in these three cases can be summed up in
two ultimate questions, namely:
(1) Did Rayala commit sexual harassment?
(2) If he did, what is the applicable penalty?
Initially, however, we must resolve a procedural issue raised
by Rayala. He accuses the Office of the Solicitor General
(OSG), as counsel for the Republic, of forum shopping because
it filed a motion for reconsideration of the decision in CA-G.R.
SP No. 61026 and then filed a comment in G.R. No. 155840
before this Court.
We do not agree.
Forum shopping is an act of a party, against whom an adverse
judgment or order has been rendered in one forum, of seeking
and possibly securing a favorable opinion in another forum,
other than by appeal or special civil action for certiorari.34 It
consists of filing multiple suits involving the same parties for
the same cause of action, either simultaneously or
successively, for the purpose of obtaining a favorable
judgment.35
70
There is forum shopping when the following elements concur:
(1) identity of the parties or, at least, of the parties who
represent the same interest in both actions; (2) identity of the
rights asserted and relief prayed for, as the latter is founded
on the same set of facts; and (3) identity of the two preceding
particulars such that any judgment rendered in the other
action will amount to res judicata in the action under
consideration or will constitute litis pendentia.36
Reviewing the antecedents of these consolidated cases, we
note that the CA rendered the assailed Resolution on October
18, 2002. The Republic filed its Motion for Reconsideration on
November 22, 2002. On the other hand, Rayala filed his
petition before this Court on November 21, 2002. While the
Republic’s Motion for Reconsideration was pending resolution
before the CA, on December 2, 2002, it was directed by this
Court to file its Comment on Rayala’s petition, which it
submitted on June 16, 2003.
When the CA denied the Motion for Reconsideration, the
Republic filed its own Petition for Review with this Court on
July 3, 2003. It cited in its "Certification and Verification of a
Non-Forum Shopping" (sic), that there was a case involving
the same facts pending before this Court denominated as G.R.
No. 155840. With respect to Domingo’s petition, the same had
already been dismissed on February 19, 2003. Domingo’s
petition was reinstated on June 16, 2003 but the resolution
was received by the OSG only on July 25, 2003, or after it had
filed its own petition.37
Based on the foregoing, it cannot be said that the OSG is
guilty of forum shopping. We must point out that it was Rayala
who filed the petition in the CA, with the Republic as the
adverse party. Rayala himself filed a motion for
reconsideration of the CA’s December 21, 2001 Decision,
which led to a more favorable ruling, i.e., the lowering of the
penalty from dismissal to one-year suspension. The parties
adversely affected by this ruling (Domingo and the Republic)
had the right to question the same on motion for
reconsideration. But Domingo directly filed a Petition for
Review with this Court, as did Rayala. When the Republic
opted to file a motion for reconsideration, it was merely
exercising a right. That Rayala and Domingo had by then
already filed cases before the SC did not take away this right.
Thus, when this Court directed the Republic to file its
Comment on Rayala’s petition, it had to comply, even if it had
an unresolved motion for reconsideration with the CA, lest it
be cited for contempt.
Accordingly, it cannot be said that the OSG "file[d] multiple
suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of
obtaining a favorable judgment."
We now proceed to discuss the substantive issues.
It is noteworthy that the five CA Justices who deliberated on
the case were unanimous in upholding the findings of the
Committee and the OP. They found the assessment made by
the Committee and the OP to be a "meticulous and
dispassionate analysis of the testimonies of the complainant
(Domingo), the respondent (Rayala), and their respective
witnesses." 38 They differed only on the appropriate imposable
penalty.
71
That Rayala committed the acts complained of – and was
guilty of sexual harassment – is, therefore, the common
factual finding of not just one, but three independent bodies:
the Committee, the OP and the CA. It should be remembered
that when supported by substantial evidence, factual findings
made by quasi-judicial and administrative bodies are accorded
great respect and even finality by the courts.39 The principle,
therefore, dictates that such findings should bind us.40
Indeed, we find no reason to deviate from this rule. There
appears no valid ground for this Court to review the factual
findings of the CA, the OP, and the Investigating Committee.
These findings are now conclusive on the Court. And quite
significantly, Rayala himself admits to having committed some
of the acts imputed to him.
He insists, however, that these acts do not constitute sexual
harassment, because Domingo did not allege in her complaint
that there was a demand, request, or requirement of a sexual
favor as a condition for her continued employment or for her
promotion to a higher position.41 Rayala urges us to apply to
his case our ruling in Aquino v. Acosta.42
We find respondent’s insistence unconvincing.
Basic in the law of public officers is the three-fold liability rule,
which states that the wrongful acts or omissions of a public
officer may give rise to civil, criminal and administrative
liability. An action for each can proceed independently of the
others.43 This rule applies with full force to sexual harassment.
The law penalizing sexual harassment in our jurisdiction is RA
7877. Section 3 thereof defines work-related sexual
harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual
Harassment Defined. – Work, education or training-
related sexual harassment is committed by an employer,
manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person
who, having authority, influence or moral ascendancy
over another in a work or training or education
environment, demands, requests or otherwise requires
any sexual favor from the other, regardless of whether
the demand, request or requirement for submission is
accepted by the object of said Act.
(a) In a work-related or employment environment,
sexual harassment is committed when:
(1) The sexual favor is made as a condition in the hiring
or in the employment, re-employment or continued
employment of said individual, or in granting said
individual favorable compensation, terms, conditions,
promotions, or privileges; or the refusal to grant the
sexual favor results in limiting, segregating or classifying
the employee which in a way would discriminate, deprive
or diminish employment opportunities or otherwise
adversely affect said employee;
(2) The above acts would impair the employee’s rights or
privileges under existing labor laws; or
72
(3) The above acts would result in an intimidating,
hostile, or offensive environment for the employee.
This section, in relation to Section 7 on penalties, defines the
criminal aspect of the unlawful act of sexual harassment. The
same section, in relation to Section 6, authorizes the
institution of an independent civil action for damages and
other affirmative relief.
Section 4, also in relation to Section 3, governs the procedure
for administrative cases, viz.:
Sec. 4. Duty of the Employer or Head of Office in a
Work-related, Education or Training Environment. – It
shall be the duty of the employer or the head of the
work-related, educational or training environment or
institution, to prevent or deter the commission of acts of
sexual harassment and to provide the procedures for the
resolution, settlement or prosecution of acts of sexual
harassment. Towards this end, the employer or head of
office shall:
(a) Promulgate appropriate rules and regulations in
consultation with and jointly approved by the
employees or students or trainees, through their
duly designated representatives, prescribing the
procedure for the investigation or sexual
harassment cases and the administrative sanctions
therefor.
 Administrative sanctions shall not be a bar to
prosecution in the proper courts for unlawful acts of
sexual harassment.
The said rules and regulations issued pursuant to
this section (a) shall include, among others,
guidelines on proper decorum in the workplace and
educational or training institutions.
(b) Create a committee on decorum and
investigation of cases on sexual harassment. The
committee shall conduct meetings, as the case may
be, with other officers and employees, teachers,
instructors, professors, coaches, trainors and
students or trainees to increase understanding and
prevent incidents of sexual harassment. It shall
also conduct the investigation of the alleged cases
constituting sexual harassment.
In the case of a work-related environment, the
committee shall be composed of at least one (1)
representative each from the management, the union, if
any, the employees from the supervisory rank, and from
the rank and file employees.
In the case of the educational or training institution, the
committee shall be composed of at least one (1)
representative from the administration, the trainors,
teachers, instructors, professors or coaches and students
or trainees, as the case maybe.
73
The employer or head of office, educational or training
institution shall disseminate or post a copy of this Act for
the information of all concerned.
The CA, thus, correctly ruled that Rayala’s culpability is not to
be determined solely on the basis of Section 3, RA 7877,
because he is charged with the administrative offense, not the
criminal infraction, of sexual harassment.44 It should be
enough that the CA, along with the Investigating Committee
and the Office of the President, found substantial evidence to
support the administrative charge.
Yet, even if we were to test Rayala’s acts strictly by the
standards set in Section 3, RA 7877, he would still be
administratively liable. It is true that this provision calls for a
"demand, request or requirement of a sexual favor." But it is
not necessary that the demand, request or requirement of a
sexual favor be articulated in a categorical oral or written
statement. It may be discerned, with equal certitude, from the
acts of the offender. Holding and squeezing Domingo’s
shoulders, running his fingers across her neck and tickling her
ear, having inappropriate conversations with her, giving her
money allegedly for school expenses with a promise of future
privileges, and making statements with unmistakable sexual
overtones – all these acts of Rayala resound with deafening
clarity the unspoken request for a sexual favor.
Likewise, contrary to Rayala’s claim, it is not essential that the
demand, request or requirement be made as a condition for
continued employment or for promotion to a higher position. It
is enough that the respondent’s acts result in creating an
intimidating, hostile or offensive environment for the
employee.45 That the acts of Rayala generated an intimidating
and hostile environment for Domingo is clearly shown by the
common factual finding of the Investigating Committee, the
OP and the CA that Domingo reported the matter to an
officemate and, after the last incident, filed for a leave of
absence and requested transfer to another unit.
Rayala’s invocation of Aquino v. Acosta46 is misplaced, because
the factual setting in that case is different from that in the
case at bench. In Aquino, Atty. Susan Aquino, Chief of the
Legal and Technical Staff of the Court of Tax Appeals (CTA),
charged then CTA Presiding Judge (now Presiding Justice)
Ernesto Acosta of sexual harassment. She complained of
several incidents when Judge Acosta allegedly kissed her,
embraced her, and put his arm around her shoulder. The case
was referred to CA Justice Josefina G. Salonga for
investigation. In her report, Justice Salonga found that "the
complainant failed to show by convincing evidence that the
acts of Judge Acosta in greeting her with a kiss on the cheek,
in a `beso-beso’ fashion, were carried out with lustful and
lascivious desires or were motivated by malice or ill motive. It
is clear from the circumstances that most of the kissing
incidents were done on festive and special occasions," and
they "took place in the presence of other people and the same
was by reason of the exaltation or happiness of the moment."
Thus, Justice Salonga concluded:
In all the incidents complained of, the respondent's pecks
on the cheeks of the complainant should be understood
in the context of having been done on the occasion of
some festivities, and not the assertion of the latter that
she was singled out by Judge Acosta in his kissing
74
escapades. The busses on her cheeks were simply
friendly and innocent, bereft of malice and lewd design.
The fact that respondent judge kisses other people on
the cheeks in the 'beso-beso' fashion, without malice,
was corroborated by Atty. Florecita P. Flores, Ms.
Josephine Adalem and Ms. Ma. Fides Balili, who stated
that they usually practice 'beso-beso' or kissing on the
cheeks, as a form of greeting on occasions when they
meet each other, like birthdays, Christmas, New Year's
Day and even Valentine's Day, and it does not matter
whether it is Judge Acosta's birthday or their birthdays.
Theresa Cinco Bactat, a lawyer who belongs to
complainant's department, further attested that on
occasions like birthdays, respondent judge would likewise
greet her with a peck on the cheek in a 'beso-beso'
manner. Interestingly, in one of several festive
occasions, female employees of the CTA pecked
respondent judge on the cheek where Atty. Aquino was
one of Judge Acosta's well wishers.
In sum, no sexual harassment had indeed transpired on
those six occasions. Judge Acosta's acts of bussing Atty.
Aquino on her cheek were merely forms of greetings,
casual and customary in nature. No evidence of intent to
sexually harass complainant was apparent, only that the
innocent acts of 'beso-beso' were given malicious
connotations by the complainant. In fact, she did not
even relate to anyone what happened to her.
Undeniably, there is no manifest sexual undertone in all
those incidents.47
This Court agreed with Justice Salonga, and Judge Acosta was
exonerated.
To repeat, this factual milieu in Aquino does not obtain in the
case at bench. While in Aquino, the Court interpreted the acts
(of Judge Acosta) as casual gestures of friendship and
camaraderie, done during festive or special occasions and with
other people present, in the instant case, Rayala’s acts of
holding and squeezing Domingo’s shoulders, running his
fingers across her neck and tickling her ear, and the
inappropriate comments, were all made in the confines of
Rayala’s office when no other members of his staff were
around. More importantly, and a circumstance absent
in Aquino, Rayala’s acts, as already adverted to above,
produced a hostile work environment for Domingo, as shown
by her having reported the matter to an officemate and, after
the last incident, filing for a leave of absence and requesting
transfer to another unit.
Rayala also argues that AO 250 does not apply to him. First,
he argues that AO 250 does not cover the NLRC, which, at the
time of the incident, was under the DOLE only for purposes of
program and policy coordination. Second, he posits that even
assuming AO 250 is applicable to the NLRC, he is not within its
coverage because he is a presidential appointee.
We find, however, that the question of whether or not AO 250
covers Rayala is of no real consequence. The events of this
case unmistakably show that the administrative charges
against Rayala were for violation of RA 7877; that the OP
properly assumed jurisdiction over the administrative case;
that the participation of the DOLE, through the Committee
75
created by the Secretary, was limited to initiating the
investigation process, reception of evidence of the parties,
preparation of the investigation report, and recommending the
appropriate action to be taken by the OP. AO 250 had never
really been applied to Rayala. If it was used at all, it was to
serve merely as an auxiliary procedural guide to aid the
Committee in the orderly conduct of the investigation.
Next, Rayala alleges that the CA erred in holding that sexual
harassment is an offense malum prohibitum. He argues that
intent is an essential element in sexual harassment, and since
the acts imputed to him were done allegedly without malice,
he should be absolved of the charges against him.
We reiterate that what is before us is an administrative case
for sexual harassment. Thus, whether the crime
of sexual harassment is malum in se or malum prohibitum is
immaterial.
We also reject Rayala’s allegations that the charges were filed
because of a conspiracy to get him out of office and thus
constitute merely political harassment. A conspiracy must be
proved by clear and convincing evidence. His bare assertions
cannot stand against the evidence presented by Domingo. As
we have already ruled, the acts imputed to Rayala have been
proven as fact. Moreover, he has not proven any ill motive on
the part of Domingo and her witnesses which would be ample
reason for her to conjure stories about him. On the contrary,
ill motive is belied by the fact that Domingo and her witnesses
– all employees of the NLRC at that time – stood to lose their
jobs or suffer unpleasant consequences for coming forward
and charging their boss with sexual harassment.
Furthermore, Rayala decries the alleged violation of his right
to due process. He accuses the Committee on Decorum of
railroading his trial for violation of RA 7877. He also scored the
OP’s decision finding him guilty of "disgraceful and immoral
conduct" under the Revised Administrative Code and not for
violation of RA 7877. Considering that he was not tried for
"disgraceful and immoral conduct," he argues that the verdict
is a "sham and total nullity."
We hold that Rayala was properly accorded due process. In
previous cases, this Court held that:
[i]n administrative proceedings, due process has been
recognized to include the following: (1) the right to
actual or constructive notice of the institution of
proceedings which may affect a respondent’s legal rights;
(2) a real opportunity to be heard personally or with the
assistance of counsel, to present witnesses and evidence
in one’s favor, and to defend one’s rights; (3) a tribunal
vested with competent jurisdiction and so constituted as
to afford a person charged administratively a reasonable
guarantee of honesty as well as impartiality; and (4) a
finding by said tribunal which is supported by substantial
evidence submitted for consideration during the hearing
or contained in the records or made known to the parties
affected.48
The records of the case indicate that Rayala was afforded all
these procedural due process safeguards. Although in the
beginning he questioned the authority of the Committee to try
him,49 he appeared, personally and with counsel, and
participated in the proceedings.
76
On the other point raised, this Court has held that, even in
criminal cases, the designation of the offense is not
controlling, thus:
What is controlling is not the title of the complaint, nor
the designation of the offense charged or the particular
law or part thereof allegedly violated, these being mere
conclusions of law made by the prosecutor, but the
description of the crime charged and the particular facts
therein recited. The acts or omissions complained of
must be alleged in such form as is sufficient to enable a
person of common understanding to know what offense
is intended to be charged, and enable the court to
pronounce proper judgment. No information for a crime
will be sufficient if it does not accurately and clearly
allege the elements of the crime charged. Every element
of the offense must be stated in the information. What
facts and circumstances are necessary to be included
therein must be determined by reference to the
definitions and essentials of the specified crimes. The
requirement of alleging the elements of a crime in the
information is to inform the accused of the nature of the
accusation against him so as to enable him to suitably
prepare his defense.50
It is noteworthy that under AO 250, sexual harassment
amounts to disgraceful and immoral conduct.51 Thus, any
finding of liability for sexual harassment may also be the basis
of culpability for disgraceful and immoral conduct.
With the foregoing disquisitions affirming the finding that
Rayala committed sexual harassment, we now determine the
proper penalty to be imposed.
Rayala attacks the penalty imposed by the OP. He alleges that
under the pertinent Civil Service Rules, disgraceful and
immoral conduct is punishable by suspension for a period of
six (6) months and one (1) day to one (1) year. He also
argues that since he is charged administratively, aggravating
or mitigating circumstances cannot be appreciated for
purposes of imposing the penalty.
Under AO 250, the penalty for the first offense is suspension
for six (6) months and one (1) day to one (1) year, while the
penalty for the second offense is dismissal.52 On the other
hand, Section 22(o), Rule XVI of the Omnibus Rules
Implementing Book V of the Administrative Code of 1987 53 and
Section 52 A(15) of the Revised Uniform Rules on
Administrative Cases in the Civil Service54 both provide that
the first offense of disgraceful and immoral conduct is
punishable by suspension of six (6) months and one (1) day to
one (1) year. A second offense is punishable by dismissal.
Under the Labor Code, the Chairman of the NLRC shall hold
office during good behavior until he or she reaches the age
of sixty-five, unless sooner removed for cause as
provided by law or becomes incapacitated to discharge the
duties of the office.55
In this case, it is the President of the Philippines, as the proper
disciplining authority, who would determine whether there is a
valid cause for the removal of Rayala as NLRC Chairman. This
77
power, however, is qualified by the phrase "for cause as
provided by law." Thus, when the President found that Rayala
was indeed guilty of disgraceful and immoral conduct, the
Chief Executive did not have unfettered discretion to impose a
penalty other than the penalty provided by law for such
offense. As cited above, the imposable penalty for the first
offense of either the administrative offense of sexual
harassment or for disgraceful and immoral conduct is
suspension of six (6) months and one (1) day to one (1) year.
Accordingly, it was error for the Office of the President to
impose upon Rayala the penalty of dismissal from the service,
a penalty which can only be imposed upon commission of a
second offense.
Even if the OP properly considered the fact that Rayala took
advantage of his high government position, it still could not
validly dismiss him from the service. Under the Revised
Uniform Rules on Administrative Cases in the Civil
Service,56 taking undue advantage of a subordinate may be
considered as an aggravating circumstance57 and where only
aggravating and no mitigating circumstances are present, the
maximum penalty shall be imposed.58Hence, the maximum
penalty that can be imposed on Rayala is suspension for one
(1) year.
Rayala holds the exalted position of NLRC Chairman, with the
rank equivalent to a CA Justice. Thus, it is not unavailing that
rigid standards of conduct may be demanded of him.
In Talens-Dabon v. Judge Arceo,59 this Court, in upholding the
liability of therein respondent Judge, said:
 The actuations of respondent are aggravated by the fact the service. Unfortunately for him, these are not significant
that complainant is one of his subordinates over whom factors in the disposition of the case. It is his character that is
he exercises control and supervision, he being the in question here and sadly, the inquiry showed that he has
executive judge. He took advantage of his position and been found wanting.
power in order to carry out his lustful and lascivious
desires. Instead of he being in loco parentis over his WHEREFORE, the foregoing premises considered, the October
subordinate employees, respondent was the one who 18, 2002 Resolution of the Court of Appeals in CA-G.R. SP No.
preyed on them, taking advantage of his superior 61026 is AFFIRMED. Consequently, the petitions in G.R. Nos.
position. 155831, 155840, and 158700 are DENIED. No
pronouncement as to costs.
In yet another case, this Court declared:
SO ORDERED.
As a managerial employee, petitioner is bound by more
exacting work ethics. He failed to live up to his higher
standard of responsibility when he succumbed to his
moral perversity. And when such moral perversity is
perpetrated against his subordinate, he provides a
justifiable ground for his dismissal for lack of trust and
confidence. It is the right, nay, the duty of every
employer to protect its employees from oversexed
superiors.60

It is incumbent upon the head of office to set an example on

how his employees should conduct themselves in public office,
so that they may work efficiently in a healthy working
atmosphere. Courtesy demands that he should set a good
example.61

Rayala has thrown every argument in the book in a vain effort

to effect his exoneration. He even puts Domingo’s character in
question and casts doubt on the morality of the former
President who ordered, albeit erroneously, his dismissal from

78
G.R. No. 49549 August 30, 1990
EVELYN CHUA-QUA, petitioner,
vs.
HON. JACOBO C. CLAVE, in his capacity as Presidential
Executive Assistant, and TAY TUNG HIGH SCHOOL,
INC., respondents.
William C. Gunitang and Jaime Opinion for petitioner.
Laogan Law Offices for private respondent.
REGALADO, J.:
This would have been just another illegal dismissal case were
it not for the controversial and unique situation that the
marriage of herein petitioner, then a classroom teacher, to her
student who was fourteen (14) years her junior, was
considered by the school authorities as sufficient basis for
terminating her services.
Private respondent Tay Tung High School, Inc. is an
educational institution in Bacolod City. Petitioner had been
employed therein as a teacher since 1963 and, in 1976 when
this dispute arose, was the class adviser in the sixth grade
where one Bobby Qua was enrolled. Since it was the policy of
the school to extend remedial instructions to its students,
Bobby Qua was imparted such instructions in school by
petitioner. 1 In the course thereof, the couple fell in love and
on December 24, 1975, they got married in a civil ceremony
solemnized in Iloilo City by Hon. Cornelio G. Lazaro, City Judge
of Iloilo.2 Petitioner was then thirty (30) years of age but
Bobby Qua being sixteen (16) years old, consent and advice to
the marriage was given by his mother, Mrs. Concepcion
79
Ong.3 Their marriage was ratified in accordance with the rites
of their religion in a church wedding solemnized by Fr. Nick
Melicor at Bacolod City on January 10, 1976. 4
On February 4, 1976, private respondent filed with the sub-
regional office of the Department of Labor at Bacolod City an
application for clearance to terminate the employment of
petitioner on the following ground: "For abusive and unethical
conduct unbecoming of a dignified school teacher and that her
continued employment is inimical to the best interest, and
would downgrade the high moral values, of the school." 5
Petitioner was placed under suspension without pay on March
12, 1976. 6 Executive Labor Arbiter Jose Y. Aguirre, Jr. of the
National Labor Relations Commission, Bacolod City, to whom
the case was certified for resolution, required the parties to
submit their position papers and supporting evidence.
Affidavits 7 were submitted by private respondent to bolster its
contention that petitioner, "defying all standards of decency,
recklessly took advantage of her position as school teacher,
lured a Grade VI boy under her advisory section and 15 years
her junior into an amorous relation." 8 More specifically,
private respondent raised issues on the fact that petitioner
stayed alone with Bobby Qua in the classroom after school
hours when everybody had gone home, with one door
allegedly locked and the other slightly open.
On September 17, 1976, Executive Labor Arbiter Jose Y.
Aguirre, Jr., without conducting any formal hearing, rendered
an "Award" in NLRC Case No. 956 in favor of private
respondent granting the clearance to terminate the
employment of petitioner. It was held therein that —
 The affidavits . . . although self-serving but were
never disputed by the respondent pointed out that
before the marriage of respondent to Bobby Qua,
fourteen (14) years her junior and during her
employment with petitioner, an amorous
relationship existed between them. In the absence
of evidence to the contrary, the undisputed written
testimonies of several witnesses convincingly
picture the circumstances under which such
amorous relationship was manifested within the
premises of the school, inside the classroom, and
within the sight of some employees. While no direct
evidences have been introduced to show that
immoral acts were committed during these times, it
is however enough for a sane and credible mind to
imagine and conclude what transpired and took
place during these times. . . . 9
Petitioner, however, denied having received any copy of the
affidavits referred to. 10
On October 7, 1976, petitioner appealed to the National Labor
Relations Commission claiming denial of due process for not
having been furnished copies of the aforesaid affidavits relied
on by the labor arbiter. She further contended that there was
nothing immoral, nor was it abusive and unethical conduct
unbecoming of a dignified school teacher, for a teacher to
enter into lawful wedlock with her student.11
On December 27, 1976, the National Labor Relations
Commission unanimously reversed the Labor Arbiter's decision
and ordered petitioner's reinstatement with backwages, with
the following specific findings:
80
Affiant Maselliones deposed and said that he saw
appellant and Qua sitting on the student desk inside
a classroom after classes. The depositions of
affiants Despi and Chin are of the same tenor. No
statements whatever were sworn by them that they
were eyewitnesses to immoral or scandalous acts.
xxx xxx xxx
Even if we have to strain our sense of moral values
to accommodate the conclusion of the Arbiter, we
could not deduce anything immoral or scandalous
about a girl and a boy talking inside a room after
classes with lights on and with the door open.
xxx xxx xxx
Petitioner-appellee naively insisted that the
clearance application was precipitated by immoral
acts which did not lend dignity to the position of
appellant. Aside from such gratuitous assertions of
immoral acts or conduct by herein appellant, no
evidence to support such claims was introduced by
petitioner-appellee. We reviewed the the sequence
of events from the beginning of the relationship
between appellant Evelyn Chua and Bobby Qua up
to the date of the filing of the present application
for clearance in search of evidence that could have
proved detrimental to the image and dignity of the
school but none has come to our attention. . . . 12
The case was elevated by private respondent to the Minister of
Labor who, on March 30, 1977, reversed the decision of the
National Labor Relations Commission. The petitioner was,
however, awarded six (6) months salary as financial
assistance. 13
On May 20, 1977, petitioner appealed the said decision to the
Office of the President of the Philippines. 14 After the
corresponding exchanges, on September 1, 1978 said office,
through Presidential Executive Assistant Jacobo C. Clave,
rendered its decision reversing the appealed decision. Private
respondent was ordered to reinstate petitioner to her former
position without loss of seniority rights and other privileges
and with full back wages from the time she was not allowed to
work until the date of her actual reinstatement. 15
Having run the gamut of three prior adjudications of the case
with alternating reversals, one would think that this decision of
public respondent wrote finis to petitioner's calvary. However,
in a resolution dated December 6, 1978, public respondent,
acting on a motion for reconsideration 16 of herein private
respondent and despite opposition thereto, 17 reconsidered and
modified the aforesaid decision, this time giving due course to
the application of Tay Tung High School, Inc. to terminate the
services of petitioner as classroom teacher but giving her
separation pay equivalent to her six (6) months salary. 18
In thus reconsidering his earlier decision, public respondent
reasoned out in his manifestation/comment filed on August 14,
1979 in this Court in the present case:
That this Office did not limit itself to the legal issues
involved in the case, but went further to view the
matter from the standpoint of policy which involves
the delicate task of rearing and educating of
81
children whose interest must be held paramount in
the school community, and on this basis, this Office
deemed it wise to uphold the judgment and action
of the school authorities in terminating the services
of a teacher whose actuations and behavior, in the
belief of the school authorities, had spawned ugly
rumors that had cast serious doubts on her
integrity, a situation which was considered by them
as not healthy for a school campus, believing that a
school teacher should at all times act with utmost
circumspection and conduct herself beyond
reproach and above suspicion; 19
In this petition for certiorari, petitioner relies on the following
grounds for the reversal of the aforesaid resolution of public
respondent, viz.:
1. The dismissal or termination of petitioner's
employment, despite Tay Tung's claim to the
contrary, was actually based on her marriage with
her pupil and is, therefore, illegal.
2. Petitioner's right to due process under the
Constitution was violated when the hearsay
affidavits of Laddy Maselliones, Eleuterio Despi,
Pina D. Chiu, and Ong Lee Bing, were admitted and
considered in evidence without presenting the
affiants as witnesses and affording the petitioner
the right to confront and cross-examine them.
3. No sufficient proofs were adduced to show that
petitioner committed serious misconduct or
breached the trust reposed on her by her employer
or committed any of the other grounds enumerated
in Article 283 (Now Article 282) of the Labor Code
 which will justify the termination of her
employment. 20
We first dispose of petitioner's claim that her right to due
process was violated. We do not agree. There is no denial of
due process where a party was afforded an opportunity to
present his side. Also, the procedure by which issues are
resolved based on position papers, affidavits and other
documentary evidence is recognized as not violative of such
right. Moreover, petitioner could have insisted on a hearing to
confront and cross-examine the affiants but she did not do so,
obviously because she was convinced that the case involves a
question of law. Besides, said affidavits were also cited and
discussed by her in the proceedings before the Ministry of
Labor.
Now, on the merits. Citing its upright intention to preserve the
respect of the community toward the teachers and to
strengthen the educational system, private respondent
submits that petitioner's actuations as a teacher constitute
serious misconduct, if not an immoral act, a breach of trust
and confidence reposed upon her and, thus, a valid and just
ground to terminate her services. It argues that as a school
teacher who exercises substitute parental authority over her
pupils inside the school campus, petitioner had moral
ascendancy over Bobby Qua and, therefore, she must not
abuse such authority and respect extended to her.
Furthermore, it charged petitioner with having allegedly
violated the Code of Ethics for teachers the pertinent provision
of which states that a "school official or teacher should never
take advantage of his/her position to court a pupil or
student." 21
82
On the other hand, petitioner maintains that there was no
ground to terminate her services as there is nothing wrong
with a teacher falling in love with her pupil and, subsequently,
contracting a lawful marriage with him. She argued that she
was dismissed because of her marriage with Bobby Qua This
contention was sustained in the aforesaid decision of the
National Labor Relations Commission thus:
. . . One thing, however, has not escaped our
observation: That the application for clearance was
filed only after more than one month elapsed from
the date of appellant's marriage to Bobby Qua
Certainly, such belated application for clearance
weakens instead of strengthening the cause of
petitioner-appellee. The alleged immoral acts
transpired before the marriage and if it is these
alleged undignified conduct that triggered the
intended separation, then why was the present
application for clearance not filed at that time when
the alleged demoralizing effect was still fresh and
abrasive?22
After a painstaking perusal of the records, we are of the
considered view that the determination of the legality of the
dismissal hinges on the issue of whether or not there is
substantial evidence to prove that the antecedent facts which
culminated in the marriage between petitioner and her student
constitute immorality and/or grave misconduct. To constitute
immorality, the circumstances of each particular case must be
holistically considered and evaluated in the light of prevailing
norms of conduct and the applicable law. Contrary to what
petitioner had insisted on from the very start, what is before
us is a factual question, the resolution of which is better left to
the trier of facts.
Considering that there was no formal hearing conducted, we
are constrained to review the factual conclusions arrived at by
public respondent, and to nullify his decision through the
extraordinary writ of certiorari if the same is tainted by
absence or excess of jurisdiction or grave abuse of discretion.
The findings of fact must be supported by substantial
evidence; otherwise, this Court is not bound thereby.23
We rule that public respondent acted with grave abuse of
discretion. As vividly and forcefully observed by him in his
original decision:
Indeed, the records relied upon by the Acting
Secretary of Labor (actually the records referred to
are the affidavits attached as Annexes "A" to "D" of
the position paper dated August 10, 1976 filed by
appellee at the arbitration proceedings) in arriving
at his decision are unbelievable and unworthy of
credit, leaving many question unanswered by a
rational mind. For one thing, the affidavits refer to
certain times of the day during off school hours
83
when appellant and her student were found
together in one of the classrooms of the school. But
the records of the case present a ready answer:
appellant was giving remedial instruction to her
student and the school was the most convenient
place to serve the purpose. What is glaring in the
affidavits is the complete absence of specific
immoral acts allegedly committed by appellant and
her student. For another, and very important at
that, the alleged acts complained of invariably
happened from September to December, 1975, but
the disciplinenary action imposed by appellee was
sought only in February, 1976, and what is more,
the affidavits were executed only in August, 1976
and from all indications, were prepared by appellee
or its counsel. The affidavits heavily relied upon by
appellee are clearly the product of after-thought. . .
. The action pursued by appellee in dismissing
appellant over one month after her marriage,
allegedly based on immoral acts committed even
much earlier, is open to basis of the action sought
seriously doubted; on the question. The basis of the
action sought is seriously doubted; on the contrary,
we are more inclined to believe that appellee had
certain selfish, ulterior and undisclosed motives
known only to itself. 24
As earlier stated, from the outset even the labor arbiter
conceded that there was no direct evidence to show that
immoral acts were committed. Nonetheless, indulging in a
patently unfair conjecture, he concluded that "it is however
enough for a sane and credible mind to imagine and conclude
what transpired during those times." 25 In reversing his
decision, the National Labor Relations Commission observed
that the assertions of immoral acts or conducts are gratuitous
and that there is no direct evidence to support such claim, 26 a
finding which herein public respondent himself shared.
We are, therefore, at a loss as to how public respondent could
adopt the volte-face in the questioned resolution, which we
hereby reject, despite his prior trenchant observations
hereinbefore quoted. What is revealing however, is that the
reversal of his original decision is inexplicably based on
unsubstantiated surmises and non sequiturs which he
incorporated in his assailed resolution in this wise:
. . . While admittedly, no one directly saw Evelyn
Chua and Bobby Qua doing immoral acts inside the
classroom it seems obvious and this Office is
convinced that such a happening indeed transpired
within the solitude of the classrom after regular
class hours. The marriage between Evelyn Chua
and Bobby Qua is the best proof which confirms the
suspicion that the two indulged in amorous
relations in that place during those times of the
day. . . . 27
With the finding that there is no substantial evidence of the
imputed immoral acts, it follows that the alleged violation of
the Code of Ethics governing school teachers would have no
basis. Private respondent utterly failed to show that petitioner
took advantage of her position to court her student. If the two
eventually fell in love, despite the disparity in their ages and
academic levels, this only lends substance to the truism that
the heart has reasons of its own which reason does not know.
But, definitely, yielding to this gentle and universal emotion is
not to be so casually equated with immorality. The deviation of
84
the circumstances of their marriage from the usual societal
pattern cannot be considered as a defiance of contemporary
social mores.
It would seem quite obvious that the avowed policy of the
school in rearing and educating children is being unnecessarily
bannered to justify the dismissal of petitioner. This policy,
however, is not at odds with and should not be capitalized on
to defeat the security of tenure granted by the Constitution to
labor. In termination cases, the burden of proving just and
valid cause for dismissing an employee rests on the employer
and his failure to do so would result in a finding that the
dismissal is unjustified.
The charge against petitioner not having been substantiated,
we declare her dismissal as unwarranted and illegal. It being
apparent, however, that the relationship between petitioner
and private respondent has been inevitably and severely
strained, we believe that it would neither be to the interest of
the parties nor would any prudent purpose be served by
ordering her reinstatement.
WHEREFORE, the petition for certiorari is GRANTED and the
resolution of public respondent, dated December 6, 1978 is
ANNULLED and SET ASIDE. Private respondent Tay Tung High
School, Inc. is hereby ORDERED to pay petitioner backwages
equivalent to three (3) years, without any deduction or
qualification, and separation pay in the amount of one (1)
month for every year of service.
SO ORDERED.
 Today is Thursday, November 08, 2018 The Facts
SSCW is a catholic and sectarian educational institution in
Silang, Cavite. In May 2001, SSCW hired the petitioner as
an Assistant to SSCW’s 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 petitioner’s pregnancy, Sr. Edna Quiambao (Sr.
Republic of the Philippines Quiambao), SSCW’s Directress, advised her to file a
SUPREME COURT resignation letter effective June 1, 2003. In response, the
Manila petitioner informed Sr. Quiambao that she would not resign
THIRD DIVISION from her employment just because she got pregnant
without the benefit of marriage.5
G.R. No. 187226 January 28, 2015
On May 28, 2003, Sr. Quiambao formally directed the
CHERYLL SANTOS LEUS, Petitioner,
petitioner to explain in writing why she should not be
vs.
dismissed for engaging in pre-marital sexual relations and
ST. SCHOLASTICA'S COLLEGE WESTGROVE and/or SR. EDNA QUIAMBAO,
getting pregnant as a result thereof, which amounts to
OSB, Respondents.
serious misconduct and conduct unbecoming of an
DECISION employee of a Catholic school.6
REYES, J.: In a letter7 dated May 31, 2003, the petitioner explained
Cheryll Santos Leus (petitioner) was hired by St. Scholastica's Collegethat her pregnancy
Westgrove (SSCW),out of wedlock does not amount to
serious
a Catholic educational institution, as a non-teaching personnel, engaged misconduct or conduct unbecoming of an employee.
in pre-marital
Shechild,
sexual relations, got pregnant out of wedlock, married the father of her averred
andthat
wasshe is unaware of any school policy
dismissed by SSCW, in that order. The question that has to be resolved stating that being
is whether the pregnant out of wedlock is considered as
petitioner's conduct constitutes a ground for her dismissal. a serious misconduct and, thus, a ground for dismissal.
Further,
Before this Court is a petition for review on certiorari under Rule 45 of the of
the Rules petitioner
Court requested a copy of SSCW’s policy
seeking to annul and set aside the Decision1 dated September 24, 2008 and and
guidelines so that she may better respond to the
Resolution2 dated March 2, 2009 issued by the Court of Appeals (CA)charge against
in CA-G.R. SP her.
No. On June 2, 2003, Sr. Quiambao
100188, which affirmed the Resolutions dated February 28, 2007 3 informed the petitioner that, pending the promulgation of a
the National Labor Relations Commission (NLRC)in NLRC CA No. 049222-06."Support Staff Handbook," SSCW follows the 1992 Manual

85
of Regulations for Private Schools (1992 MRPS) on the causes for termination
that her employment
of with SSCW is terminated on the ground of serio
employments; that Section 94(e) of the 1992 MRPS cites "disgracefulstressed
or immoral
that conduct"
pre-marital sexual relations between two consenting ad
as a ground for dismissal in addition to the just causes for termination
impediment
of employment
to marry, even if they subsequently married, amounts to
8
provided under Article 282 of the Labor Code. She further pointed out that SSCW finds unacceptable the scandal br
On June 4, 2003, the petitioner, through counsel, sent Sr. Quiambaopetitioner’s
a letter, pregnancy out of wedlock as it ran counter to the moral p
part, reads: stands for and teaches its students.
Thereupon, to
To us, pre-marital sex between two consenting adults without legal impediment themarry
petitioner filed a complaint for illegal dismissal with t
Arbitration Branch
each other who later on married each other does not fall within the contemplation of of the NLRC in Quezon City against SSCW and Sr.
14
(respondents).
"disgraceful or immoral conduct" and "serious misconduct" of the Manual In her
of Regulations forposition paper, the petitioner claimed that SS
Private Schools and the Labor Code of the Philippines. management prerogative as there was no just cause for her dismissa
that her pregnancy out of wedlock cannot be considered as serious m
Your argument that what happened to our client would set a bad example
same tois athe students
purely private affair and not connected in any way with her
and other employees of your school is speculative and is more imaginary than real. To
employee of SSCW. Further, the petitioner averred that she and her
dismiss her on that sole ground constitutes grave abuse of management prerogatives.
got married even prior to her dismissal.
Considering her untarnished service for two years, dismissing her with her present
For their part, SSCW claimed that there was just cause to terminate
condition would also mean depriving her to be more secure in terms employment
of financial capacity
with SSCW to and that the same is a valid exercise of SSC
10
sustain maternal needs. prerogative. They maintained that engaging in pre-marital sex, and g
In a letter11 dated June 6, 2003, SSCW, through counsel, maintainedresultthat pre-marital
thereof, amounts to a disgraceful or immoral conduct, which is
sexual relations, evenif between two consenting adults without legal dismissal
impediment to marry,
of an employee under the 1992 MRPS.
is considered a disgraceful and immoral conduct or a serious misconduct, which are
They pointed out that SSCW is a Catholic educational institution, whi
grounds for the termination of employment under the 1992 MRPS and to the Labor
young Code.
girls; that SSCW would lose its credibility if it would mainta
That SSCW, as a Catholic institution of learning, has the right to uphold
not live up to theofvalues
the teaching the and teachings it inculcates to its students. S
Catholic Church and expect its employees to abide by the same. They further
that asserted that
the petitioner, being an employee of a Catholic educational instit
the petitioner’s indiscretion is further aggravated by the fact that shestrived
is the Assistant to
to maintain the honor, dignity and reputation of SSCW as a C
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 The Ruling of the Labor Arbiter
to submit a written explanation on why she should not be dismissed.On February 28, 2006, the Labor Arbiter (LA) rendered a Decision, 16
On June 9, 2003, the petitioner informed Sr. Quiambao that she adopts 17657-03-C whichletter
her counsel’s dismissed the complaint filed by the petitioner. Th
dated June 4, 2003 as her written explanation.12 was a valid ground for the petitioner’s dismissal; that her pregnancy
considered as a "disgraceful and immoral conduct." The LA pointed o
Consequently, in her letter13 dated June 11, 2003, Sr. Quiambao informedemployeethe petitioner
of a Catholic educational institution, the petitioner is expec
86
Catholic values taught by SSCW to its students. Likewise, the LA opined dismissal.
that: She maintained that pregnancy out of wedlock cannot be c
Further, a deep analysis of the facts would lead us to disagree with thedisgraceful or immoral
complainant that conduct; that SSCW failed to prove that its stu
she was dismissed simply because she violate[d] a Catholic [teaching]. gravely scandalized
It should not be by her pregnancy out of wedlock. She likewise as
erred in applying Section 94(e) of the 1992 MRPS.
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 The Ruling of the CA
and the nature of her employer-school. For us, it is not just an ordinary violation. It24,
On September was2008, the CA rendered the herein assailed Decisio
committed by the complainant in an environment where her strict adherence to certiorari
petition for the same filed by the petitioner. The CA held that it is the
is called for and where the reputation of the school is at stake. x x x.1992 MRPS and not the Labor Code which governs the termination of
The LA further held that teachers and school employees, both in theirteaching
official and
and personal
non-teaching personnel of private schools, explaining th
conduct, must display exemplary behavior and act in a manner that isIt beyond reproach.
is a principle of statutory construction that where there are two sta
The petitioner appealed to the NLRC, insisting that there was no validparticular
ground for
case,
thethat which was specially intended for the said case m
termination of her employment. She maintained that her pregnancy was out of
employed
wedlock by
cannot
respondent private Catholic institution which unden
be considered as "serious misconduct" under Article 282 of the Laborprecepts
Code since
or norms
the sameof conduct set forth by the Catholic Church. Accor
was not of such a grave and aggravated character. She asserted thatRegulations
SSCW did notfor Private Schools followed by it must prevail over the L
present any evidence to establish that her pregnancy out of wedlock statute.
indeed eroded
The Manual
the constitutes the private schools’ Implementing Ru
18
moral principles that it teaches its students. of Batas Pambansa Blg. 232 or the Education Act of 1982. x x x.24
The Ruling of the NLRC The CA further held that the petitioner’s dismissal was a valid exercis
On February 28, 2007, the NLRC issued a Resolution,19 which affirmed management prerogative to discipline and impose penalties on erring
the LA Decision
dated February 28, 2006. The NLRC pointed out that the terminationtoits policies,
of the rules and
employment of regulations. The CA upheld the NLRC’s conclu
the personnel of private schools is governed by the 1992 MRPS; thatpetitioner’s
Section 94(e)pregnancy
thereof out of wedlock is considered as a "disgraceful
and,
cites "disgraceful or immoral conduct" as a just cause for dismissal, in thus, to
addition a ground
the for dismissal under Section 94(e) of the 1992 MR
grounds for termination of employment provided for under Article 282 opined
of thethat theCode.
Labor petitioner’s pregnancy out of wedlock is scandalous p
environment
The NLRC held that the petitioner’s pregnancy out of wedlock is a "disgraceful and social milieu that she was in, viz:
or immoral
conduct" within the contemplation of Section 94(e) of the 1992 MRPSUnder
and, Section
thus, SSCW
94 (e)
hadof the [MRPS], and even under Article 282 (seri
a valid reason to terminate her employment. the Labor Code, "disgraceful and immoral conduct" is a basis for term
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. xxxx
Unperturbed, the petitioner filed a petition22 for certiorari with the CA,
Petitioner
alleging contends
that the that her pre-marital sexual relations with her boy
NLRC gravely abused its discretion in ruling that there was a valid ground
pregnancy
for her
prior to marriage was not disgraceful or immoral conduct

87
dismissal because she was not a member of the school’s faculty and regulations
there is no evidence
of Batas Pambansa Bilang 232 (BP 232) or the "Education
that her pregnancy scandalized the school community. there is no provision in BP 232, which provides for the grounds for th
employment
We are not persuaded. Petitioner’s pregnancy prior to marriage is scandalous of teaching
in itself given and non-teaching personnel of private schoo
the work environment and social milieu she was in. Respondent school of the 1992 MRPS,
for young ladies which provides for the causes of terminating an e
as it "widened
precisely seeks to prevent its students from situations like this, inculcating in them the scope and coverage" of BP 232.
strict
moral values and standards. Being part of the institution, petitioner’sprivate
The Courtand
does
public
notlife
agree.
could not be separated. Her admitted pre-marital sexual relations was a violation
The of private
Court notes that the argument against the validity of the 1992 M
respondent’s prescribed standards of conduct that views pre-marital Section
sex as immoral
94 thereof, is raised by the petitioner for the first time in the
because sex between a man and a woman must only take place within the bounds
review. Nowhere of in the proceedings before the LA, the NLRC or the C
marriage. assail the validity of the provisions of the 1992 MRPS.
Finally, petitioner’s dismissal is a valid exercise of the employer-school’s
"It ismanagement
well established that issues raised for the first time on appeal a
prerogative to discipline and impose penalties on erring employees pursuant to itsinpolicies,
proceedings the lower court are barred by estoppel. Points of law,
25
rules and regulations. x x x. (Citations omitted) arguments not brought to the attention of the trial court ought not to
The petitioner moved for reconsideration26 but it was denied by the CA
reviewing
in its court, as these cannot be raised for the first time on appea
27
Resolution dated March 2, 2009. alleged facts and arguments belatedly raised would amount to tramp
Hence, the instant petition. principles of fair play, justice, and due process."28
Issues In any case, even if the Court were to disregard the petitioner’s belat
invalidity of the 1992 MRPS, the Court still finds the same untenable.
Essentially, the issues set forth by the petitioner for this Court’s decision are the following:
first, whether the CA committed reversible error in ruling that it is theThe 1992
1992 MRPS,
MRPS andthe
notregulation in force at the time of the instant con
29
the Labor Code that governs the termination of employment of teaching by the
andSecretary of Education pursuant to BP 232. Section 70 of BP
non-teaching
Secretaryout
personnel of private schools; and second, whether the petitioner’spregnancy of of
Education with the authority to issue rules and regulatio
wedlock constitutes a valid ground to terminate her employment. provisions of BP 232. Concomitantly, Section 57 30 specifically empow
Education to promulgate rules and regulations necessary for the adm
The Ruling of the Court supervision and regulation of the educational system in accordance w
The Court grants the petition. policy of BP 232.
First Issue: Applicability of the 1992 MRPS The qualifications of teaching and non-teaching personnel of private s
causes for
The petitioner contends that the CA, in ruling that there was a valid ground the termination
to dismiss her, of their employment, are an integral aspec
erred in applying Section 94 of the 1992 MRPS. Essentially, she claimssystem of private
that the schools. Indubitably, ensuring that the teaching an
1992 MRPS
was issued by the Secretary of Education as the revised implementing personnel
rules and of private schools are not only qualified, but competent an
goes hand in hand with the declared objective of BP 232 – establishin
88
relevant quality education.31 It is thus within the authority of the Secretary
exists where
of Education
an act to
of a court or tribunal is performed with a capricio
issue a rule, which provides for the dismissal of teaching and non-teaching
exercise
personnel of equivalent to lack of jurisdiction. 34 The determin
ofjudgment
private schools based on their incompetence, inefficiency, or some otheror absence
disqualification.
of grave abuse of discretion does not include an inquiry in
Moreover, Section 69 of BP 232 specifically authorizes the Secretary the evaluationtoof evidence, which was the basis of the labor agency i
of Education35
"prescribe and impose such administrative sanction as he may deemconclusion.
reasonable and
appropriate in the implementing rules and regulations" for the "[g]ross Nevertheless,
inefficiency while
of thea certiorari proceeding does not strictly include a
32
teaching or non-teaching personnel" of private schools. Accordingly, correctness
contrary toofthe the evaluation of evidence (that was the basis of the la
petitioner’s claim, the Court sees no reason to invalidate the provisions
determining
of the 1992 their
MRPS,
conclusion), the incorrectness of its evidentiary eva
specifically Section 94 thereof. Second Issue: Validity of the Petitioner’s
resultDismissal
in negating the requirement of substantial evidence. Indeed, w
The validity of the petitioner’s dismissal hinges on the determination showing
of whether thatpregnancy
the findings or conclusions, drawn from the same piece
out of wedlock by an employee of a catholic educational institution isarrived
a causeatfor arbitrarily
the or in disregard of the evidence on record, they m
termination of her employment. the courts. In particular, the CA can grant the petition for certiorariif
in its assailed decision or resolution, made a factual finding not suppo
In resolving the foregoing question,the Court will assess the matter from a strictly
evidence. neutralthat is not supported by substantial evidence is
A decision
and secular point of view – the relationship between SSCW as employer taintedandwith
the petitioner
grave abuse of discretion.36
as an employee, the causes provided for by law in the termination of suchrelationship, and
the evidence on record. The ground cited for the petitioner’s dismissal,Thei.e.,
labor tribunals’ respective
pre-marital
sexual relations and, consequently, pregnancy outof wedlock, will beconclusions
assessed asthat to the petitioner’s
whether the same constitutes a valid ground for dismissal pursuant to pregnancy
Section 94(e)is a "disgraceful
of the or
1992 MRPS. immoral conduct" were arrived at
arbitrarily.
The standard of review in a Rule 45
petition from the CA decision in The CA and the labor tribunals affirmed the validity of the petitioner’s
labor cases. to Section 94(e) of the 1992 MRPS, which provides that:
Sec.instant
In a petition for review under Rule 45 of the Rules of Court, such as the 94. Causes of Terminating Employment – In addition to the just
petition,
where the CA’s disposition in a labor case is sought to be calibrated, inthethe Laborreview
Court’s Code, the employment of school personnel, including fac
terminated
isquite limited. In ruling for legal correctness, the Court has to view the CA decisionfor any of the following causes:
in the
same context that the petition for certiorari it ruled upon was presented to it; the Court xxxx
has to examine the CA decision from the prism of whether it correctly e.determined
Disgraceful the
or immoral conduct;
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. xxxx

The phrase "grave abuse of discretion" is well-defined in the Court’s The labor tribunals
jurisprudence. It concluded that the petitioner’s pregnancy out of w
89
"disgraceful and immoral"considering that she is employed in a Catholic There
educational
is still a necessity to determine whether the petitioner’s pregna
institution. In arriving at such conclusion, the labor tribunals merely considered
assessed the disgraceful
fact of or immoral in accordance with the prevailing n
the petitioner’s pregnancy vis-à-visthe totality of the circumstances surrounding the same.
Public and secular morality should
However, the Court finds no substantial evidence to support the aforementioned
determine theconclusion
prevailing norms of
arrived at by the labor tribunals. The fact of the petitioner’s pregnancy
conduct,
out of not
wedlock,
religious morality.
without more, is not enough to characterize the petitioner’s conduct However,
as disgraceful or
determining what the prevailing norms of conduct are cons
immoral. There must be substantial evidence to establish that pre-marital sexual relations
immoral is not an easy task. An individual’s perception of what is mo
and, consequently, pregnancy outof wedlock, are indeed considered confluence
disgraceful of
or a myriad of influences, such as religion, family, social s
immoral. cacophony of others. In this regard, the Court’s ratiocination in Estra
The totality of the circumstances instructive.
surrounding the conduct alleged to In Estrada, an administrative case against a court interpreter charged
be disgraceful or immoral must be immoral conduct, the Court stressed that in determining whether a p
assessed against the prevailing be considered as disgraceful and immoral, the distinction between pu
norms of conduct. morality on the one hand, and religious morality, on the other, shoul
37 40
In Chua-Qua v. Clave, the Court stressed that to constitute immorality,
mind.the That the distinction between public and secular morality and
circumstances of each particular case must be holistically consideredimportant
and evaluated because
in light
the jurisdiction of the Court extends only to public
38 41
of the prevailing norms of conductand applicable laws. Otherwise stated,
morality.
it is notThethe
Court further explained that:
totality of the circumstances surrounding the conduct per se that determines
The moralitywhether the to in the law is public and necessarily secular, n
referred
same is disgraceful or immoral, but the conduct that is generally accepted by society
"Religious as as expressed in public debate may influence the
teachings
respectable or moral. If the conduct does not conform to what society generally
public moralviews as may be resolved only on grounds articulable in
disputes
respectable or moral, then the conduct is considered as disgraceful or immoral. Tersely
Otherwise, if government relies upon religious beliefs in formulating p
put, substantial evidence must be presented, which would establish that a particular
morals, the resulting policies and morals would require conformity to
conduct, viewed in light of the prevailing norms of conduct, is considered
regarddisgraceful
as religious or programs or agenda.The non-believers would ther
immoral. conform to a standard of conduct buttressed by a religious belief, i.e.
Thus, the determination of whether a conduct is disgraceful or immoral religion,"
involvesanathema
a two-step
to religious freedom. Likewise, if government bas
process: first, a consideration of the totality of the circumstances surrounding
religious beliefs,
the conduct;
it would tacitly approve or endorse that belief and th
and second, an assessment of the said circumstances vis-à-visthe prevailing
disapprovenorms
contrary
of religious or non-religious views that would not su
conduct, i.e., what the society generally considers moral and respectable.
result, government will not provide full religious freedom for all its cit
That the petitioner was employed by a Catholic educational institution it per
appear that not
se does those whose beliefs are disapproved are second-class c
absolutely determine whether her pregnancy out of wedlock is disgracefulreligious freedom therefore requires that government be neutral in m
or immoral.
90
governmental reliance upon religious justification is inconsistent withUnder
this policy
theseoftests, two things may be concluded from the fact that an
neutrality. gives birth out of wedlock:
In other words, government action, including its proscription of immorality as expressed
(1) if the in
father of the child is himself unmarried, the wom
criminal law like concubinage, must have a secular purpose. That is, the governmentadministratively liable for disgraceful and immoral conduc
proscribes this conduct because it is "detrimental (or dangerous) to those conditions
ideal situation
upon and may cause complications for both moth
which depend the existence and progress of human society" and not because the does
conduct
not give cause for administrative sanction. There is n
is proscribed by the beliefs of one religion or the other. Although admittedly, moral
an unmarried mother under those circumstances by reaso
judgments based on religion might have a compelling influence on those engaged conduct
in public
or proscribes the consensual sexual activity betwe
deliberations over what actions would be considered a moral disapprobation punishable
persons.by Neither does the situation contravene any fundam
law. After all, they might also be adherents of a religion and thus have religiousexpressed
opinions in the Constitution, a document that accommod
and moral codes with a compelling influence on them; the human mind endeavors systems
to irrespective of dogmatic origins.
regulate the temporal and spiritual institutions of society in a uniform manner, (2) if the father of the child born out of wedlock is himself
harmonizing earth with heaven. Succinctly put, a law could be religious or Kantian otheror thanthe mother, then there is a cause for administra
Aquinian or utilitarian in its deepest roots, but it must have an articulable and discernible
either the father or the mother. In sucha case, the "disgra
secular purpose and justification to pass scrutiny of the religion clauses.x x x. conduct" consists of having extramarital relations with a m
omitted and emphases ours) sanctity of marriage is constitutionally recognized and like
Accordingly, when the law speaks of immoral or, necessarily, disgraceful conduct, statutes
it as a special contract of permanent union. Accordi
pertains to public and secular morality; it refers to those conducts which are proscribed
employees have been sanctioned for their dalliances with
because they are detrimental to conditions upon which depend the existence and their
progress
own betrayals of the marital vow of fidelity.
43
of human society. Thus, in Anonymous v. Radam, an administrativeIncase this involving a not disputed that, like respondent, the father of h
case, it was
court utility worker likewise charged with disgraceful and immoral conduct, applying
unmarried. the
Therefore, respondent cannot be held liable for disgracefu
doctrines laid down in Estrada, the Court held that: conduct simply because she gave birth to the child Christian Jeon out
44
For a particular conduct to constitute "disgraceful and immoral" behavior
wedlock.
under (Citations
civil omitted and emphases ours)
service laws, it must be regulated on account of the concerns of public and
Both secularand Radamare administrative cases against employees
Estrada
morality. It cannot be judged based on personal bias, specifically those
Thecolored
Court, by however, sees no reason not to apply the doctrines enunc
particular mores. Nor should it be grounded on "cultural" values not convincingly
Radamin the instant case. Estrada and Radamalso required the Court
demonstrated to have been recognized in the realm of public policy expressed
conducts are in the
considered disgraceful and/or immoral as would constitu
Constitution and the laws. At the same time, the constitutionally guaranteed
dismissal. More(such
rights importantly, as in the said administrative cases, the
as the right to privacy) should be observed to the extent that they protect behavior that
an employee’s security of tenure; this case likewise concerns employ
may be frowned upon by the majority. merely a specie of property right, but also the means by which the em

91
who depend on him live.45 conceived a child, had no legal impediment to marry. Indeed, even p
It bears stressing that the right of an employee to security of tenure the petitionerby
is protected married
the her boyfriend, the father of her child. As the C
Constitution. Perfunctorily, a regular employee may not be dismissedthere is no
unless for law which penalizes an unmarried mother by reason of he
cause
provided under the Labor Code and other relevant laws, in this case,proscribes the consensual
the 1992 MRPS. As sexual activity between two unmarried per
stated above, when the law refers to morality, it necessarily pertainsdoes such and
to public situation
secularcontravene any fundamental state policy enshrine
morality and not religious morality. Thus, the proscription against "disgraceful
Admittedly, orthe
immoral
petitioner is employed in an educational institution w
conduct" under Section 94(e) of the 1992 MRPS, which is made as a and causedoctrines
for dismissal,
of the Catholic Church, including that on pre-marital se
must necessarily refer to public and secular morality. Accordingly, in strictly
order forupheld
a conduct
and taught to the students. That her indiscretion, whic
tobe considered as disgraceful or immoral, it must be "‘detrimental (orpregnancy
dangerous) out to
of wedlock, is anathema to the doctrines of the Cathol
those conditions upon which depend the existence and progress of human viewedsociety’
againstandthenot
prevailing norms of conduct, the petitioner’s cond
because the conduct is proscribed by the beliefs of one religion or theconsidered
other." as disgraceful or immoral; such conduct is not denounced
Thus, in Santos v. NLRC,46 the Court upheld the dismissal of a teacher morality.
who had It an
may be an unusual arrangement, but it certainly is not di
extra-
within
marital affair with his co-teacher, who is likewise married, on the ground ofthe contemplation
disgraceful and of the law.
immoral conduct under Section 94(e) of the 1992 MRPS. The Court pointed
To stress,
outpre-marital
that extra- sexual relations between two consenting adults
marital affair is considered as a disgraceful and immoral conduct is an
impediment
afront to the
to marry each other, and, consequently, conceiving a ch
sanctity of marriage, which is a basic institution of society, viz: gauged from a purely public and secular view of morality, does not a
or immoral
We cannot overemphasize that having an extra-marital affair is an afront to the conduct
sanctity under
of Section 94(e) of the 1992 MRPS.
marriage, which is a basic institution of society. Even our Family Code
Accordingly,
provides thatthe labor tribunals erred in upholding the validity of the
husband and wife must live together, observe mutual love, respect and Thefidelity.
labor tribunals
This is arbitrarily relied solely on the circumstances surro
rooted in the fact that both our Constitution and our laws cherish thepetitioner’s
validity of marriage
pregnancy and its supposed effect on SSCW and its stude
and unity of the family. Our laws, in implementing this constitutionalevaluating
edict on marriage
whetherand
the petitioner’s conduct is indeed considered disg
the family underscore their permanence, inviolability and solidarity. view of the prevailing norms of conduct. In this regard, the labor trib
The petitioner’s pregnancy out of haphazard evaluation of the evidence amounts to grave abuse of disc
wedlock is not a disgraceful or Court will rectify.
immoral conduct since she and the The labor tribunals’ finding that the petitioner’s pregnancy out of wed
father of her child have no absence of substantial evidence is not only arbitrary, but a grave abu
impediment to marry each other. which should have been set right by the CA.
In stark contrast to Santos, the Court does not find any circumstanceThere
in this
is case
no substantial
which evidence to
would lead the Court to conclude that the petitioner committed a disgraceful
prove thator the
immoral
petitioner’s pregnancy
conduct. It bears stressing that the petitioner and her boyfriend, at the
outtime
of wedlock
they caused grave scandal
92
to SSCW and its students. limited. Itis thus quite impossible that her pregnancy out of wedlock
SSCW claimed that the petitioner was primarily dismissed because her scandal, as claimed
pregnancy out of by SSCW, as to warranther dismissal.
wedlock caused grave scandal to SSCW and its students. That the scandal Settledbrought
is the rule
about
that in termination cases, the burden of proving th
by the petitioner’s indiscretion prompted them to dismiss her. The LAemployees
upheld thewas for a valid and authorized cause rests on the employe
respondents’ claim, stating that: upon the employer to show by substantial evidence that the terminat
In this particular case, an "objective" and "rational evaluation" of theemployment
facts and of the employees was validly made and failure to 50
discha
meanx that
circumstances obtaining in this case would lead us to focus our attention thethe
x x on dismissal is not justified and therefore illegal. "Subst
more than
impact of the act committed by the complainant. The act of the complainant x xaxmere scintilla of evidence. It means such relevant evide
eroded
the moral principles being taught and project[ed] by the respondent mind mightschool
[C]atholic accepttoas adequateto support a conclusion, even if other
their young lady students.48 (Emphasis in the original) reasonable mightconceivably opine otherwise."51
On the other hand, the NLRC opined that: Indubitably, bare allegations do not amount to substantial evidence.
respondents failed to adduce substantial evidence to prove their asse
In the instant case, when the complainant-appellant was already conceiving a child
petitioner’s even the labor tribunals should not have upheld thei
dismissal,
before she got married, such is considered a shameful and scandalous linebehavior, inimical
and sinker. to
The labor tribunals’ respective findings, which were a
public welfare and policy. It eroded the moral doctrines which the respondent Catholic
substantial evidence, amounts to a grave abuse of discretion, which t
school, an exclusive school for girls, is teaching the young girls. Thus, when the
rectified. "Security of tenure is a right which may not be denied on m
respondent-appellee school terminated complainant-appellant’s services,unclearand a
it was valid
nebulous basis."52
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. The petitioner’s dismissal is not a
Respondents-
appellees uphold the teachings of the Catholic Church on pre-maritalvalid exercise
sex and of SSCW’s
that the
complainant-appellant as an employee of the school was expected tomanagement
abide by thisprerogative.
basic
principle and to live up with the standards of their purely Catholic values.
The CA Her
besubsequent
labored the management prerogative of SSCW to disciplin
marriage did not take away the fact that she had engaged in pre-maritalCA opined
sex which
that the
the petitioner’s dismissal is a valid exercise of manag
respondent-appellee school denounces as the same is opposed to theimpose teachings
penalties
and on erring employees pursuant to its policies, rules a
49
doctrines it espouses. (Emphasis ours) The Court does not agree.
Contrary to the labor tribunals’ declarations, the Court finds that SSCW
Thefailed
Courttohasadduce
held that "management is free to regulate, according t
substantial evidence to prove that the petitioner’s indiscretion indeedand
caused
judgment, scandal
grave all aspects of employment, including hiring, work assi
to SSCW and its students. Other than the SSCW’s bare allegation, the methods, time, placeofand manner of work, processes to be followed,
records are bereft
any evidence that would convincingly prove that the petitioner’s conduct indeed
workers, adversely
working regulations, transfer of employees, work supervisio
affected SSCW’s integrity in teaching the moral doctrines, which it stands for. The
and discipline, dismissal and recall of workers. The exercise of manag
petitioner is only a non-teaching personnel; her interaction with SSCW’s students
however, is very
is not absolute as it must beexercised in good faith and wit
93
rights of labor." Management cannot exercise its prerogative in a cruel,
because
repressive,
of strained
or relations between the employer and the employe
53
despotic manner. dismissal, the accepted doctrine is that separation pay is available in
whenand,
SSCW, as employer, undeniably has the right to discipline its employees the iflatter
needrecourse
be, is no longer practical or in the best interest
dismiss themif there is a valid cause to do so. However, as already explained,
In Divine Word is no School v. NLRC,58 the Court ordered the employe
there High
cause to dismiss the petitioner. Her conduct is not considered by lawpay as disgraceful
the illegallyordismissed high school teacher separation pay in lieu
immoral. Further, the respondents themselves have admitted that SSCW, reinstatement
at the time
sinceof her continued presence as a teacher in the schoo
the controversy, does not have any policy or rule against an employee withwhoantipathy
engagesand in antagonism by some sectors in the school commu
pre-marital sexual relations and conceives a child as a result thereof.InThere
view being
of theno valid
particular circumstances of this case, it would be more
basis in law or even in SSCW’s policy and rules, SSCW’s dismissal of SSCW
the petitioner is
to pay the petitioner separation pay inlieu of actual reinstatem
despotic and arbitrary and, thus, not a valid exercise of managementemployment
prerogative.of the petitioner with SSCW would only serve to intensif
In sum, the Court finds that the petitioner was illegally dismissed as antipathy
there wasand no just
antagonism between the parties. Consequently, the Co
cause for the termination of her employment. SSCW failed to adducepay substantial
to the petitioner
evidenceequivalent to one (1) month pay for every year
to establish that the petitioner’s conduct, i.e., engaging in pre-marital
fraction
sexualof relations
at least and
six (6) months considered as one (1) whole year,
conceiving a child out of wedlock, assessed in light of the prevailing norms
illegal dismissal
of conduct, upisto the finality of this judgment, as an alternative
considered disgraceful or immoral. The labor tribunals gravely abused their
Also, discretion in
"employees who are illegally dismissed are entitled to full backw
upholding the validity of the petitioner’s dismissal as the charge against the petitioner
allowances and other lay benefits or their monetary equivalent, compute
not on substantial evidence, but on the bare allegations of SSCW. In actual
turn, the CA
compensation was withheld from them up to the time of their
committed reversible error in upholding the validity of the petitioner’s dismissal, failing
but if reinstatement is no longer possible, the backwages shall be com
torecognize that the labor tribunals gravely abused their discretion inofruling
their for thetermination up to the finality of the decision." 60 Accord
illegal
respondents. entitled to an award of full backwages from the time she was illegally
The petitioner is entitled to finality of this decision.
separation pay, in lieu of actual Nevertheless, the petitioner is not entitled to moral and exemplary da
reinstatement, full backwages and employee isentitled to moral damages when the dismissal is attended
attorney’s fees, but not to moral and or constitutes an act oppressive to labor, or is done in a manner cont
exemplary damages. good customs or public policy. Exemplary damages may be awarded
Having established that the petitioner was illegally dismissed, the Court
effected in a wanton, oppressive or malevolent manner." 61
now determines
the reliefs thatshe is entitled to and their extent. Under the law and prevailing
"Bad faith, under the law, does not simply connote bad judgment or
jurisprudence, "an illegally dismissed employee is entitled to reinstatement
importsasaa matter ofpurpose or some moral obliquity and conscious d
dishonest
54 55
right." Aside from the instances provided under Articles 283 and 284 breach of a known duty through some motive or interest or ill will tha
Code, separation pay is, however, granted when reinstatement is no nature
longer of
feasible
fraud."62
94
"It must be noted that the burden of proving bad faith rests on the one
SO alleging
ORDERED. it"
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 attorney’s 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 attorney’s 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.
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. Scholastica’s 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)
attorney’s 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 petitioner’s monetary awards.
95
G.R. No. 168081 October 17, 2008
ARMANDO G. YRASUEGUI, petitioners,
vs.
PHILIPPINE AIRLINES, INC., respondents.
DECISION
REYES, R.T., J.:
THIS case portrays the peculiar story of an international flight
steward who was dismissed because of his failure to adhere to
the weight standards of the airline company.
He is now before this Court via a petition for review on
certiorari claiming that he was illegally dismissed. To buttress
his stance, he argues that (1) his dismissal does not fall under
282(e) of the Labor Code; (2) continuing adherence to the
weight standards of the company is not a bona fide
occupational qualification; and (3) he was discriminated
against because other overweight employees were promoted
instead of being disciplined.
After a meticulous consideration of all arguments pro and con,
We uphold the legality of dismissal. Separation pay, however,
should be awarded in favor of the employee as an act of social
justice or based on equity. This is so because his dismissal is
not for serious misconduct. Neither is it reflective of his moral
character.
The Facts
96
Petitioner Armando G. Yrasuegui was a former international
flight steward of Philippine Airlines, Inc. (PAL). He stands five
feet and eight inches (5’8") with a large body frame. The
proper weight for a man of his height and body structure is
from 147 to 166 pounds, the ideal weight being 166 pounds,
as mandated by the Cabin and Crew Administration Manual1 of
PAL.
The weight problem of petitioner dates back to 1984. Back
then, PAL advised him to go on an extended vacation leave
from December 29, 1984 to March 4, 1985 to address his
weight concerns. Apparently, petitioner failed to meet the
company’s weight standards, prompting another leave without
pay from March 5, 1985 to November 1985.
After meeting the required weight, petitioner was allowed to
return to work. But petitioner’s weight problem recurred. He
again went on leave without pay from October 17, 1988 to
February 1989.
On April 26, 1989, petitioner weighed 209 pounds, 43 pounds
over his ideal weight. In line with company policy, he was
removed from flight duty effective May 6, 1989 to July 3,
1989. He was formally requested to trim down to his ideal
weight and report for weight checks on several dates. He was
also told that he may avail of the services of the company
physician should he wish to do so. He was advised that his
case will be evaluated on July 3, 1989.2
On February 25, 1989, petitioner underwent weight check. It
was discovered that he gained, instead of losing, weight. He
was overweight at 215 pounds, which is 49 pounds beyond the
limit. Consequently, his off-duty status was retained.
On October 17, 1989, PAL Line Administrator Gloria Dizon
personally visited petitioner at his residence to check on the
progress of his effort to lose weight. Petitioner weighed 217
pounds, gaining 2 pounds from his previous weight. After the
visit, petitioner made a commitment3 to reduce weight in a
letter addressed to Cabin Crew Group Manager Augusto
Barrios. The letter, in full, reads:
Dear Sir:
I would like to guaranty my commitment towards a weight
loss from 217 pounds to 200 pounds from today until 31 Dec.
1989.
From thereon, I promise to continue reducing at a reasonable
percentage until such time that my ideal weight is achieved.
Likewise, I promise to personally report to your office at the
designated time schedule you will set for my weight check.
Respectfully Yours,
F/S Armando Yrasuegui4
Despite the lapse of a ninety-day period given him to reach his
ideal weight, petitioner remained overweight. On January 3,
1990, he was informed of the PAL decision for him to remain
grounded until such time that he satisfactorily complies with
the weight standards. Again, he was directed to report every
two weeks for weight checks.
97
Petitioner failed to report for weight checks. Despite that, he
was given one more month to comply with the weight
requirement. As usual, he was asked to report for weight
check on different dates. He was reminded that his grounding
would continue pending satisfactory compliance with the
weight standards.5
Again, petitioner failed to report for weight checks, although
he was seen submitting his passport for processing at the PAL
Staff Service Division.
On April 17, 1990, petitioner was formally warned that a
repeated refusal to report for weight check would be dealt with
accordingly. He was given another set of weight check
dates.6 Again, petitioner ignored the directive and did not
report for weight checks. On June 26, 1990, petitioner was
required to explain his refusal to undergo weight checks.7
When petitioner tipped the scale on July 30, 1990, he weighed
at 212 pounds. Clearly, he was still way over his ideal weight
of 166 pounds.
From then on, nothing was heard from petitioner until he
followed up his case requesting for leniency on the latter part
of 1992. He weighed at 219 pounds on August 20, 1992
and 205 pounds on November 5, 1992.
On November 13, 1992, PAL finally served petitioner a Notice
of Administrative Charge for violation of company standards
on weight requirements. He was given ten (10) days from
receipt of the charge within which to file his answer and
submit controverting evidence.8
On December 7, 1992, petitioner submitted his
Answer.9 Notably, he did not deny being overweight. What he
claimed, instead, is that his violation, if any, had already been
condoned by PAL since "no action has been taken by the
company" regarding his case "since 1988." He also claimed
that PAL discriminated against him because "the company has
not been fair in treating the cabin crew members who are
similarly situated."
On December 8, 1992, a clarificatory hearing was held where
petitioner manifested that he was undergoing a weight
reduction program to lose at least two (2) pounds per week so
as to attain his ideal weight.10
On June 15, 1993, petitioner was formally informed by PAL
that due to his inability to attain his ideal weight, "and
considering the utmost leniency" extended to him "which
spanned a period covering a total of almost five (5) years," his
services were considered terminated "effective immediately." 11
His motion for reconsideration having been denied, 12
petitioner
filed a complaint for illegal dismissal against PAL.
Labor Arbiter, NLRC and CA Dispositions
On November 18, 1998, Labor Arbiter Valentin C. Reyes
ruled13 that petitioner was illegally dismissed. The dispositive
part of the Arbiter ruling runs as follows:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered, declaring the complainant’s dismissal illegal, and
ordering the respondent to reinstate him to his former position
or substantially equivalent one, and to pay him:
98
a. Backwages of Php10,500.00 per month from his dismissal
on June 15, 1993 until reinstated, which for purposes of
appeal is hereby set from June 15, 1993 up to August 15,
1998 at ₱651,000.00;
b. Attorney’s fees of five percent (5%) of the total award.
SO ORDERED.14
The Labor Arbiter held that the weight standards of PAL are
reasonable in view of the nature of the job of
petitioner.15 However, the weight standards need not be
complied with under pain of dismissal since his weight did not
hamper the performance of his duties.16 Assuming that it did,
petitioner could be transferred to other positions where his
weight would not be a negative factor.17 Notably, other
overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr.
Barrios, were promoted instead of being disciplined.18
Both parties appealed to the National Labor Relations
Commission (NLRC).19
On October 8, 1999, the Labor Arbiter issued a writ of
execution directing the reinstatement of petitioner without loss
of seniority rights and other benefits.20
On February 1, 2000, the Labor Arbiter denied21 the Motion to
Quash Writ of Execution22 of PAL.
On March 6, 2000, PAL appealed the denial of its motion to
quash to the NLRC.23
On June 23, 2000, the NLRC rendered judgment24 in the
following tenor:
WHEREFORE, premises considered[,] the Decision of the
Arbiter dated 18 November 1998 as modified by our findings
herein, is hereby AFFIRMED and that part of the dispositive
portion of said decision concerning complainant’s entitlement
to backwages shall be deemed to refer to complainant’s
entitlement to his full backwages, inclusive of allowances and
to his other benefits or their monetary equivalent instead of
simply backwages, from date of dismissal until his actual
reinstatement or finality hereof. Respondent is enjoined to
manifests (sic) its choice of the form of the reinstatement of
complainant, whether physical or through payroll within ten
(10) days from notice failing which, the same shall be deemed
as complainant’s reinstatement through payroll and execution
in case of non-payment shall accordingly be issued by the
Arbiter. Both appeals of respondent thus, are DISMISSED for
utter lack of merit.25
According to the NLRC, "obesity, or the tendency to gain
weight uncontrollably regardless of the amount of food intake,
is a disease in itself."26 As a consequence, there can be no
intentional defiance or serious misconduct by petitioner to the
lawful order of PAL for him to lose weight.27
Like the Labor Arbiter, the NLRC found the weight standards of
PAL to be reasonable. However, it found as unnecessary the
Labor Arbiter holding that petitioner was not remiss in the
performance of his duties as flight steward despite being
overweight. According to the NLRC, the Labor Arbiter should
have limited himself to the issue of whether the failure of
99
petitioner to attain his ideal weight constituted willful defiance
of the weight standards of PAL.28
PAL moved for reconsideration to no avail.29 Thus, PAL
elevated the matter to the Court of Appeals (CA) via a petition
for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure.30
By Decision dated August 31, 2004, the CA reversed31 the
NLRC:
WHEREFORE, premises considered, we hereby GRANT the
petition. The assailed NLRC decision is declared NULL and
VOID and is hereby SET ASIDE. The private respondent’s
complaint is hereby DISMISSED. No costs.
SO ORDERED.32
The CA opined that there was grave abuse of discretion on the
part of the NLRC because it "looked at wrong and irrelevant
considerations"33 in evaluating the evidence of the parties.
Contrary to the NLRC ruling, the weight standards of PAL are
meant to be a continuing qualification for an employee’s
position.34 The failure to adhere to the weight standards is
an analogous cause for the dismissal of an employee under
Article 282(e) of the Labor Code in relation to Article 282(a). It
is not willful disobedience as the NLRC seemed to
suggest.35 Said the CA, "the element of willfulness that the
NLRC decision cites is an irrelevant consideration in arriving at
a conclusion on whether the dismissal is legally proper." 36 In
other words, "the relevant question to ask is not one of
willfulness but one of reasonableness of the standard and
whether or not the employee qualifies or continues to qualify
under this standard."37
Just like the Labor Arbiter and the NLRC, the CA held that the
weight standards of PAL are reasonable.38 Thus, petitioner was
legally dismissed because he repeatedly failed to meet the
prescribed weight standards.39 It is obvious that the issue of
discrimination was only invoked by petitioner for purposes of
escaping the result of his dismissal for being overweight. 40
On May 10, 2005, the CA denied petitioner’s motion for
reconsideration.41 Elaborating on its earlier ruling, the CA held
that the weight standards of PAL are a bona fide occupational
qualification which, in case of violation, "justifies an
employee’s separation from the service."42
Issues
In this Rule 45 petition for review, the following issues are
posed for resolution:
I.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
IN HOLDING THAT PETITIONER’S OBESITY CAN BE A GROUND
FOR DISMISSAL UNDER PARAGRAPH (e) OF ARTICLE 282 OF
THE LABOR CODE OF THE PHILIPPINES;
II.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
IN HOLDING THAT PETITIONER’S DISMISSAL FOR OBESITY
100
CAN BE PREDICATED ON THE "BONA FIDE OCCUPATIONAL
QUALIFICATION (BFOQ) DEFENSE";
III.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
IN HOLDING THAT PETITIONER WAS NOT UNDULY
DISCRIMINATED AGAINST WHEN HE WAS DISMISSED WHILE
OTHER OVERWEIGHT CABIN ATTENDANTS WERE EITHER
GIVEN FLYING DUTIES OR PROMOTED;
IV.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
WHEN IT BRUSHED ASIDE PETITIONER’S CLAIMS FOR
REINSTATEMENT [AND] WAGES ALLEGEDLY FOR BEING MOOT
AND ACADEMIC.43 (Underscoring supplied)
Our Ruling
I. The obesity of petitioner is a ground for dismissal
under Article 282(e) 44 of the Labor Code.
A reading of the weight standards of PAL would lead to no
other conclusion than that they constitute a continuing
qualification of an employee in order to keep the job. Tersely
put, an employee may be dismissed the moment he is unable
to comply with his ideal weight as prescribed by the weight
standards. The dismissal of the employee would thus fall
under Article 282(e) of the Labor Code. As explained by the
CA:
x x x [T]he standards violated in this case were not mere
"orders" of the employer; they were the "prescribed weights"
that a cabin crew must maintain in order to qualify for and
keep his or her position in the company. In other words,
they were standards that establish continuing
qualifications for an employee’s position. In this sense, the
failure to maintain these standards does not fall under Article
282(a) whose express terms require the element of willfulness
in order to be a ground for dismissal. The failure to meet the
employer’s qualifying standards is in fact a ground that
does not squarely fall under grounds (a) to (d) and is
therefore one that falls under Article 282(e) – the "other
causes analogous to the foregoing."
By its nature, these "qualifying standards" are norms that
apply prior to and after an employee is hired. They
apply prior to employment because these are the standards
a job applicant must initially meet in order to be hired. They
apply after hiring because an employee must continue to
meet these standards while on the job in order to keep his job.
Under this perspective, a violation is not one of the faults for
which an employee can be dismissed pursuant to pars. (a) to
(d) of Article 282; the employee can be dismissed simply
because he no longer "qualifies" for his job irrespective of
whether or not the failure to qualify was willful or intentional.
x x x45
Petitioner, though, advances a very interesting argument. He
claims that obesity is a "physical abnormality and/or
illness."46 Relying on Nadura v. Benguet Consolidated,
Inc.,47 he says his dismissal is illegal:
101
Conscious of the fact that Nadura’s case cannot be made to
fall squarely within the specific causes enumerated in
subparagraphs 1(a) to (e), Benguet invokes the provisions of
subparagraph 1(f) and says that Nadura’s illness – occasional
attacks of asthma – is a cause analogous to them.
Even a cursory reading of the legal provision under
consideration is sufficient to convince anyone that, as the trial
court said, "illness cannot be included as an analogous cause
by any stretch of imagination."
It is clear that, except the just cause mentioned in sub-
paragraph 1(a), all the others expressly enumerated in the law
are due to the voluntary and/or willful act of the employee.
How Nadura’s illness could be considered as "analogous" to
any of them is beyond our understanding, there being no
claim or pretense that the same was contracted through his
own voluntary act.48
The reliance on Nadura is off-tangent. The factual milieu
in Nadura is substantially different from the case at
bar. First, Nadura was not decided under the Labor Code. The
law applied in that case was Republic Act (RA) No.
1787. Second, the issue of flight safety is absent in Nadura,
thus, the rationale there cannot apply here. Third, in Nadura,
the employee who was a miner, was laid off from work
because of illness, i.e., asthma. Here, petitioner was dismissed
for his failure to meet the weight standards of PAL. He was not
dismissed due to illness. Fourth, the issue in Nadura is
whether or not the dismissed employee is entitled to
separation pay and damages. Here, the issue centers on the
propriety of the dismissal of petitioner for his failure to meet
the weight standards of PAL. Fifth, in Nadura, the employee
was not accorded due process. Here, petitioner was accorded
utmost leniency. He was given more than four (4) years to
comply with the weight standards of PAL.
In the case at bar, the evidence on record militates against
petitioner’s claims that obesity is a disease. That he was able
to reduce his weight from 1984 to 1992 clearly shows that it is
possible for him to lose weight given the proper attitude,
determination, and self-discipline. Indeed, during the
clarificatory hearing on December 8, 1992, petitioner himself
claimed that "[t]he issue is could I bring my weight down to
ideal weight which is 172, then the answer is yes. I can do it
now."49
True, petitioner claims that reducing weight is costing him "a
lot of expenses."50 However, petitioner has only himself to
blame. He could have easily availed the assistance of the
company physician, per the advice of PAL.51 He chose to ignore
the suggestion. In fact, he repeatedly failed to report when
required to undergo weight checks, without offering a valid
explanation. Thus, his fluctuating weight indicates absence of
willpower rather than an illness.
Petitioner cites Bonnie Cook v. State of Rhode Island,
Department of Mental Health, Retardation and
Hospitals,52decided by the United States Court of Appeals
(First Circuit). In that case, Cook worked from 1978 to 1980
and from 1981 to 1986 as an institutional attendant for the
mentally retarded at the Ladd Center that was being operated
by respondent. She twice resigned voluntarily with an
unblemished record. Even respondent admitted that her
102
performance met the Center’s legitimate expectations. In
1988, Cook re-applied for a similar position. At that time, "she
stood 5’2" tall and weighed over 320 pounds." Respondent
claimed that the morbid obesity of plaintiff compromised her
ability to evacuate patients in case of emergency and it also
put her at greater risk of serious diseases.
Cook contended that the action of respondent amounted to
discrimination on the basis of a handicap. This was in direct
violation of Section 504(a) of the Rehabilitation Act of
1973,53 which incorporates the remedies contained in Title VI
of the Civil Rights Act of 1964. Respondent claimed, however,
that morbid obesity could never constitute a handicap within
the purview of the Rehabilitation Act. Among others, obesity is
a mutable condition, thus plaintiff could simply lose weight and
rid herself of concomitant disability.
The appellate Court disagreed and held that morbid obesity is
a disability under the Rehabilitation Act and that respondent
discriminated against Cook based on "perceived" disability.
The evidence included expert testimony that morbid obesity is
a physiological disorder. It involves a dysfunction of both the
metabolic system and the neurological appetite – suppressing
signal system, which is capable of causing adverse effects
within the musculoskeletal, respiratory, and cardiovascular
systems. Notably, the Court stated that "mutability is relevant
only in determining the substantiality of the limitation flowing
from a given impairment," thus "mutability only precludes
those conditions that an individual can easily and quickly
reverse by behavioral alteration."
Unlike Cook, however, petitioner is not morbidly obese. In the
words of the District Court for the District of Rhode Island,
Cook was sometime before 1978 "at least one hundred pounds
more than what is considered appropriate of her height."
According to the Circuit Judge, Cook weighed "over 320
pounds" in 1988. Clearly, that is not the case here. At his
heaviest, petitioner was only less than 50 pounds over his
ideal weight.
In fine, We hold that the obesity of petitioner, when placed in
the context of his work as flight attendant, becomes an
analogous cause under Article 282(e) of the Labor Code that
justifies his dismissal from the service. His obesity may not be
unintended, but is nonetheless voluntary. As the CA correctly
puts it, "[v]oluntariness basically means that the just cause is
solely attributable to the employee without any external force
influencing or controlling his actions. This element runs
through all just causes under Article 282, whether they be in
the nature of a wrongful action or omission. Gross and
habitual neglect, a recognized just cause, is considered
voluntary although it lacks the element of intent found in
Article 282(a), (c), and (d)."54
II. The dismissal of petitioner can be predicated on the bona
fide occupational qualification defense.
Employment in particular jobs may not be limited to persons
of a particular sex, religion, or national origin unless the
employer can show that sex, religion, or national origin is an
actual qualification for performing the job. The qualification is
called a bona fide occupational qualification (BFOQ).55 In the
United States, there are a few federal and many state job
103
discrimination laws that contain an exception allowing an
employer to engage in an otherwise unlawful form of
prohibited discrimination when the action is based on a BFOQ
necessary to the normal operation of a business or
enterprise.56
Petitioner contends that BFOQ is a statutory defense. It does
not exist if there is no statute providing for it.57 Further, there
is no existing BFOQ statute that could justify his dismissal. 58
Both arguments must fail.
First, the Constitution,59 the Labor Code,60 and RA No.
727761 or the Magna Carta for Disabled Persons62 contain
provisions similar to BFOQ.
Second, in British Columbia Public Service Employee
Commission (BSPSERC) v. The British Columbia Government
and Service Employee’s Union (BCGSEU),63 the Supreme Court
of Canada adopted the so-called "Meiorin Test" in determining
whether an employment policy is justified. Under this test, (1)
the employer must show that it adopted the standard for a
purpose rationally connected to the performance of the
job;64 (2) the employer must establish that the standard is
reasonably necessary65 to the accomplishment of that work-
related purpose; and (3) the employer must establish that the
standard is reasonably necessary in order to accomplish the
legitimate work-related purpose. Similarly, in Star Paper
Corporation v. Simbol,66 this Court held that in order to justify
a BFOQ, the employer must prove that (1) the employment
qualification is reasonably related to the essential operation of
the job involved; and (2) that there is factual basis for
believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of
the job.67
In short, the test of reasonableness of the company policy is
used because it is parallel to BFOQ.68 BFOQ is valid "provided
it reflects an inherent quality reasonably necessary for
satisfactory job performance."69
In Duncan Association of Detailman-PTGWTO v. Glaxo
Wellcome Philippines, Inc.,70 the Court did not hesitate to pass
upon the validity of a company policy which prohibits its
employees from marrying employees of a rival company. It
was held that the company policy is reasonable considering
that its purpose is the protection of the interests of the
company against possible competitor infiltration on its trade
secrets and procedures.
Verily, there is no merit to the argument that BFOQ cannot be
applied if it has no supporting statute. Too, the Labor
Arbiter,71 NLRC,72 and CA73 are one in holding that the weight
standards of PAL are reasonable. A common carrier, from the
nature of its business and for reasons of public policy, is bound
to observe extraordinary diligence for the safety of the
passengers it transports.74 It is bound to carry its passengers
safely as far as human care and foresight can provide, using
the utmost diligence of very cautious persons, with due regard
for all the circumstances.75
The law leaves no room for mistake or oversight on the part of
a common carrier. Thus, it is only logical to hold that the
weight standards of PAL show its effort to comply with the
104
exacting obligations imposed upon it by law by virtue of being
a common carrier.
The business of PAL is air transportation. As such, it has
committed itself to safely transport its passengers. In order to
achieve this, it must necessarily rely on its employees, most
particularly the cabin flight deck crew who are on board the
aircraft. The weight standards of PAL should be viewed as
imposing strict norms of discipline upon its employees.
In other words, the primary objective of PAL in the imposition
of the weight standards for cabin crew is flight safety. It
cannot be gainsaid that cabin attendants must maintain agility
at all times in order to inspire passenger confidence on their
ability to care for the passengers when something goes wrong.
It is not farfetched to say that airline companies, just like all
common carriers, thrive due to public confidence on their
safety records. People, especially the riding public, expect no
less than that airline companies transport their passengers to
their respective destinations safely and soundly. A lesser
performance is unacceptable.
The task of a cabin crew or flight attendant is not limited to
serving meals or attending to the whims and caprices of the
passengers. The most important activity of the cabin crew is to
care for the safety of passengers and the evacuation of the
aircraft when an emergency occurs. Passenger safety goes to
the core of the job of a cabin attendant. Truly, airlines need
cabin attendants who have the necessary strength to open
emergency doors, the agility to attend to passengers in
cramped working conditions, and the stamina to withstand
grueling flight schedules.
On board an aircraft, the body weight and size of a cabin
attendant are important factors to consider in case of
emergency. Aircrafts have constricted cabin space, and narrow
aisles and exit doors. Thus, the arguments of respondent that
"[w]hether the airline’s flight attendants are overweight or not
has no direct relation to its mission of transporting passengers
to their destination"; and that the weight standards "has
nothing to do with airworthiness of respondent’s airlines,"
must fail.
The rationale in Western Air Lines v. Criswell76 relied upon by
petitioner cannot apply to his case. What was involved there
were two (2) airline pilots who were denied reassignment as
flight engineers upon reaching the age of 60, and a flight
engineer who was forced to retire at age 60. They sued the
airline company, alleging that the age-60 retirement for flight
engineers violated the Age Discrimination in Employment Act
of 1967. Age-based BFOQ and being overweight are not the
same. The case of overweight cabin attendants is another
matter. Given the cramped cabin space and narrow aisles and
emergency exit doors of the airplane, any overweight cabin
attendant would certainly have difficulty navigating the
cramped cabin area.
In short, there is no need to individually evaluate their ability
to perform their task. That an obese cabin attendant occupies
more space than a slim one is an unquestionable fact which
courts can judicially recognize without introduction of
evidence.77 It would also be absurd to require airline
companies to reconfigure the aircraft in order to widen the
aisles and exit doors just to accommodate overweight cabin
attendants like petitioner.
105
The biggest problem with an overweight cabin attendant is the
possibility of impeding passengers from evacuating the
aircraft, should the occasion call for it. The job of a cabin
attendant during emergencies is to speedily get the
passengers out of the aircraft safely. Being overweight
necessarily impedes mobility. Indeed, in an emergency
situation, seconds are what cabin attendants are dealing with,
not minutes. Three lost seconds can translate into three lost
lives. Evacuation might slow down just because a wide-bodied
cabin attendant is blocking the narrow aisles. These
possibilities are not remote.
Petitioner is also in estoppel. He does not dispute that the
weight standards of PAL were made known to him prior to his
employment. He is presumed to know the weight limit that he
must maintain at all times.78 In fact, never did he question the
authority of PAL when he was repeatedly asked to trim down
his weight. Bona fides exigit ut quod convenit fiat. Good faith
demands that what is agreed upon shall be done. Kung ang
tao ay tapat kanyang tutuparin ang napagkasunduan.
Too, the weight standards of PAL provide for separate weight
limitations based on height and body frame for both male and
female cabin attendants. A progressive discipline is imposed to
allow non-compliant cabin attendants sufficient opportunity to
meet the weight standards. Thus, the clear-cut rules obviate
any possibility for the commission of abuse or arbitrary action
on the part of PAL.
III. Petitioner failed to substantiate his claim that he
was discriminated against by PAL.
Petitioner next claims that PAL is using passenger safety as a
convenient excuse to discriminate against him.79 We are
constrained, however, to hold otherwise. We agree with the
CA that "[t]he element of discrimination came into play in this
case as a secondary position for the private respondent in
order to escape the consequence of dismissal that being
overweight entailed. It is a confession-and-avoidance position
that impliedly admitted the cause of dismissal, including the
reasonableness of the applicable standard and the private
respondent’s failure to comply."80It is a basic rule in evidence
that each party must prove his affirmative allegation. 81
Since the burden of evidence lies with the party who asserts
an affirmative allegation, petitioner has to prove his allegation
with particularity. There is nothing on the records which could
support the finding of discriminatory treatment. Petitioner
cannot establish discrimination by simply naming the
supposed cabin attendants who are allegedly similarly situated
with him. Substantial proof must be shown as to how and why
they are similarly situated and the differential treatment
petitioner got from PAL despite the similarity of his situation
with other employees.
Indeed, except for pointing out the names of the supposed
overweight cabin attendants, petitioner miserably failed to
indicate their respective ideal weights; weights over their ideal
weights; the periods they were allowed to fly despite their
being overweight; the particular flights assigned to them; the
discriminating treatment they got from PAL; and other
relevant data that could have adequately established a case of
discriminatory treatment by PAL. In the words of the CA, "PAL
really had no substantial case of discrimination to meet." 82
106
We are not unmindful that findings of facts of administrative
agencies, like the Labor Arbiter and the NLRC, are accorded
respect, even finality.83 The reason is simple: administrative
agencies are experts in matters within their specific and
specialized jurisdiction.84 But the principle is not a hard and
fast rule. It only applies if the findings of facts are duly
supported by substantial evidence. If it can be shown that
administrative bodies grossly misappreciated evidence of such
nature so as to compel a conclusion to the contrary, their
findings of facts must necessarily be reversed. Factual findings
of administrative agencies do not have infallibility and must be
set aside when they fail the test of arbitrariness.85
Here, the Labor Arbiter and the NLRC inexplicably
misappreciated evidence. We thus annul their findings.
To make his claim more believable, petitioner invokes the
equal protection clause guaranty86 of the Constitution.
However, in the absence of governmental interference, the
liberties guaranteed by the Constitution cannot be
invoked.87 Put differently, the Bill of Rights is not meant to be
invoked against acts of private individuals.88 Indeed, the
United States Supreme Court, in interpreting the Fourteenth
Amendment,89 which is the source of our equal protection
guarantee, is consistent in saying that the equal protection
erects no shield against private conduct, however
discriminatory or wrongful.90 Private actions, no matter how
egregious, cannot violate the equal protection guarantee.91
IV. The claims of petitioner for reinstatement and
wages are moot.
As his last contention, petitioner avers that his claims for
reinstatement and wages have not been mooted. He is entitled
to reinstatement and his full backwages, "from the time he
was illegally dismissed" up to the time that the NLRC was
reversed by the CA.92
At this point, Article 223 of the Labor Code finds relevance:
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory, even
pending appeal. The employee shall either be admitted back to
work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer,
merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement
provided herein.
The law is very clear. Although an award or order of
reinstatement is self-executory and does not require a writ of
execution,93 the option to exercise actual reinstatement or
payroll reinstatement belongs to the employer. It does not
belong to the employee, to the labor tribunals, or even to the
courts.
Contrary to the allegation of petitioner that PAL "did
everything under the sun" to frustrate his "immediate return
to his previous position,"94 there is evidence that PAL opted to
physically reinstate him to a substantially equivalent position
in accordance with the order of the Labor Arbiter. 95 In fact,
petitioner duly received the return to work notice on February
23, 2001, as shown by his signature.96
107
Petitioner cannot take refuge in the pronouncements of the
Court in a case97 that "[t]he unjustified refusal of the employer
to reinstate the dismissed employee entitles him to payment
of his salaries effective from the time the employer failed to
reinstate him despite the issuance of a writ of execution" 98 and
""even if the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer
to reinstate and pay the wages of the employee during the
period of appeal until reversal by the higher court."99 He failed
to prove that he complied with the return to work order of
PAL. Neither does it appear on record that he actually
rendered services for PAL from the moment he was dismissed,
in order to insist on the payment of his full backwages.
In insisting that he be reinstated to his actual position despite
being overweight, petitioner in effect wants to render the
issues in the present case moot. He asks PAL to comply with
the impossible. Time and again, the Court ruled that the law
does not exact compliance with the impossible.100
V. Petitioner is entitled to separation pay.
Be that as it may, all is not lost for petitioner.
Normally, a legally dismissed employee is not entitled to
separation pay. This may be deduced from the language of
Article 279 of the Labor Code that "[a]n employee who
is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from
him up to the time of his actual reinstatement." Luckily for
petitioner, this is not an ironclad rule.

Exceptionally, separation pay is granted to a legally dismissed

employee as an act "social justice,"101 or based on
"equity."102 In both instances, it is required that the dismissal
(1) was not for serious misconduct; and (2) does not reflect
on the moral character of the employee.103

Here, We grant petitioner separation pay equivalent to one-

half (1/2) month’s pay for every year of service. 104 It should
include regular allowances which he might have been
receiving.105 We are not blind to the fact that he was not
dismissed for any serious misconduct or to any act which
would reflect on his moral character. We also recognize that
his employment with PAL lasted for more or less a decade.

WHEREFORE, the appealed Decision of the Court of Appeals

is AFFIRMED but MODIFIED in that petitioner Armando G.
Yrasuegui is entitled to separation pay in an amount
equivalent to one-half (1/2) month’s pay for every year of
service, which should include his regular allowances.

SO ORDERED.

108
G.R. No. 194884 October 22, 2014
IMASEN PHILIPPINE MANUFACTURING
CORPORATION, Petitioner,
vs.
RAMONCHITO T. ALCON and JOANN S.
PAPA, Respondents.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari 1 the
challenge to the June 9, 2010 decision2 and the December 22,
2010 resolution3 of the Court of Appeals (CA) in CA-G.R. SP
No. 110327. This CA decision nullified the December 24, 2008
decision4 of the National Labor Relations Commission (NLRC)
in NLRC CA No. 043915-05 (NLRC CASE No. RAB IV-12-1661-
02-L). The NLRC ruling, in turn, affirmed the December 10,
2004 decision5 of the Labor Arbiter (LA), dismissing the illegal
dismissal complaint filed by respondents Ramonchito T. Alcon
and Joann S. Papa (collectively referred to as respondents).
The Factual Antecedents
Petitioner Imasen Philippine Manufacturing Corporation is a
domestic corporation engaged in the manufacture of auto
seat-recliners and slide-adjusters. It hired the respondents as
manual welders in 2001.
On October 5, 2002, the respondents reported for work on the
second shift – from 8:00 pm to 5:00 am of the following day.
109
At around 12:40 am, Cyrus A. Altiche, Imasen’s security guard
on duty, went to patrol and inspect the production plant’s
premises. When Altiche reached Imasen’s Press Area, he
heard the sound of a running industrial fan. Intending to turn
the fan off, he followed the sound that led him to the plant’s
"Tool and Die" section.
At the "Tool and Die" section, Altiche saw the respondents
having sexual intercourse on the floor, using a piece of carton
as mattress. Altiche immediately went back to the guard
house and relayed what he saw to Danilo S. Ogana, another
security guard on duty.
On Altiche’s request, Ogana madea follow-up inspection.
Ogana went to the "Tool and Die" section and saw several
employees, including the respondents, already leaving the
area. He noticed, however, that Alcon picked up the carton
that Altiche claimed the respondents used as mattress during
their sexual act, and returned it to the place where the cartons
were kept. Altiche then submitted a handwritten report 6 of the
incident to Imasen’s Finance and Administration Manager.
On October 14, 2002, Imasen issued the respondents separate
interoffice memoranda7 informing them of Altiche’sreport on
the October 5, 2002 incident and directing them to submit
their individual explanation. The respondents complied with
the directive; they claimed that they were merely sleeping in
the "Tool and Die" section at the time of the incident. They
also claimed that other employees were near the area, making
the commission of the act charged impossible.
On October 22, 2002, Imasen issued the respondents another
interoffice memorandum8 directing them to appear atthe
formal hearing of the administrative charge against them. The
hearing was conducted on October 30, 2002,9presided by a
mediator and attended by the representatives of Imasen, the
respondents, Altiche and Ogana. Altiche and Ogana reiterated
the narrations in Altiche’s handwritten report.
On December 4, 2002, Imasen issued the respondents
separate interoffice memoranda10 terminating their services. It
found the respondents guilty of the act charged which it
considered as "gross misconduct contrary to the existing
policies, rules and regulations of the company."
On December 5, 2002, the respondents filed before the LA the
Complaint11 for illegal dismissal. The respondents maintained
their version of the incident.
In the December 10, 2004 decision,12 the LA dismissed the
respondents’ complaint for lack of merit. The LA found the
respondents’ dismissal valid, i.e., for the just cause of gross
misconduct and with due process. The LA gave weight to
Altiche’s account of the incident, which Ogana corroborated,
over the respondents’mere denial of the incident and the
unsubstantiated explanation that other employees were
present near the "Tool and Die" section, making the sexual act
impossible. The LA additionally pointed out that the
respondents did not show any ill motive or intent on the part
of Altiche and Ogano sufficient to render their accounts of the
incident suspicious.
The NLRC’s ruling
110
In its December 24, 2008 decision,13 the NLRC dismissed the
respondents’ appeal14 for lack of merit. In affirming the LA’s
ruling, the NLRC declared that Imasen substantially and
convincingly proved just cause for dismissing the respondents
and complied with the required due process.
The respondents filed before the CA a petition for
certiorari15 after the NLRC denied their motion for
reconsideration16 in its May 29, 2009 resolution.17
The CA’s ruling
In its June 9, 2010 decision,18 the CA nullified the NLRC’s
ruling. The CA agreed with the labor tribunals’ findings
regarding the infraction charged – engaging in sexual
intercourse on October 5, 2002 inside company premises –
and Imasen’s observance of due process in dismissing the
respondents from employment.
The CA, however, disagreed with the conclusion that the
respondents’ sexual intercourse inside company premises
constituted serious misconduct that the Labor Code considers
sufficient tojustify the penalty of dismissal. The CA pointed out
that the respondents’ act, while provoked by "reckless passion
in an inviting environment and time," was not done with
wrongful intent or with the grave or aggravated character that
the law requires. To the CA, the penalty of dismissal is not
commensurate to the respondents’ act, considering especially
that the respondents had not committed any infraction in the
past.
Accordingly, the CA reduced the respondents’ penalty to a
threemonth suspension and ordered Imasen to: (1) reinstate
the respondents to their former position without loss of
seniority rights and other privileges; and (2) pay the
respondents backwages from December 4, 2002 until actual
reinstatement, less the wages corresponding to the three-
month suspension.
Imasen filed the present petition after the CA denied its
motion for Reconsideration19 in the CA’s December 22, 2010
resolution.20
The Petition
Imasen argues in this petition that the act of engaging in
sexual intercourse inside company premises during work hours
is serious misconduct by whatever standard it is measured.
According to Imasen, the respondents’ infraction is an affront
to its core values and high ethical work standards, and
justifies the dismissal. When the CA reduced the penalty from
dismissal to three-month suspension, Imasen points out that
the CA, in effect, substituted its own judgment with its
(Imasen’s) own legally protected management prerogative.
Lastly, Imasen questions the CA’s award of backwages in the
respondents’ favor. Imasen argues that the respondents would
virtually gain from their infraction as they would be paid eight
years worth of wages without having rendered any service;
eight (8) years, in fact, far exceeds their actual period of
service prior to their dismissal.
The Case for the Respondents
111
The respondents argue in their comment21 that the elements
of serious misconduct that justifies an employee’s dismissal
are absent in this case, adopting thereby the CA’s ruling.
Hence, to the respondents, the CA correctly reversed the
NLRC’s ruling; the CA, in deciding the case, took a wholistic
consideration of all the attendant facts, i.e., the time, the
place, the persons involved, and the surrounding
circumstances before, during, and after the sexual intercourse,
and not merely the infraction committed.
The Issue
The sole issue for this Court’s resolution is whether the
respondents’ infraction – engaging in sexual intercourse inside
company premises during work hours – amounts to serious
misconduct within the terms of Article 282 (now Article 296) of
the Labor Code justifying their dismissal.
The Court’s Ruling
We GRANT the petition.
We find that the CA reversibly erred when it nullified the
NLRC’s decision for grave abuse of discretion the NLRC’s
decision.
Preliminary considerations: tenurial security vis-à-vis
management prerogative
The law and jurisprudence guaranteeto every employee
security of tenure. This textual and the ensuing jurisprudential
commitment to the cause and welfare of the working class
proceed from the social justice principles of the Constitution
that the Court zealously implements out of its concern for
those with less in life. Thus, the Court will not hesitate to
strike down as invalid any employer act that attempts to
undermine workers’ tenurial security. All these the State
undertakes under Article 279 (now Article 293)22 of the Labor
Code which bar an employer from terminating the services of
an employee, except for just or authorized cause and upon
observance of due process.
In protecting the rights of the workers, the law, however, does
not authorize the oppression or self-destruction of the
employer.23 The constitutional commitment to the policy of
social justice cannot be understood to mean that every labor
dispute shall automatically be decided in favor of labor.24 The
constitutional and legal protection equally recognize the
employer’s right and prerogative to manage its operation
according to reasonable standards and norms of fair play.
Accordingly, except as limited by special law, an employer is
free to regulate, according to his own judgment and discretion,
all aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, tools to
beused, processes to be followed, supervision of workers,
working regulations, transfer of employees, worker
supervision, layoff of workers and the discipline, dismissal and
recall of workers.25 As a general proposition, an employer has
free reign over every aspect of its business, including the
dismissal of his employees as long as the exercise of its
management prerogativeis done reasonably, in good faith, and
in a manner not otherwise intended to defeat or circumvent
the rights of workers.
112
In these lights, the Court’s task inthe present petition is to
balance the conflicting rights of the respondents to security of
tenure, on one hand, and of Imasen to dismiss erring
employees pursuant to the legitimate exercise of its
management prerogative, on the other.
Management’s right to dismiss an employee; serious
misconduct as just cause for the dismissal
The just causes for dismissing an employee are provided
under Article 28226 (now Article 296)27 of the Labor Code.
Under Article 282(a), serious misconduct by the employee
justifies the employer in terminating his or her employment.
Misconduct is defined as an improper or wrong conduct. It is a
transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment.28 To
constitute a valid cause for the dismissal within the text and
meaning of Article 282 of the Labor Code, the employee’s
misconduct must be serious, i.e., of such grave and
aggravated character and not merely trivial or unimportant.29
Additionally, the misconduct must be related to the
performance of the employee’s duties showing him tobe unfit
to continue working for the employer.30 Further, and equally
important and required, the act or conduct must have been
performed with wrongful intent.31
To summarize, for misconduct or improper behavior to be a
just cause for dismissal, the following elements must concur:
(a) the misconduct must be serious; (b) it must relate to the
performance of the employee’s duties showing that the
employee has become unfit to continue working for the
employer;32 and (c) it must have been performed with
wrongful intent.
The respondents’ infraction amounts to serious misconduct
within the terms of Article 282 (now Article296) of the Labor
Code justifying their dismissal
Dismissal situations (on the ground of serious misconduct)
involving sexual acts, particularly sexual intercourse
committed by employees inside company premises and during
workhours, are not usual violations33 and are not found in
abundance under jurisprudence. Thus, in resolving the present
petition, we are largely guided by the principles we discussed
above, as applied to the totality of the circumstances that
surrounded the petitioners’ dismissal.
In other words, we view the petitioners’ act from the prism of
the elements that must concur for an act to constitute serious
misconduct, analyzed and understood within the context of the
overall circumstances of the case. In taking this approach,
weare guided, too, by the jurisdictional limitations that a Rule
45 review of the CA’s Rule 65 decision in labor cases imposes
on our discretion.34
In addressing the situation that we are faced with in this
petition, we determine whether Imasen validly exercised its
prerogative as employer to dismiss the respondents-
employees who, within company premises and during work
hours, engaged in sexual intercourse. As framed within our
limited Rule 45 jurisdiction, the question that we ask is:
113
whether the NLRC committed grave abuse of discretion in
finding that the respondents’ act amounted to what Article 282
of the Labor Code textually considers as serious misconduct to
warrant their dismissal.
After due consideration, we find the NLRC legally correct and
well within its jurisdiction when it affirmed the validity of the
respondents’ dismissal on the ground of serious misconduct.
Sexual acts and intimacies between two consenting adults
belong, as a principled ideal, to the realm of purely private
relations.1âwphi1 Whether aroused by lust or inflamed by
sincere affection, sexual acts should be carried out at such
place, time and circumstance that, by the generally accepted
norms of conduct, will not offend public decency nor disturb
the generally held or accepted social morals. Under these
parameters, sexual acts between two consenting adults do not
have a place in the work environment.
Indisputably, the respondents engaged in sexual intercourse
inside company premisesand during work hours. These
circumstances, by themselves, are already
punishablemisconduct. Added to these considerations,
however, is the implication that the respondents did not only
disregard company rules but flaunted their disregard in a
manner that could reflect adversely on the status of ethics and
morality in the company.
Additionally, the respondents engaged in sexual intercourse in
an area where co-employees or other company personnel have
ready and available access. The respondents likewise
committed their act at a time when the employees were
expected to be and had, in fact, been at their respective posts, discretion attended the NLRC’s decision to support the
and when they themselves were supposed to be, as all other respondents’ dismissal for serious misconduct.
employees had in fact been, working.
WHEREFORE, in light of these considerations, we hereby
Under these factual premises and inthe context of legal GRANT the petition. We REVERSE the decision dated June 9,
parameters we discussed, we cannot help but consider the 2010 and the resolution dated December 22, 2010 of the
respondents’ misconduct to be of grave and aggravated Court of Appeals in CA-G.R. SP No. 110327 and REINSTATE
character so that the company was justified in imposing the the decision dated December 24, 2008 of the National Labor
highest penalty available ― dismissal. Their infraction Relations Commission in NLRC CA No. 043915-05 (NLRC Case
transgressed the bounds of sociallyand morally accepted No. RAB IV-12-1661-02-L).
human public behavior, and at the same time showedbrazen
disregard for the respect that their employer expected of them SO ORDERED.
as employees. By their misconduct, the respondents, in effect,
issued an open invitation for othersto commit the same
infraction, with like disregard for their employer’s rules, for the
respect owed to their employer, and for their co-employees’
sensitivities. Taken together, these considerations reveal a
depraved disposition that the Court cannot but consider as a
valid cause for dismissal. In ruling as we do now, we
considered the balancing between the respondents’ tenurial
rights and the petitioner’s interests – the need to defend their
management prerogative and to maintain as well a high
standard of ethics and morality in the workplace.
Unfortunately for the respondents, in this balancing under the
circumstances ofthe case, we have to rule against their
tenurial rights in favor of the employer’s management rights.

All told, the respondents’ misconduct,under the circumstances

of this case, fell within the terms of Article 282 (now Article
296) of the Labor Code. Consequently, we reverse the CA’s
decision for its failure to recognize that no grave abuse of

114
 G.R. No. 202090, September 09, 2015
ICT MAJRKETING SERVICES, INC. (NOW KNOWN AS
SYKES MARKETING SERVICES,
INC.), Petitioner, v. MARIPHIL L. SALES, Respondent.
DECISION
DEL CASTILLO, J.:
1
This Petition for Review on Certiorari assails: 1) the January
10, 2012 Decision2 of the Court of Appeals (CA) in CA-G.R. SP
No. 109860 nullifying and setting aside the February 16,
20093 and May 20, 20094Resolutions of the National Labor
Relations Commission (NLRC) in NLRC LAC CN. 07-002404-
08(7)/(8) and reinstating with modification the April 30, 2008
Decision5 of the Labor Arbiter in NLRC-NCR Case No. 10-
11004-07; and 2) the CA's May 28, 2012 Resolution 6 denying
petitioner's Motion for Reconsideration7of the herein assailed
Decision.
Factual Antecedents
Petitioner ICT Marketing Services, Inc. (ICT) - now known as
Sykes Marketing Services, Inc. - is a duly registered domestic
corporation engaged in the business of providing outsourced
customer relations management and business process
outsourcing solutions to various clients in government and in
the financial services, insurance, telecommunications, health
care, information technology, media, energy, and hospitality
industries.
On February 22, 2006, petitioner hired respondent Mariphil L.
Sales as its Customer Service Representative (CSR) or
115
Telephone Service Representative (TSR), and assigned her to
its Capital One account. On August 21, 2006, respondent
became a regular employee, and her monthly base salary was
increased to P16,350.00 and she was given monthly
transportation and meal allowances.
On February 21, 2007, respondent was assigned to the
Washington Mutual account, where she was awarded with a
certificate for being the "Top Converter/Seller (Second Place)"
for the month of April 2007.8
On July 3, 2007, respondent wrote to Glen Odom (Odom) -
petitioner's Vice President - complaining about supposed
irregularities in the handling of funds entrusted to petitioner
by Washington Mutual which were intended for distribution to
outstanding Washington Mutual CSRs and TSRs as prizes and
incentives. However, no action appears to have been taken on
her complaint.
Respondent was then transferred to the Bank of America
account on July 30, 2007. Without prior notice to respondent,
petitioner scheduled her for training from July 30 to August 6,
2007 on the very same day of her transfer. On the third day of
training (August 1), respondent was unable to attend. When
she reported for training the next day, respondent was
informed that she could not be certified to handle calls for
Bank of America due to her failure to complete the training.
From then on, respondent was placed on "floating status" and
was not given any work assignment.
In a September 28, 2007 letter9 to petitioner's Human
Resource (HR) Manager, respondent tendered her resignation
from work, effective upon receipt of the letter. Respondent
wrote:cralawlawlibrary
I was forced to resign due to the reason that my employment
was made on "floating status" effective August 4, 2007 and up
to present (almost two months)
I haven't receive [sic] any notice from you or the HR
department to report for work despite my repeated follow-up
[with] your office thru telephone and mobile phone text
messages. Hence, I consider your inaction to my follow-up as
an indirect termination of my work with ICT.
The reason I was placed [on] floating status is that, I was
absent during the third day of my training with Bank of
America, the account to which I was transferred from
Washington Mutual (WaMu). However, my absence during
such period was justified by the fact that I was sick and I need
[sic] to undergo a medical check-up on that date.
Furthermore, I see my transfer from WaMu Account to Bank of
America and the continued floating status of my work was
prompted by the fact that I lodged a complaint against
managers/supervisors assigned in WaMu account regarding
irregularities in the handling of funds given by ICT clients
which were supposed to be distributed as prizes to TSR's
assigned with WaMu. After the filing of the said complaint,
through your office, I was transferred to another account
(Bank of America) for no apparent reason. I was not even
included in the original list of those who were supposed to be
transferred because my performance record with WaMu is
satisfactory as proven by the fact that I was even awarded
116
with a certificate as "top converter (seller)" for the month of
April and was supposed to be included again in the top three
highest converters] for the month of May, but unfortunately
irregularities were committed, that is why I filed the
aforementioned complaint [with] your office.
On August 1, 2007, a few days after my transfer [to] Bank of
America, my coach, angelo [sic], informed me that I will be
having a training on that same day with Bank of America
which is really unexpected. I was not given a notice in
advance about the training. My coach informed me only three
hours before the said training. Later on during my training
with Bank of America I was [placed on floating status]
indefinitely due to a single absence even though I am a
regular employee having worked in ICT for almost two years.
Another instance [of] discrimination [sic] and bad faith on the
part of ICT management is that, all my fellow agents who
were [placed on floating status] for the same reason were all
ordered to return to work except me [sic]. Moreover, ICT is
continuously hiring TSR's which only shows that there are still
accounts open or work available in ICT. However despite the
availability of work, I was still on floating status.
Based on the aforementioned facts and circumstance[s], it is
very clear that the harassment, pressure, and indefinite
floating of my employment with ICT are retaliatory acts
perpetrated by the company because of my complaint/ request
for investigation on the irregularities being committed by
certain company officials.
Thus, I can no longer bear the above-mentioned abuses and
discrimination committed against me by ICT management.
Therefore, I have no option but to sever my relationship with
the company, as my continued floating status had already
prejudiced me emotionally and financially.10chanrobleslaw
Riding of the Labor Arbiter
On October 2, 2007, respondent filed a complaint for
constructive dismissal against petitioner and Odom before the
NLRC NCR, Quezon City, docketed as NLRC-NCR Case No. 10-
11004-07.
In her Position Paper,11 Reply,12 Rejoinder,13 and
Surrejoinder,14 respondent claimed that for complaining about
the supposed irregularities in the Washington Mutual account,
petitioner discriminated against her and unduly punished her.
Although she was not included in the original list of CSRs/TSRs
for program transfer, she was transferred to another account,
and then placed on "floating status," which is tantamount to
suspending her indefinitely without due process, despite her
satisfactory performance. Respondent averred that petitioner's
claim of multiple absences is not true, because not once was
she penalized therefor, assuming such charge is true.
Respondent also alleged that her one-day absence during the
training for the Bank of America program cannot justify her
being placed on a "floating status" because the "no-absence
during training" requirement cited by petitioner - using her
employment contract15 and the "New Hire Training Bay"16 as
bases - applies only to new hires on probationary status, and
not to regularized employees. In any case, the "New Hire
Training Bay" used by petitioner was for the Capital One
program. She also pointed out that during her indefinite
suspension or "floating status," petitioner continued to hire
117
new CSRs, as shown by its newspaper advertisements during
the period.17Finally, she asserted that her resignation was not
voluntary, but was forced upon her by petitioner as a result of
its unlawful acts. Thus, respondent prayed for the recovery of
backwages, separation pay, P100,000.00 combined moral and
exemplary damages, and attorney's fees equivalent to 10 per
cent (10%) of the total award.
In its Position Paper,18 Reply,19 Rejoinder,20 and
Surrejoinder,21 petitioner prayed for the dismissal of the
complaint, arguing that respondent was transferred from the
Washington Mutual account as an exercise of management
initiative or prerogative, and due to infractions22 committed by
her, as well as attendance and punctuality issues that arose. It
claimed that respondent could not be certified for the Bank of
America account for failing to complete the training. It
maintained that respondent was placed on standby status
only, and not suspended or constructively dismissed. In fact,
she was directed to report to its HR department, but she did
not do so. It also insisted that respondent resigned voluntarily.
It denied committing any act of discrimination or any other act
which rendered respondent's employment impossible,
unreasonable or unlikely. Finally, it claimed that prior notice of
her transfer to the Bank of America account was made
through an electronic mail message sent to her; and that
respondent has no cause of action since she resigned
voluntarily, and thus could not have been illegally dismissed.
On April 30, 2008, the Labor Arbiter rendered a
Decision23 finding complainant to have been constructively
dismissed and awarding separation pay, moral and exemplary
damages, and attorney's fees to respondent. The Labor Arbiter I Separation Pay
held:cralawlawlibrary 2/21/06-8/4/07 = 2yrs.
P16,350.00 x 2yrs.= P32.700.00
xxx Complainant was indeed constructively dismissed from her II Damages P50,000.00
employment and she quitted [sic] because her continued P82,700.00
employment thereat is rendered impossible, unreasonable or 10% Attorney's Fees P8.270.00 P90,970.00
unlikely.
SO ORDERED.24chanrobleslaw
Complainant's resignation was sparked by her transfer of
assignment and eventual placing her [sic] by the respondent Riding of the National Labor Relations Commission
company of [sic] a "on floating" status.
Petitioner appealed before the NLRC arguing that the Labor
xxx [T]here was no x x x evidence xxx that complainant's Arbiter erred in ruling that respondent was constructively
transfer was due to the request of a client. Further, if dismissed. It also argued that Odom was not personally liable
complainant was indeed remised of [sic] her duties due to her as he was merely acting in good faith and within his authority
punctuality and attendance problem of committing twelve (12) as corporate officer.
absences alone incurred in July 2007 [sic], why was there no
disciplinary action taken against her like reprimand or Respondent likewise interposed an appeal25 arguing that the
warning[?] award of backwages should be computed from the date of her
dismissal until finality of the Labor Arbiter's Decision; and that
xxxx the proportionate share of her 13th month pay should be paid
to her as well.
And its effect, complainant is entitled to her claim of
separation pay, moral and exemplary damages of P50,000.00 On February 16, 2009, the NLRC issued a
pesos [sic] including an award of attorney's fees. Resolution,26 declaring as follows:cralawlawlibrary

WHEREFORE, premises considered, judgment is rendered We reverse.

ordering the respondents to pay complainant of [sic] one
month pay per year of service as separation pay in the total
amount of P32,700.00, P50,000.00 moral and exemplary
damages plus 10% of the award as attorney's fees, hereunder
computed:chanRoblesvirtualLawlibrary
118
Upon an examination of the pleadings on file, We find that in
the past the complainant had been transferred from one
program to another without any objection on her part. Insofar
as the instant case is concerned, it appears that the
complainant, aside from having been given a warning for
wrong disposition of a call, had been absent or usually late in
reporting for work, constraining the respondent ICT to transfer
her to another program/account. Required of the complainant
was for her to undergo Product Training for the program from
July 30 to August 6,2007, and the records indicate that she
attended only two (2) days of training on July 30 and 31,
2007, did not report on August 1, 2007 and again reported for
training on August 2, 2007. It was then that ICT's Operations
Subject Matter Expert, Ms. Suzette Lualhati, informed the
complainant that she cannot be certified for the program
because she tailed to complete the number of training days,
and there was a need for her to report to Human Resources
for further instructions. As the complainant did not report to
Human Resources, and due to her derogatory record, the
respondent company could not find another program where
the complainant could be transferred.
From what has been narrated above, We come to the
conclusion that the respondent company cannot be faulted for
placing the complainant on "floating state." And there does not
appear to be any ill will or bad faith that can be attributed to
the respondent.
Finally, it is well to emphasize that the complainant tendered
her resignation on October 1, 2007. There is no evidence that
the complainant has presented that would indicate that duress
or force has been exerted on her.
All told, We are of the opinion that the findings of the Labor
Arbiter are in stark contrast to the evidence on record.
119
WHEREFORE, in view of the foregoing, the decision appealed
from is hereby reversed and set aside. Addordingly [sic], a
new one is entered dismissing the complaint for lack of merit.
SO ORDERED.27chanrobleslaw
Respondent filed a Motion for Reconsideration,28 but in a May
20, 2009 Resolution,29 the motion was denied.
Ruling of the Court of Appeals
In a Petition for Certiorari30 filed with the CA and docketed as
CA-G.R. SP No. 109860, respondent sought a reversal of the
February 16, 2009 and May 20, 2009 Resolutions of the NLRC.
Petitioner filed its Comment,31 to which respondent interposed
a Reply.32
On January 10, 2012, the CA issued the assailed Decision
containing the following pronouncement:cralawlawlibrary
This Court finds the petition meritorious.
While it is true that management has the prerogative to
transfer employees, the exercise of such right should not be
motivated by discrimination, made in bad faith, or effected as
a form of punishment or demotion without sufficient cause.
When the transfer is unreasonable, unlikely, inconvenient,
impossible, or prejudicial to the employee, it already amounts
to constructive dismissal. In constructive dismissal, the
employer has the burden of proving that the transfer and
demotion of an employee are for just and valid grounds, such
as genuine business necessity. Should the employer fail to
overcome this burden of proof, the employee's transfer shall
be tantamount to unlawful constructive dismissal.
In the case at bench, private respondent corporation failed to
discharge this burden of proof considering the circumstances
surrounding the petitioner's July 2007 transfer to another
account. Prior to her reassignment, petitioner's annual
performance merited increase in her salary effective February
2007 and was also awarded a certificate of achievement for
performing well in April 2007. Her transfer was also abrupt as
there was no written transfer agreement Morming her of the
same and its requirements unlike her previous transfer from
Capital One to Washington Mutual account. It is therefore
difficult to see the reasonableness, urgency, or genuine
business necessity to transfer petitioner to a new account.
While it may be true that petitioner has attendance and
punctuality issues, her over-all performance as a CSR/TSR
cannot be said to be below par given the annual merit increase
and the certificate of achievement awarded to her. If indeed,
private respondent corporation had trouble transferring the
petitioner to another post because of her derogatory record,
the corporation could just have dismissed her for cause.
After petitioner's unjustified transfer, she was informed by
private respondent corporation that she could not be
"certified" or allowed to handle calls for the new account
because of her absence during training. She was later placed
on a floating status and was not given another post.
The Court considers placing the petitioner on a floating status
as another unjustified action of the private respondent
120
corporation prejudicial to petitioner as employee. In this case,
except for private respondent corporation's bare assertion that
petitioner no longer reported to the human resources
department as instructed, no proof was offered to prove that
petitioner intended to sever the employer-employee
relationship. Private respondent corporation also offered no
credible explanation why it failed to provide a new assignment
to petitioner. Its assertion that it is petitioner's derogatory
record which made it difficult for the corporation to transfer
her to another account despite its efforts is not sufficient to
discharge the burden of proving that there are no posts or no
accounts available or willing to accept her.
In Nationwide Security and Allied Services, Inc. vs.
Valderama,33 the Supreme Court declared that due to the grim
economic consequences to the employee of being placed on a
floating status, the employer should bear the burden of
proving that there are no posts available to which the
employee temporarily out of work can be assigned.
These acts by the private respondent corporation, of
transferring petitioner to another account without sufficient
cause and proper notice and its subsequent failure to provide
a new post for her for two months without credible
explanation, constitute unjustified actions prejudicial to the
petitioner as an employee, making it unbearable for her to
continue employment.
Thus, petitioner opted to resign, albeit involuntarily. The
involuntariness of her resignation is evident in her letter which
states categorically:
"I was forced to resign due to the reason that my employment
was made on 'floating status' effective August 4, 2007 and up
to the present (almost two months) I haven't receive [sic] any
notice from you or the HR department to report for work
despite my repeated follow-up to your office thru telephone
and mobile phone text messages. Hence, I consider your
inaction to my follow-up as an indirect termination of my work
with ICT."
Further, petitioner immediately filed a complaint for illegal
dismissal. Resignation, it has been held, is inconsistent with
the filing of a complaint. Thus, private respondent
corporation's mere assertion that petitioner voluntarily
resigned without offering convincing evidence to prove it, is
not sufficient to discharge the burden of proving such
assertion. It is worthy to note that the fact of filing a
resignation letter alone does not shift the burden of proof and
it is still incumbent upon the employer to prove that the
employee voluntarily resigned.
Therefore, we believe and so hold that petitioner was
constructively dismissed from employment. Constructive
dismissal exists when the resignation on title part of the
employee was involuntary due to the harsh, hostile and
unfavorable conditions set by the employer. The test 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. With the
decision of the private respondent corporation to transfer and
to thereafter placed [sic] her on floating status, petitioner felt
that she was being discriminated and this perception
compelled her to resign. It is clear from her resignation letter
that petitioner felt oppressed by the situation created by the
121
private respondent corporation, and this forced her to
surrender her position.
Under Article 279 of the Labor Code, an employee who is
unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.
As petitioner did not pray for reinstatement but only sought
payment of money claims, the labor arbiter is correct in
awarding separation pay equivalent to one month pay for
every year of service. We also do not find any cogent reason
to disturb the award of damages and attorney's fees since we
have found bad faith on the part of the private respondent
corporation to abruptly [sic] transfer and place the petitioner
on floating status. Individual respondent Glen Odom is
however, exonerated from any liability as there was no clear
finding that he acted with malice or bad faith. Backwages and
other monetary benefits must also be included in compliance
with the above-mentioned provision of labor law which shall be
reckoned from the time her constructive dismissal took effect
until the finality of this decision.
WHEREFORE, premises considered, the Resolutions dated
February 16, 2009 and May 20, 2009 respectively, issued by
the public respondent National Labor Relations Commission
(NLRC) in NLRC CA No. 07-002404-08 are REVERSED and SET
ASIDE. The decision of the Labor Arbiter dated April 30, 2008
is REINSTATED with MODIFICATION that the petitioner
Mariphil L. Sales, be awarded backwages and other monetary
benefits from the date of her constructive dismissal up to the
finality of this Decision.
SO ORDERED.34
chanrobleslaw
Petitioner filed a Motion for Reconsideration, but the same was
denied in a May 28,2012 Resolution. Hence, the present
Petition.
In a November 11, 2013 Resolution,35 this Court resolved to
give due course to the Petition.
Issues
Petitioner submits that -cralawlawlibrary
A.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT
RESPONDENT'S TRANSFER WAS UNJUSTIFIED
NOTWITHSTANDING EVIDENCE TO SHOW THAT RESPONDENT
WAS NOT DEMOTED AND WAS EVEN GIVEN THE SAME RANK
AND PAY.
B.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT
RESPONDENT'S PLACEMENT UNDER FLOATING STATUS WAS
TANTAMOUNT TO CONSTRUCTIVE DISMISSAL AS THIS IS
CONTRARY TO NUMEROUS DECISIONS OF THE HONORABLE
COURT.
122
C.
THE COURT OF APPEALS ERRED WHEN IT REINSTATED LABOR
ARBITER MACAM'S DECISION DATED 30 APRIL 2008 WHICH
DECLARED THAT RESPONDENT WAS CONSTRUCTIVELY
DISMISSED, NOTWITHSTANDING EVIDENCE THAT CLEARLY
SHOWS THAT RESPONDENT VOLUNTARILY RESIGNED.
D.
THE COURT OF APPEALS ERRED IN AWARDING RESPONDENT
SEPARATION PAY, BACKWAGES, MORAL AND EXEMPLARY
DAMAGES AND ATTORNEY'S FEES.36chanrobleslaw
Petitioner's Arguments
Praying that the assailed CA dispositions be set aside and that
the NLRC's February 16, 2009 and May 20, 2009 Resolutions
be reinstated instead, petitioner maintains in the Petition and
Reply37 that respondent's transfer to another account was
done as a valid exercise of management prerogative, which
allows it to regulate all aspects of employment. Her transfer
was done in good faith, and without diminution in rank and
salary. It contends that respondent knew very well that any
CSR/TSR may be transferred to another program/account
anytime for business reasons; in fact, respondent herself was
transferred from Capital One to Washington Mutual, and she
did not complain. Moreover, she knew as well that "schedule
adherence" or attendance/punctuality is one of the "metrics"
or standards by which the performance of a CSR is measured,
and that she failed to comply in this regard. It claims that the
decision to place her on "floating status" instead of dismissing
her was an accommodation and should not be treated as an
illegal or unjustified act; that being on "floating status" is not
tantamount to constructive dismissal, and the failure to place
or transfer respondent to another account was due to her
derogatory record, and not petitioner's bad faith or inaction. It
insists that the placing of an employee on "floating status" for
up to six months is allowed in the event of a bona
fide suspension of the operations or undertaking of a
business.38 In any event, respondent's voluntary resignation
prior to the expiration of the allowable six-month "floating
status" period cannot constitute constructive dismissal, and
her immediate filing of the labor case thereafter is thus
premature. Finally, petitioner posits that since there is no
illegal dismissal but rather a voluntary relinquishment of
respondent's post, then there is no basis for the pecuniary
awards in her favor.
Respondent's Arguments
In her Comment39 praying for dismissal of the Petition and the
corresponding affirmance of the assailed dispositions,
respondent insists that she was illegally dismissed. She
reiterates that her transfer to the Bank of America account
was an undue penalty for her complaining about supposed
anomalies in the Washington Mutual account. She avers that
the documentary evidence of her supposed unauthorized
absences were manufactured to support petitioner's false
allegations and mislead this Court into believing that she was
delinquent at work. She argues that assuming that these
absences were true, then they should have merited her
dismissal for cause - yet the fact is she was not dismissed nor
punished for these supposed absences. She asserts that
123
petitioner's claim that she was transferred on the
recommendation of a client is untrue and self-serving, and is
unjustified since the client has no authority to order or
recommend her transfer. She maintains that her being placed
on "floating status" was illegal, since a) there is no evidence to
prove her alleged "attendance and punctuality issues," and b)
there was no bona fide suspension of petitioner's business or
undertaking for a period not exceeding six months, as
prescribed under Article 286 of the Labor Code,40 which would
justify the suspension of her employment for up to months. As
enunciated in the Philippine Industrial Security Agency Corp.
v. Dapiton41 case which petitioner itself cited, Article 286
applies only when there is a bonafide suspension of the
employer's operation or undertaking for a period not
exceeding six months, due to dire exigencies of the business
that compel the employer to suspend the employment of its
workers. Respondent points out that petitioner continued with
its business, and worse, it in fact continued to hire new
CSRs/TSRs during the period of respondent's suspension from
work. In fine, respondent alleges that she was constructively
dismissed and forced to resign, rather than continue to subject
herself to petitioner's discrimination, insensibility, harassment,
and disdain; and that for such illegal acts, she is entitled to
indemnity from petitioner.
Our Ruling
The Court denies the Petition.
Respondent's Transfercralawlawlibrary
Under the doctrine of management prerogative, every
employer has the inherent right to regulate, according to his
own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, the
time, place and manner of work, work supervision, transfer of
employees, lay-off of workers, and discipline, dismissal, and
recall of employees. The only limitations to the exercise of this
prerogative are those imposed by labor laws and the principles
of equity and substantial justice.
While the law imposes many obligations upon the employer,
nonetheless, it also protects the employer's right to expect
from its employees not only good performance, adequate
work, and diligence, but also good conduct and loyalty, hi fact,
the Labor Code does not excuse employees from complying
with valid company policies and reasonable regulations for
their governance and guidance.
Concerning the transfer of employees, these are the following
jurisprudential guidelines: (a) a transfer is a movement from
one position to another of equivalent rank, level or salary
without break in the service or a lateral movement from one
position to another of equivalent rank or salary; (b) the
employer has the inherent right to transfer or reassign an
employee for legitimate business purposes; (c) a transfer
becomes unlawful where it is motivated by discrimination or
bad faith or is effected as a form of punishment or is a
demotion without sufficient cause; (d) the employer must be
able to show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee.42chanrobleslaw
While the prerogative to transfer respondent to another
124
account belonged to petitioner, it weilded the same unfairly.
The evidence suggests that at the time respondent was
transferred from the Washington Mutual account to the Bank
of America program, petitioner was hiring additional
CSRs/TSRs.43 This simply means that if it was then hiring new
CSRs/TSRs, then there should be no need to transfer
respondent to the Bank of America program; it could simply
train new hires for that program. Transferring respondent - an
experienced employee who was already familiar with the
Washington Mutual account, and who even proved to be
outstanding in handling the same - to another account means
additional expenses for petitioner: it would have to train
respondent for the Bank of America account, and train a new
hire to take her place in the Washington Mutual account. This
does not make sense; quite the contrary, it is impractical and
entails more expense on petitioner's part. If respondent
already knew her work at the Washington Mutual account very
well, then it is contrary to experience and logic to transfer her
to another account which she is not familiar with, there to
start from scratch; this could have been properly relegated to
a new hire.
There can be no truth to petitioner's claim either that
respondent's transfer was made upon request of the client. If
she was performing outstanding work and bringing in good
business for the client, there is no reason - indeed it is beyond
experience and logic - to conclude that the client would seek
her transfer. Such a claim could only be fabricated.
Truly,cralawlawlibrary
Experience which is the life of the law — as well as logic and
common sense — militates against the petitioners'
cause.44chanrobleslaw
Moreover, as the appellate court correctly observed, even if
respondent had attendance and punctuality issues, her overall
performance as a CSR/TSR was certainly far from mediocre;
on the contrary, she proved to be a top performer. And if it
were true that respondent suddenly became lax by way of
attendance in July 2007, it is not entirely her fault. This may
be attributed to petitioner's failure to properly address her
grievances relative to the supposed irregularities in the
handling of funds entrusted to petitioner by Washington
Mutual which were intended for distribution to outstanding
Washington Mutual CSRs and TSRs as prizes and incentives.
She wrote petitioner about her complaint on July 3, 2007;
however, no explanation was forthcoming from petitioner, and
it was only during these proceedings - or after a case had
already been filed - that petitioner belatedly and for no other
useful purpose attempted to address her concerns. This may
have caused a bit of disillusionment on the part of respondent,
which led her to miss work for a few days in July 2007. Her
grievance should have been addressed by petitioner; after all,
they were serious accusations, and have a bearing on the
CSRs/TSRs' overall performance in the Washington Mutual
account.
Respondent's work as a CSR - which is essentially that of a call
center agent - is not easy. For one, she was made to work the
graveyard shift - that is, from late at night or midnight until
dawn or early morning. This certainly takes a toll on anyone's
physical health. Indeed, call center agents are subjected to
125
conditions that adversely affect their physical, mental and
emotional health; exposed to extreme stress and pressure at
work by having to address the customers' needs and insure
their satisfaction, while simultaneously being conscious of the
need to insure efficiency at work by improving productivity
and a high level of service; subjected to excessive control and
strict surveillance by management; exposed to verbal abuse
from customers; suffer social alienation precisely because they
work the graveyard shift - while family and friends are at rest,
they are working, and when they are at rest, family and
friends are up and about; and they work at a quick-paced
environment and under difficult circumstances owing to
progressive demands and ambitious quotas/targets set by
management. To top it all, they are not exactly well-paid for
the work they have to do and the conditions they have to
endure. Respondent's written query about the prizes and
incentives is not exactly baseless and frivolous; the least
petitioner could have done was to timely address it, if it cared
about its employee's welfare. By failing to address
respondent's concerns, petitioner exhibited an indifference and
lack of concern for its employees - qualities that are
diametrically antithetical to the spirit of the labor laws, which
aim to protect the welfare of the workingman and foster
harmonious relations between capital and labor. By its actions,
petitioner betrayed the manner it treats its employees.
Thus, the only conceivable reason why petitioner transferred
respondent to another account is the fact that she openly and
bravely complained about the supposed anomalies in the
Washington Mutual account; it is not her "derogatory record"
or her "attendance and punctuality issues", which are
insignificant and thus irrelevant to her overall performance in
the Washington Mutual account. And, as earlier stated,
respondent's "attendance and punctuality issues" were
attributable to petitioner's indifference, inaction, and lack of
sensitivity in failing to timely address respondent's complaint.
It should share the blame for respondent's resultant
delinquencies.
Thus, in causing respondent's transfer, petitioner clearly acted
in bad faith and with discrimination, insensibility and disdain;
the transfer was effected as a form of punishment for her
raising a valid grievance related to her work. Furthermore,
said transfer was obviously unreasonable, not to mention
contrary to experience, logic, and good business sense. This
being the case, the transfer amounted to constructive
dismissal.
The managerial prerogative to transfer personnel must
be exercised without grave abuse of discretion, bearing
in mind the basic elements of justice and fair play.
Having the right should not be confused with the manner in
which that right is exercised. Thus, it cannot be used as a
subterfuge by the employer to rid himself of an
undesirable worker. In particular, the employer must be
able to show that the transfer is not unreasonable,
inconvenient or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his
salaries, privileges and other benefits. Should the
employer fail to overcome this burden of proof, the
employee's transfer shall be tantamount to constructive
dismissal, which has been defined as a quitting because
continued employment is rendered impossible, unreasonable
or unlikely; as an offer involving a demotion in rank and
126
diminution in pay. Likewise, constructive dismissal exists
when an act of clear discrimination, insensibility or
disdain by an employer has become so unbearable to
the employee leaving him with no option but to forego
with his continued employment45 (Emphasis and
underscoring supplied)
The instant case can be compared to the situation in Veterans
Security Agency, Inc. v. Gonzalvo, Jr.,46where the employee
concerned - a security guard who was brave enough to
complain about his employer's failure to remit its employees'
Social Security System premiums - was "tossed around" and
finally placed on floating status for no valid reason. Taking the
poor employee's side, this Court declared:cralawlawlibrary
True, it is the inherent prerogative of an employer to transfer
and reassign its employees to meet the requirements of its
business. Be that as it may, the prerogative of the
management to transfer its employees must be exercised
without grave abuse of discretion. The exercise of the
prerogative should not defeat an employee's right to security
of tenure. The employer's privilege to transfer its employees
to different workstations cannot be used as a subterfuge to rid
itself of an undesirable worker.
Here, riled by respondent's consecutive filing of
complaint against it for nonpayment of SSS
contributions, VSAI had been tossing respondent to
different stations thereafter. From his assignment at
University of Santo Tomas for almost a year, he was assigned
at the OWWA main [o]ffice in Pasig where he served for more
than three years. After three years at the OWWA main office,
he was transferred to the OWWA Pasay City parking lot
knowing that the security services will end forthwith. VSAI
even concocted the reason that he had to be assigned
somewhere because his spouse was already a lady guard
assigned at the OWWA main office. Inasmuch as respondent
was single at that time, this was obviously a mere facade to
[get] rid of respondent who was no longer in VSAIs good
graces.
The only logical conclusion from the foregoing
discussion is that the VSAI constructively dismissed the
respondent. This ruling is in rhyme with the findings of the
Court of Appeals and the NLRC. Dismissal is the ultimate
penalty that can be meted to an employee. Inasmuch as
petitioners failed to adduce clear and convincing evidence to
support the legality of respondent's dismissal, the latter is
entitled to reinstatement and back wages as a necessary
consequence. However, reinstatement is no longer feasible in
this case because of the palpable strained relations, thus,
separation pay is awarded in lieu of reinstatement.
xxxx
Indeed, the Court ought to deny this petition lest the
wheels of justice for aggrieved workingmen grind to a
halt. We ought to abate the culture of employers
bestowing security of tenure to employees, not on the
basis of the latter's performance on the job, but on their
ability to toe the line set by their employer and endure
in silence the flagrant incursion of their rights, zealously
protected by our labor laws and by the Constitution, no
less.47 (Emphasis and underscoring supplied)chanrobleslaw
127
Respondent's Floating Status
In placing respondent on "floating status," petitioner further
acted arbitrarily and unfairly, making life unbearable for her.
In so doing, it treated respondent as if she were a new hire; it
improperly disregarded her experience, status, performance,
and achievements in the company; and most importantly,
respondent was illegally deprived of her salary and other
emoluments. For her single absence during training for the
Bank of America account, she was refused certification, and as
a result, she was placed on floating status and her salary was
withheld. Clearly, this was an act of discrimination and
unfairness considering that she was not an inexperienced new
hire, but a promising and award-winning employee who was
more than eager to succeed within the company. This
conclusion is not totally baseless, and is rooted in her
outstanding performance at the Washington Mutual account
and her complaint regarding the incentives, which only proves
her zeal, positive work attitude, and drive to achieve financial
success through hard work. But instead of rewarding her,
petitioner unduly punished her; instead of inspiring her,
petitioner dashed her hopes and dreams; in return for her
industry, idealism, positive outlook and fervor, petitioner left
her with a legacy of, and awful examples in, office politicking,
intrigue, and internecine schemes.
In effect, respondent's transfer to the Bank of America account
was not only jinreasonable, unfair, inconvenient, and
prejudicial to her; it was effectively a demotion in rank and
diminution of her salaries, privileges and other benefits. She
was unfairly treated as a new hire, and eventually her salaries,
privileges and other benefits were withheld when petitioner
refused to certify her and instead placed her on floating
status. Far from being an "accommodation" as petitioner
repeatedly insists, respondent became the victim of a series of
illegal punitive measures inflicted upon her by the former.
Besides, as correctly argued by respondent, there is no basis
to place her on "floating status" in the first place since
petitioner continued to hire new CSRs/TSRs during the period,
as shown by its paid advertisements and placements in
leading newspapers seeking to hire new CSRs/TSRs and
employees.48True enough, the placing of an employee on
"floating status" presupposes, among others, that there is less
work than there are employees;49 but if petitioner continued to
hire new CSRs/TSRs, then surely there is a surplus of work
available for its existing employees: there is no need at all to
place respondent on floating status. If any, respondent - with
her experience, knowledge, familiarity with the workings of the
company, and achievements -should be the first to be given
work or posted with new clients/accounts, and not new hires
who have no experience working for petitioner or who have no
related experience at all. Once more, experience, common
sense, and logic go against the position of petitioner.
The CA could not be more correct in its pronouncement that
placing an employee on floating status presents dire
consequences for him or her, occasioned by the withholding of
wages and benefits while he or she is not reinstated. To
restate what the appellate court cited, "[d]ue to the grim
economic consequences to the employee, the employer should
bear the burden of proving that there are no posts available to
which the employee temporarily out of work can be
128
assigned."50 However, petitioner has failed miserably in this
regard.
Resignation
While this Court agrees with the appellate court's observation
that respondent's resignation was involuntary as it became
unbearable for her to continue with her employment,
expounding on the issue at length is unnecessary. Because
she is deemed constructively dismissed from the time of her
illegal transfer, her subsequent resignation became
unnecessary and irrelevant. There was no longer any position
to relinquish at the time of her
Pecuniary Awards
With the foregoing pronouncements, an award of indemnity in
favor of respondent should be forthcoming. In case of
constructive dismissal, the employee is entitled to full
backwages, inclusive of allowances, and other benefits or their
monetary equivalent, as well as separation pay in lieu of
reinstatement. The readily determinable amounts, as
computed by the Labor Arbiter and correspondingly reviewed
and corrected by the appellate court, should be accorded
finality and deemed binding on this Court.cralawlawlibrary
Settled is the rule that that an employee who is unjustly
dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges, and to his full
backwages, inclusive of allowances and to his other benefits or
their monetary equivalent computed from the time his
compensation was withheld up to the time of actual
reinstatement. If reinstatement is not possible, however, the
award of separation pay is proper.
Backwages and reinstatement are separate and distinct reliefs
given to an illegally dismissed employee in order to alleviate
the economic damage brought about by the employee's
dismissal. "Reinstatement is a restoration to a state from
which one has been removed or separated" while "the
payment of backwages is a form of relief that restores the
income that was lost by reason of the unlawful dismissal."
Therefore, the award of one does not bar the other.
In the case of Aliling v. Feliciano, citing Golden Ace Builders v.
Talde, the Court explained:
Thus, an illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are
separate and distinct. In instances where reinstatement is no
longer feasible because of strained relations between the
employee and the employer, separation pay is granted. In
effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is
no longer viable, and backwages.
The normal consequences of respondents' illegal dismissal,
then, are reinstatement without loss of seniority rights, and
payment of backwages computed from the time compensation
was withheld up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service
should be awarded as an alternative. The payment of
separation pay is in addition to payment of backwages.51
chanrobleslaw
129
WHEREFORE, the Petition is DENIED. The assailed January
10, 2012 Decision and May 28, 2012 Resolution of the Court of
Appeals in CA-G.R. SP No. 109860 are AFFIRMED,
with MODIFICATIONS, in that petitioner ICT Marketing
Services, Inc., now known as Sykes Marketing Services, Inc.,
is ordered to PAY respondent Mariphil L. Sales the
following:chanRoblesvirtualLawlibrary
1) Backwages and all other benefits from July 30,2007 until
finality of this Decision;ChanRoblesVirtualawlibrary
2) Separation pay equivalent to one (1) month salary for
every year of service;ChanRoblesVirtualawlibrary
3) Moral and exemplary damages in the amount of
P50,000.00;ChanRoblesVirtualawlibrary
4) Attorney's fees equivalent to ten percent (10%) of the total
monetary award; and
5) Interest of twelve per cent (12%) per annum of the total
monetary awards, computed from July 30, 2007 up to June
30, 2013, and thereafter, six per cent (6%) per annum from
July 1,2013 until their full satisfaction.
The appropriate Computation Division of the National Labor
Relations Commission is hereby ordered
to COMPUTE and UPDATE the award as herein
determined WITH DISPATCH.
SO ORDERED.ch
130
G.R. No. 198261 October 16, 2013
HECHANOVA BUGAY VILCHEZ LAWYERS, HECHANOVA &
CO., INC., ATTY. EDITHA R. HECHANOVA,Petitioners,
vs.
ATTY. LENY O. MATORRE, Respondent.
DECISION
VILLARAMA, JR., J.:
On appeal under Rule 45 is the March 14 2011 Decision1 of the
Court of Appeals CA) which upheld the Decision2 of the
National Labor Relations Commission NLRC) that set aside the
Decision3 of the Labor Arbiter in NLRC-NCR Case No. 09-
12260-08. Likewise challenged is the Resolution4 denying
reconsideration of the said CA decision.
The assailed CA decision upheld the finding of the NLRC that
respondent Atty. Leny 0 Matorre Atty. Matorre) was
constructively dismissed by petitioners Hechanova Bugay
Vilchez Lawyers HBV Law Firm), Hechanova Co., Inc. and Atty.
Editha R. Hechanova Atty. Hechanova). The Labor Arbiter,
whose decision was overturned by the NLRC had earlier
dismissed the complaint filed by Atty. Matorre alleging that
she was constructively dismissed.5
The facts follow:
Atty. Matorre claimed that on August 1, 2008, she was
employed by HBV Law Firm as a Senior Associate Attorney.
Due to her work experience, her probationary period was
131
waived and she was immediately employed as a regular
employee of the said law firm with a monthly salary of
₱40,000, consultancy fee of ₱5,000, and an incentive pay
equivalent to 8% of ₱1,500 per billable hour. 6
As the managing partner of HBV Law Firm, Atty. Hechanova
was the one who supervised Atty. Matorre and gave her work
assignments.
On August 11, 2008, Atty. Matorre, orally or through e-mails,
started to express her feelings of being harassed by Atty.
Hechanova.
In an e-mail7 sent to Atty. Hechanova on August 11, 2008,
Atty. Matorre wrote:
Ma’am Edith,
I cannot register yet the corporate name of Big Flick Animation
with SEC online because the steps to be done require a lot of
time and its system or our system is very slow before I
proceed to the next step [sic].
I regret to realize [sic] that you seem to be not pleased with
my work output so far, even if I am trying and doing my best
to adjust with your work style here, x x x.
Honestly, I get seriously offended every time you speak to me
because you always get irritated about the things I say, that I
hesitate now to approach you personally to find out what I
need to know about a certain assignment.
I feel so humiliated whenever you scold me or whenever you
raise your voice within the hearing [sic] of x x x other
associate lawyers at a distance [sic]. I feel so embarrassed
because it seems that you make it appear I am so stupid x x
x.
xxxx
Hoping for your understanding and I pray that you would have
a not-so-stressful work schedule, so that you can keep your
cool at all times.
Thanks a lot.
Leny
Atty. Matorre also explained8 that she intended to improve her
work and that she was not making excuses when she could
not accomplish assigned tasks on time.
During a meeting between Atty. Matorre and Atty. Hechanova
on August 19, 2008,9 Atty. Matorre told Atty. Hechanova that
since she (Atty. Hechanova) was not satisfied with her work
and because they were frequently arguing with each other, it
would be best if she (Atty. Matorre) resigns from the
firm.10 Atty. Matorre requested that her resignation be made
effective on September 30, 2008, but thinking that the said
date was too far off, Atty. Hechanova accepted the
resignation, with the condition that it be made effective on
September 15, 2008.11
Atty. Matorre, in her own Position Paper12 which she submitted
to the NLRC, admitted to the fact of her resignation. She
132
recalled the conversation between her and Atty. Hechanova
thus:
Complainant [Atty. Matorre]: Ma’am kung sa tingin po ninyo,
wala akong ginagawa o magagawang trabaho, kahit na kung
tutuusin araw-araw akong may natatapos na trabaho, mas
mabuti pa po sigurong mag-resign na lang ho ako, kasi lagi na
lang po ninyo akong hinahanapan ng mali at kinagagalitan
kahit hindi naman kailangang pagalitan.1âwphi1Hindi po tayo
nagkakasundo sa trabaho.
Respondent [Atty. Hechanova]: Okay, if that is what you like!
Complainant [Atty. Matorre]: Pero Ma’am kung pwede po sana
sa katapusan na lang ang effectivity, sa katapusan po ng
September, kasi alanganin po kung katapusan ng August, para
may enough time pa po ako maghanap ng new job.
Respondent [Atty. Hechanova]: No, you make it earlier!
Pumunta ka na ng SEC habang maaga pa kasi almost 2:00
p.m. na!
Complainant [Atty. Matorre]: Sige po.13
On September 1, 2008, Atty. Matorre received a letter 14 from
Atty. Hechanova conveying the latter’s acceptance of her oral
resignation. Atty. Hechanova’s secretary, Gladies
Nepomuceno, attested15 that when Atty. Matorre received the
aforementioned letter, Atty. Matorre merely said "okay"
without displaying any sign of protest.
On September 1, 2008, Atty. Matorre filed a complaint for
constructive illegal dismissal, nonpayment of separation pay,
and for payment of moral and exemplary damages and
attorneys’ fees against HBV Law Firm.
During the mandatory conference on September 18, 2008,
Atty. Matorre stated that her demands consist of damages in
the amount of ₱850,000 and a public apology.16
During the conciliation conference on October 23, 2008, HBV
Law Firm stated that it has no offer for settlement. 17
On November 13, 2008, during the conciliation conference,
upon previous order of the Labor Arbiter, HBV Law Firm gave
Atty. Matorre’s last pay, consultancy fee, and incentive pay in
the total amount of ₱48,492.35.18
In a Decision19 dated April 22, 2009, the Labor Arbiter
rendered judgment in favor of HBV Law Firm by dismissing
Atty. Matorre’s complaint for lack of merit. It held that Atty.
Matorre voluntarily resigned from her employment on August
19, 2008, and that Atty. Hechanova readily accepted Atty.
Matorre’s oral resignation "when as Atty. Matorre was in the
process of orally tendering her resignation, Atty. Hechanova
intimated her intention of shortening the period of effectivity
of Atty. Matorre’s resignation from 30 September 2008 to 15
September 2008."20
The Labor Arbiter cited jurisprudence stating that "once
resignation is accepted, the employee no longer has any right
to the job. It, therefore, goes without saying that resignation
terminates the employer-employee relationship."21
The Labor Arbiter also denied Atty. Matorre’s monetary claims
since she was not illegally dismissed, holding that these claims
133
could not be awarded because of her "failure to prove that she
was terminated from her employment with the requisite malice
and/or bad faith."22
On May 13, 2010, the NLRC reversed23 the Decision of the
Labor Arbiter and declared that Atty. Matorre was illegally
dismissed.
The NLRC held inter alia that a written resignation is the
proper proof of her alleged voluntary resignation.24 The NLRC
also reasoned that Atty. Hechanova’s act of moving Atty.
Matorre’s last day of employment with HBV Law Firm from
September 30, 2008 to September 15, 2008 is an act of
harassment.25 This act, according to the NLRC, pushed Atty.
Matorre, leaving her with no other option or time to save her
job or look for another one.26 The NLRC stated that this, along
with Atty. Hechanova’s refusal to give Atty. Matorre any
assignment, her assignment of a subordinate to perform Atty.
Matorre’s function while the latter was still in the office, Atty.
Hechanova’s continuing harassment are "all clear acts
constituting constructive dismissal."27
The NLRC thus awarded to Atty. Matorre full back wages and
benefits from the time of illegal dismissal amounting to
₱936,000, separation pay amounting to ₱90,000, moral
damages amounting to ₱200,000, exemplary damages
amounting to ₱100,000, and attorney’s fees equivalent to 10%
of the monetary award.28
Aggrieved, HBV Law Firm filed a petition for certiorari with the
CA alleging that the NLRC committed grave abuse of discretion
in holding that Atty. Matorre was constructively dismissed. The
CA posed this query to resolve the matter: Whether Atty.
Matorre’s utterance during her conversation with Atty.
Hechanova on August 19, 2008 constitutes voluntary
resignation on her part.29 If said resignation was a forced one,
the CA continued, it is a clear case of constructive dismissal
equivalent to illegal dismissal.30
On March 14, 2011, the CA upheld the ruling of the NLRC and
held that no voluntary resignation took place.31 It ruled in
favor of Atty. Matorre, saying that she was illegally dismissed
in light of the circumstances surrounding the supposed
resignation.32
The CA cited jurisprudence saying that constructive dismissal
is a cessation of work because continued employment has
been rendered impossible, unreasonable, or unlikely, as when
there is a demotion in rank or diminution in pay or both or
when a clear discrimination, insensibility, or disdain by an
employer becomes unbearable to the employee.33
The CA justified the existence of constructive dismissal by
arguing that first, Atty. Hechanova belittled Atty. Matorre
regarding her work performance thus causing her emotional
strain; second, when Atty. Matorre allegedly tendered her
resignation, HBV Law Firm moved the period of effectivity
thereof to an earlier date, thus making it more difficult for
Atty. Matorre to find employment elsewhere; and third, the
refusal of HBV Law Firm to give assignments to Atty. Matorre
while she was still at the office is indicative of harassment on
their part.34 The CA held that all these circumstances, taken
together, constitute constructive dismissal.35
134
Petitioners are now before this Court asserting that the CA
erred in not finding that Atty. Matorre’s resignation was
voluntary and that she was not constructively dismissed.
It should be noted that the fact of resignation is now
undisputed. What remains to be determined is whether Atty.
Matorre voluntarily resigned or was constructively dismissed
by petitioners.
We find the petition meritorious. The resignation of Atty.
Matorre was voluntary and she was not constructively
dismissed.
Atty. Matorre failed to prove that her resignation was not
voluntary, and that Atty. Hechanova and other members of
HBV Law Firm committed acts against her that would
constitute constructive dismissal.
Atty. Matorre was not able to prove her allegations of
harassment, insults, and verbal abuse on the part of Atty.
Hechanova.
The case of Vicente v. Court of Appeals (Former 17th Div.) 36 is
instructive on this matter. In the case at bar and in Vicente,
the fact of resignation is not disputed, but only the
voluntariness thereof. In Vicente, the employee alleged that
her employer forced her to resign. The Court held that she
voluntarily resigned and was not constructively dismissed. The
Court said, Hence, petitioner cannot take refuge in the
argument that it is the employer who bears the burden of
proof that the resignation is voluntary and not the product of
coercion or intimidation.
Having submitted a resignation letter, it is then incumbent
upon her to prove that the resignation was not voluntary but
was actually a case of constructive dismissal with clear,
positive, and convincing evidence. Petitioner failed to
substantiate her claim of constructive dismissal.
xxxx
We agree with the Court of Appeals that it was grave error on
the part of the NLRC to rely on the allegation that Mr. Tecson
threatened and forced petitioner to resign. Other than being
unsubstantiated and self-serving, the allegation does not
suffice to support the finding of force, intimidation, and
ultimately constructive dismissal.
Bare allegations of constructive dismissal, when
uncorroborated by the evidence on record, cannot be given
credence.37 (Emphases supplied.)
Digitel Telecommunications Philippines, Inc. v. Soriano 38 is
similarly enlightening. In that case, the employee, a Director
for Market and Communications, claimed that her employers
harassed her to compel her to resign. This Court found that
the employee failed to present a single witness to substantiate
her claims of harassment and that her narration of events was
unbelievable and contrary to human experience. It was then
held that she failed to prove that she was constructively
dismissed.
In relation to the two abovementioned decided cases, in the
case of Atty. Matorre, she also presented no evidence of
135
constructive dismissal, apart from her self-serving and
uncorroborated allegations.
First, Atty. Matorre was not able to present a single witness to
corroborate her claims of verbal abuse and insults from Atty.
Hechanova. She was only able to adduce transcriptions39 of
what she claims were conversations between her and Atty.
Hechanova, and nothing more. These are indeed self-serving
and uncorroborated and should not be given evidentiary
weight.
On the other hand, the body of evidence presented by HBV
Law Firm would show affidavits demonstrating that the other
personnel in the said law firm neither heard nor saw any
inappropriate behavior on the part of Atty. Hechanova towards
Atty. Matorre.
The Affidavit of Gladies Nepomuceno,40 the secretary of HBV
Law Firm, states that the said affiant did "not believe that
Atty. Matorre was treated like a slave" by the firm, as Atty.
Matorre argued.
The Affidavit of Gladys C. Vilchez,41 a partner at HBV Law Firm,
states that Atty. Vilchez, whose room was near Atty.
Matorre’s, never heard Atty. Hechanova shout at Atty. Matorre
nor speak to her in an offensive manner.
Second, the act of HBV Law Firm of moving the effectivity date
of Atty. Matorre’s resignation from September 30, 2008 to
September 15, 2008 is not an act of harassment, as Atty.
Matorre would have us believe. The 30-day notice requirement
for an employee’s resignation is actually for the benefit of the
employer who has the discretion to waive such period. Its
purpose is to afford the employer enough time to hire another
employee if needed and to see to it that there is proper turn-
over of the tasks which the resigning employee may be
handling. As one author42 puts it,
x x x The rule requiring an employee to stay or complete the
30-day period prior to the effectivity of his resignation
becomes discretionary on the part of management as an
employee who intends to resign may be allowed a shorter
period before his resignation becomes effective. (Emphasis
supplied.)
Moreover, the act of HBV Law Firm of moving the effectivity
date of Atty. Matorre’s resignation to an earlier date cannot be
seen as a malicious decision on the part of the firm in order to
deprive Atty. Matorre of an opportunity to seek new
employment. This decision cannot be viewed as an act of
harassment but rather merely the exercise of the firm’s
management prerogative. Surely, we cannot expect employers
to maintain in their employ employees who intend to resign,
just so the latter can have continuous work as they look for a
new source of income.
Third, the fact that HBV Law Firm was no longer assigning new
work to Atty. Matorre after her resignation is not an act of
harassment, but is also an exercise of management
prerogative. Expecting that Atty. Matorre would no longer be
working for HBV Law Firm after three to four weeks, she was
no longer given additional assignments to ensure a smooth
turn-over of duties and work. Indeed, having an employee
focus on her remaining tasks and not assigning new ones to
136
her would be beneficial on the part of HBV Law Firm as there
would in fact be less tasks to be turned over to Atty. Matorre’s
replacement. Said actuation is well within the ambit of the
firm’s management prerogative, and is certainly not an act of
harassment.
To reiterate, in line with settled jurisprudence,43 since Atty.
Matorre admittedly resigned, it was incumbent upon her to
prove that her resignation was not voluntary, but was actually
a case of constructive dismissal, with clear, positive, and
convincing evidence.
As shown above, Atty. Matorre failed to present any evidence
of constructive dismissal, such as proof of the alleged
harassment, insults, and verbal abuse she allegedly received
during her stay at HBV Law Firm that led her to terminate her
employment. Thus, it can be concluded that she resigned
voluntarily.
Since Atty. Matorre failed to prove that she was illegally or
constructively dismissed, there is no need to discuss the issue
of her monetary claims due to her lack of entitlement thereto.
WHEREFORE, the petition is GRANTED. The Decision dated
March 14, 2011 and Resolution dated August 12, 2011 of the
Court of Appeals in CA-G.R. SP No. 115266 are REVERSED and
SET ASIDE. The Decision of the Labor Arbiter dated April 22,
2009 is hereby REINSTATED. The complaint of respondent
Atty. Leny O. Matorre for illegal dismissal is DISMISSED in its
entirety for lack of merit.
No pronouncement as to costs.
SO ORDERED.

137
G.R. No. 191154 April 7, 2014
SPI TECHNOLOGIES, INC. and LEA
VILLANUEVA, Petitioners,
vs.
VICTORIA K. MAPUA, Respondent.
DECISION
REYES, J.:
The Court remains steadfast on its stand that the
determination of the continuing necessity of a particular officer
or position in a business corporation is a management
prerogative, and the courts will not interfere unless arbitrary
or malicious action on the part of management is shown.
Indeed, an employer has no legal obligation to keep more
employees than are necessary for the operation of its
business.1 In the instant case however, we find our intrusion
indispensable, to look into matters which we would otherwise
consider as an exercise of management prerogative.
"Management prerogative" are not magic words uttered by an
employer to bring him to a realm where our labor laws cannot
reach.
This is a petition for review on certiorari2 under Rule 45 of the
Rules of Court of the Decision3 dated October 28, 2009 and
Resolution4 dated January 18, 2010 of the Court of Appeals
(CA) in CA-G.R. SP. No. 107879.
The Facts
138
Victoria K. Mapua (Mapua) alleged that she was hired in 2003
by SPI Technologies, Inc. (SPI) and was the Corporate
Development’s Research/Business Intelligence Unit Head and
Manager of the company. Subsequently in August 2006, the
then Vice President and Corporate Development Head, Peter
Maquera (Maquera) hired Elizabeth Nolan (Nolan) as Mapua’s
supervisor.5
Sometime in October 2006, the hard disk on Mapua’s laptop
crashed, causing her to lose files and data. Mapua informed
Nolan and her colleagues that she was working on recovering
the lost data and asked for their patience for any possible
delay on her part in meeting deadlines.6
On November 13, 2006, Mapua retrieved the lost data with the
assistance of National Bureau of Investigation Anti-Fraud and
Computer Crimes Division. Yet, Nolan informed Mapua that
she was realigning Mapua’s position to become a subordinate
of co-manager Sameer Raina (Raina) due to her missing a
work deadline. Nolan also disclosed that Mapua’s colleagues
were "demotivated" [sic] because she was "taking things easy
while they were working very hard," and that she was
"frequently absent, under timing, and coming in late every
time [Maquera] goes on leave or on vacation."7
On November 16, 2006, Mapua obtained a summary of her
attendance for the last six months to prove that she did not
have frequent absences or under time when Maquera would be
on leave or vacation. When shown to Nolan, she was merely
told not to give the matter any more importance and to just
move on.8
In December 2006, Mapua noticed that her colleagues began March 21, 2007
to ostracize and avoid her. Nolan and Raina started giving out
majority of her research work and other duties under xxxx
Healthcare and Legal Division to the rank-and-file staff. Mapua
lost about 95% of her work projects and job responsibilities. 9 Dear Ms. MAPUA,

Mapua consulted these work problems with SPI’s Human xxxx

Resource Director, Lea Villanueva (Villanueva), and asked if
she can be transferred to another department within SPI. This notice of separation, effective March 21, 2007 should be
Subsequently, Villanueva informed Mapua that there is an regarded as redundancy. Your separation pay will be
intra-office opening and that she would schedule an computed as one month’s salary for every year of service, a
exploratory interview for her. However, due to postponements fraction of at least six months will be considered as one year.
not made by Mapua, the interview did not materialize.
Your separation pay will be released on April 20, 2007 subject
On February 28, 2007, Mapua allegedly saw the new table of to your clearance of accountabilities and as per Company
organization of the Corporate Development Division which policy.
would be renamed as the Marketing Division. The new
x x x x13
structure showed that Mapua’s level will be again downgraded
because a new manager will be hired and positioned between
Mapua’s lawyer, in a phone call, advised Villanueva that SPI
her rank and Raina’s.10
violated Mapua’s right to a 30-day notice.
On March 21, 2007, Raina informed Mapua over the phone
On March 27, 2007, Mapua filed with the Labor Arbiter (LA) a
that her position was considered redundant and that she is
complaint for illegal dismissal, claiming reinstatement or if
terminated from employment effective immediately. Villanueva
deemed impossible, for separation pay. Afterwards, she went
notified Mapua that she should cease reporting for work the
to a meeting with SPI, where she was given a second
next day. Her laptop computer and company mobile phone
termination letter,14 the contents of which were similar to the
were taken right away and her office phone ceased to
first one.15
function.11
On April 25, 2007, Mapua received through mail, a third Notice
Mapua was shocked and told Raina and Villanueva that she
of Termination16 dated March 21, 2007 but the date of
would sue them. Mapua subsequently called her lawyer to
effectivity of the termination was changed from March 21 to
narrate the contents of the termination letter,12 which reads:
April 21, 2007. It further stated that her separation pay will be
139
released on May 20, 2007 and a notation was inscribed,
"refused to sign and acknowledge" with unintelligible
signatures of witnesses.
17
On May 13, 2007, a recruitment advertisement of SPI was
published in the Philippine Daily Inquirer (Inquirer
advertisement, for brevity). It listed all vacancies in SPI,
including a position for Marketing Communications Manager
under Corporate Support – the same group where Mapua
previously belonged.
SPI also sent a demand letter18 dated May 15, 2007 to Mapua,
asking her to pay for the remaining net book value of the
company car assigned to her under SPI’s car plan policy.
Under the said plan, Mapua should pay the remaining net book
value of her car if she resigns within five years from start of
her employment date.
In her Reply19 and Rejoinder,20 Mapua submitted an
affidavit21 and alleged that on July 16, 2007, Prime Manpower
Resources Development (Prime Manpower) posted an
advertisement on the website of Jobstreet Philippines for the
employment of a Corporate Development Manager in an
unnamed Business Process Outsourcing (BPO) company
located in Parañaque City. Mapua suspected that this
advertisement was for SPI because the writing style used was
similar to Raina’s. She also claimed that SPI is the only BPO
office in Parañaque City at that time. Thereafter, she applied
for the position under the pseudonym of "Jeanne Tesoro". On
the day of her interview with Prime Manpower’s consultant,
Ms. Portia Dimatulac (Dimatulac), the latter allegedly revealed
to Mapua that SPI contracted Prime Manpower’s services to
140
search for applicants for the Corporate Development Manager
position.
Because of these developments, Mapua was convinced that
her former position is not redundant. According to her, she
underwent psychiatric counseling and incurred medical
expenses as a result of emotional anguish, sleepless nights,
humiliation and shame from being jobless. She also averred
that the manner of her dismissal was unprofessional and
incongruous with her rank and stature as a manager as other
employees have witnessed how she was forced to vacate the
premises on the same day of her termination.
On the other hand, SPI stated that the company regularly
makes an evaluation and assessment of its
corporate/organizational structure due to the unexpected
growth of its business along with its partnership with ePLDT
and the acquisition of CyMed.22 As a result, SPI underwent a
reorganization of its structure with the objective of
streamlining its operations. This was embodied in an Inter-
Office Memorandum23 dated August 28, 2006 issued by the
company’s Chief Executive Officer.24 It was then discovered
after assessment and evaluation that the duties of a Corporate
Development Manager could be performed/were actually being
performed by other officers/managers/departments of the
company. As proof that the duties of Mapua are being/could
be performed by other SPI officers and employees, Villanueva
executed an affidavit25 attesting that Mapua’s functions are
being performed by other SPI managers and employees.
On March 21, 2007, the company, through Villanueva, served
a written notice to Mapua, informing her of her termination
effective April 21, 2007. Mapua refused to receive the notice, termination is therefore hereby declared illegal. Accordingly,
thus, Villanueva made a notation "refused to sign and she should be paid her backwages, separation pay in lieu of
acknowledge" on the letter. On that same day, SPI filed an reinstatement, moral and exemplary damages and attorney’s
Establishment Termination Report with the Office of the fees as follows:
Regional Director of the Department of Labor and
Employment-National Capital Region (DOLE-NCR) informing a Backwages:
the latter of Mapua’s termination. Mapua was offered her )
separation and final pay, which she refused to receive. Before 03/21/07-06/30/08
the effective date of her termination, she no longer reported
₱67,996 x 15.30 ₱1,040,3
for work. SPI has not hired a Corporate Development Manager
mos. = 38.80
since then.
13th Month Pay:
SPI denied contracting the services of Prime Manpower for the
hiring of a Corporate Development Manager and emphasized ₱1,040,338.80/12= ₱520,16 ₱1,560,5
that Prime Manpower did not even state the name of its client 9.40 08.20
in the Jobstreet website. SPI also countered that Dimatulac’s
b Separation Pay: (1 mo. per year of
alleged revelation to Mapua that its client is SPI must be
) service)
struck down as mere hearsay because only Mapua executed
an affidavit to prove that such disclosure was made. While SPI 12/01/03-06/30/08
admitted the Inquirer advertisement, the company stated that = 5.7 or 6 yrs.
Mapua was a Corporate Development Manager and not a
Marketing Communications Manager, and that from the ₱67,996.00 x 6 = 407,976.
designations of these positions, it is obvious that the functions 00
of one are entirely different from that of the other. 26 c Moral Damages: ₱500,00
) 0.00
LA Decision
d Exemplary Damages: 250,000.
On June 30, 2008, the LA rendered a Decision,27 with the ) 00
following dispositive portion:
e Attorney’s Fees: 196,848.
WHEREFORE, prescinding from the foregoing, the redundancy ) 42
of [Mapua’s] position being in want of factual basis, her

141
 Total Award ₱2,915,3
32.62
or a grand total of TWO MILLION NINE HUNDRED
FIFTEEN THOUSAND THREE HUNDRED THIRTY-TWO and
62/100 (₱2,915,332.62)Pesos only.
Respondents are further ordered to award herein
complainant the car assigned to her.
SO ORDERED.28
Unrelenting, SPI appealed the LA decision to the
National Labor Relations Commission (NLRC).
NLRC Ruling
On October 24, 2008, the NLRC rendered its
Decision,29 with the fallo, as follows:
WHEREFORE, the foregoing premises considered, the
instant appeal is hereby GRANTED. The Decision
appealed from is REVERSED and SET ASIDE, and a new
one is issued finding the appellants not guilty of illegal
dismissal.
However, appellants are ordered to pay the sum of
Three Hundred Thirty[-]Four Thousand Five Hundred
Thirty[-]Eight Pesos and Thirty[-]Four Centavos
([P]334,538.34) representing her separation benefits
and final pay in the amount of [P]203,988.00 and
[P]130,550.34, respectively.
142
SO ORDERED.30
In ruling so, the NLRC held that "[t]he determination of
whether [Mapua’s] position as Corporate Development
Manager is redundant is not for her to decide. It
essentially and necessarily lies within the sound
business management."31 As early as August 28, 2006,
Ernest Cu, SPI’s Chief Executive Officer, announced the
corporate changes in the company.
A month earlier, the officers held their Senior
Management Strategic Planning Session with the theme,
"Transformation" or re-invention of SPI purposely to
create an organizational structure that is streamlined,
clear and efficient.32 In fact, Nolan and Raina, Mapua’s
superiors were actually doing her functions with the
assistance of the pool of analysts, as attested to by
Villanueva.
At odds with the NLRC decision, Mapua elevated the
case to the CA by way of petition for certiorari, arguing
that based on evidence, the LA decision should be
reinstated.
CA Ruling
Mapua’s petition was initially dismissed by the CA in its
Resolution33 dated March 25, 2009 for lack of counsel’s
MCLE Compliance number, outdated IBP and PTR
numbers of counsel, and lack of affidavit of service
attached to the petition.
Mapua filed a motion for reconsideration which was
granted by the CA, reinstating the petition in its
Resolution34 dated May 26, 2009.
On October 28, 2009, the CA promulgated its
Decision,35 reinstating the LA’s decree, viz:
WHEREFORE, in view of the foregoing, the assailed
decision dated October 24, 2008, as well as the
resolution dated December 23, 2008 of the National
Labor Relations Commission in NLRC LAC No. 09-
003262-08 (8) NLRC NCR CN. 00-03-02761-07 are
hereby REVERSED and SET ASIDE. The decision of the
Labor Arbiter dated June 30, 2008 in NLRC-NCR Case
No. 00-03-02761-07 is hereby REINSTATED with
MODIFICATION in that the amount of 13th month pay of
[P]520,169.40 is hereby reduced to [P]86,694.90.
SO ORDERED.36
SPI’s motion for reconsideration was denied on January
18, 2010. Thus, through a petition for review on
certiorari, SPI submitted the following grounds for the
consideration of this Court:
I
THE CA DECLARED AS ILLEGAL [MAPUA’S]
SEPARATION FROM SERVICE SOLELY ON THE
BASIS OF HER SELF-SERVING AND UNFOUNDED
ALLEGATION OF A SUPPOSED JOB ADVERTISEMENT
II
143
THE CA COMPLETELY DISREGARDED THE FACT
THAT [MAPUA] WAS VALIDLY SEPARATED FROM
SERVICE ON THE GROUND OF REDUNDANCY
WHICH IS AN AUTHORIZED CAUSE FOR
TERMINATION OF EMPLOYMENT UNDER ARTICLE
283 OF THE LABOR CODE AND PREVAILING
JURISPRUDENCE
III
THE CA FOUND THAT [MAPUA] WAS NOT
ACCORDED HER RIGHT TO DUE PROCESS IN UTTER
DEROGATION OF THE APPLICABLE PROVISIONS OF
THE LABOR CODE AND THE PERTINENT
JURISPRUDENCE
IV
THE CA COMPLETELY AFFIRMED THE AWARDS OF
SEPARATION PAY, BACKWAGES, DAMAGES AND
ATTORNEY’S FEES IN THE [LA’S] DECISION IN
TOTAL DISREGARD OF THE APPLICABLE LAW AND
JURISPRUDENCE
V
THE CA UPHELD THE [LA’S] DECISION HOLDING
INDIVIDUAL PETITIONER SOLIDARILY AND
PERSONALLY LIABLE TO [MAPUA] WITHOUT
SHOWING ANY BASIS THEREFOR37
Our Ruling
The Court sustains the CA’s ruling.
Mapua was dismissed from employment supposedly due
to redundancy. However, she contended that her
position as Corporate Development Manager is not
redundant. She cited that SPI was in fact actively
looking for her replacement after she was terminated.
Furthermore, SPI violated her right to procedural due
process when her termination was made effective on
the same day she was notified of it.
Article 283 of the Labor Code provides for the following:
ART. 283. Closure of establishment and reduction of
personnel. – The employer may also terminate the
employment of any employee due to 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 worker 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 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 and
financial reverses, the separation pay shall be
144
equivalent to one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be
considered as one (1) whole year. (Emphasis ours)
Expounding on the above requirements of written notice
and separation pay, this Court in Asian Alcohol
Corporation v. NLRC38 pronounced that for a valid
implementation of a redundancy program, the employer
must comply with the following requisites: (1) written
notice served on both the employee and the DOLE at
least one month prior to the intended date of
termination; (2) payment of separation pay equivalent
to at least one month pay or at least one month pay for
every year of service, whichever is higher; (3) good
faith in abolishing the redundant position; and (4) fair
and reasonable criteria in ascertaining what positions
are to be declared redundant.39
Anent the first requirement which is written notice
served on both the employee and the DOLE at least one
month prior to the intended date of termination, SPI
had discharged the burden of proving that it submitted
a notice to the DOLE on March 21, 2007, stating therein
that the effective date of termination is on April 21,
2007. It is, however, quite peculiar that two kinds of
notices were served to Mapua. One termination letter
stated that its date of effectivity is on the same day,
March 21, 2007. The other termination letter sent
through mail to Mapua’s residence stated that the
effective date of her termination is on April 21, 2007.
Explaining the discrepancy, SPI alleged that the
company served a notice to Mapua on March 21, 2007,
which stated that the effective date of termination is on
April 21, 2007. However she refused to acknowledge or
accept the letter. Later on, Mapua requested for a copy
of the said letter but due to inadvertence and oversight,
a draft of the termination letter bearing a wrong
effectivity date was given to her. To correct the
oversight, a copy of the original letter was sent to her
through mail.40
Our question is, after Mapua initially refused to accept
the letter, why did SPI make a new letter instead of just
giving her the first one – which the Court notes was
already signed and witnessed by other employees?
Curiously, there was neither allegation nor proof that
the original letter was misplaced or lost which would
necessitate the drafting of a new one. SPI did not even
explain in the second letter that the same was being
sent in lieu of the one given to her. Hence, SPI must
shoulder the consequence of causing the confusion
brought by the variations of termination letters given to
Mapua.
Also, crucial to the determination of the effective date
of termination was that Mapua was very specific as
regards what happened immediately after: "Ms.
Villanueva had Ms. Mapua’s assigned laptop computer
and cellphone immediately taken by Human Resources
supervisor, Ms. Dhang Rondael. Within about an hour,
Ms. Mapua’s landline phone ceased to function after Ms.
Villanueva’s and Mr. Raina’s announcement." Her
145
company I.D. was taken away from her that very same
day.41 To counter these statements, SPI merely stated
that before the effective date of Mapua’s termination on
April 21, 2007, she no longer reported for work. To this
Court, this is insufficient rebuttal to the precise
narrative of Mapua.
On the matter of separation pay, there is no question
that SPI indeed offered separation pay to Mapua, but
the offer must be accompanied with good faith in the
abolishment of the redundant position and fair and
reasonable criteria in ascertaining the redundant
position. It is insignificant that the amount offered to
Mapua is higher than what the law requires because the
Court has previously noted that "a job is more than the
salary that it carries. There is a psychological effect or a
stigma in immediately finding one’s self laid off from
work."42
Moving on to the issue of the validity of redundancy
program, SPI asserted that an employer has the
unbridled right to conduct its own business in order to
achieve the results it desires. To prove that Villanueva’s
functions are redundant, SPI submitted an Inter-Office
Memorandum43 and affidavit executed by its Human
Resources Director, Villanueva. The pertinent portions
of the memorandum read:
ORGANIZATION STRUCTURE
One of the most important elements of successfully
effecting change is to create an organization structure
that is streamlined, clear and efficient. We think we
have done that and the new format is illustrated in
Attachment A. The upper part shows my direct reports
who are heads of the various shared services
departments and the lower part shows the set up of the
business units. The important features of the structure
are discussed in the following sections. For brevity, I
have purposely not summarized the roles that will
remain the same.
xxxx
Corporate Development
Peter Maquera will continue to head Corporate
Development but the group’s scope will be expanded to
include Marketing across the whole company.
Essentially, Marketing will be taken out of the business
units and centralized under Corporate Development.
Elizabeth Nolan will move from her role as Publishing’s
VP of Sales and Marketing to become the head of Global
Marketing. The unit will continue to focus on
strengthening the SPI brand, while at the same time
maximizing the effectiveness of our spending. Josie
Gonzales, head of Corporate Relations, will also be
transitioned to Corporate Development.44
The memorandum made no mention that the position of
the Corporate Development Manager or any other
position would be abolished or deemed redundant. In
this regard, may the affidavit of Villanueva which
enumerated the various functions of a Corporate
146
Development Manager being performed by other SPI
employees be considered as sufficient proof to uphold
SPI’s redundancy program?
In AMA Computer College, Inc. v. Garcia, et al., 45 the
Court held that the presentation of the new table of the
organization and the certification of the Human
Resources Supervisor that the positions occupied by the
retrenched employees are redundant are inadequate as
evidence to support the college’s redundancy program.
The Court quotes the related portion of its ruling:
In the case at bar, ACC attempted to establish its
streamlining program by presenting its new table of
organization. ACC also submitted a certification by its
Human Resources Supervisor, Ma. Jazmin Reginaldo,
that the functions and duties of many rank and file
employees, including the positions of Garcia and Balla
as Library Aide and Guidance Assistant, respectively,
are now being performed by the supervisory employees.
These, however, do not satisfy the requirement of
substantial evidence that a reasonable mind might
accept as adequate to support a conclusion. As they are,
they are grossly inadequate and mainly self-serving.
More compelling evidence would have been a
comparison of the old and new staffing patterns, a
description of the abolished and newly created
positions, and proof of the set business targets and
failure to attain the same which necessitated the
reorganization or streamlining.46(Citations omitted and
emphasis ours)
Also connected with the evidence negating redundancy
was SPI’s publication of job vacancies after Mapua was
terminated from employment. SPI maintained that the
CA erred when it considered Mapua’s self-serving
affidavit as regards the Prime Manpower advertisement
because the allegations therein were based on Mapua’s
unfounded suspicions. Also, the failure of Mapua to
present a sworn statement of Dimatulac renders the
former’s statements hearsay.
Even if we disregard Mapua’s affidavit as regards the
Prime Manpower advertisement, SPI admitted that it
caused the Inquirer advertisement for a Marketing
Communications Manager position.47 Mapua alleged that
this advertisement belied the claim of SPI that her
position is redundant because the Corporate
Development division was only renamed to Marketing
division.
Instead of explaining how the functions of a Marketing
Communications Manager differ from a Corporate
Development Manager, SPI hardly disputed Mapua
when it stated that, "[j]udging from the titles or
designation of the positions, it is obvious that the
functions of one are entirely different from that of the
other."48 SPI, being the employer, has possession of
valuable information concerning the functions of the
offices within its organization. Nevertheless, it did not
even bother to differentiate the two positions.
Furthermore, on the assumption that the functions of a
Marketing Communications Manager are different from
147
that of a Corporate Development Manager, it was not
even discussed why Mapua was not considered for the
position. While SPI had no legal duty to hire Mapua as a
Marketing Communications Manager, it could have
clarified why she is not qualified for that position. In
fact, Mapua brought up the subject of transfer to
Villanueva and Raina several times prior to her
termination but to no avail. There was even no showing
that Mapua could not perform the duties of a Marketing
Communications Manager.
Therefore, even though the CA based its ruling only on
the Prime Manpower advertisement coupled with the
purported disclosure to Mapua, the Court holds that the
confluence of other factors supports the said ruling.
The Court does not agree with the rationalization of the
NLRC that "[i]f it were true that her position was not
redundant and indispensable, then the company must
have already hired a new one to replace her in order not
to jeopardize its business operations. The fact that
there is none only proves that her position was not
necessary and therefore superfluous."49
What the above reasoning of the NLRC failed to perceive
is that "[o]f primordial consideration is not the
nomenclature or title given to the employee, but the
nature of his functions."50 "It is not the job title but the
actual work that the employee performs."51 Also,
change in the job title is not synonymous to a change in
the functions. A position cannot be abolished by a mere
change of job title. In cases of redundancy, the
management should adduce evidence and prove that a
position which was created in place of a previous one
should pertain to functions which are dissimilar and
incongruous to the abolished office.
Thus, in Caltex (Phils.), Inc. (now Chevron Phils., Inc.)
v. NLRC,52 the Court dismissed the employer’s claim of
redundancy because it was shown that after declaring
the employee’s position of Senior Accounting Analyst as
redundant, the company opened other accounting
positions (Terminal Accountant and Internal Auditor)
for hiring. There was no showing that the private
respondent therein could not perform the functions
demanded of the vacant positions, to which he could be
transferred to instead of being dismissed.
On the issue of the solidary obligation of the corporate
officers impleaded vis-à-vis the corporation for Mapua’s
illegal dismissal, "[i]t is hornbook principle that
personal liability of corporate directors, trustees or
officers attaches only when: (a) they assent to a
patently unlawful act of the corporation, or when they
are guilty of bad faith or gross negligence in directing
its affairs, or when there is a conflict of interest
resulting in damages to the corporation, its
stockholders or other persons; (b) they consent to the
issuance of watered down stocks or when, having
knowledge of such issuance, do not forthwith file with
the corporate secretary their written objection; (c) they
agree to hold themselves personally and solidarily liable
with the corporation; or (d) they are made by specific
148
provision of law personally answerable for their
corporate action."53
While the Court finds Mapua’s averments against
Villanueva, Nolan, Maquera and Raina as detailed and
exhaustive, the Court takes notice that these are mostly
suppositions on her part. Thus, the Court cannot apply
the above-enumerated exceptions when a corporate
officer becomes personally liable for the obligation of a
corporation to this case.
With respect to the vehicle under the company car plan
which the LA awarded to Mapua, the Court rules that
the subject matter is not within the jurisdiction of the
LA but with the regular courts, the remedy being civil in
nature arising from a contractual obligation, following
this Court’s ruling in several cases.54
The Court sustains the CA’s award of moral and
exemplary damages. Award of moral and exemplary
damages for an illegally dismissed employee is proper
where the employee had been harassed and arbitrarily
terminated by the employer. Moral damages may be
awarded to compensate one for diverse injuries such as
mental anguish, besmirched reputation, wounded
feelings, and social humiliation occasioned by the
employer’s unreasonable dismissal of the employee.
The Court has consistently accorded the working class a
right to recover damages for unjust dismissals tainted
with bad faith; where the motive of the employer in
dismissing the employee is far from noble.1âwphi1 The
award of such damages is based not on the Labor Code
but on Article 220 of the Civil Code.55 However, the Petitioner SPI Technologies, Inc. shall be liable for the
Court observes that the CA decision affirming the LA’s foregoing awards.
award of ₱500,000.00 and ₱250,000.00 as moral and
exemplary damages, respectively, is evidently excessive SO ORDERED.
because the purpose for awarding damages is not to
enrich the illegally dismissed employee. Consequently,
the Court hereby reduces the amount of ₱50,000.00
each as moral and exemplary damages.56

Mapua is also entitled to attorney’s fees but the Court is

modifying the amount of ₱196,848.42 awarded by the
LA and fix such attorney’s fees in the amount of ten
percent (10%) of the total monetary award, pursuant to
Article 11157 of the Labor Code.

WHEREFORE, the Decision dated October 28, 2009 and

Resolution dated January 18, 2010 of the Court of
Appeals in CA-G.R. SP. No. 107879 are hereby
AFFIRMED with the following MODIFICATIONS:

1. Moral and exemplary damages is hereby reduced

to ₱50,000.00 each; and

2. Attorney's fees shall be computed at ten percent

(10%) of the aggregate monetary award.

The monetary awards shall earn interest at the rate of

six percent (6%) per annum from the time of
respondent Victoria K. Mapua's illegal dismissal until
finality of this Decision, and twelve percent (12%) legal
interest thereafter until fully paid.

149
 G.R. No. 190389, April 19, 2017
MANGGAGAWA NG KOMUNIKASYON SA
PILIPINAS, Petitioner, v. PHILIPPINE LONG DISTANCE
TELEPHONE COMPANY INCORPORATED, Respondent.
G.R. No. 190390
MANGGAGAWA NG KOMUNIKASYON SA
PILIPINAS, Petitioner, v. PHILIPPINE LONG DISTANCE
TELEPHONE COMPANY INCORPORATED, Respondent.
DECISION
LEONEN, J.:
An employer's declaration of redundancy becomes a valid and
authorized cause for dismissal when the employer proves by
substantial evidence that the services of an employee are
more than what is reasonably demanded by the requirements
of the business enterprise.1
This resolves the Petition for Review on Certiorari2 filed by
Manggagawa ng Komunikasyon sa Pilipinas assailing the Court
of Appeals' Decision3 dated August 28, 2008 and
Resolution4 dated November 24, 2009 in CA-G.R. SP No.
94365 and CA-G.R. SP No. 98975. CA-G.R. SP No. 94365
upheld the October 28, 20055 and January 31,
20066 Resolutions of the National Labor Relations Commission
in NLRC Certified Case No. 000232-03 (NLRC NCR NS 11-405-
02 & 11-412-02). In turn, CA-G.R. SP No. 98975 upheld the
Secretary of Labor and Employment's August 11, 2006
Resolution7 and March 16, 2007 Order.8
On June 27, 2002, the labor organization Manggagawa ng
150
Komunikasyon sa Pilipinas, which represented the employees
of Philippine Long Distance Telephone Company, filed a notice
of strike with the National Conciliation and Mediation
Board.9 Manggagawa ng Komunikasyon sa Pilipinas charged
Philippine Long Distance Telephone Company with unfair labor
practice "for transferring several employees of its Provisioning
Support Division to Bicutan, Taguig."10
The first notice of strike was amended twice by Manggagawa
ng Komunikasyon sa Pilipinas.11 On its second amendment
dated November 4, 2002, docketed as NCMB-NCR-NS No. 11-
405-02,12Manggagawa ng Komunikasyon sa Pilipinas accused
Philippine Long Distance Telephone Company of the following
unfair labor practices:
UNFAIR LABOR PRACTICES, to wit:
1. PLDT's abolition of the Provisioning Support Division.
Such action, together with the consequent redundancy of
PSD employees and the farming out of the jobs to
casuals and contractuals, violates the duty to bargain
collectively with MKP in good faith.
2. PLDT's unreasonable refusal to honor its commitment
before this Honorable Office that it will provide MKP its
comprehensive planls with respect to personnel
downsizing/ reorganization and closure of exchanges.
Such refusal violates its duty to bargain collectively with
MKP in good faith.
3. PLDT's continued hiring of "contractual," "temporary,"
"project," and "casual" employees for regular jobs
performed by union members, resulting in the
 decimation of the union membership and in the denial of
the right to self-organization to the concerned
employees.13
On November 11, 2002, while the first notice of strike was
pending, Manggagawa ng Komunikasyon sa Pilipinas filed
another notice of strike,14 docketed as NCMB-NCR-NS No. 11-
412-02, and accused Philippine Long Distance Telephone
Company of:chanRoblesvirtualLawlibrary
UNFAIR LABOR PRACTICES, to wit:
1. PLDT's alleged restructuring of its [Greater
Metropolitan Manila] Operation Services December
31, 2002 and its closure of traffic operations at the
Batangas, Calamba, Davao, Iloilo, Lucena, Malolos
and Tarlac Regional Operator Services effective
December 31, 2002. These twin moves unjustly
imperil the job security of 503 of MKP's members
and will substantially decimate the parties'
bargaining unit. And in the light of PLDT's previous
commitment before this Honorable Office that it will
provide MKP its comprehensive plan/s with respect
to personnel downsizing/reorganization and closure
of exchanges and of its more recent declaration
that the Davao operator services will not be closed,
these moves are treacherous and are thus violative
of PLDT's duty to bargain collectively with MKP in
good faith. That these moves were effected with
PLDT paying only lip service to its duties under Art.
III, Section 8 of the parties' CBA do [sic] signifies
PLDT's gross violation of said CBA.15
On December 23, 2002, Manggagawa ng Komunikasyon sa
Pilipinas went on strike.16
151
On December 31, 2002, Philippine Long Distance Telephone
Company declared only 323 employees as redundant as it was
able to redeploy 180 of the 503 affected employees to other
positions.17
On January 2, 2003, the Secretary of Labor and Employment
certified the labor dispute for compulsory arbitration. 18 The
dispositive portion of the Secretary of Labor and Employment's
Order read as follows:chanRoblesvirtualLawlibrary
WHEREFORE, FOREGOING PREMISES CONSIDERED, this Office
hereby CERTIFIES the labor dispute at the Philippine Long
Distance Telephone Company to the National Labor Relations
Commission (NLRC) for compulsory arbitration pursuant to
Article 263 (g) of the Labor Code, as amended.
Accordingly, the strike staged by the Union is hereby enjoined.
All striking workers are hereby directed to return to work
within twenty four (24) hours from receipt of this Order,
except those who were terminated due to redundancy. The
employer is hereby enjoined to accept the striking workers
under the same terms and conditions prevailing prior to the
strike. The parties are likewise directed to cease and desist
from committing any act that might worsen the situation.
Let the entire records of the case be forwarded to the NLRC for
its immediate and appropriate action.
SO ORDERED.19
Manggagawa ng Komunikasyon sa Pilipinas filed a Petition
for Certiorari before the Court of Appeals, challenging the
Secretary of Labor and Employment's Order insofar as it
created a distinction among the striking workers in the return-
to-work order. The petition was docketed as CA-G.R. SP No.
76262.20
On November 25, 2003, the Court of Appeals granted the
Petition for Certiorari, setting aside and nullifying the
Secretary of Labor and Employment's assailed Order.21
The Philippine Long Distance Telephone Company appealed
the Court of Ap eals' Decision to this Court. The appeal was
docketed as G.R. No. 162783.22
On July 14, 2005,23 this Court upheld the Court of Appeals'
Decision, and directed Philippine Long Distance Telephone
Company to readmit all striking workers under the same terms
and conditions prevailing before the strike. This Court
held:chanRoblesvirtualLawlibrary
As Article 263(g) is clear and unequivocal in stating that ALL
striking or locked out employees shall immediately return to
work and the employer shall immediately resume operations
and readmit ALL workers under the same terms and conditions
prevailing before the strike or lockout, then the unmistakable
mandate must be followed by the Secretary.24
On October 28, 2005, the National Labor Relations
Commission dismissed Manggagawa ng Komunikasyon sa
Pilipinas' charges of unfair labor practices against Philippine
Long Distance Telephone Company.25
The National Labor Relations Commission held that Philippine
Long Distance Telephone Company's redundancy program in
2002 was valid and did not constitute unfair legal
practice.26 The redundancy program was due to the decline of
152
subscribers for long distance calls and to fixed line services
produced by technological advances in the communications
industry.27 The National Labor Relations Commission ruled that
the termination of employment of Philippine Long Distance
Telephone Company's employees due to redundancy was
legal.28 The dispositive portion of the National Labor Relations
Commission's Resolution read:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the Union[']s charge of
unfair labor practice against PLDT is ordered DISMISSED for
lack of merit.
SO ORDERED.29
On January 31, 2006, the National Labor Relations
Commission denied Manggagawa ng Komunikasyon sa
Pilipinas' motion for reconsideration.30
On May 8, 2006, Manggagawa ng Komunikasyon sa Pilipinas
filed a Petition for Certiorari31 with the Court of Appeals. The
petition was docketed as CA-G.R. SP No. 94365, and it
assailed the National Labor Relations Commission's
resolutions, which upheld the validity of Philippine Long
Distance Telephone Company's redundancy program.32
On August 11, 2006, the Secretary of Labor and Employment
dismissed Manggagawa ng Komunikasyon sa Pilipinas' Motion
for Execution33 of this Court's July 14, 2005 Decision. 34
On March 16, 2007, the Secretary of Labor and Employment
denied35 Manggagawa ng Komunikasyon sa Pilipinas' motion
for reconsideration.36
On May 21, 2007, Manggagawa ng Komunikasyon sa Pilipinas
filed a Petition for Certiorari37 before the Court of Appeals,
assailing the August 11, 2006 Resolution and March 16, 2007
Order of the Secretary of Labor and Employment. The petition
was docketed as CA-G.R. SP No. 98975.
The Court of Appeals consolidated CA-G.R. SP No. 94365 with
CA G.R. SP No. 98975, and dismissed Manggagawa ng
Komunikasyon sa Pilipinas' appeals on August 28, 2008.38
For CA-G.R. SP No. 94365, the Court of Appeals ruled that the
National Labor Relations Commission did not commit grave
abuse of discretion when it found that Philippine Long Distance
Telephone Company's declaration of redundancy was justified
and valid, as the redundancy program was based on
substantial evidence.39
The Court of Appeals also found that Philippine Long Distance
Telephone Company's 2002 declaration of redundancy "was
not attended by [unfair labor practice] ... [because it was]
transparent and forthright in its implementation of the
redundancy program."40 Philippine Long Distance Telephone
Company also successfully redeployed 180 of the 503 affected
emp1oyees to other positions.41
As for CA-G.R. SP No. 98975, the Court of Appeals confirmed
that its assailed order of reinstatement indicated that all
employees, even those declared separated effective December
31, 2002, should be reinstated pendente lite.42 However, the
Court of Appeals stated that the order of reinstatement
became moot due to the National Labor Relations
Commission's October 28, 2005 Decision, which upheld the
validity of the dismissal of the employees affected by the
153
redundancy program.43
The Court of Appeals also denied Manggagawa ng
Komunikasyon sa Pilipinas' prayer
that:chanRoblesvirtualLawlibrary
[T]he affected employees should at least be paid their salaries
during the period from January 3, 2003 (the working day
immediately following the effectivity of their separation) to
April 29, 2006 (the date when the October 28, 2005 decision
of the NLRC (declaring the employees' dismissal as valid)
became final and executory.44
The Court of Appeals compared the case to an illegal dismissal
case where the Labor Arbiter found for the employee and
ordered the payroll reinstatement of the employee; however,
the finding of illegality was later reversed on appeal.45
The dispositive portion of the Court of Appeals' Decision
read:chanRoblesvirtualLawlibrary
WHEREFORE, the PETITIONS FOR CERTIORARI IN CA-G.R. SP
Nos. 94365 and 98975 are DISMISSED for lack of merit.
SO ORDERED.46 (Emphasis in the original)
On November 24, 2009, the Court of Appeals denied
Manggagawa ng Komunikasyon sa Pilipinas' motion for
reconsideration.47
In its Petition for Review on Certiorari, Manggagawa ng
Komunikasyon sa Pilipinas states that employees in the
Provisioning Support Division and in the Operator Services
Section had their positions declared redundant in
2002.48 Manggagawa ng Komunikasyon sa Pilipinas asserts
that the total number of rank-and-file positions actually
declared redundant was 538, or 35 positions in the
Provisioning Support Division and 503 positions in the
Operator Services Section.49
Manggagawa ng Komunikasyon sa Pilipinas maintains that
Philippine Long Distance Telephone Company failed to submit
evidence in support of its declaration of redundancy of the 35
rank-and-file employees in the Provisioning Support
Division.50 It claimed that "[Philippine Long Distance Telephone
Company] only notified [the Department of Labor and
Employment] of the 'closure of traffic operations at Regional
Operator Services affecting three hundred ninety-two (392)
employees and the restructuring of [Greater Metropolitan
Manila] Operator Services affecting one hundred eleven (111)
employees.'"51 Manggagawa ng Komunikasyon sa Pilipinas
asserts that there was no notice given regarding the closure of
Philippine Long Distance Telephone Company's Provisioning
Support Division, and the termination of employment due to
redundancy of the affected rank-and-file employees.52 It points
out that the justifications for the redundancy put forth by
Philippine Long Distance Telephone Company "only pertained
to the affected operator services positions and not the affected
[Provisioning Support Division] positions."53
Manggagawa ng Komunikasyon sa Pilipinas also maintains that
the National Labor Relations Commission committed grave
abuse of discretion when it disallowed the written
interrogatories that Manggagawa ng Komunikasyon sa
Pilipinas submitted.54
As for the issue of reinstatement pendente lite, Manggagawa
ng Komunikasyon sa Pilipinas cites Garcia v. Philippine
154
Airlines, Inc.55 to bolster its stand. It holds that an employee is
entitled to reinstatement or backwages pending appeal if the
Labor Arbiter's finding of illegal dismissal is later on reversed
by the National Labor Relations Commission.56
For its part, Philippine Long Distance Telephone Company
claims that the validity of redundancy of the affected
Provisioning Support Division employees was only raised by
Manggagawa ng Komunikasyon sa Pilipinas for the first time
on appeal.57 Philippine Long Distance Telephone Company
asserts that the real issue in that case was whether Philippine
Long Distance Telephone Company was obligated to transfer
the affected Provisioning Support Division employees, and not
whether their redundancies were valid.58Philippine Long
Distance Telephone Company maintains that the affected
Provisioning Support Division personnel were given the
opportunity to apply for another division, yet they chose not
to.59
Philippine Long Distance Telephone Company avers that
Manggagawa ng Komunikasyon sa Pilipinas' resort to
interrogatories has been denied with finality by the Court of
Appeals.60 It also claims that the National Labor Relations
Commission's Rules of Procedure do not allow the use of
discovery proceedings; thus, Manggagawa ng Komunikasyon
sa Pilipinas cannot assert that their resort to interrogatories is
a matter of procedural right.61
Philippine Long Distance Telephone Company states that
neither the Court of Appeals nor the Supreme Court ordered
the reinstatement of Manggagawa ng Komunikasyon sa
Pilipinas' members, since their decisions set aside Secretary of
Labor and Employment's January 2, 2003 Order.62 The order
enjoined the striking workers to return to work, except those
who were terminated due to redundancy.63Philippine Long
Distance Telephone Company asserts that "what controls
execution is the dispositive or decretal statement of the
[d]ecision sought to be executed."64 Furthermore, Philippine
Long Distance Telephone Company maintains that the Court of
Appeals correctly ruled that the reinstatement of the excluded
employees was rendered moot when the National Labor
Relations Commission upheld its redundancy program.65
Finally, Philippine Long Distance Telephone Company holds
that Garcia is not applicable because the case at bar does not
involve a reinstatement award by a Labor Arbiter.66
We resolve the following issues:
First, whether the Court of Appeals committed grave abuse of
discretion in upholding the validity of Philippine Long Distance
Telephone Company's 2002 redundancy program; and
Second, whether the return-to-work order of the Secretary of
Labor and Employment was rendered moot when the National
Labor Relations Commission upheld the validity of the
redundancy program.
The Petition is partly meritorious.
I prism of whether it correctly determined the presence or
A petition for review on certiorari under Rule 45 is a mode of
appeal where the issue is limited only to questions of law. 67 In
155
labor cases, a Rule 45 petition "can prosper only if the Court of
Appeals ... fails to correctly determine whether the National
Labor Relations Commission committed grave abuse of
discretion."68
A court or tribunal is said to have acted with grave abuse of
discretion when it capriciously acts or whimsically exercises
judgment to be "equivalent to lack of
jurisdiction."69 Furthermore, the abuse of discretion must be so
flagrant to amount to a refusal to perform a duty or to act as
provided by law.70
Career Philippines Shipmanagement, Inc. v.
Serna,71 citing Montoya v. Transmed,72 provides the
parameters of judicial review for a labor case under Rule
45:chanRoblesvirtualLawlibrary
As a rule, only questions of law may be raised in a Rule 45
petition. In one case, we discussed the particular parameters
of a Rule 45 appeal from the CA's Rule 65 decision on a labor
case, as follows:chanRoblesvirtualLawlibrary
In a Rule 45 review, we consider the correctness of the
assailed CA decision, in contrast with the review for
jurisdictional error that we undertake under Rule 65.
Furthermore, Rule 45 limits us to the review of questions of
law raised against the assailed CA decision. In ruling for legal
correctness, we have to view the CA decision in the same
context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from the
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. 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.73 (Emphasis in the original)
Justice Arturo D. Brion's dissent in Abbot Laboratories,
Philippines v. Alcaraz74 thereafter laid down the guidelines to
be followed in reviewing a petition for review under Rule
45:chanRoblesvirtualLawlibrary
If the NLRC ruling has basis in the evidence and the applicable
law and jurisprudence, then no grave abuse of discretion
exists and the CA should so declare and,
accordingly, dismissthe petition. If grave abuse of discretion
exists, then the CA must grant the petition and nullify the
NLRC ruling, entering at the same time the ruling that is
justified under the evidence and the governing law, rules and
jurisprudence. In our Rule 45 review, this Court
must deny the petition if it finds that the CA correctly
acted.75 (Emphasis in the original)
We shall adopt these parameters in resolving the substantive
issues in the Petition.
II
Redundancy is one of the authorized causes for the
termination of employment provided for in Article 298 76 of the
Labor Code, as amended:
Article 298. 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
156
circumventing the provisions of this Title, by serving a written
notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-
saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment
to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (112)
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.
Wiltshire File Co. Inc. v. National Labor Relations
Commission77 has explained that redundancy exists when "the
services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise."78
While a declaration of redundancy is ultimately a management
decision in exercising its business judgment, and the employer
is not obligated to keep in its payroll more employees than are
needed for its day to-day operations,79 management must not
violate the law nor declare redundancy without sufficient
basis.80
Asian Alcohol Corporation v. National Labor Relations
Commission81 listed down the elements for the valid
implementation of a redundancy
program:chanRoblesvirtualLawlibrary
For the implementation of a redundancy program to be valid, 199 24,797, 212,363 237,161,
the employer must comply with the following requisites: (1) 9 870 ,846 716
written notice served on both the employees and the
Department of Labor and Employment at least one month 200 21,697, 218,380 240,077,
prior to the intended date of retrenchment; (2) payment of 0 367 ,277 644
separation pay equivalent to at least one month pay or at least
200 15,773, 158,310 174,084,
one month pay for every year of service, whichever is higher;
1 988 ,276 264
(3) good faith in abolishing the redundant positions; and (4)
fair and reasonable criteria in ascertaining what positions are 200 14,363, 114,430 128,794,
to be declared redundant and accordingly 2 918 ,469 387
abolished.82 (Citations omitted)
Philippine Long Distance Telephone Company has stated that
To establish good faith, the company must provide substantial
"from 1996 to 2002, the [t]otal [d]emand of [c]alls dropped
proof that the services of the employees are in excess of what
by 334,972,997 or a 72% reduction."85 It has attributed the
is required of the company, and that fair and reasonable
reduction of demand for operatorassisted 108/109 calls to
criteria were used to determine the redundant positions.83
"migration calls to direct distance dialing," and to "more
usage/substitution of text message over voice."86 It has added
In order to prove the validity of its redundancy program,
that "migration of calls from landline to cell," competitors'
Philippine Long Distance Telephone Company has presented
eating into the Philippine Long Distance Telephone Company's
data on the decreasing volume of the received calls by the
market, and "compliance with the regulatory requirement of
Operator Services Center for the years 1996 to 2002: 84
local integration per province" likewise aggravated the
RECEIVED CALLS situation.87
YEA
108 109 TOTAL Philippine Long Distance Telephone Company claims that the
R
pattern of decline with operator-assisted calls has been
199 33,641, 430,125 463,767, consistent through the years,88 and it has summarized the
6 751 ,633 384 challenges facing its long distance services as
follows:chanRoblesvirtualLawlibrary
199 34,834, 318,942 353,777,
7 800 ,573 373 (a) international long distance revenues in 2001 stood at
P11.4 billion; in 2002, this declined to P10.6 billion (pg.
199 28,651, 209,458 238,109, 33, PLDT's Financial Statement and Annual Report;
8 703 ,041 744 Atmex "4-A") - a decrease of P813 million. More
157
 drastically, this figure stood at P18.2 billion in 1997,
indicating that international long distance call revenue
has declined to the tune of P8 billion in five years.
(b national long distance revenues in 2001 were P8.388
) billion in 2001; in 2002, this declined to P7.6 billion (pg.
35, PLDT's Financial Statement and Annual Report;
Annex "4-B") a decrease of P719 million. As with
international calls, there is a pattern on decline: PLDT
earned P10.6 billion from this service in 2000, so it is
accurate to say that the company has seen revenue
from national long distance decline by more than a
billion pesos a year.89
The National Labor Relations Commission has found that
Philippine Long Distance Telephone Company was able to
discharge its burden of proving that its redundancy measures
had substantial basis:chanRoblesvirtualLawlibrary
Guided by the foregoing jurisprudence, it is evident that PLDT
discharged the burden of proving that the declaration or
implementation of redundancy measures have basis. For one,
PLDT experienced a decline of subscribers, long distance calls,
operated both local and abroad, has declined, landline or fixed
line services also declined. This decrease of the need of PLDT
services resulted from the advent of wireless telephone, of
texting as means of communication, the use of direct dialing
including prepaid telesulit and teletipid measures introduced in
the communication services. For another, PLDT has a debt
burden of P70 billion pesos and it cannot subsidize the salaries
of employees whose positions are redundant.90
The Court of Appeals echoed the findings of the National Labor
Relations Commission regarding the validity of Philippine Long
158
Distance Telephone Company's redundancy
measures:chanRoblesvirtualLawlibrary
We find that MKP demonstrated no such patent and gross
evasion of a positive duty on the part of the NLRC. On the
contrary, the NLRC's finding that the 2002 redundancy
declaration of PLDT was justified and valid rested on
substantial evidence, for the NLRC ostensibly based its finding
on established facts showing the decline of subscribers, the
decline in long distance local and international calls, and the
decline in landline or fixed line services, constraining PLDT to
declare certain positions redundant. There could be no
question that such factual circumstances were traceable to
"the advent of wireless telephone, of texting as a means of
communication, the use of direct dialing including
prepaid telesulit and teletipid measures introduced in the
communication services."
As such, the NLRC did not commit any grave abuse of
discretion when it regarded the technological advancements
resulting in less work for the redundated employees as
justifying PLOT's declaration of redundancy.91
This Court sees no reason to depart from the findings of the
Court of Appeals and of the National Labor Relations
Commission.
Philippine Long Distance Telephone Company's declaration of
redundancy was backed by substantial evidence showing a
consistent decline for operator-assisted calls for both local and
international calls because of cheaper alternatives like direct
dialing services, and the growth of wireless communication.
Thus, the National Labor Relations Commission did not commit
grave abuse of discretion when it upheld the validity of PLDT's
redundancy program. Redundancy is ultimately a management
prerogative, and the wisdom or soundness of such business
judgment is not subject to discretionary review by labor
tribunals or even this Court, as long as the law was followed
and malicious or arbitrary action was not shown.92
III
Nonetheless, there is a need to review the redundancy
package awarded to the employees terminated due to
redundancy. For either redundancy or retrenchment, the law
requires that the employer give separation pay equivalent to
at least one (1) month pay of the affected employee, or at
least one (1) month pay for every year of service, whichever is
higher. The employer must also serve a written notice on both
the employees and the Department of Labor and Employment
at least one (1) month before the effective date of termination
due to redundancy or retrenchment.93
While we agree that Philippine Long Distance Telephone
Company complied with the notice requirement, the same
cannot be said as regards the separation pay received by
some of the affected workers.
Philippine Long Distance Telephone Company claims that most
employees who were declared redundant received a very
generous separation package or "as much as 2.75 months
[worth of salary] for every year of service, with the average
separation package at [P]586,580.27."94 However, the records
belie its claims as shown by the notice of termination of
employment received by the workers affected by the
redundancy program:chanRoblesvirtualLawlibrary
159
November 25, 2002
MYRNA C. CASTRO
OPERATOR SERVICES-NORTH
Dear Ms. Castro:
After a thorough review of operations, Management has
determined that there is a need to reduce its manpower
requirements considering technological, organization, and
process developments. This reduction is inevitable to ensure
the company's survival in the long term.
Your position is one of those affected by such changes and
developments. Thus, with much regret, your service to the
company will be considered completed by December 30,
2002.
In recognition of your loyalty and dedicated service, the
company is granting a generous separation pay package that
will assist you in making the necessary adjustments to your
new situation.
This separation package consists of your regular retirement
benefits plus 75% of basic monthly pay for every year of
service, or a minimum of 175% of basic monthly pay for every
year of service for employees with less than 15 years of
service.
Counseling service on financial options in the future will be
available to assist you during your period of adjustment.
We would like to take this opportunity to thank you for your
service to the Company and wish you well in all your future
undertakings.
Very truly yours,
PHILIPPINE LONG DISTANCE TELEPHONE CO., INC
(signed)
ERLINDA S. KABIGTING95
(Emphasis supplied)
The notices of termination of employment96 signed by Erlinda
S. Kabigting, Philippine Long Distance Telephone Company
Vice-President for Operator Services Section,97 provided two
(2) types of separation packages for the terminated workers.
These were: (1) regular retirement benefits plus 75% basic
monthly pay for every year of service for employees who had
been with Philippine Long Distance Telephone Company for
more than 15 years; and (2) 175% of basic monthly pay for
every year of service for employees who had been with PLDT
for less than 15 years.
When an employer declares redundancy, Article 298 of the
Labor Code requires that the employer provides a separation
pay equivalent to at least one (1) month pay of the affected
employee, or at least one (1) month pay for every year of
service, whichever is higher.98 In this case, Philippine Long
Distance Telephone Company claims that the terminated
workers received a generous separation package of about 2.75
months' worth of salary for every year of service. But it seems
that the retirement benefits of the terminated workers were
160
added to the separation pay due them, hence the large
payout. This should not be the case.
Aquino v. National Labor Relations Commission99 differentiated
between separation pay and retirement
benefits:chanRoblesvirtualLawlibrary
Separation pay is required in the cases enumerated in Articles
283 and 284 of the Labor Code, which include retrenchment,
and is computed at at least one month salary or at the rate of
one-half month salary for every month of service, whichever is
higher. We have held that it is a statutory right designed to
provide the employee with the wherewithal during the period
that he is looking for another employment.
Retirement benefits, where not mandated by law, may be
granted by agreement of the employees and their employer or
as a voluntary act on the part of the employer. Retirement
benefits are intended to help the employee enjoy the
remaining years of his lifelessening the burden of worrying for
his financial sup ort, and are a form of reward for his loyalty
and service to the employer.100 (Citation omitted)
Separation pay brought about by redundancy is a statutory
right, and it is irrelevant that the retirement benefits together
with the separation pay given to the terminated workers
resulted in a total amount that appeared to be more than what
is required by the law. The facts. show that instead of the
legally required one (1) month salary for every year of service
rendered, the terminated workers who were with Philippine
Long Distance Telephone Company for more than 15 years
received a separation pay of only 75% of their basic pay for
every year of service, despite the clear wording of the law.
The workers, who were terminated from employment as a
result of redundancy, are entitled to the separation pay due
them under the law.
IV
Department of Labor and Employment Secretary Patricia A.
Sto. Tomas (Secretary Sto. Tomas) assumed jurisdiction over
the labor dispute between Manggagawa ng Komunikasyon sa
Pilipinas and Philippine Long Distance Telephone Company
pursuant to Article. 278(g)101 of the Labor Code. She
certified102 the case to the National Labor Relations
Commission for compulsory arbitration. This return-to-work
order from the Secretary of Labor and Employment aims to
preserve the status quo ante103 while the validity of the
redundancy program is being threshed out in the proper
forum.
In Telefunken Semiconductors Employees Union-FFW v.
Secretary of Labor,104 pending resolution of the legality of the
strike, the Secretary of Labor and Employment directed the
employer to accept all the striking workers except the Union
Officers, shop stewards, and those with pending criminal
charges.105This Court struck down the Secretary of Labor and
Employment's order for being issued with grave abuse of
discretion,106 and directed the employer to accept all the
striking workers without qualifications.107
The ruling in Telefunken cannot be applied to the case at bar.
In Philippine Long Distance Telephone Co. Inc. v. Manggagawa
ng Komunikasyon sa Pilipinas,108 which was promulgated on
161
July 14, 2005, this Court struck down the return-to-work order
dated January 2, 2003 issued by Secretary Sto. Tomas for
being tainted with grave abuse of discretion. We ruled that the
return-to-work order should have included all striking workers,
and should not have excluded the workers affected by the
redundancy program.109 However, barely three (3) months
after Philippine Long Distance Telephone Co. Inc.'s
promulgation, the National Labor Relations Commission in its
October 28, 2005 Resolution110 upheld the validity of Philippine
Long Distance Telephone Company's redundancy program.
This resolution also dismissed the charges of unfair labor
practice, and illegal dismissal against Philippine Long Distance
Telephone Company.111
When petitioner filed its Motion for Execution112 on January 17,
2006 pursuant to this Court's ruling in Philippine Long
Distance Telephone Co. Inc., there was no longer any existing
basis for the return-to-work order. This was because the
Secretary of Labor and Employment's return-to-work order
had been superseded by the National Labor Relations
Commission's Resolution. Hence, the Secretary of Labor and
Employment did not err in dismissing the motion for execution
on the ground of mootness.
Petitioner cites Garcia v. Philippine Airlines113 to support its
claim that the affected and striking workers are entitled to
reinstatement and backwages from January 2, 2003, when
Secretary Sto. Tomas directed the striking workers to return
to work, up to April 29, 2006, when the National Labor
Relations Commission's Resolution upholding Philippine Long
Distance Telephone Company's redundancy program became
final and executory.114

Petitioner is mistaken.
Garcia upholds the prevailing doctrine that even if a Labor
Arbiter's order of reinstatement is reversed on appeal, the
employer is obligated "to reinstate and pay the wages of the
dismissed employee during the period of appeal until reversal
by the higher court."115
There is no order of reinstatement from a Labor Arbiter in the
case at bar, instead, what is at issue is the return-to-work
order from the Secretary of Labor and Employment. An order
of reinstatement is different from a return-to-work order.
The award of reinstatement, including backwages, is awarded
by a Labor Arbiter to an illegally dismissed employee pursuant
to Article 294116 of the Labor Code:chanRoblesvirtualLawlibrary
Article 294. Security of Tenure. - In cases of regular
employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary
equivalent computedfrom the time his compensation was
withheld from him up to the time of his actual reinstatement.
(Emphasis supplied)
If actual reinstatement is no longer possible, the employee
becomes entitled to separation pay in lieu of reinstatement. 117
On the other hand, a return-to-work order is issued by the
Secretary of Labor and Employment when he or she assumes
162
jurisdiction over a labor dispute in an industry that is
considered indispensable to the national interest. Article
278(g) of the Labor Code provides that the assumption and
certification of the Secretary of Labor and Employment shall
automatically enjoin the intended or impending strike. When a
strike has already taken place at the time the Secretary of
Labor and Employment assumes jurisdiction over the labor
dispute, all striking employees shall immediately return to
work. Moreover, the employer shall immediately resume
operations, and readmit all workers under the same terms and
conditions prevailing before the strike.
Return-to-work and reinstatement orders are both
immediately executory; however, a return-to-work order is
interlocutory in nature, and is merely meant to
maintain status quo while the main issue is being threshed out
in the proper forum. In contrast, an order of reinstatement is a
judgment on the merits handed down by the Labor Arbiter
pursuant to the original and exclusive jurisdiction provided for
under Article 224(a)118 of the Labor Code. Clearly, Garcia is not
applicable in the case at bar, and there is no basis to reinstate
the employees who were terminated as a result of
redundancy.
WHEREFORE, premises considered, the Petition
is PARTIALLY GRANTED. The Court of Appeals' August 28,
2008 Decision and November 24, 2009 Resolution in CA-G.R.
SP No. 94365 and CA-G.R. SP No. 98975 are AFFIRMED with
MODIFICATION. Private respondent Philippine Long Distance
Telephone Company, Inc. is DIRECTED to pay the workers
affected by its 2002 redundancy program and who had been
employed for more than fifteen (15) years prior to their
dismissal, the balance of the separation pay due them or a
sum equivalent to twenty-five percent (25%) of their basic
monthly pay for every year of service with Philippine Long
Distance Telephone Company, Inc.

A legal interest of 6% per annum119 shall be imposed on the

total judgment award from the finality of this Decision until its
full satisfaction.

163