Practitioners in the field of labor or Human Resources (HR), as well as managers and executive

officers of companies, are aware that an employee may only be dismissed for cause. Disciplinary
actions, including dismissal from work, must comply with both substantive and procedural due
process. Substantive due process requires a valid cause for the dismissal. For procedural due
process, outlined below, an interesting question is this: is there a minimum period that must be
given to the employee to answer the show-cause notice?
We recently received a query as to how many days should be given to the employee to answer the
show-cause notice. We find this query “interesting” because there is no provision in the Labor Code,
or its Implementing Rules and Regulations, which spells out a specific period. What’s more
interesting, however, is that the Supreme Court has construed this period to mean five (5) days
from receipt of the show cause notice. The procedural requirements, as summarized by the
Supreme Court, are:
(A) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. “Reasonable opportunity” under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged
against the employees.
(B) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify their
defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut
the evidence presented against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.
(C) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2) grounds have been established to
justify the severance of their employment.
The Supreme Court (SC) overturned the CA, holding that there was nothing in the records to
prove that the accountant had voluntarily resigned from her position in the company. It further
ruled that there was no illegal dismissal despite the company’s failure to follow the two-notice
rule.

Article 282 of the Labor Code provides that an employer may terminate an employment for fraud
or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative.

The Court made a distinction between managerial and rank and file employees when it comes to
the termination of employees based on breach of trust. For managerial employees, the
mere existence that there is basis to believe that such employee has breached
the trust of the employer would suffice his dismissal. For rank and file employees,
proof of involvement in the alleged events in question is necessary. The accountant, being a
managerial employee, was validly terminated for loss of confidence –
In securing this position, she fraudaulently misrepresented her personal qualifications by stating
in her Personal Information Sheet that she was a CPA… [t]his deceitful action alone was
sufficient basis for respondent’s loss of confidence in her as a managerial employee.

The SC, however, explained that in labor cases, the existence of just cause is not enough to
comply with procedural due process.

In the case of termination by the employer, it is not enough that there exists a just cause therefor,
as procedural due process dictates compliance with the two-notice rule in effecting a dismissal:
(a) the employer must inform the employee of the specific acts or omissions for which his
dismissal is sought, and (b) the employer must inform him of the decision to terminate
employment after affording the latter the opportunity to be heard.

Despite the existence of a just cause for termination, the accountant was dismissed from service
in violation of procedural due process, because she did not receive any notice of her termination
and was fired on the spot. Nevertheless, the failure to comply with procedural due process does
not render a dismissal for valid cause illegal. Instead, the employees remedy is to be granted
damages.

Hence, the present petition for review on certiorari.

 
Dismissals have two facets: the legality of the act of dismissal, which
constitutes substantive due process, and the legality of the manner of dismissal
which constitutes procedural due process.[12]
 
As to substantive due process, the Court finds that respondent companys loss
of trust and confidence arising from petitioners smuggling out of the scrap iron,
conpounded by his past acts of unauthorized selling cartons belonging to
respondent company, constituted just cause for terminating his services.
 
Loss of trust and confidence as a ground for dismissal of employees covers
employees occupying a position of trust who are proven to have breached the trust
and confidence reposed on them. Apropos is Cruz v. Court of Appeals[13] which
explains the basis and quantum of evidence of loss of trust and confidence, viz:
 
In addition, the language of Article 282(c) of the Labor Code states that
the loss of trust and confidence must be based on willful breach of the
trust reposed in the employee by his employer. Such breach is willful
if it is done intentionally, knowingly, and purposely, without justifiable
excuse, as distinguished from an act done carelessly, thoughtlessly,
 heedlessly or inadvertently. Moreover, it must be based
on substantial evidence and not on the employers whims or caprices
or suspicions otherwise, the employee would eternally remain at the
mercy of the employer. Loss of confidence must not be indiscriminately
used as a shield by the employer against a claim that the dismissal of an
employee was arbitrary. And, in order to constitute a just cause for
dismissal, the act complained of must be work-related and shows
that the employee concerned is unfit to continue working for the
employer. In addition, loss of confidence as a just cause for
termination of employment is premised on the fact that the employee
concerned holds a position of responsibility, trust and confidence or
that the employee concerned is entrusted with confidence with respect
to delicate matters, such as the handling or care and protection of
the property and assets of the employer. The betrayal of this trust is
the essence of the offense for which an employee is penalized. (emphasis
and underscoring supplied)
]
 Tirazona v. Court of Appeals, G.R. No. 169712, March 14, 2008.
[13]
 G.R. No. 148544, July 12, 2006.

Termination of Employment in the Philippines

Terminating an employee in the Philippines is taken VERY seriously and can be a complex process,
especially after the employee is regularized. The Philippine Constitution says, no involuntary
servitude in any form shall exist except as punishment for a crime whereof the party shall have been
duly convicted. In view of the prohibition on involuntary servitude, an employee is given the right to
resign under Art. 285 of the Labor Code. The provision recognizes two kinds of resignation – without
cause and with cause. If the resignation is without cause, the employee is required to give a 30-day
advance written notice to the employer, to enable the employer to look for a replacement to prevent
work disruption. If the employee fails to give a written notice, he or she runs the risk of incurring
liability for damages. The same provision also indicates the just causes for resignation (with cause):

 Serious insult to the honor and person of the employee;

 Inhuman and unbearable treatment;
 Crime committed against the person of the employee or any of the immediate members of
the employee’s family; and
 Other analogous causes.
In this second type of resignation, the employee need not serve a written notice. Forced resignation
is not allowed and is considered “constructive” dismissal – a dismissal in disguise. Employee
retirement is either voluntary or compulsory under Art. 287 of the Labor Code.

Dismissal of an Employee in the Philippines

An equality of rights exists between employer and employee. While the employer cannot force the
employee to work against his or her will, neither can the employee compel the employer to continue
giving him or her work if there is a lawful reason not to do so. Thus, the employer may terminate the
services of an employee for just or authorized causes after following the procedure laid down by law,
but the employer has the burden of proving the lawfulness of the employee’s dismissal in the proper
forum.

Just causes are blameworthy acts on the part of the employee such as serious misconduct, willful
disobedience, gross and habitual neglect of duties, fraud or willful breach of trust, commission of a
crime and other analogous causes (Art. 282, Labor Code).

Authorized causes are of two types – business reasons and disease. The business reasons are
installation of labor-saving devices, redundancy, retrenchment and closure or cessation of operation
(Art. 283, Labor Code). Before the employer can terminate employment on the ground of disease, he
must obtain from a competent public health authority a certification that the employee’s disease is
of such a nature and at such a stage that it can no longer be cured within a period of six months
even with medical attention (Art. 284, Labor Code; Implementing Rules of Book VI, Labor Code).

Those hired on a temporary basis, that is, for a “term” or “fixed period” are not regular employees, but
are “contractual employees.” Consequently, there is no illegal dismissal when their services are
terminated by reason of the expiration of their contracts. Lack of notice of termination is of no
consequence, because a contract for employment for a definite period terminates by its own term at
the end of such period.

An Illegal Strike can be cause for Termination of

Employment
Employment is not deemed terminated when there is a bona fide suspension of the operations of a
business or undertaking for a period not exceeding six months, or when the employee fulfills a
military or civic duty (Art. 286, Labor Code). Under the Corporation Code (sec. 80), the surviving or
consolidated entity in a merger or consolidation automatically assumes all rights and obligations,
assets and liabilities of the combining entities. This includes obligations or liabilities under valid
agreements, like labour contracts. The surviving or consolidated entity must, therefore, recognize the
security of tenure and length of service of the workers of the merging or consolidating corporations.
By the fact of merger or consolidation, a succession of employment rights and obligations occurs.

Notice and prior procedural safeguards

As stated above, dismissals based on just causes contemplate acts or omissions attributable to the
employee while dismissals based on authorized causes involve grounds – business or health –
allowing the employer to terminate. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal, reinstatement and full
backwages are mandated under Art. 279 of the Labor Code. If reinstatement is no longer possible
where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Art. 282 of the Labor Code, the
employer must give the employee two written notices and a hearing or opportunity to be heard
before terminating the employment, that is, a notice specifying the grounds for which dismissal is
sought and, after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if
the dismissal is based on authorized causes under Arts. 283 and 284 of the Labor Code, the
employer must give the employee and the Department of Labour and Employment written notices 30
days prior to the effectivity of the separation.

Severance pay with Termination

As already noted, separation pay is required to be paid to the employee when there is termination of
employment by the employer for an authorized cause, the amount of which depends on the cause. If
the termination is due to the installation of labour-saving devices or redundancy, the separation pay
is one month’s pay for every year of service or one month pay, whichever is higher (Art. 283, Labor
Code). If the termination is due to retrenchment to prevent losses, or closure or cessation of
operation of the establishment not due to serious business losses, or due to disease, the separation
pay is one-half month’s pay for every year of service or one month pay, whichever is higher (Arts. 283
and 284, Labor Code). However, there is no requirement for separation pay if the closure is due to
serious business losses.

Avenues for redress

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

In the first situation, the dismissal is undoubtedly valid and the employer will not incur any liability,
save for separation pay when the dismissal is for an authorized cause.

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

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be
cured, it should not invalidate the dismissal. However, the employer should be held liable for nominal
damages for non-compliance with the procedural requirements of due process. If the dismissal is
for an authorized cause, the employee is also entitled to separation pay.

Compulsory arbitration of illegal dismissal cases is conducted by the Labour Arbiters of the National
Labour Relations Commission and their decisions are appealable to the Commission (Arts. 217 and
218, Labor Code).
In view of the stated preference for voluntary modes of settling labour disputes under Art. 13 (3) of
the Constitution and Art. 211of the Labor Code, voluntary arbitration of illegal dismissals is
recognized on the basis of mutual agreement between the parties (Art. 262, Labor Code).

Compulsory arbitration is both the process of settlement of labour disputes by a government agency
which has the authority to investigate and issue an award binding on all the parties, as well as a
mode of arbitration where the parties are compelled to accept the resolution of their dispute through
arbitration by a third party.

While a voluntary arbitrator is not part of the labour department, he or she renders arbitration
services provided for under labour laws. Generally, the voluntary arbitrator is expected to decide only
questions that are expressly delineated by the submission agreement. However, since arbitration is
the final resort for the adjudication of disputes, the arbitrator can assume that he or she has the
power to make a final settlement. Thus, assuming that the submission agreement empowers the
arbitrator to decide whether an employee was discharged for just cause, the arbitrator can
reasonably assume that his or her powers extend beyond giving a mere yes-or-no answer and
include the authority to reinstate with or without back pay.

Difference between a Just and Authorized Cause of

Termination
Just cause refers to a wrong doing committed by the employer or employee on the basis of which
the aggrieved party may terminate the employer-employee relationship. Authorized cause refers to a
cause brought about by changing economic or business conditions of the employer.

Causes for Termination by the Employer

1. Serious misconduct;
2. Willful disobedience of employer’s lawful orders connected with work;
3. Gross and habitual neglect of duty;
4. Fraud or breach of trust;
5. Commission of a crime or offense against the employer, employer’s family, or representative;
and
6. Other analogous causes.

Just Causes for Termination by the Employee

1. Serious insult by the employer or his or her representative on the honor and person of the
employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his or her
representative;
3. Commission of a crime by the employer or his or her representative against the person of the
employee or any of the immediate members of his or her family; and
4. Other analogous causes.
Authorized Causes for Termination
1. Installation of labor-saving devices;
2. Redundancy;
3. Retrenchment to prevent losses;
4. Closure or cessation of business; and
5. Disease not curable within six months as certified by competent public authority, and
continued employment of the employee is prejudicial to his or her health or to the health of
his or her co-employees.

Due Process in the Context of Termination of

Employment
Due process means the right of an employee to be notified of the reason for his or her dismissal and,
in case of just causes, to be provided the opportunity to defend himself or herself.

Components of Due Process in Termination Cases

In a termination for a just cause, due process involves the two-notice rule:

1. A notice of intent to dismiss specifying the ground for termination, and giving to said
employee reasonable opportunity within which to explain his or her side;
2. A hearing or conference where the employee is given opportunity to respond to the charge,
present evidence, or rebut the evidence presented against him or her;
3. A notice of dismissal indicating that upon due consideration of all the circumstances,
grounds have been established to justify the termination.
In a termination for an authorized cause, due process means a written notice of dismissal to the
employee specifying the grounds given, at least 30 days before the date of termination. A copy of
the notice shall be furnished by the Regional Office of the Department of Labor and Employment of
the Philippines (DOLE).

An Employee may Question the Legality of his or her

Dismissal
The legality of the dismissal may be questioned before the Labor Arbiter of the National Labor
Relations Commission (NLRC) of the Philippines, through a complaint for illegal dismissal. In
establishments with a collective bargaining agreement (CBA), the dismissal may be questioned
through the grievance machinery established under the CBA. If the issue is not resolved at this level,
it will be submitted to voluntary arbitration.

Proving the Dismissal is Legal

In a case of illegal dismissal, the employer has the burden of proving that the dismissal is legal.
Grounds for an Employee to Question his or her
Dismissal
An employee may question his or her dismissal based on substantive or procedural grounds. The
Substantive aspect pertains to the absence of a just or authorized cause supporting the dismissal.
The Procedural aspect refers to the notice of termination or the opportunity to present an
explanation.

What are the rights afforded to an unjustly dismissed

employee?
An employee who is dismissed without just cause is entitled to any or all of the following:

1. Reinstatement without loss of seniority rights, or separation pay if reinstatement is not

possible;
2. Full backwages, inclusive of allowances and other benefits or their monetary equivalent from
the time compensation was withheld from him or her up to the time of reinstatement;
3. Damages and attorney’s fees if the dismissal was done in bad faith.

Reinstatement
Reinstatement means restoration of the employee to the position from which he or she has been
unjustly removed.

Reinstatement without loss of seniority rights means that the employee, upon reinstatement, should
be treated in matters involving seniority and continuity of employment as though he or she had not
been dismissed from work.

When a Labor Arbiter rules for an illegal dismissal, reinstatement is immediately executory even
pending appeal.

Forms in which reinstatement be effected

Reinstatement may be actual or payroll in nature, at the option of the employer.

Full Backwages
Full backwages refer to all compensations, including allowances and other benefits with monetary
equivalent, that should have been earned by the employee but was not collected by him or her
because of unjust dismissal. It includes all the amounts he or she could have earned starting from
the date of dismissal up to the time of reinstatement.

In cases of illegal dismissal, a dismissed employee who has found another job may still be entitled
to collect full backwages from his or her former employer. Full backwages is a form of penalty
imposed by law on an employer who illegally dismisses his or her employee. The fact that the
dismissed employee may already be employed and earning elsewhere does not extinguish the
penalty.

The former position of the employee no longer exists at

the time of reinstatement
In that case, the employee shall be given a substantially equivalent position in the same
establishment without loss of seniority rights and to backwages from the time compensation was
withheld up to the time of reinstatement.

Employee Benefits when the Establishment no longer

exists
When an establishment no longer exists at the time an order for reinstatement is made, the
employee can claim benefits. The employee is entitled to a separation pay equivalent to at least one-
month pay or at least one-month pay for every year of service whichever is higher. A fraction of at
least six months shall be considered as one whole year. The period of service is deemed to have
lasted up to the time of closure of the establishment. He or she may also claim backwages to cover
the period between dismissal from work and the closure of the establishment.

Separation Pay
In authorized cause terminations, separation pay is the amount given to an employee terminated due
to retrenchment, closure, or cessation of business or incurable disease. The employee is entitled to
receive the equivalent of one month pay or one-half month pay, whichever is higher, for every year
service.

In just cause terminations, separation pay is also the amount given to employees who have been
dismissed without just cause and could no longer be reinstated.

Reinstatement is not possible so that separation pay

shall be given to an illegally dismissed employee
1. When company operations have ceased;
2. When the employee’s position or an equivalent thereof is no longer available;
3. When the illegal dismissal case has engendered strained relations between the parties, in
cases of just causes and usually when the position involved requires the trust and
confidence of the employer; and
4. When a substantial amount of years have lapsed from the filing of the case to its finality.
Exception for an employee dismissed for just cause be
entitled to separation pay
As a rule, no. But in instances where the just cause for dismissal is other than serious misconduct or
moral turpitude, the employee may be awarded Financial Assistance in the amount of one month’s
pay as a form of compassionate justice.

Proof of Financial Losses is Necessary to Justify

Retrenchment
Yes. Proof of actual or imminent financial losses that are substantive in character must be proven to
justify retrenchment.

Proof of Financial losses is NOT necessary to justify

redundancy
In redundancy, the existing manpower of the establishment is in excess of what is necessary to run
its operation in an economical and efficient manner.

Other Conditions before an Employee may be

Dismissed on the Ground of Redundancy
It must be shown that:
 Good faith in abolishing redundant position;
 There is fair and reasonable criteria in selecting the employees to be dismissed, such as but
not limited to less preferred status (e.g. temporary employee), efficiency, and seniority; or
 A one-month prior notice is given to the employee as prescribed by law.

Failure to Comply with the Due Process Requirements

Failure to comply with the due process requirements will NOT invalidate a dismissal with an
otherwise established just or authorized cause. The employee, however, will be entitled to
backwages from the time of termination till finality of the decision confirming the presence of a just
or authorized cause.

Difference between Transfer and Promotion

Promotion is the advancement of an employee from one position to another with an increase in
duties and responsibilities, and is usually accompanied by an increase in salary. Promotion is a
privilege and as such may be declined by the employee.
Transfer is a lateral movement that does not amount to a promotion. It constitutes a valid exercise
of management prerogative, unless it is done to defeat an employee’s right to self-organization, to
get rid of undesirable workers, or to penalize an employee of his or her union activities. If done in
good faith, management’s decision to transfer an employee may not be questioned. An employee’s
refusal to transfer may constitute willful disobedience, a just cause for his or her dismissal.

An Employer Transferring an Employee to another

place of work without prior notice
Generally, an employer cannot transfer an employee to another place of work without prior notice.
But if the urgency of the service requires a transfer, and such transfer is exercised in good faith for
the advancement of the employer’s interest and will not adversely affect the rights of the employee,
the transfer may be undertaken even without the employee’s consent.

Non-union member availing of the grievance

machinery in case of termination
If a non-union member belonging to an appropriate bargaining unit of the recognized bargaining
agent and pays agency fees to the union and accepts the benefits under the collective agreement,
said non-union members may avail of the grievance machinery. On the other hand, if the non-union
member is not part of the appropriate bargaining unit of the recognized bargaining agent and is
expressly excluded in the collective agreements, said employee cannot avail of the grievance
machinery.

Reasonable period for an Employee subjected to

Dismissal to answer charges against him or her by the
Employer
A reasonable period should be provided wherein the employee can answer all the charges against
him or her, gather evidence, and confront the witnesses against him or her. It should include the
opportunity to secure the assistance of a representative who could be a union officer.
Reasonableness of the period should be based, among others, on the gravity of the charges against
the employee.

An employee charged with an offense may be placed

under preventive suspension while he or she is
preparing to answer charges filed against him or her by
the employer
Only on grounds that his or her continued presence inside the company premises poses a serious
imminent threat to the life or property of the employer or his or her co-workers, and only for a period
of 30 days may be placed under preventive suspension. After 30 days, the employee should be
reinstated to his or her former position or in a substantially equivalent position.

The employer, however, may extend the period of suspension provided that the employee is paid his
or her wages and other benefits during the extension. If the employer decides to dismiss the
employee after completion of the investigation, the employee is not bound to reimburse the amount
paid to him or her during the extended period. The employer is required to immediately notify the
employee in writing of a decision to dismiss him or her stating clearly the reasons for the dismissal.

Preventive suspension is not a disciplinary measure, and should be distinguished from suspension
imposed as a penalty.

Validity of the Employer’s Decision on Termination

A dismissed employee may still question the validity or legality of his or her dismissal by filing a
complaint for illegal or unjust dismissal before the Arbitration Branch of NLRC. In such a case, the
burden of proving that the dismissal is for a valid or authorized cause rests on the employer.

During the pendency of the termination case, an

employee may be be retained in his or her work
An employee may be retained in his or her work even during the pendency of a termination case
under the following circumstances:

1. Upon serving the preventive suspension period of 30 days; and

2. Upon management prerogative allowing the employee to be retained at work and his or her
continued employment poses no serious nor imminent threat to the life or property of the
employer or his or her co-employees.

The Effects of Termination may be Suspended Pending

Resolution of the Case
The Secretary of Labor of the Philippines may provisionally order a reinstatement in the event of
prima facie finding that the dismissal may cause a serious labor dispute as in a strike or lock-out, or
is in implementation of mass lay-off.

Services of an Employee Terminated due to Disease

The employer may terminate employment on ground of disease only upon the issuance of a
certification by a competent public health authority that the disease is of such nature or at such
stage that it cannot be cured within a period of six months even with proper medical treatment.
Suspending Operations of a Business
If the period of suspension of operations do not exceed six months, the workers shall be reinstated
to their respective positions without loss of seniority rights if they indicated their desire to resume
work not later than one month from the resumption of operations of business.

If the shutdown is for a period of not more than six months such as may occur in equipment check
or repair, stock inventory, or lack of raw materials, the employee is only temporarily laid off and,
therefore, employer-employee relationship is not severed. If it will last for a period of more than six
months and is of an indefinite character, it may be considered as equivalent to closure of the
establishment leading to termination of employment. In such a case, the requirements of the law
and rules on employee dismissals must be observed.

DUE PROCESS IN TERMINATION AND DISCIPLINARY

ACTIONS; MINIMUM PERIOD FOR REPLY TO SHOW-
CAUSE NOTICE
By: Atty.Fred | March 4, 2015 in HR and Labor
36 Replies | Related posts at the bottom of article

Practitioners in the field of labor or Human Resources (HR), as well as managers and executive
officers of companies, are aware that an employee may only be dismissed for cause. Disciplinary
actions, including dismissal from work, must comply with both substantive and procedural due
process. Substantive due process requires a valid cause for the dismissal. For procedural due
process, outlined below, an interesting question is this: is there a minimum period that must be
given to the employee to answer the show-cause notice?

We recently received a query as to how many days should be given to the employee to answer the
show-cause notice. We find this query “interesting” because there is no provision in the Labor Code,
or its Implementing Rules and Regulations, which spells out a specific period. What’s more
interesting, however, is that the Supreme Court has construed this period to mean five (5) days
from receipt of the show cause notice. The procedural requirements, as summarized by the
Supreme Court, are:

(A) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. “Reasonable opportunity” under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged
against the employees.

(B) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify their
defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut
the evidence presented against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.

(C) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2) grounds have been established to
justify the severance of their employment.

Two requisites to justify loss of trust and confidence as a

ground for termination
Posted on March 1, 2012by Erineus
Article 282 of the Labor Code states:

ART. 282. TERMINATION BY EMPLOYER. – An employer may terminate an

employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative;
and

(e) Other causes analogous to the foregoing.

Article 282(c) of the Labor Code prescribes two separate and distinct grounds for
termination of employment, namely: (1) fraud or (2) willful breach by the employee of
the trust reposed in him by his employer or duly authorized representative.

Settled is the rule that under Article 282(c), the breach of trust must be willful. Ordinary
breach will not suffice. “A breach is willful if it is done intentionally and knowingly
without any justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly or inadvertently.”[30]
“As firmly entrenched in our jurisprudence, loss of trust and confidence as a just cause
for termination of employment is premised on the fact that an employee concerned
holds a position where greater trust is placed by management and from whom greater
fidelity to duty is correspondingly expected.”[31] “The betrayal of this trust is the
essence of the offense for which an employee is penalized.”[32]
           
Sanden has the burden of proof to prove its allegations.
“Unlike in other cases where the complainant has the burden of proof to [prove] its
allegations, the burden of establishing facts as bases for an employer’s loss of confidence
in an employee – facts which reasonably generate belief by the employer that the
employee was connected with some misconduct and the nature of his participation
therein is such as to render him unworthy of trust and confidence demanded of his
position – is on the employer.”[33]
While it is true that loss of trust and confidence is one of the just causes for termination,
such loss of trust and confidence must, however, have some basis. Proof beyond
reasonable doubt is not required. It is sufficient that there must only be some basis for
such loss of confidence or that there is reasonable ground to believe if not to entertain
the moral conviction that the concerned employee is responsible for the misconduct and
that the nature of his participation therein rendered him absolutely unworthy of trust
and confidence demanded by his position.[34]
Sanden failed to discharge the burden of proof that the dismissal of
Loressa is for a just cause.
The first requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be holding a position of trust and confidence.

In this case, we agree that Loressa, who had immediate access to Sanden’s confidential
files, papers and documents, held a position of trust and confidence as Coordinator and
Data Custodian of the MIS Department.

“The second requisite is that there must be an act that would justify the loss of trust and
confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based
on a willful breach of trust and founded on clearly established facts. The basis for the
dismissal must be clearly and convincingly established but proof beyond reasonable
doubt is not necessary.”[35]
  
Republic of the Philippines
Supreme Court
Baguio City
 
 
THIRD DIVISION
 
 
QUIRICO LOPEZ, G.R. No. 191008
Petitioner, Present:
   
  CARPIO MORALES,
  Chairperson, J.,
- versus BRION,
  BERSAMIN,
  VILLARAMA, JR., and
  SERENO, JJ.
ALTURAS GROUP OF  
COMPANIES and/or  
MARLITO UY, Promulgated:
Respondents.  
 
April 11, 2011
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
 
 
DECISION
 
 
CARPIO MORALES, J.:
 
Quirico Lopez (petitioner) was hired by respondent Alturas Group of Companies in
1997 as truck driver. Ten years later or sometime in November 2007, he was
dismissed after he was allegedly caught by respondents security guard in the act of
attempting to smuggle out of the company premises 60 kilos of scrap iron
worth P840 aboard respondents Isuzu Cargo Aluminum Van with Plate Number
PHP 271 that was then assigned to him. When questioned, petitioner allegedly
admitted to the security guard that he was taking out the scrap iron consisting of
lift springs out of which he would make axes.
 
Petitioner, in compliance with the Show Cause Notice[1] dated December 5,
2007 issued by respondent companys Human Resource Department Manager,
denied the allegations by a handwritten explanation written in the Visayan dialect.
 
Finding petitioners explanation unsatisfactory, respondent company
terminated his employment by Notice of Termination [2] effective December 14,
2007 on the grounds of loss of trust and confidence, and of violation of company
rules and regulations. In issuing the Notice, respondent company also took into
account the result of an investigation showing that petitioner had been smuggling
out its cartons which he had sold, in conspiracy with one Maritess Alaba, for his
own benefit to thus prompt it to file a criminal case for Qualified Theft [3] against
him before the Regional Trial Court (RTC) of Bohol. It had in fact earlier filed
another criminal case for Qualified Theft [4] against petitioner arising from the theft
of the scrap iron.
 
Petitioner thereupon filed a complaint against respondent company for
illegal dismissal and underpayment of wages. He claimed that the smuggling
charge against him was fabricated to justify his illegal dismissal; that the filing of
the charge came about after he reported the loss of the original copy of his pay slip,
which report, he went on to claim, respondent company took to mean that he could
use the pay slip as evidence for filing a complaint for violation of labor laws; and
that on account of the immediately stated concern of respondent, it forced him into
executing an affidavit that if the pay slip is eventually found, it could not be used
in any proceedings between them.
 
By Decision[5] of June 30, 2008, the Labor Arbiter, holding that the pendency of
the criminal case involving the scrap iron did not warrant the suspension of the
proceedings before him, held that petitioners dismissal was justified, for he, a truck
driver, held a position of trust and confidence, and his act of stealing company
property was a violation of the trust reposed upon him.
 
 Respecting the charge of underpayment of wages, the Labor Arbiter noted
that on the basis of the records, petitioner had been paid the correct wages and
benefits mandated by law.
 
The Labor Arbiter accordingly dismissed petitioners complaint.
 
On appeal, the National Labor Relations Commissions (NLRC) Fourth Division
(Cebu City) set aside the Labor Arbiters Decision by Decision[6] dated December
22, 2008, finding that respondents evidence did not suffice to warrant the
termination of petitioners services; and that petitioners alleged admission of taking
the scrap iron was belied by his vehement denial, as even the security guard, one
Gerardo Luega, who allegedly witnessed the asportation and before whom the
alleged admission was made, did not even execute an affidavit in support thereof.
 
Citing Salaw v. NLRC,[7] the NLRC went on to hold that petitioner should
have been afforded, or at least advised of the right to counsel. It thus held that any
evaluation which was based only on the explanation to the show-cause letter and
any so-called investigation but without confrontation of the vital witnesses, do[es]
not suffice.
 
Respondent companys motion for reconsideration was denied by
Resolution[8] of April 30, 2009, hence, it appealed to the Court of Appeals.
 
By Report[9] of December 18, 2009, the appellate court reversed the NLRC
ruling. It held that respondent company was justified in terminating petitioners
employment on the ground of loss of trust and confidence, his alleged act of
smuggling out the scrap iron having been sufficiently established through the
affidavits of Patrocinio Borja and Zalde Tare, supervisor and junior supervisor,
respectively, of its Supermarket Motorpool.
 
The appellate court further held that the evidence supporting the criminal
charge, found after preliminary investigation are [sic] sufficient to show prima
facie guilt, which constitutes just cause for [petitioners dismissal] based on loss of
trust and confidence; and that petitioners subsequent acquittal in the criminal case
did not automatically preclude a determination that he is guilty of acts inimical to
the employers interest resulting in loss of trust and confidence.
  
Albeit the appellate court found that petitioners dismissal was for a just
cause, it held that due process was not observed when respondent company failed
to give him a chance to defend his side in a proper hearing. Following Agabon v.
NLRC,[10] the appellate court thus ordered respondent to pay nominal damages
of P30,000.
 
Thus the appellate court disposed:
 
WHEREFORE, in view of the foregoing, the Decision of the
NLRC dated December 22, 2008 is hereby MODIFIED. Private
respondents dismissal from employment is upheld on the ground of loss
of trust and confidence, a just cause for termination. However, for failure
to comply fully with the procedural due process, petitioner
is ORDERED to pay private respondent the amount of  P30,000.00 as
nominal damages.[11] (underscoring supplied)
 
Hence, the present petition for review on certiorari.
 
Dismissals have two facets: the legality of the act of dismissal, which
constitutes substantive due process, and the legality of the manner of dismissal
which constitutes procedural due process.[12]
 
As to substantive due process, the Court finds that respondent companys loss
of trust and confidence arising from petitioners smuggling out of the scrap iron,
conpounded by his past acts of unauthorized selling cartons belonging to
respondent company, constituted just cause for terminating his services.
 
Loss of trust and confidence as a ground for dismissal of employees covers
employees occupying a position of trust who are proven to have breached the trust
and confidence reposed on them. Apropos is Cruz v. Court of Appeals[13] which
explains the basis and quantum of evidence of loss of trust and confidence, viz:
 
In addition, the language of Article 282(c) of the Labor Code states that
the loss of trust and confidence must be based on willful breach of the
trust reposed in the employee by his employer. Such breach is willful
if it is done intentionally, knowingly, and purposely, without justifiable
 excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently.Moreover, it must be based
on substantial evidence and not on the employers whims or caprices
or suspicions otherwise, the employee would eternally remain at the
mercy of the employer. Loss of confidence must not be indiscriminately
used as a shield by the employer against a claim that the dismissal of an
employee was arbitrary. And, in order to constitute a just cause for
dismissal, the act complained of must be work-related and shows
that the employee concerned is unfit to continue working for the
employer. In addition, loss of confidence as a just cause for
termination of employment is premised on the fact that the employee
concerned holds a position of responsibility, trust and confidence or
that the employee concerned is entrusted with confidence with respect
to delicate matters, such as the handling or care and protection of
the property and assets of the employer. The betrayal of this trust is
the essence of the offense for which an employee is penalized. (emphasis
and underscoring supplied)
 
 
Petitioner, a driver assigned with a specific vehicle, was entrusted with the
transportation of respondent companys goods and property, and consequently with
its handling and protection, hence, even if he did not occupy a managerial position,
he can be said to be holding a position of responsibility. As to his actprincipal
ground for his dismissal his attempt to smuggle out the scrap iron belonging to
respondent company, the same is undoubtedly work-related.
 
Respondent companys charge against petitioner was amply proven by substantial
evidence consisting of the affidavits of various employees of respondent. Contrary
to the NLRCs observation, the security guard who apprehended petitioner, Gerardo
Luega, actually executed a statement [14] relative to the smuggling out of scrap iron,
which was attached to, and served as basis for the filing of, the corresponding
complaint for Qualified Theft. Petitioners claim that he was framed up after he
allegedly lost his pay slip to draw respondent company to suspect that he might file
a labor complaint for underpayment does not inspire credence.
 
It is, however, with respect to the appellate courts finding that petitioner was
not afforded procedural due process that the Court deviates from. Procedural due
process has been defined as giving an opportunity to be heard before judgment is
rendered.[15] In termination cases, Perez v. Philippine Telegraph and Telephone
Company,[16] illuminates on the correct proceedings to be followed therein in order
to comply with the due process requirement:
 
The above rulings are a clear recognition that the employer may
provide an employee with ample opportunity to be heard and defend
himself with the assistance of a representative or counsel in ways other
than a formal hearing. The employee can be fully afforded a chance to
respond to the charges against him, adduce his evidence or rebut the
evidence against him through a wide array of methods, verbal or
written.
 
After receiving the first notice apprising him of the charges against
him, the employee may submit a written explanation (which may be
in the form of a letter, memorandum, affidavit or position paper) and
offer evidence in support thereof, like relevant company records
(such as his 201 file and daily time records) and the sworn statements
of his witnesses. For this purpose, he may prepare his explanation
personally or with the assistance of a representative or counsel. He
may also ask the employer to provide him copy of records material
to his defense. His written explanation may also include a request
that a formal hearing or conference be held.  In such a case, the
conduct of a formal hearing or conference becomes mandatory,
just as it is where there exist substantial evidentiary disputes or
where company rules or practice requires an actual hearing as
part of employment pretermination procedure. (emphasis and
underscoring supplied)
 
 
Petitioner was given the opportunity to explain his side when he was
informed of the charge against him and required to submit his written explanation
with which he complied. That there might have been no hearing is of no moment,
for as Autobus Workers Union v. NLRC[17] holds:
 
This Court has held that there is no violation of due process even if no
hearing was conducted, where the party was given a chance to
explain his side of the controversy. What is frowned upon is the denial
of the opportunity to be heard. (emphasis supplied)
 
 
 Parenthetically, the Court finds that it was error for the NLRC to opine that
petitioner should have been afforded counsel or advised of the right to
counsel. The right to counsel and the assistance of one in investigations involving
termination cases is neither indispensable nor mandatory, except when the
employee himself requests for one or that he manifests that he wants a formal
hearing on the charges against him. In petitioners case, there is no showing that he
requested for a formal hearing to be conducted or that he be assisted by
counsel. Verily, since he was furnished a second notice informing him of his
dismissal and the grounds therefor, the twin-notice requirement had been complied
with to call for a deletion of the appellate courts award of nominal damages to
petitioner.
 
As for the subsequent dismissal of the criminal cases [18] filed against
petitioner, criminal and labor proceedings are distinct and separate from each
other. Each requires a different quantum of proof, arising though they are from the
same set of facts or circumstances. As Vergara v. NLRC[19] holds:
 
An employees acquittal in a criminal case does not automatically
preclude a determination that he has been guilty of acts inimical to the
employers interest resulting in loss of trust and confidence.Corollarily,
the ground for the dismissal of an employee does not require proof
beyond reasonable doubt; as noted earlier, the quantum of proof required
is merely substantial evidence. More importantly, the trial court
acquitted petitioner not because he did not commit the offense, but
merely because of the failure of the prosecution to prove his guilt beyond
reasonable doubt.. In other words, while the evidence presented
against petitioner did not satisfy the quantum of proof required for
conviction in a criminal case, it substantially proved his culpability
which warranted his dismissal from employment. (emphasis supplied)
 
 
WHEREFORE, the petition is DENIED. The Report dated December 18,
2009 of the Court of Appeals dismissing petitioners complaint
is AFFIRMED withMODIFICATION in that the award of nominal damages in
the amount of P30,000 is DELETED.
 
Costs against petitioner.
 
 Republic of the Philippines
Supreme Court
Baguio City
 
FIRST DIVISION
 
JAMES BEN L. JERUSALEM   G.R. No. 169564
Petitioner,    
   
    Present:
     
-versus-   CORONA, C. J., Chairperson,
  VELASCO, JR.,
    LEONARDO-DE CASTRO,
    DEL CASTILLO, and
KEPPEL MONTE BANK, HOE ENG   PEREZ, JJ.
HOCK, SUNNY YAP and JOSEFINA    
PICART,   Promulgated:
Respondents.   April 6, 2011
x-----------------------------------------------------------------
--x
 
DECISION
 
DEL CASTILLO, J.:
 
For breach of trust and confidence to become a valid ground for the dismissal of an
employee, the cause of loss of trust and confidence must be related to the performance of
the employees duties.
 
This Petition for Review on Certiorari[1] assails the Decision[2] dated June 22, 2005 of the
Court of Appeals (CA) in CA-G.R. SP No. 86988, which granted the petition
for certiorariand reversed and set aside the Decision[3] dated June 25, 2004 of the
National Labor Relations Commission (NLRC) in NLRC NCR CA No. 029793-01
(NCR-00-10-05292-00). Also assailed is the CA Resolution[4] dated August 31,
2005 denying the Motion for Reconsideration thereto.
Factual Antecedents
 
James Ben L. Jerusalem (James) was employed by Keppel Monte Bank (Keppel)
on May 25, 1998 as Assistant Vice-President. On June 1, 1998, he was assigned as Head
of the newly created VISA Credit Card Department. The bank subsequently re-organized
the VISA Credit Card Department and reduced it to a mere unit. On April 5, 1999,
carrying the same rank, James was reassigned as Head of the Marketing and Operations
of the Jewelry Department. The VISA Credit Card Unit was then headed by Senior Vice
President Roberto Borromeo (Roberto) and supported by Marciana C. Gerena
(Marciana), Rosario R. Ronquillo (Rosario), and Aileen Alcantara as Unit Head,
Processor and Bookkeeper, respectively.
 
In or about May 1999, James received from Jorge Javier (Jorge) a sealed envelope
said to be containing VISA Card application forms. Jorge is a Keppel Visa Card Holder
since December 1998. James immediately handed over the envelope with accomplished
application forms to the VISA Credit Card Unit. All in all, the VISA credit card
applications referred by Jorge which James forwarded to the VISA Credit Card Unit
numbered 67, all of which were subsequently approved. As it turned out, all the accounts
under these approved applications became past due.
 
On July 20, 2000, Marciana sent a letter [5] to Jorge asking the latter to assist the
bank in the collection of his referred VISA accounts which have already an accumulated
principal balance of P6,281,443.90 excluding interest and service fees in the amount
of P1,157,490.08. On the same date, James upon knowing the status of the accounts
referred by Jorge, sent a Memorandum [6] to Roberto recommending the filing of a
criminal case for estafa against Jorge. He further recommended that a coordination with
the other banks where Jorge has deposits should be made promptly so that they can ask
said banks to freeze Jorges accounts. James even warned Keppel that immediate action
should be taken while Jorge is still in the country.
 
On July 31, 2000, Jorge arranged a meeting with bank officials. The said meeting
was attended by James and Marciana.
On August 9, 2000, James sent a Memorandum[7] to Napoleon Jamer (Napoleon),
Vice-President of Audit Department, and to Atty. Rowena Wilwayco, Senior Manager of
Legal Department. He summarized in the said Memorandum the events that transpired
during the July 31, 2000 meeting with Jorge and reiterated his suggestion for Keppel to
file a case against Jorge. He further suggested that Keppel look into the inside job angle
of the approval of the VISA cards and that all key officers and staff should be probed for
possible involvement.
 
On August 14, 2000, Napoleon issued a Memorandum[8] in reply to the August 9,
2000 Memorandum of James, advising the latter to coordinate with Roberto and not with
him.Furthermore, James was requested not to interfere with the audit process being
undertaken by the Audit Department.
 
On August 18, 2000, James received a Notice to Explain [9] from Keppels Vice
President for Operations, Sunny Yap (Sunny), why no disciplinary action should be taken
against him for referring/endorsing fictitious VISA card applicants. The said referrals
resulted in substantial financial losses to Keppel.
 
On August 23, 2000, James submitted his written explanation [10] to Sunny. He
pointed out that he had no participation in the processing of the VISA card applications
since he was no longer connected with the VISA Credit Card Unit at the time of such
transactions. He explained that he can only endorse the applications referred by Jorge to
the VISA Credit Card Unit because he was already transferred to Jewelry Department, as
Head.
 
On September 26, 2000, the Manager for Human Resources Department, Josefina
Picart, handed to James a Notice of Termination[11] informing the latter that he was found
guilty of breach of trust and confidence for knowingly and maliciously referring,
endorsing and vouching for VISA card applicants who later turned out to be impostors
resulting in financial loss to Keppel. This prompted James to file before the Labor
Arbiter a complaint for illegal dismissal, illegal confiscation of car with prayer for the
payment of vacation/sick leaves, 13th month pay, damages, attorneys fees and full
backwages against Keppel on October 9, 2000.
 
Ruling of the Labor Arbiter
 
On August 15, 2001, Labor Arbiter Daisy G. Cauton-Barcelona rendered a
Decision[12] finding Keppel guilty of illegal dismissal.
 
The dispositive portion of the Labor Arbiters Decision reads:
 
VIEWED IN THE LIGHT OF THE FOREGOING, the dismissal
being illegal, the complainant should be paid his backwages from the time of
his illegal termination up to the date of this decision in the amount
of P584,204.54; in lieu of reinstatement, the complainant is further ordered
paid his separation pay equivalent to one (1) month pay for every year of
service, in the amount of P150,000.00; the amounts ofP100,000.00
and P50,000.00 pesos as payment for moral and exemplary damages
respectively; and ten (10%) percent of the total monetary award as and for
attorneys fees, or the aggregate amount ofP957,624.99.
 
Respondents are further ordered to deliver to complainant his car,
Toyota Corona with plate number THE 735 without prejudice to the payment
of the remaining balance thereon.
 
 
SO ORDERED.[13]
 
 
Ruling of the National Labor Relations Commission
 
 
Keppel sought recourse to the NLRC which issued a Decision [14] dated June 25,
2004 affirming the Decision of the Labor Arbiter with the modification that the award of
moral and exemplary damages be deleted and that the attorneys fees be based on the
13th month pay and service incentive leave pay.
 
Keppel filed a Motion for Reconsideration[15] which was denied by the NLRC in a
Resolution[16] dated July 30, 2004.
 
Aggrieved, Keppel filed with the CA a Petition for Certiorari.[17]
 
Ruling of the Court of Appeals
 
The CA found merit in the petition and granted the same through a
Decision[18] dated June 22, 2005, the dispositve portion of which reads:
  
WHEREFORE, the petition is GRANTED. The assailed decision and
resolution of the public respondent are hereby SET ASIDE, and a new
judgment is entered DISMISSING the private respondents complaint for lack
of merit.
 
SO ORDERED.[19]
 
 
Petitioner moved for reconsideration[20] but to no avail.[21] Hence, this appeal raising the
following issues:
 
Issues
 
A. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT
REVERSED THE CONCURRING FINDINGS OF THE LABOR
ARBITER AND THE NATIONAL LABOR RELATIONS
COMMISSION THAT RESPONDENTS DISMISSAL OF
PETITIONER BASED ON ALLEGED LOSS OF TRUST AND
CONFIDENCE HAS NO BASIS AT ALL AND THEREBY
DECLARING THE DISMISSAL OF PETITIONER AS JUSTIFIED.
 
B. THE COURT OF APPEALS GRAVELY ERRED IN DECLARING
PETITIONERS DISMISSAL AS LEGAL AND EFFECTIVELY
DELETING THE MONETARY AWARDS BY THE LABOR
ARBITER AND NLRC.
 
C. THE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING
THE DECISION OF THE LABOR ARBITER AND X X X [THE]
RESOLUTION OF THE NATIONAL LABOR RELATIONS
COMMISSION BY USING A SUPREME COURT RULING WHICH
IS NOT APPLICABLE TO THE INSTANT CASE.[22]
 
 
The above issues can be summed up to the sole issue of whether Keppel legally
terminated Jamess employment on the ground of willful breach of trust and confidence.
 
Petitioners Arguments
 
 Petitioner believes that the Labor Arbiter and the NLRC, who are deemed to have
acquired expertise in matters within their respective jurisdictions, correctly held that there
was no basis to justify the alleged loss of trust and confidence of respondents on
petitioner.
 
He avers that a dismissal based on loss of trust and confidence should be proven by
substantial evidence and founded on clearly established facts. As culled from the records
and as correctly cited by the lower tribunals, respondents have not been able to show any
concrete proof that petitioner had participated in the
approval of the subject credit cards and that his only participation was his act of
forwarding the applications to the VISA Credit Card Unit of which he is no longer the
head.
 
Furthermore, the loss of trust and confidence in addition to being willful and without
justifiable excuse must also be work-related rendering the employee concerned unfit to
continue working. In this case, petitioner points out that he was not anymore connected
with the VISA Credit Card Unit when the alleged credit card scam happened and claims
that he had nothing to do with the approval of the said card applications. Hence, he
should not be made answerable for the erroneous judgment of the officers of the VISA
Credit Card Unit.
Respondents Arguments
 
Loss of trust and confidence is a valid ground for dismissing an employee, provided that
same arises from proven facts. Termination of employment on this ground does not
require proof beyond reasonable doubt of the employees conduct. It is sufficient that
there is some basis for the loss of trust or that the employer has reasonable ground to
believe that the employee is responsible for the misconduct which renders him unworthy
of the trust and confidence demanded of his position.
 
In this case, respondents believe that the testimonies of Marciana and Rosario who were
former subordinates of James in the VISA Credit Card Unit deserve full faith and
credence in the absence of any evidence that they were impelled by improper
motives. The two corroborated each other in saying that no credit investigation and
residence checking were conducted on the applications endorsed by Jorge because there
was a specific instruction from James for them not to conduct the said investigations and
validation as he was personally vouching for the existence and validity of the said
accounts.
 
The dismissal of James is therefore valid in view of the overwhelming and unrebutted
evidence presented against him. It is the prerogative of management to dismiss petitioner,
who is a managerial employee, for loss of trust and confidence.
 
Our Ruling
The petition is impressed with merit.
 
Article 282 of the Labor Code states:
 
ART. 282. TERMINATION BY EMPLOYER. An employer may
terminate an employment for any of the following causes:
 
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his work;
 
(b) Gross and habitual neglect by the employee of his duties;
 
(c) Fraud or willful breach by the employee of the trust reposed in him
by his employer or duly authorized representative;
 
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his duly
authorized representative; and
 
(e) Other causes analogous to the foregoing.
 
 
Article 282(c) of the Labor Code prescribes two separate and distinct grounds for
termination of employment, namely: (1) fraud; or (2) willful breach by the employee of
the trust reposed in him by his employer or duly authorized representative.
 
Law and jurisprudence have long recognized the right of employers to dismiss
employees by reason of loss of trust and confidence.[23] As provided for in Article 282, an
employer may terminate an employees employment for fraud or willful breach of trust
reposed in him. But, in order to constitute a just cause for dismissal, the act complained
of must be work-related such as would show the employee concerned to be unfit to
continue working for the employer.[24]
 
Keppel has the burden of proof to discharge
its allegations.
 
 
Unlike in other cases where the complainant has the burden of proof to discharge its
allegations, the burden of establishing facts as bases for an employers loss of confidence
in an employee facts which reasonably generate belief by the employer that the employee
was connected with some misconduct and the nature of his participation therein is such as
to render him unworthy of trust and confidence demanded of his position is on the
employer.[25]
 
While it is true that loss of trust and confidence is one of the just causes for termination,
such loss of trust and confidence must, however, have some basis. Proof beyond
reasonable doubt is not required. It is sufficient that there must only be some basis for
such loss of confidence or that there is reasonable ground to believe, if not to entertain,
the moral conviction that the concerned employee is responsible for the misconduct and
that the nature of his participation therein rendered him absolutely unworthy of trust and
confidence demanded by his position.[26]
 
Keppel failed in discharging the burden of
proof that the dismissal of James is for a just
cause.
 
 
The first requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be holding a position of trust and confidence. In this case,
there is no doubt that James held a position of trust and confidence as Assistant Vice-
President of the Jewelry Department.
The second requisite is that there must be an act that would justify the loss of trust and
confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based
on a willful breach of trust and founded on clearly established facts. The basis for the
dismissal must be clearly and convincingly established but proof beyond reasonable
doubt is not necessary.[27] Keppels evidence against James fails to meet this standard.
 
Worthy to note is the pertinent portion of the Decision of Labor Arbiter Daisy G.
Cauton-Barcelona, to wit:
 
Looking closely at the circumstances obtaining herein, we note that
respondent bank has not been able to show any concrete proof that indeed
complainant had participated in the approval of the questioned VISA CARD
accounts. The records [are] bereft of any concrete showing that complainant
directed Ms. Gerena to approve the applications without passing through the
process. The alleged marginal notations in the applications were admittedly
scribbled by Ms. Gerena. Even assuming that there are such notations on the
applications i.e., c/o James Jerusalem, still, such notations to us can not be
construed as a directive coming from complainant to specifically do away with
existing policy on the approval of applications for VISA Card.
 
Of course, we concede to the fact that respondent had sustained losses on
account of the so-called credit card scam in the amount of P7,961,619.82 all
coming from the accounts referred x x x by Mr. Jorge Javier, but no amount of
mind boggling can we infer that the mere act of handing the already
accomplished forms for VISA CREDIT Card could be interpreted as
Favorable endorsement with instructions not to conduct the usual credit
investigation/verification of applicants. To lay the blame upon the complainant
would be at the height of injustice considering that at that time, he no longer
has the authority to pass upon such applications. To attribute such huge
financial losses to one who is no longer connected with the VISA Card
department would be stretching too far, the import of the term some basis. We
simply could not see our way through how respondent bank could have
inferred that complainant made such instruction upon Ms. Gerena to forego
the usual process and have the applications approved without any direct
evidence showing to be so.[28]
 
 
Also significant is the findings of the NLRC that petitioner had not committed any acts
inimical to the interest of Keppel. The NLRC stated, viz:
 
The lines having been drawn between the VISA Card Unit and the Jewelry
Department, the complainant who is assigned with the latter as Vice-President
can not be made responsible for the misdeeds of those in the former.
Moreover, the act of betrayal of trust if any, must have been committed by the
employee in connection with the performance of his function or position.
 Verily, in this case, complainant who has nothing to do with the approval of
VISA Cards, should not be made answerable to the imprudence and
indiscretion of Ms. Gerena and Ms. Ronquillo.[29]
 
Loss of confidence as a just cause for termination of employment is premised on
the fact that the employee concerned holds a position of responsibility or trust and
confidence.He must be invested with confidence on delicate matters, such as custody
handling or care and protection of the property and assets of the employer. And, in order
to constitute a just cause for dismissal, the act complained of must be work-related and
shows that the employee concerned is unfit to continue to work for the employer.[30]
 
From the findings of both the Labor Arbiter and the NLRC it is clear that James did
nothing wrong when he handed over to Marciana the envelope containing the
applications of persons under the referred accounts of Jorge who were later found to be
fictitious. As the records now stand, James was no longer connected with the VISA
Credit Card Unit when the 67 applications for VISA card were approved. At such time,
he was already the Head of the Marketing and Operations of the Jewelry
Department. His act therefore of forwarding the already accomplished applications to the
VISA Credit Card Unit is proper as he is not in any position to act on them. The
processing and verification of the identities of the applicants would have been done by
the proper department, which is the VISA Credit Card Unit. Therefore, it is incumbent
upon Marciana as Unit Head to have performed her duties.As correctly observed by the
Labor Arbiter, Keppel had gone too far in blaming James for the shortcomings and
imprudence of Marciana. The invocation of Keppel of the loss of trust and confidence as
ground for Jamess termination has therefore no basis at all.
Having shown that Keppel failed to discharge its burden of proving that Jamess
dismissal is for a just cause, we have no other recourse but to declare that such dismissal
based on the ground of loss of trust and confidence was illegal. This is in consonance
with the constitutional guarantee of security of tenure.
 
WHEREFORE, the instant Petition for Review
on Certiorari is GRANTED. The Decision dated June 22, 2005 and the Resolution
dated August 31, 2005 of the Court of Appeals in CA-G.R. SP No. 86988
are REVERSED and SET ASIDE and the Decision dated June 25, 2004 and
Resolution dated July 30, 2004 of the National Labor Relations Commission
are REINSTATED.
Abandonment of work not appreciated; worker
was illegally dismissed - G.R. No. 190794
G.R. No. 190794

"x x x.

Discussion
We rule in the affirmative.
Abandonment is a matter of intention and cannot lightly be presumed from
certain equivocal acts, especially during times of hardship.[6] Thus, we have ruled
in a series of cases that there are two elements that must concur in order for an
act to constitute abandonment: (1) failure to report for work or absence without
valid or justifiable reason; and (2) a clear intention to sever the employer-
employee relationship.[7] The second element is the more determinative factor,
which must be manifested by some overt acts.[8] Mere absence or failure to report
for work does not, ipso facto, amount to abandonment of work. [9] To prove
abandonment, the employer must show that the employee deliberately and
unjustifiably refused to resume his employment without any intention of
returning.[10]
The NLRC and the CA found that the true reason why respondent did not
report for work for about 50 days was that he had been told by petitioners to “lie
low.” This is a finding of fact, which we shall no longer disturb. Thus, when
respondent realized that he was no longer going to receive work assignments, he
wasted no time in filing a case for illegal dismissal against petitioners. Employees
who take steps to protest their dismissal cannot logically be said to have
abandoned their work.[11] A charge of abandonment is totally inconsistent with
the immediate filing of a complaint for illegal dismissal. [12] The filing thereof is
proof enough of one’s desire to return to work, thus negating any suggestion of
abandonment.[13]
Respondent must therefore be deemed to have been constructively
dismissed. There is constructive dismissal when continued employment is
rendered impossible, unreasonable, or unlikely.[14] In this case, although Aduna
agreed to “lie low” because of the incident, it became clear that petitioners no
longer had the intention to give him future assignments. In fact, they already
deemed the issuance of the Certificate of Employment as a sign of abandonment
of work. The continued failure of petitioners to offer him a new assignment makes
the former liable for constructive dismissal. [15]Clearly, the instruction to
temporarily “lie low” was meant to be for a permanent cessation from work. With
the absence of any proof of dire exigency that would justify the failure to give
further assignments, the only logical conclusion is that respondent was
constructively dismissed.[16]
In an illegal dismissal case, the onus probandi rests on the employer, who
has to prove that the dismissal of an employee was for a valid cause.  [17]Since
petitioners based their defense on abandonment by respondent, it is likewise
incumbent upon them, as employers, to prove that he clearly, voluntarily, and
intentionally abandoned his work.[18] As previously discussed, it is clear from the
evidence on record that petitioners failed to discharge this burden. [19] As we have
consistently affirmed, if the evidence presented by the employer and the
employee are in equipoise, the scales of justice must be tilted in favor of the
latter.[20] Accordingly, the finding of illegal dismissal must be upheld.[21]
Article 279 of the Labor Code provides that an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges; to his full back wages, inclusive of allowances; and to
other applicable benefits or their monetary equivalent computed from the time
compensation was withheld up to the time of actual reinstatement. [22] However,
in recognition of the strained relations between petitioners and respondent, the
former are instead liable to give separation pay as found by the CA.
 Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

 
EXODUS INTERNATIONAL   G.R. No. 166109
CONSTRUCTION CORPORATION    
and ANTONIO P. JAVALERA,    
Petitioners,   Present:
     
-versus-   CORONA, C. J., Chairperson,
    VELASCO, JR.,
    NACHURA,⃰
GUILLERMO BISCOCHO,   DEL CASTILLO, and
FERNANDO PEREDA, FERDINAND   PEREZ, JJ.
MARIANO, GREGORIO BELLITA    
and MIGUEL BOBILLO,   Promulgated:
Respondents.   February 23, 2011
x-------------------------------------------------------------------x

 
 DECISION
 

DEL CASTILLO, J.:

In illegal dismissal cases, it is incumbent upon the employees to first establish the fact of
their dismissal before the burden is shifted to the employer to prove that the dismissal
was legal.

This Petition for Review on Certiorari[1] assails the Decision[2] dated August 10, 2004 of
the Court of Appeals (CA) in CA-G.R. SP No. 79800, which dismissed the petition
forcertiorari challenging the Resolutions dated January 17, 2003[3] and July 31, 2003[4] of
the National Labor Relations Commission (NLRC) in NLRC NCR CASE Nos. 30-11-04656-
00[5] and 30-12-04714-00.

Factual Antecedents

Petitioner Exodus International Construction Corporation (Exodus) is a duly

licensed labor contractor for the painting of residential houses, condominium units and
commercial buildings. Petitioner Antonio P. Javalera is the President and General
Manager of Exodus.

On February 1, 1999, Exodus obtained from Dutch Boy Philippines, Inc. (Dutch
Boy) a contract[6] for the painting of the Imperial Sky Garden located at Ongpin Street,
Binondo, Manila. On July 28, 1999, Dutch Boy awarded another contract[7] to Exodus for
the painting of Pacific Plaza Towers in Fort Bonifacio, Taguig City.

 
 In the furtherance of its business, Exodus hired respondents as painters on
different dates with the corresponding wages appearing opposite their names as
hereunder listed:

 
NAME DATE EMPLOYED DAILY SALARY  
1. Guillermo B. Biscocho Feb. 8, 1999 P 222.00
 
2. Fernando S. Pereda Feb. 8, 1999 235.00
Guillermo
3. Ferdinand M. Mariano April 12, 1999 235.00
Biscocho
4. Gregorio S. Bellita May 20, 1999 225.00 (Guillermo) was
5. Miguel B. Bobillo March 10, 2000 220.00 assigned at
the Imperial Sk
y Garden from
February 8, 1999 to February 8, 2000. Fernando Pereda (Fernando) worked in the same
project from February 8, 1999 to June 17, 2000. Likewise, Ferdinand Mariano
(Ferdinand) worked there from April 12, 1999 to February 17, 2000. All of them were
then transferred to Pacific Plaza Towers.

Gregorio S. Bellita (Gregorio) was assigned to work at the house of Mr. Teofilo
Yap in Ayala Alabang, Muntinlupa City from May 20, 1999 to December 4,
1999. Afterwards he was transferred to Pacific Plaza Towers.
 

Miguel B. Bobillo (Miguel) was hired and assigned at Pacific Plaza Towers on

March 10, 2000.

On November 27, 2000, Guillermo, Fernando, Ferdinand, and Miguel filed a

complaint[8] for illegal dismissal and non-payment of holiday pay, service incentive leave
pay, 13thmonth pay and night-shift differential pay. This was docketed as NLRC NCR
CASE No. 30-11-04656-00.

 
 On December 1, 2000, Gregorio also filed a complaint[9] which was docketed as
NLRC NCR CASE No. 30-12-04714-00. He claimed that he was dismissed from the
service on September 12, 2000 while Guillermo, Fernando, Ferdinand, and Miguel were
orally notified of their dismissal from the service on November 25, 2000.

Petitioners denied respondents allegations. As regards Gregorio, petitioners

averred that on September 15, 2000, he absented himself from work and applied as a
painter with SAEI-EEI which is the general building contractor
of Pacific Plaza Towers. Since then, he never reported back to work.

Guillermo absented himself from work without leave on November 27,

2000. When he reported for work the following day, he was reprimanded for being
Absent Without Official Leave (AWOL). Because of the reprimand, he worked only half-
day and thereafter was unheard of until the filing of the instant complaint.

Fernando, Ferdinand, and Miguel were caught eating during working hours on
November 25, 2000 for which they were reprimanded by their foreman. Since then
they no longer reported for work.

Ruling of the Labor Arbiter

On March 21, 2002, the Labor Arbiter rendered a Decision [10] exonerating

petitioners from the charge of illegal dismissal as respondents chose not to report for
work. The Labor Arbiter ruled that since there is neither illegal dismissal nor
abandonment of job, respondents should be reinstated but without any
backwages. She disallowed the claims for premium pay for holidays and rest days and
nightshift differential pay as respondents failed to prove that actual service was
rendered on such non-working days. However, she allowed the claims for holiday pay,
service incentive leave pay and 13th month pay. The dispositive portion of the Labor
Arbiters Decision reads:
  
WHEREFORE, premises considered, respondents Exodus International
Construction Corporation and/or Antonio Javalera are hereby ordered to
reinstate complainants to their former positions as painters without loss of
seniority rights and other benefits appurtenant thereto without any
backwages.
 
Respondents are likewise hereby ordered to pay complainants the
following:
 

1.              Guillermo Biscocho

P 1,968.75 - Service Incentive Leave Pay

10,237.50 - 13th Month Pay

3,600.00 - Holiday Pay

P 15,806.25 - Sub-Total

+ 1,580.87 - 10% Attorneys Fees

P 17,386.86 Total
 

2.              Fernando Pereda

P 2,056.25 - Service Incentive Leave Pay

10,692.50 - 13th Month Pay

3,525.00 - Holiday Pay

P 16,273.75 - Sub-Total

+ 1,627.37 - 10% Attorneys Fees

P 17,901.12 Total
 
3.              Miguel Bobillo

P 3,813.34 - 13th Month Pay

1,320.00 - Holiday Pay

P 5,133.34 - Sub-Total

+ 513.33 - 10% Attorneys Fees

P 5,646.67 Total
 

4. Ferdinand Mariano

P 1,860.42 - Service Incentive Leave Pay

9,674.19 - 13th Month Pay

3,055.00 - Holiday Pay

P 14,589.61 - Sub-Total

+ 1,458.96 - 10% Attorneys Fees

P 16,048.57 Total
 

5.              Gregorio Bellita

P 1,500.00 - Service Incentive Leave Pay

7,800.00 - 13th Month Pay

2,700.00 - Holiday Pay

P 12,000.00 - Sub-Total

+ 1,200.00 - 10% Attorneys Fees

P 13,200.00 Total
 
 or the total aggregate sum of Seventy Thousand, One Hundred Eighty Three
and 23/100 (P70,183.23) Pesos, inclusive of the ten (10%) percent of the
award herein by way of attorneys fees, all within ten (10) days from receipt
hereof;

The rest of complainants claims for lack of merit are hereby Dismissed.

SO ORDERED.[11]

 
 
                                      

Ruling of the National Labor Relations Commission

 

Petitioners sought recourse to the NLRC limiting their appeal to the award of
service incentive leave pay, 13th month pay, holiday pay and 10% attorneys fees in the
sum ofP70,183.23.

On January 17, 2003, the NLRC dismissed the appeal. It ruled that petitioners, who have
complete control over the records of the company, could have easily rebutted the
monetary claims against it. All that it had to do was to present the vouchers showing
payment of the same. However, they opted not to lift a finger, giving an impression that
they never paid said benefits.
As to the award of attorneys fees, the NLRC found the same to be proper because
respondents were forced to litigate in order to validate their claim.
 
The NLRC thus affirmed the Decision of the Labor Arbiter, viz:
 
 Accordingly, premises considered, the decision appealed from is hereby AFFIRMED and

the appeal DISMISSED for lack of merit.

SO ORDERED.[12]

Petitioners filed a Motion for Reconsideration[13] which was denied by the NLRC in a

Resolution[14] dated July 31, 2003.
 

Ruling of the Court of Appeals

Aggrieved, petitioners filed with the CA a petition for certiorari. The CA through a

Resolution[15] dated October 22, 2003, directed the respondents to file their
comment. On December 4, 2003, respondents filed their comment. [16] On January 12,
2004, petitioners filed their reply.[17]

 
On August 10, 2004, the CA dismissed the petition and affirmed the findings of the
Labor Arbiter and the NLRC. It opined that in a situation where the employer has
complete control over the records and could thus easily rebut any monetary claims
against it but opted not to lift any finger, the burden is on the employer and not on the
complainants. This is so because the latter are definitely not in a position to adduce any
documentary evidence, the control of which being not with them.

However, in addition to the reliefs awarded to respondents in the March 21, 2002
Decision of the Labor Arbiter which was affirmed by the NLRC in a Resolution dated
January 17, 2003, the petitioners were directed by the CA to solidarily pay full
backwages, inclusive of all benefits the respondents should have received had they not
been dismissed.

The dispositive portion of the CA Decision reads:

 
WHEREFORE, the instant petition for certiorari is dismissed. However,
in addition to the reliefs awarded to private respondents in the decision
dated March 21, 2002 of Labor Arbiter Aldas and resolution of the NLRC
dated January 17, 2003, the petitioners are directed to solidarily pay private
respondents full backwages, inclusive of all benefits they should have
received had they not been dismissed, computed from the time their wages
were withheld until the time they are actually reinstated. Such award of full
backwages shall be included in the computation of public respondents award
of ten percent (10%) attorneys fees.

SO ORDERED.[18]

Petitioners moved for reconsideration,[19] but to no avail. Hence, this appeal

anchored on the following grounds:

Issues
 

I.

The Honorable Court of Appeals erred and committed grave abuse of

discretion in ordering the reinstatement of respondents to their former
 positions which were no longer existing because its findings of facts are
premised on misappreciation of facts.

II.

The Honorable Court of Appeals also seriously erred and committed grave
abuse of discretion in affirming the award of service incentive leave pay,
13th month pay, and holiday pay in the absence of evidentiary and legal basis
therefor.

III.

The Honorable Court of Appeals likewise seriously erred and committed

grave abuse of discretion in affirming the award of attorney's fees even in the
absence of counsel on record to handle and prosecute the case.

IV.

The Honorable Court of Appeals also seriously erred and gravely abused its
discretion in holding individual petitioner solidarily liable with petitioner
company without specific evidence on which the same was based.[20]

Petitioners Arguments

Petitioners contend that, contrary to their allegations, respondents were never

dismissed from the service. If respondents find themselves no longer in the service of
petitioners, it is simply because of their refusal to report for work. Further, granting that
they were dismissed, respondents prolonged absences is tantamount to
abandonment which is a valid ground for the termination of their employment.  As to
respondents monetary claims, it is incumbent upon them to prove the same because
the burden of proof rests on their shoulders. But since respondents failed to prove the
same, their claims should be denied.

Respondents Arguments

Respondents, in support of their claim that they were illegally dismissed, argue that as
painters, they performed activities which were necessary and desirable in the usual
business of petitioners, who are engaged in the business of contracting painting
jobs. Hence, they are regular employees who, under the law, cannot just be dismissed
from the service without prior notice and without any just or valid cause. According to
the respondents, they did not abandon their job. For abandonment to serve as basis for
a valid termination of their employment, it must first be established that there was a
deliberate and unjustified refusal on their part to resume work. Mere absences are not
sufficient for these must be accompanied by overt acts pointing to the fact that they
simply do not want to work anymore. Petitioners failed to prove this. Furthermore, the
filing of a complaint for illegal dismissal ably defeats the theory of abandonment of the
job.

Our Ruling

The petition is partly meritorious.

[T]his Court is not unmindful of the rule that in cases of illegal dismissal, the employer
bears the burden of proof to prove that the termination was for a valid or authorized
cause.[21]But [b]efore the [petitioners] must bear the burden of proving that the
dismissal was legal, [the respondents] must first establish by substantial evidence that
indeed they were dismissed.[I]f there is no dismissal, then there can be no question as
to the legality or illegality thereof.[22]
 
There was no dismissal in this case, hence,
there is no question that can be entertained
regarding its legality or illegality.
 

As found by the Labor Arbiter, there was no evidence that respondents were dismissed
nor were they prevented from returning to their work. It was only respondents
unsubstantiated conclusion that they were dismissed. As a matter of fact, respondents
could not name the particular person who effected their dismissal and under what
particular circumstances.

In Machica v.  Roosevelt  Services Center, Inc.,[23] this Court sustained the employer's
denial as against the employees' categorical assertion of illegal dismissal. In so ruling,
this Court held that:

 
The rule is that one who alleges a fact has the burden of proving it;
thus, petitioners were burdened to prove their allegation that respondents
dismissed them from their employment. It must be stressed that the
evidence to prove this fact must be clear, positive and convincing. The rule
that the employer bears the burden of proof in illegal dismissal cases finds no
application here because the respondents deny having dismissed the
petitioners.

In this case, petitioners were able to show that they never dismissed respondents. As to
the case of Fernando, Miguel and Ferdinand, it was shown that on November 25, 2000,
at around 7:30 a.m., the petitioners foreman, Wenifredo Lalap (Wenifredo) caught the
three still eating when they were supposed to be working already. Wenifredo
reprimanded them and, apparently, they resented it so they no longer reported for
work. In the case of Gregorio, he absented himself from work on September 15, 2000
to apply as a painter with SAEI-EEI, the general contractor of Pacific Plaza Towers. Since
then he never reported back to work. Lastly, in the case of Guillermo, he absented
himself without leave on November 27, 2000, and so he was reprimanded when he
reported for work the following day. Because of the reprimand, he did not report for
work anymore.
 

Hence, as between respondents general allegation of having been orally dismissed from
the service vis-a-vis those of petitioners which were found to be substantiated by the
sworn statement of foreman Wenifredo, we are persuaded by the latter. Absent any
showing of an overt or positive act proving that petitioners had dismissed respondents,
the latters claim of illegal dismissal cannot be sustained. Indeed, a cursory examination
of the records reveal no illegal dismissal to speak of.
 
There was also no abandonment of work on
the part of the respondents.

The Labor Arbiter is also correct in ruling that there was no abandonment on the part of
respondents that would justify their dismissal from their employment.
 
It is a settled rule that [m]ere absence or failure to report for work x x x is not enough to
amount to abandonment of work.[24] Abandonment is the deliberate and unjustified
refusal of an employee to resume his employment.[25]

In Northwest Tourism Corporation v. Former Special 3rd  Division of the Court of

Appeals[26] this Court held that [t]o constitute abandonment of work, two elements
must concur, [namely]:

 
 (1)         the employee must have failed to report for work or must have been
absent without valid or justifiable reason; and

(2)         there must have been a clear intention on the part of the employee to
sever the employer-employee relationship manifested by some overt act.

It is the employer who has the burden of proof to show a deliberate and
unjustified refusal of the employee to resume his employment without any intention
of returning.[27] It is therefore incumbent upon petitioners to ascertain the
respondents interest or non-interest in the continuance of their
employment. However, petitioners failed to do so.
 
Respondents must be reinstated and paid

their holiday pay, service incentive leave

pay, and 13th month pay.

Clearly therefore, there was no dismissal, much less illegal, and there was also
no abandonment of job to speak of. The Labor Arbiter is therefore correct in
ordering that respondents be reinstated but without any backwages.
 
However, petitioners are of the position that the reinstatement of
respondents to their former positions, which were no longer existing, is impossible,
highly unfair and unjust. The project was already completed by petitioners on
September 28, 2001. Thus the completion of the project left them with no more
work to do. Having completed their tasks, their positions automatically ceased to
exist. Consequently, there were no more positions where they can be reinstated as
painters.
 
Petitioners are misguided. They forgot that there are two types of employees
in the construction industry. The first is referred to as project employees or those
employed in connection with a particular construction project or phase thereof and
such employment is coterminous with each project or phase of the project to which
they are assigned. The second is known as non-project employees or those
employed without reference to any particular construction project or phase of a
project.
 
The second category is where respondents are classified. As such they are
regular employees of petitioners. It is clear from the records of the case that when
one project is completed, respondents were automatically transferred to the next
project awarded to petitioners. There was no employment agreement given to
respondents which clearly spelled out the duration of their employment, the specific
work to be performed and that such is made clear to them at the time of hiring. It is
now too late for petitioners to claim that respondents are project employees whose
employment is coterminous with each project or phase of the project to which they
are assigned.
 
Nonetheless, assuming that respondents were initially hired as project
employees, petitioners must be reminded of our ruling in Maraguinot, Jr. v. National
Labor Relations Commission[28] that [a] project employee x x x may acquire the status
of a regular employee when the following [factors] concur:
 
1.              There is a continuous rehiring of project employees even after cessation of a project; and

 
 2.              The tasks performed by the alleged project employee are vital, necessary and

indespensable to the usual business or trade of the employer.

In this case, the evidence on record shows that respondents were employed
and assigned continuously to the various projects of petitioners. As painters, they
performed activities which were necessary and desirable in the usual business of
petitioners, who are engaged in subcontracting jobs for painting of residential units,
condominium and commercial buildings. As regular employees, respondents are
entitled to be reinstated without loss of seniority rights.
 
Respondents are also entitled to their money claims such as the payment of
holiday pay, service incentive leave pay, and 13 th month pay. Petitioners as the
employer of respondents and having complete control over the records of the
company could have easily rebutted the monetary claims against it. All that they had
to do was to present the vouchers or payrolls showing payment of the
same. However, they decided not to provide the said documentary evidence. Our
conclusion therefore is that they never paid said benefits and therefore they must
be ordered to settle their obligation with the respondents.
 
Respondents are also entitled to the

payment of attorneys fees.

Even though respondents were not represented by counsel in most of the

stages of the proceedings of this case, the award of attorneys fees as ruled by the
Labor Arbiter, the NLRC and the CA to the respondents is still proper. In Rutaquio v.
National Labor Relations Commission,[29] this Court held that:
 
It is settled that in actions for recovery of wages or where an employee was forced to litigate

and, thus, incur expenses to protect his rights and interest, the award of attorneys fees is legally

and morally justifiable.

In Producers Bank of the Philippines v. Court of Appeals [30] this Court ruled

that:
 
Attorneys fees may be awarded when a party is compelled to litigate or to incur expenses to

protect his interest by reason of an unjustified act of the other party.

In this case, respondents filed a complaint for illegal dismissal with claim for
payment of their holiday pay, service incentive leave pay, and 13 th month pay. The
Labor Arbiter, the NLRC and the CA were one in ruling that petitioners did not pay
the respondents their holiday pay, service incentive leave pay, and 13 th month pay
as mandated by law. For sure, this unjustified act of petitioners had compelled the
respondents to institute an action primarily to protect their rights and interests.
 
The CA erred when it ordered

reinstatement of respondents with

payment of full backwages.

 
 

It must be noted that the Labor Arbiters disposition directed petitioners to reinstate
respondents without any backwages and awarded the payment of service incentive
leave pay, holiday pay, 13th month pay, and 10% attorneys fees in the sum
of P70,183.23.
 
On appeal to the NLRC, petitioners limited their appeal to the award of service
incentive leave pay, holiday pay, 13th month pay, and 10% attorneys fees. No appeal
was made on the order of reinstatement.
 
In the proceedings before the CA, it is only the award of service incentive leave pay,
holiday pay, 13th month pay, and 10% attorneys fees that were raised by the
petitioners. The CA in fact dismissed the petition. However, the CA further
concluded in its Decision that since there is no abandonment to speak about, it is
therefore indisputable that respondents were illegally dismissed. Therefore, they
deserve not only reinstatement but also the payment of full backwages.
 
We do not agree with this ruling of the CA.
 
In cases where there is no evidence of dismissal, the remedy is
reinstatement but without backwages. In this case, both the Labor Arbiter and the
NLRC made a finding that there was no dismissal much less an illegal one. It is settled
that factual findings of quasi-judicial agencies are generally accorded respect and
finality so long as these are supported by substantial evidence.[31]
 
In Leonardo v. National Labor Relations Commission,[32] this Court held that:
 
In a case where the employees failure to work was occasioned neither by his

abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the

employer; each party must bear his own loss.

  

Thus, inasmuch as no finding of illegal dismissal had been made, and

considering that the absence of such finding is supported by the records of the case,
this Court is bound by such conclusion and cannot allow an award of the payment of
backwages.
 
Lastly, since there was no need to award backwages to respondents, the
ruling of the CA that Javalera is solidarily liable with Exodus International
Construction Corporation in paying full backwages need not be discussed.
 
WHEREFORE, the instant petition for review on certiorari is PARTLY
GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 79800 dated
August 10, 2004, is AFFIRMED with MODIFICATION that the award of full
backwages is DELETED for lack of legal basis.
 
February 2011 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on March 18, 2011 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law
• Taggedabandonment, burden of proof, certiotari, constructive dismissal, due process, execution, illegal
dismissal, jurisdiction,project employee, quitclaim, redundancy, retrenchment, unfair, union
Here are selected February 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Abandonment; elements. Respondents filed an illegal dismissal case against the petitioner-corporation. For its
defense, petitioner-corporation alleged that the respondents abandoned their work and were not dismissed, and
that it sent letters advising respondents to report for work, but they refused. The Court held that for
abandonment to exist, it is essential (a) that the employee must have failed to report for work or must have
been absent without valid or justifiable reason; and (b) that there must have been a clear intention to sever the
employer-employee relationship manifested by some overt acts. The employer has the burden of proof to show
the employee’s deliberate and unjustified refusal to resume his employment without any intention of returning.
Mere absence is not sufficient. There must be an unequivocal intent on the part of the employee to discontinue
his employment. Based on the evidence presented, the reason why respondents failed to report for work was
because petitioner-corporation barred them from entering its construction sites. It is a settled rule that failure to
report for work after a notice to return to work has been served does not necessarily constitute abandonment.
The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.
Petitioner-corporation failed to show overt acts committed by respondents from which it may be deduced that
they had no more intention to work.  Respondents’ filing of the case for illegal dismissal barely four (4) days
from their alleged abandonment is totally inconsistent with the known concept of what constitutes
abandonment. E.G. & I. Construction Corporation and Edsel Galeos v. Ananias P. Sato, et al.,  G.R. No.
182070, February 16, 2011.
Certification election; petition for cancellation of union registration. Respondent union filed a petition for
certification election. Petitioner moved to dismiss the petition for certification election alleging the pendency
of a petition for cancellation of the union’s registration. The DOLE Secretary ruled in favor of the legitimacy
of the respondent as a labor organization and ordered the immediate conduct of a certification election.
Pending appeal in the Court of Appeals, the petition for cancellation was granted and became final and
executory. Petitioner argued that the cancellation of the union’s certificate of registration should retroact to the
time of its issuance. Thus, it claimed that the union’s petition for certification election and its demand to enter
into collective bargaining agreement with the petitioner should be dismissed due to respondent’s lack of legal
personality. The Court ruled that the pendency of a petition for cancellation of union registration does not
preclude collective bargaining, and that an order to hold a certification election is proper despite the pendency
of the petition for cancellation of the union’s registration because at the time the respondent union filed its
petition, it still had the legal personality to perform such act absent an order cancelling its registration.  Legend
International Resorts Limited v. Kilusang Manggagawa ng Legenda,  G.R. No. 169754, February 23, 2011.
Certiorari under Rule 65; review of facts by the Court of Appeals. While it is true that factual findings made by
quasi-judicial and administrative tribunals, if supported by substantial evidence, are accorded great respect and
even finality by the courts, this general rule admits of exceptions.  When there is a showing that a palpable and
demonstrable mistake that needs rectification has been committed or when the factual findings were arrived at
arbitrarily or in disregard of the evidence on record, these findings may be examined by the courts. In the
present case, the Court of Appeals found itself unable to completely sustain the findings of the NLRC thus, it
was compelled to review the facts and evidence and not limit itself to the issue of grave abuse of
discretion. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February
9, 2011.
Construction Industry; project employees. Petitioner is a duly licensed labor contractor engaged in painting
houses and buildings. Respondents, former painters of the petitioner, filed an illegal dismissal case against
petitioner. Petitioner alleged that the respondents abandoned their job and were not dismissed by the petitioner.
The Labor Arbiter ruled that there was neither illegal dismissal nor abandonment of job and that the
respondents should be reinstated but without any backwages. On appeal, petitioner alleged that the
reinstatement of respondents to their former positions, which were no longer existing, is impossible, highly
unfair and unjust.  It further alleged that the project they were working on at the time of their alleged dismissal
was already completed. Having completed their tasks, their positions automatically ceased to exist.  Thus, there
were no more positions where they can be reinstated as painters. The Court ruled that there are two types of
employees in the construction industry. The first is referred to as project employees or those employed in
connection with a particular construction project or phase thereof and such employment is coterminous with
each project or phase of the project to which they are assigned.  The second is known as non-project
employees or those employed without reference to any particular construction project or phase of a project.
Respondents belonged to the second type and are classified as regular employees of petitioner.  It is clear from
the records of the case that when one project is completed, respondents were automatically transferred to the
next project awarded to petitioners. There was no employment agreement given to respondents which clearly
spelled out the duration of their employment and the specific work to be performed and there is no proof that
they were made aware of these terms and conditions of their employment at the time of hiring. Thus, it is now
too late for petitioner to claim that respondents are project employees whose employment is coterminous with
each project or phase of the project to which they are assigned. Nonetheless, assuming that respondents were
initially hired as project employees, a project employee may acquire the status of a regular employee when the
following factors concur: (1) There is a continuous rehiring of project employees even after cessation of a
project; and (2) The tasks performed by the alleged project employee are vital, necessary and indispensable to
the usual business or trade of the employer. In this case, the evidence on record shows that respondents were
employed and assigned continuously to the various projects of petitioners.  As painters, they performed
activities which were necessary and desirable in the usual business of petitioner, which was engaged in
subcontracting jobs for painting of residential units, condominium and commercial buildings. As regular
employees, respondents are entitled to be reinstated without loss of seniority rights. Exodus International
Construction Corporation, et al. v. Guillermo Biscocho, et al., G.R. No. 166109, February 23, 2011.
Constructive Dismissal; security guards. Respondent was hired by petitioner, a security agency, as a security
guard. He was assigned at the Philippine Heart Center until his relief on January 30, 2006.  Respondent was
not given any assignment thereafter.  Thus, on August 2, 2006, he filed a complaint for constructive dismissal
and nonpayment of 13th month pay, with prayer for damages against petitioner. To refute the claim, petitioner
alleged that respondent was not constructively or illegally dismissed, but had voluntarily resigned. The Court
held that respondent was constructively dismissed. In cases involving security guards, a relief and transfer
order in itself does not sever employment relationship between a security guard and his agency. An employee
has the right to security of tenure, but this does not give him a vested right to his position as would deprive the
company of its prerogative to change his assignment or transfer him where his service, as security guard, will
be most beneficial to the client. Temporary “off-detail” or the period of time security guards are made to wait
until they are transferred or assigned to a new post or client does not constitute constructive dismissal, so long
as such status does not continue beyond six months. Theonus of proving that there is no post available to
which the security guard can be assigned rests on the employer. In the instant case, the failure of petitioner to
give respondent a work assignment beyond the reasonable six-month period makes it liable for constructive
dismissal. Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R. No. 186614, February
23, 2011.
Constructive dismissal; defense of abandonment. Respondent filed an illegal dismissal case against the
petitioner. Petitioner alleged that respondent abandoned his job and was not dismissed. The Court held that
respondent was illegally dismissed. The jurisprudential rule on abandonment is constant.  It is a matter of
intention and cannot lightly be presumed from certain equivocal acts. To constitute abandonment, two
elements must concur:  (1) the failure to report for work or absence without valid or justifiable reason; and (2)
a clear intent, manifested through overt acts, to sever the employer-employee relationship.  In this case,
petitioner failed to establish clear evidence of respondent’s intention to abandon his employment.  Except for
petitioner’s bare assertion that respondent did not report to the office for reassignment, no proof was offered to
prove that respondent intended to sever the employer-employee relationship.  Besides, the fact that respondent
filed the instant complaint negates any intention on his part to forsake his work. It is a settled doctrine that the
filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee who
takes steps to protest his dismissal cannot by logic be said to have abandoned his work. Nationwide Security
and Allied Services, Inc. v. Ronald P. Valderama, G.R. No. 186614, February 23, 2011.
Constructive dismissal; defense of resignation. Respondent, a security guard, filed an illegal dismissal case
against the petitioner. To refute the claim, petitioner alleged that respondent was not constructively or illegally
dismissed, but had voluntarily resigned. Petitioner alleged that respondent’s resignation is evident from his
withdrawal of his cash and firearm bonds. Resignation is the voluntary act of an employee who is in a situation
where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one
has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment
of an office. The intent to relinquish must concur with the overt act of relinquishment. Thus, the acts of the
employee before and after the alleged resignation must be considered in determining whether, he or she, in
fact, intended to sever his or her employment. Should the employer interpose the defense of resignation, it is
incumbent upon the employer to prove that the employee voluntarily resigned.  On this point, the Court held
that petitioner failed to discharge its burden. Moreover, the filing of a complaint belies petitioner’s claim that
respondent voluntarily resigned. Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R.
No. 186614, February 23, 2011.
Execution of Judgment; properties covered. Premier Allied and Contracting Services, Inc. (PACSI) and its
President, the petitioner, were held liable to pay the respondents separation pay and attorney’s fees. To execute
this judgment, the NLRC sheriff issued a Notice of Sale of a property with a TCT in the name of the petitioner
and his wife. The Court ruled that the Notice of Sale is null and void. The power of the NLRC, or the courts, to
execute its judgment extends only to properties unquestionably belonging to the judgment debtor alone.  A
sheriff, therefore, has no authority to attach the property of any person except that of the judgment debtor.
Likewise, there is no showing that the sheriff ever tried to execute on the properties of the corporation. The
TCT of the property bears out that, indeed, it belongs to petitioner and his wife. Thus, even if we consider
petitioner as an agent of the corporation – and, therefore, not a stranger to the case – such that the provision on
third-party claims will not apply to him, the property was registered not only in the name of petitioner but also
of his wife. She stands to lose the property subject of execution without ever being a party to the case. This
will be tantamount to deprivation of property without due process. Paquito V. Ando v. Andresito Y. Campo, et
al.,  G.R. No. 184007, February 16, 2011.
Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against petitioner. Petitioner
alleged that the respondents abandoned their work and were never dismissed by the petitioner. NLRC ruled
that the respondents were not illegally dismissed since they failed to present a written notice of termination.
This was however reversed by the Court of Appeals. The Court held that a written notice of dismissal is not a
pre-requisite for a finding of illegal dismissal. Petitioner failed to prove that respondents were dismissed for a
just or authorized cause. In an illegal dismissal case, the onus probandi rests on the employer to prove that the
dismissal of an employee is for a valid cause. E.G. & I. Construction Corporation and Edsel Galeos v.
Ananias P. Sato, et al., G.R. No. 182070, February 16, 2011.
Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against the petitioners.
Petitioners, in their defense, alleged that the respondents abandoned their work and were not dismissed by the
petitioners. Although In cases of illegal dismissal, the employer bears the burden of proof to prove that the
termination was for a valid or authorized cause, the employee must first establish by substantial evidence the
fact that he was dismissed. If there is no dismissal, then there can be no question as to the legality or illegality
thereof. In the present case, the Court held that there was no evidence that respondents were dismissed or that
they were prevented from returning to their work.  It was only respondents’ unsubstantiated conclusion that
they were dismissed.  As a matter of fact, respondents could not name the particular person who effected their
dismissal and under what particular circumstances. Absent any showing of an overt or positive act proving that
petitioners had dismissed respondents, the latters’ claim of illegal dismissal cannot be sustained. Exodus
International Construction Corporation, et al. v. Guillermo Biscocho, et al.,  G.R. No. 166109, February 23,
2011.
Illegal dismissal; final and executory judgment. Respondent employee filed an illegal dismissal case against
the petitioner-company and Tom Madula, its operations manager. The case was dismissed by the labor arbiter
and the dismissal was affirmed by NLRC. On August 29, 2002, the Court of Appeals reversed and set aside the
NLRC decision and resolution. The CA ordered the petitioner company to pay respondent separation pay,
moral and exemplary damages, and attorney’s fees. The decision became final and executory on February 27,
2004, and consequently a writ of execution was issued. Petitioner-company filed a Motion to Quash Writ of
Execution. The Labor Arbiter granted the Motion and exonerated the petitioner company from paying
backwages and held that it was petitioner Madula who should be liable to pay backwages. Respondent then
filed before the CA a Very Urgent Motion for Clarification of Judgment. On December 10, 2004, CA granted
the Motion and held that petitioner-company is solely liable for the judgment award. As a general rule, final
and executory judgments are immutable and unalterable, except under these recognized exceptions, to wit: (a)
clerical errors; (b) nunc pro tunc entries which cause no prejudice to any party; and (c) void judgments. The
underlying reason for the rule is two-fold: (1) to avoid delay in the administration of justice and thus make
orderly the discharge of judicial business, and (2) to put judicial controversies to an end, at the risk of
occasional errors, inasmuch as controversies cannot be allowed to drag on indefinitely and the rights and
obligations of every litigant must not hang in suspense for an indefinite period of time. What the CA rendered
on December 10, 2004 was a nunc pro tunc order clarifying the decretal portion of its August 29, 2002
Decision. The object of a judgment nunc pro tunc is not the rendering of a new judgment and the
ascertainment and determination of new rights, but is one placing in proper form on the record, the judgment
that had been previously rendered, to make it speak the truth, so as to make it show what the judicial action
really was. It is not to correct judicial errors, such as to render a judgment anew in place of the one it rendered,
nor to supply nonaction by the court, however erroneous the judgment may have been. Filipinas Palmoil
Processing, Inc. and Dennis T. Villareal v. Joel P. Dejapa, represented by his Attorney-in-Fact Myrna
Manzano,  G.R. No. 167332, February 7, 2011.
Illegal dismissal; liability of corporate officers. Petitioner filed a complaint against respondent company and its
officers for illegal dismissal, unfair labor practice, and money claims. Petitioner alleged that the officers should
be held personally liable for the acts of company which were tainted with bad faith and arbitrariness. As a
general rule, a corporate officer cannot be held liable for acts done in his official capacity because a
corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders, and
members.  To pierce this fictional veil, it must be shown that the corporate personality was used to perpetuate
fraud or an illegal act, or to evade an existing obligation, or to confuse a legitimate issue.  In illegal dismissal
cases, corporate officers may be held solidarily liable with the corporation if the termination was done with
malice or bad faith. Moral damages are awarded only where the dismissal was attended by bad faith or fraud,
or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public
policy.  Exemplary damages may avail if the dismissal was effected in a wanton, oppressive or malevolent
manner. In the present case, the Court held that petitioner failed to prove that his dismissal was orchestrated by
the individual respondents and their acts were attended with bad faith or were done oppressively. Nelson A.
Culili v. Eastern Telecommunications Philippines, Inc., et al.  G.R. No. 165381, February 9, 2011.
Illegal dismissal; redundancy. Respondent-company, due to business troubles and losses, implemented a Right-
Sizing Program which entailed a company-wide reorganization involving the transfer, merger, absorption or
abolition of certain departments of the company. As a result, respondent-company terminated the services of
petitioner on account of redundancy. Petitioner filed a complaint against respondent-company and its officers
for illegal dismissal, unfair labor practice, and money claims. The Court ruled that petitioner was validly
dismissed. There is redundancy when the service capability of the workforce is greater than what is reasonably
required to meet the demands of the business enterprise.  A position becomes redundant when it is rendered
superfluous by any number of factors such as over-hiring of workers, decrease in volume of business, or
dropping a particular product line or service activity previously manufactured or undertaken by the enterprise.
The Court has been consistent in holding that the determination of whether or not an employee’s services are
still needed or sustainable properly belongs to the employer.  Provided there is no violation of law or a
showing that the employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this
exercise of business judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC.
However, an employer cannot simply declare that it has become overmanned and dismiss its employees
without producing adequate proof to sustain its claim of redundancy.  Among the requisites of a valid
redundancy program are: (1) the good faith of the employer in abolishing the redundant position; and (2) fair
and reasonable criteria in ascertaining what positions are to be declared redundant, such as but not limited to:
preferred status, efficiency, and seniority.  The Court also held that the following evidence may be proffered to
substantiate redundancy: adoption of a new staffing pattern, feasibility studies/ proposal on the viability of the
newly created positions, job description and the approval by the management of the restructuring. Nelson A.
Culili v. Eastern Telecommunications Philippines, Inc., et al.  G.R. No. 165381, February 9, 2011.
Labor Union; collateral attack on legal personality. . Petitioner moved to dismiss the petition for certification
election filed by respondent union by questioning the validity of the respondent’s union registration. The Court
held that legitimacy of the legal personality of respondent cannot be collaterally attacked in a petition for
certification election proceeding but only through a separate action instituted particularly for the purpose of
assailing it. The Implementing Rules stipulate that a labor organization shall be deemed registered and vested
with legal personality on the date of issuance of its certificate of registration.  Once a certificate of registration
is issued to a union, its legal personality cannot be subject to a collateral attack.  It may be questioned only in
an independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing
Rules. Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No.
169754 , February 23, 2011.
Money claims; burden of proof. Respondents alleged that petitioner-corporation failed to pay them their full
compensation. The Labor Arbiter granted their monetary claims but the NLRC reversed the award considering
that the petitioner-corporation submitted copies of payrolls, which it annexed to its memorandum on appeal,
showing full payment. The general rule is that the burden rests on the employer to prove payment, rather than
on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls,
records, remittances, and other similar documents — which will show that overtime, differentials, service
incentive leave, and other claims of the worker have been paid — are not in the possession of the worker but in
the custody and absolute control of the employer. In this case, the submission by petitioner-corporation of the
time records and payrolls only when the case was on appeal before the NLRC is contrary to the elementary
precepts of justice and fair play. Respondents were not given the opportunity to check the authenticity and
correctness of the evidence submitted on appeal. Thus, the Supreme Court held that the monetary claims of
respondents should be granted. It is a time-honored principle that if doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. It is the
rule in controversies between a laborer and his master that doubts reasonably arising from the evidence, or in
the interpretation of agreements and writing, should be resolved in the former’s favor. E.G. & I. Construction
Corporation and Edsel Galeos v. Ananias P. Sato, et al., G.R. No. 182070 ,February 16, 2011.
National Labor Relations Commission; jurisdiction. Respondents filed an illegal dismissal case against
Premier Allied and Contracting Services, Inc. (PACSI) and its President, the petitioner. PACSI and the
petitioner were held liable to pay the respondents separation pay and attorney’s fees. To execute this judgment,
NLRC sheriff issued a Notice of Sale of a property with TCT in the name of the petitioner and his wife.
Petitioner filed an action for prohibition and damages with prayer for the issuance of a temporary restraining
order (TRO) before the Regional Trial Court (RTC). The Court ruled that the RTC lacks jurisdiction to resolve
the matter. The Court has long recognized that regular courts have no jurisdiction to hear and decide questions
which arise from and are incidental to the enforcement of decisions, orders, or awards rendered in labor cases
by appropriate officers and tribunals of the Department of Labor and Employment. To hold otherwise is to
sanction splitting of jurisdiction which is obnoxious to the orderly administration of justice. The NLRC
Manual on the Execution of Judgment deals specifically with third-party claims in cases brought before that
body. It defines a third-party claim as one where a person, not a party to the case, asserts title to or right to the
possession of the property levied upon. It also sets out the procedure for the filing of a third-party claim, to wit:
“such person shall make an affidavit of his title thereto or right to the possession thereof, stating the grounds of
such right or title and shall file the same with the sheriff and copies thereof served upon the Labor Arbiter or
proper officer issuing the writ and upon the prevailing party.”  In the present case, there is no doubt that
petitioner’s complaint is a third-party claim within the cognizance of the NLRC. Petitioner may indeed be
considered a “third party” in relation to the property subject of the execution since there is no question that the
property belongs to petitioner and his wife, and not to the corporation. It can be said that the property belongs
to the conjugal partnership, and not to petitioner alone. At the very least, the Court can consider petitioner’s
wife to be a third party within the contemplation of the law. Paquito V. Ando v. Andresito Y. Campo, et
al.,  G.R. No. 184007, February 16, 2011.
Placement Fee; proof of excessive collection. Petitioner filed a complaint against respondent for collection of
excess placement fee defined in Article 34(a) of the Labor Code. Petitioner presented as her evidence a
promissory note reflecting excessive fees and testified as to the deductions made by her foreign employer. On
the other hand, respondent presented an acknowledgment receipt reflecting collection of an amount authorized
by POEA. The Court held that the pieces of evidence presented by petitioner are not substantial enough to
show that the respondent collected from her more than the allowable placement fee. In proceedings before
administrative and quasi-judicial agencies, the quantum of evidence required to establish a fact is substantial
evidence, or that level of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion. The Court gave more credence to respondent’s evidence consisting of the acknowledgment receipt
showing the amount paid by petitioner and received by respondent. A receipt is a written and signed
acknowledgment that money or goods have been delivered. Although a receipt is not conclusive evidence, an
exhaustive review of the records of the case fails to disclose any other evidence sufficient and strong enough to
overturn the acknowledgment embodied in respondent’s receipt as to the amount it actually received from
petitioner. Having failed to adduce sufficient rebuttal evidence, petitioner is bound by the contents of the
receipt issued by respondent. The subject receipt remains as the primary or best evidence. The promissory note
presented by petitioner cannot be considered as adequate evidence to show the excessive placement fee. It
must be emphasized that a promissory note is a solemn acknowledgment of a debt and a formal commitment to
repay it on the date and under the conditions agreed upon by the borrower and the lender. A person who signs
such an instrument is bound to honor it as a legitimate obligation duly assumed by him through the signature
he affixes thereto as a token of his good faith. The fact that respondent is not a lending company does not
preclude it from extending a loan to petitioner for her personal use. As for the deductions purportedly made by
petitioner’s foreign employer, the Court noted that there is no single piece of document or receipt showing that
deductions have in fact been made, or is there any proof that these deductions from the salary formed part of
the subject placement fee. To be sure, mere general allegations of payment of excessive placement fees cannot
be given merit as the charge of illegal exaction is considered a grave offense which could cause the suspension
or cancellation of the agency’s license.  They should be proven and substantiated by clear, credible, and
competent evidence. Avelina F. Sagun v. Sunace International Management Services, Inc.,  G.R. No. 179242,
February 23, 2011.
Procedural due process; notice requirements. Petitioner was dismissed by respondent-company due to
redundancy. However, it failed to provide the Department of Labor and Employment with a written notice
regarding petitioner’s termination. The notice of termination was also not properly served on the petitioner.
Further, a reading of the notice shows that respondent-company failed to properly inform the petitioner of the
grounds for his termination.  There are two aspects which characterize the concept of due process under the
Labor Code: one is substantive — whether the termination of employment was based on the provision of the
Labor Code or in accordance with the prevailing jurisprudence; the other is procedural — the manner in which
the dismissal was effected. There is a psychological effect or a stigma in immediately finding one’s self laid
off from work.  This is why our labor laws have provided for procedural due process.  While employers have
the right to terminate employees it can no longer sustain, our laws also recognize the employee’s right to be
properly informed of the impending termination of his employment. Though the failure of respondent-
company to comply with the notice requirements under the Labor Code did not affect the validity of the
dismissal, petitioner is however entitled to nominal damages in addition to his separation pay. Nelson A. Culili
v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.
Quitclaims; validity. Respondents were terminated from employment due to retrenchment implemented by
petitioner. Upon their dismissal, the respondents signed individual “Release Waiver and Quitclaim.” The Court
ruled that a waiver or quitclaim is a valid and binding agreement between the parties, provided that it
constitutes a credible and reasonable settlement, and that the one accomplishing it has done so voluntarily and
with a full understanding of its import. In this case, the respondents were sufficiently apprised of their rights
under the waivers and quitclaims that they signed. Each document contained the signatures of the union
president and its counsel, which proved that respondents were duly assisted when they signed the waivers and
quitclaims. Hence, the Court upheld the validity of the waivers and quitclaims signed by the respondents in this
case. Plastimer Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February
16, 2011.
Retrenchment; notice requirements. Petitioner issued a Memorandum informing all its employees of the
decision of the company’s Board of Directors to downsize and reorganize its business operations due to the
change of its corporate structure. Petitioner served the individual notice of termination on its employees on
May 14, 2004 or 30 days before the effective date of their termination on 13 June 2004, while it submitted the
notice of termination to the Department of Labor and Employment only on 26 May 2004, short of the one-
month prior notice requirement under Article 283 of the Labor Code. The Court held that petitioners’ failure to
comply with the one-month notice to the DOLE is only a procedural infirmity and does not render the
retrenchment illegal. When the dismissal is for a just cause, the absence of proper notice will not nullify the
dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for violation
of his statutory rights. Plastimer Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al.,  G.R. No.
183390, February 16, 2011.
Retrenchment; notice requirements. In 2004, the petitioner had to retrench and consequently terminate the
employment of the respondents. Respondents questioned the validity of the retrenchment, and alleged that
though petitioner’s financial statements in 2001 and 2002 reflected losses, it declared net income in 2003. The
Court ruled that the fact that there was a net income in 2003 does mean that there was no valid reason for the
retrenchment. Records showed that the net income of P6,185,707.05 in 2003 was not enough to allow
petitioners to recover the loss ofP52,904,297.88 which it suffered in 2002. Article 283 of the Labor Code
recognizes retrenchment to prevent losses as a right of the management to meet clear and continuing economic
threats or during periods of economic recession to prevent losses. There is no need for the employer to wait for
substantial losses to materialize before exercising ultimate and drastic option to prevent such losses. Plastimer
Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.
Unfair Labor Practice; right to self-organize. Respondent-company implemented a company-wide
reorganization which resulted in the abolition of petitioner’s position. Petitioner alleged that he was illegally
dismissed and that respondent-company is guilty of unfair labor practice because his functions were
outsourced to labor-only contractors.  The Supreme Court held unfair labor practice refers to acts that violate
the workers’ right to organize.  The prohibited acts are related to the workers’ right to self-organization and to
the observance of a CBA. Thus, an employer may be held liable for unfair labor practice only if it can be
shown that his acts interfere with his employees’ right to self-organization. Since there is no showing that the
respondent company’s implementation of the Right-Sizing Program was motivated by ill will, bad faith or
malice, or that it was aimed at interfering with its employees’ right to self-organization, there is no unfair labor
practice to speak of in this case. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al.  G.R.
No. 165381, February 9, 2011.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 208321               July 30, 2014

WESLEYAN UNIVERSITY PHILIPPINES, Petitioner, 

vs.
NOWELLA REYES, Respondent.

DECISION

VELASCO, JR., J.:

Nature of the Case

The issue in this petition boils down to the legality of respondent Nowella Reyes' termination as
University Treasurer of petitioner Wesleyan University - Philippines (WUP) on the ground of loss of
trust and confidence. Petitioner prays in this recourse that We reverse the February 28, 2013
Decision of the Court of Appeals (CA) in CA-G.R. SP No. 122536 which declared respondent's
termination illegal.

The Facts

On March 16, 2004, respondent Nowella Reyes was appointed as WUP's University Treasurer on
probationary basis. A little over a year after, she was appointed as full time University Treasurer.

On April 27, 2009, a new WUP Board of Trustees was constituted. Among its first acts was to
engage the services of Nepomuceno Suner & Associates Accounting Firm (External Auditor) to
investigate circulating rumors on alleged anomalies in the contracts entered into by petitioner and in
its finances.

Discovered following an audit were irregularities in the handling of petitioner’s finances, mainly, the
encashment by its Treasury Department of checks issued to WUP personnel, a practice purportedly
in violation of the imprest system of cash management, and the encashment of various crossed
checks payable to the University Treasurer by Chinabank despite management’s intention to
merelyhave the funds covered thereby transferred from one of petitioner’s bankaccounts to another.
The External Auditor’s report embodied the following findings and recommendations: 1

Treasury Department (Cash Management):

Findings:

1. It was noted that checks consisting of various checks payable to teachers, staffs and other
third parties had been the subject of encashment directly with the Treasury Department
 under the stewardship of Mrs. Nowella A. Reyes,the University Treasurer. This practice is a
clear violation of imprest system of cash management, hence, resulting to unsound
accounting practice. This laxity in cash management of those checks were paid as intended
for them. Recommendations:

For internal control reasons, the treasury should not accept any check encashment from its
daily collections. Checks are being issued for encashment with our depository bank for
security reasons. The mere acceptance of checks from the collections is tantamount to cash
disbursement out of collections.

Findings:

2. It was also noted that various checks payable to the Treasurer of WUP x x x had been
negotiated for encashment directly to China Bank – Cabanatuan Branch, while the intention
of the management for these checks were merely for fund transfer with the other account
maintained at China Bank. This practice is a violation not only in the practice of
accounting/cash custodianship but had been mingled with spurious elements. Unfortunately,
check vouchers relating to this exception are nowhere to be found or not on file.

Findings:

3. A crossed check payable to the Treasurer – [WUP] x x x had been negotiated for
encashment to China Bank – Cabanatuan Branch despite of the restriction indicated in the
face of the check. Unfortunately, the used check was no longer found on file.

As a result of said audit, petitioner served respondent a Show Cause Order and placed her
under preventive suspension.  The said Show Cause Order required her to explain the
2

following matters found by the External Auditors:

(a) your encashment of Php300,000.00 ofa crossed check you issued payable to
yourself (Chinabank Check No. 000873613 dated 26 November 2008) x x x;

(b) the encashment of various checks without any supporting vouchers x x x;

(c) unliquidated cash advances in the aggregate amount of Php9.7 million x x x. 3

On June 18, 2009, respondent submitted her Explanation. Following which, WUP’s Human
Resources Development Office (HRDO) conducted an investigation. Finding respondent’s
Explanation unsatisfactory, the HRDO, on July 2, 2009, submitted an Investigation Report  to the
4

University President containing its findings and recommending respondent’s dismissal as University
Treasurer.

Upon receipt of her notice of termination on July 9, 2009, respondent post-haste filed a complaint for
illegal dismissal with the Arbitration Branch of the National Labor Relations Commission. She
contended that her dismissal was illegal, void and unjust, for the following reasons:

First,her 60-day preventive suspension violated the Labor Code provisions prohibiting such
suspensions tolast for more than thirty (30) days. Thus, the fact that she was not reinstated to her
former position before the lapse of thirty (30) days, amounted to constructive
dismissal;  Second,there was a violation of her right to substantive and procedural due process, as
5
evidencedby petitioner’s failure to apply the pertinent due process provisions under its Administrative
and Personnel Policy Manual;  and6

Finally,the charges against her werebased on mere suspicion and speculations and unsupported by
evidence. 7

Petitioner, for its part, predicated its defense on the contention that respondent was a highly
confidential employee who handled significant amounts of money as University Treasurer and that
the irregularities attributed to her in the performance ofher duties justify her dismissal on the basis of
loss of trust and confidence.8

Petitioner also averred that the 60-day preventive suspension thus imposed does not necessarily
make suchsuspension void, inasmuch as the law merely requires that after a 30-day preventive
suspension, the affected employee shall automatically be reinstated. But in the case of respondent,
there was no need for her automatic reinstatement inasmuch as she was duly terminated within the
30-day period of her preventive suspension. Moreover, respondent was duly afforded her right to
9

due process since WUP substantially complied with the twin-notice rule.

Ruling of the Labor Arbiter

On December 15, 2010, Labor Arbiter Reynaldo V. Abdon rendered a Decision finding for
respondent. The dispositive portion of the Labor Arbiter Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered, DECLARING that complainant

Nowella Reyes x x x [was] illegally dismissed by respondent Wesleyan University Philippines.

Accordingly, respondent Wesleyan University Philippines through its President is hereby DIRECTED
to:

(1) Reinstate complainant Nowella Reyes to her former or equivalent position without loss of
seniority right;

(1.1) Since reinstatement is immediately executory, to render a Report of

Compliance to this Office within ten (10) days from receipt of this Decision.

(2) Pay complainant Reyes her backwages, from the time of her dismissal until
reinstatement, the present sum of which is P429,000.00;

(3) Pay complainant Reyes, her 13th month pay in the sum of P52,000; her shared (sic) in
related learning experience fee, P12,000.00; clothing allowance, P6,000.00; Honorarium as
member of standing committees,P4,000.00; and her vacation leave credits in the sum
of P17,862.59;

(4) Pay complainant Reyes, moral damages in the sum of P150,000.00, exemplary damages
in the amount of P100,000.00, and 10% attorney’s fees in the sum of P77,086.25;

xxxx

SO ORDERED. 10
The Labor Artbiter noted, as respondent has insisted, that the charges against the latter were based
on mere rumors and speculations. As observed too by the Labor Arbiter, petitioner itself was in the
wrong because it had no proper policies on its accounting and financial procedures and that the
encashment and accommodation of checks to personnel, especially after banking hours, had been
the practice of its previous and present administrations. Thus, it was unfair to put all the blame on
respondent without any evidence that her actionswere highly irregular, unfair or unjustified.
11

As regards petitioner’sfindings on the alterations in the Check Disbursement Voucher (CDV),

unliquidated cash advances and duplicate checks, the Labor Arbiter found and wrote:

Anent the alleged finding of the university that there was material alteration on the documents as
regards the Check Disbursement Voucher (CDV), for allegedly there was an absence of Board
Resolution entry in the CDV filed in the Accounting while the copy submitted by the Treasurer has a
Board Resolution entry as well as the word ATM on the payee portion on the photocopy as crossed
out while in the original it was not crossed out, respondent cannot summarily state that complainant
was at fault. The Human Resource should have conducted an in-depth investigation on this matter.
Unfortunately, respondent just followed the twin-notice rule, and did not conduct a thorough
administrative investigation in accordance with their own internal rules and policies in the Manual.
Consequently, this Office has serious doubt that such matter was the fault of the complainant for the
blame may fall on the accounting personnel who is handling the CDV.

With respect to the unliquidated cash advances, it is not likewise the fault of the complainant. She
pointed out that follow ups of the liquidation is [sic] being handled by the auditor, while respondent
claims that she was previously handling the same before it was transferred to Accounting Office in
August 2008. We see no evidence to prove that the liquidation is being handled by the complainant
prior to August 2008. Moreover, it is common practice thatthe Treasurer disburses the funds such as
cash advances but the liquidation must be done by the beneficiary of the fund, and the responsible
people who should follow up the liquidation is the accounting office.

With respect to the duplicate checks, the same were done by a syndicate or individuals not
connectedwith the University. The bank has already admitted responsibility in the encashment of
these checks and had returned the amounts to the respondent University, thus complainant has no
fault about this incident.
12

Ruling of the NLRC

Petitioner filed an appeal withthe National Labor Relations Commission (NLRC) which was granted
in the tribunal’s Decision dated July 11, 2011, declaring that respondentwas legally dismissed.
However, petitioner was ordered to pay respondent her proportionate 13th month pay, the monetary
value of her vacation leave, and attorney’s fees.

Adopting a stance entirely opposite to that of the Labor Arbiter, the NLRC held that respondent failed
to controvert and disprove the established charges of petitioner (as appellant-respondent) and
insteadconveniently put the blame on other departments for her inculpatory acts. The NLRC opined
that her termination was not motivated by the change of petitioner’s officers but by the University’s
goal to promote the economy and efficiency of its Treasury Department. 13

In net effect, the NLRC found petitioner’s contention of loss of trust and confidence in respondent
with sufficient basis. While respondent, so the NLRC notes, may not have been guilty ofwillful breach
of trust, the fact that she held a highly confidential position, and considering that anomalous
transactions transpired under her command responsibility, provided petitioner with ample ground
todistrust and dismiss her.  The NLRC explained:
14
In this case, complainant-appellee [herein respondent] may not have been guilty of willful breach of
trust. But as Treasurer of [WUP] who handles and supervises all monetary transactions in the
University and being a highly confidential employee at that, holding trust and confidence and after
considering the series of irregular and anomalous transactions that transpired under complainant-
appellee’s command responsibility, respondent has basis or ample reason to distrust complainant-
appellee. Thus, we cannot justly deny [WUP] the authority to dismiss complainant-appellee.

The principle of respondent (sic) superior or command responsibility may be cited as basis for the
termination of employment of managerial employees based on loss of trust and confidence. In the
Etcuban case (Ibid) the Supreme Court in upholding the validity of petitioner-employee’s dismissal
on the ground of loss of trust and confidence, ruled that even if the employee x x x had no actual and
direct participation in the alleged anomalies, his failure to detect any anomaly that would normally fall
withinthe scope of his work reflects his ineffectiveness and amounts to gross negligence and
incompetence which are likewise justifiable grounds for his irregularity, for what is material is that his
actuations were more than sufficient to sow in his employer the seed of mistrust and loss of
confidence.

As found by the External Auditor, complainant-appellee should have implemented an imprest system
of cash management in order to secure the indicated payees in those checks and they were paid of
the checks as intended for them. It appears that checks payable to teachers, staffs and other third
parties had beenthe subject of encashment directly with the Treasury Department x x x and this is an
unsound accounting practice.

Moreover, the External Auditors found that various checks payable to the Treasurer of Wesleyan
University has been negotiated for encashment directly to China Bank-Cabanatuan Branch while the
intention of the management for those checks weremerely for fund transfer with the other account
maintained at China Bank. That this practice violated accounting or cash custodianship and check
vouchers are nowhere to be found.

Further, the crossed check payable to the Treasurer (complainantappellee) in the amount
of P300,000.00 dated 26 November 2008 had been negotiated for encashment to China Bank –
Cabanatuan Branch despite of restriction indicated in the face of the check and that the used check
was no longer found on file. There is a need for a clear policy when to issue crossed-checks or
otherwise and the use of debit/credit memo to transfer one account to another with the same bank.
That these acts of violation of cash and check custodianship by complainant-appellee resulted in the
loss of respondent-appellant thus affecting the economy of the respondent-appellant institution.

In view of our finding that respondents-appellants (sic) has validly terminated complainant-appellee
the latter’s claim for damages and attorney’s fees lacks sufficient factual and legal basis.
Accordingly, the Labor Arbiter’s decision directing the reinstatement of complainantappellee with full
backwages ishereby vacated and set aside. 15

The NLRC denied respondent’s motion for reconsideration in a Resolution dated September 29,
2011.Therefrom, respondent went on Certiorari to the CA, inCA-G.R. SP No. 122536.

Ruling of the Court of Appeals

On February 28, 2013, the CA, through its assailed Decision,  found the NLRC’s ruling tainted with
16

grave abuse of discretion and reinstated the Decision of the Labor Arbiter. The fallo of the CA
Decision reads:
WHEREFORE, premises considered, the assailed Decision and Resolution of the National Labor
Relations Commission dated July 11, 2011 and September 29, 2011 are REVERSED and SET
ASIDE. The Decision of the Labor Arbiter dated December 15, 2010 is hereby REINSTATED,
subject to the modification that if reinstatement is no longer feasible, petitioner shall be awarded
separation pay equivalent to one month salary for every year ofservice reckoned from the time of
employment to the finality of this decision.
17

Holding that respondent’s termination was unjust, the CA, in virtual restoration of the findings and
conclusions of the Labor Arbiter, pointed out, among others, that: (1) respondent sufficiently
countered all charges against her; (2) it had been the practice of the previous and present
administrations of petitioner to encash and accommodate checks of WUP personnel; thus, it would
be unjust to penalize respondent for observing a practice already in place when she assumed office;
(3) the duty to liquidate cash advances is assigned to the internal auditor; (4) it has been established
that the encashments of spurious duplicate checks were perpetrated by individuals not connected
with WUP, and that the bank admitted responsibility therefor and had returned the amount involved
to petitioner; (5) there was no imputation of any violation of the University’s Administration and
Personnel Policy Manual; (6) while the acts complained of violated the imprest system of cash
management, there was no showing that the said system had been adopted and observed in the
school’s accounting and financial procedures; and (7) there was no showing that respondent had the
responsibility to implement changes in petitioner’s accounting system even if it were not in
accordance with the generally accepted principles of accounting. 18

Hence, the instant petition.

The Issues

For consideration herein are the following issues raised by petitioner:

1. Whether or not the CA over-reached its power of review under Rule 65 of the Rules of
Court when it reversed the judgment of the NLRC; and

2. Whether or not the CA erred in finding respondent illegally dismissed by petitioner on the
ground of loss of trust and confidence.

The Court’s Ruling

The petition is impressed with merit. The CA erred in reinstating the Labor Arbiter’s Decision and in
finding that respondent was illegally dismissed.

The CA’s power of review

We first resolve the procedural issue raised in this recourse. Petitioner contends that the CA over-
reached its power of review under Rule 65 when it substituted its own judgment over errors of
judgment that it found in the NLRC Decision, stressing that the province of a writ of certiorari is to
correct only errors of jurisdiction and not errors of judgment.

This contention is misplaced. It is settled that under Section 9 of Batas Pambansa Blg.129,  as
19

amended by Republic Act No. 7902,  the CA, pursuant to the exercise of its original jurisdiction over
20

petitions for certiorari, is specifically given the power to pass upon the evidence, if and when
necessary, to resolve factual issues. Sec. 9 clearly states:
The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and
perform any and all acts necessary to resolve factual issues raised in cases falling within its original
and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings.
xxx

Hence, the appellate court acted within its sound discretion when it re-evaluated the NLRC’s factual
findings and substituted the latter’s own judgment.

Loss of trust and confidence as a ground for termination

We now proceed to the substantive issue on the propriety of respondent’s dismissal due to loss of
trust and confidence.As provided in Art. 282(c) of Presidential Decree No. 442, otherwise known as
the Labor Code of the Philippines:

Article 282. Termination by employer.An employer may terminate an employment for any of the
following causes:

xxxx

c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;

We explained in M+W Zander Philippines, Inc. v. Enriquez  the requisites of a valid dismissal based
21

on loss of trust and confidence. As the case elucidates:

Article 282 (c) of the Labor Code allows an employer to terminate the services of an employee for
loss of trust and confidence. Certain guidelines must be observed for the employer to terminate an
employee for loss of trust and confidence. We held in General Bank and Trust Company v. Court of
Appeals, viz.:

[L]oss of confidence should not be simulated. It should not be used as a subterfuge for causes which
are improper, illegal, or unjustified. Loss of confidence may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary. It must be genuine, not a mere afterthought tojustify earlier
action taken in bad faith.

The first requisite for dismissal on the ground of loss of trust and confidence is that the employee
concerned must be one holding a position of trust and confidence.

There are two classes of positions of trust: managerial employees and fiduciary rank-and-file
employees.

Managerial employees are defined as those vested with the powers or prerogatives to lay down
management policies and to hire, transfer, suspend, lay-off, recall, discharge,assign or discipline
employees or effectively recommend such managerialactions. They refer to those whose primary
duty consists of the management of the establishment in which they are employed or of a
department or a subdivision thereof, and to other officers or members of the managerialstaff.
Officers and members of the managerial staff perform work directlyrelated to management policies
of their employer and customarily and regularly exercise discretion and independent judgment.

The second class or fiduciary rank-and-file employees consist of cashiers, auditors, property
custodians, etc., or those who, in the normal exercise of their functions, regularlyhandle significant
amounts of money or property. These employees, though rank-and-file, are routinely charged with
the care and custody of the employer’s money or property, and are thus classified as occupying
positions of trust and confidence. 22

xxxx

The second requisite of terminating an employee for loss of trust and confidence is that there must
be an act that would justify the loss of trust and confidence. To be a valid cause for dismissal, the
loss of confidence must be based on a willful breach of trust and founded on clearly established
facts.
23

To summarize, the first requisite is that the employee concerned must be one holding a position of
trust and confidence, thus, one who is either: (1) a managerial employee; or (2) a fiduciary rank-and-
file employee, who, in the normal exercise of his or her functions, regularly handles significant
amounts of money or property of the employer. The secondrequisite is that the loss of confidence
must be based on a willful breach of trust and founded on clearly established facts.

In Lima Land, Inc. v. Cuevas,  We discussed the difference between the criteria for determining the
24

validity of invoking loss of trust and confidence as a ground for terminating a managerial employee
on the one hand and a rank-and-file employee on the other. In the said case, We held that with
respect to rank-and-file personnel, loss of trust and confidence, as ground for valid
dismissal,requires proof of involvement in the alleged events in question, and that mere
uncorroborated assertions and accusations by the employer would not suffice. Withrespect to a
managerial employee, the mere existence of a basis for believing that such employee has breached
the trust of his employer would suffice for his dismissal. The following excerpts from Lima Land are
instructive:

As firmly entrenched in our jurisprudence, loss of trust and confidence, as a just cause for
termination of employment, is premised on the fact that an employee concerned holds a position
where greater trust is placed by management and from whom greater fidelity to duty is
correspondingly expected. This includes managerial personnel entrusted with confidence on delicate
matters, such as the custody, handling, or care and protection of the employer’s property.The
betrayal of this trust is the essence of the offense for which an employee is penalized.

It must be noted, however, that ina plethora of cases, this Court has distinguished the treatment of
managerial employees from that of rank-and-file personnel, insofar as the application of the doctrine
of loss of trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of
trust and confidence, as ground for valid dismissal, requires proof of involvement in the alleged
events in question, and that mere uncorroborated assertions and accusations by the employer will
not be sufficient. But as regards a managerial employee, the mere existence of a basis for believing
that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in
the case of managerial employees, proof beyond reasonable doubt is not required, it being sufficient
that there is some basis for such loss of confidence, such as when the employer has
reasonableground to believe that the employee concerned is responsible for the purported
misconduct, and the nature of his participation therein renders him unworthy of the trust and
confidence demanded of his position.

On the other hand, loss of trust and confidence as a ground of dismissal has never been intended to
afford an occasion for abuse because of its subjective nature. It should not be used as a subterfuge
for causes which are illegal, improper, and unjustified. It must be genuine, not a mere afterthought
intended to justify an earlier action taken in bad faith. Let it not be forgotten that what is at stake is
the means of livelihood, the name, and the reputation of the employee. To countenance an arbitrary
exercise of that prerogative is to negate the employee’s constitutional right to security of tenure.25

Respondent’s employment classification is irrelevant in light of her proven willful breach

There is no doubt that respondent held a position of trust; thus, greater fidelity is expected of her.
She was not an ordinary rank-and-file employee but an employee occupying a very sensitive
position. As University Treasurer, she handled and supervised all monetary transactions and was
the highest custodian of funds belonging to WUP.  To be sure, in the normal exercise of her
26

functions, she regularly handled significant amounts of money of her employer and managed a
critical department.

The presence of the first requisite iscertain. So is as regards the second requisite. Indeed, the Court
finds that petitioner adequately proved respondent’s dismissal was for a just cause, based on a
willful breach of trust and founded on clearly established facts as required by jurisprudence. At the
end of the day, the question of whether she was a managerial or rank-andfile employee does not
matter in this case because not only is there basis for believing that she breached the trust of her
employer, her involvement in the irregularities attending to petitioner’sfinances has also been
proved.

To recall, petitioner, per its account, allegedly lost trust and confidence in respondent owing to any
or an interplay of the following events: (1) she encashed a check payable to the University Treasurer
in the amount of three hundred thousand pesos (PhP 300,000); (2) she encashed crossed checks
payable to the University Treasurer, when the intention of management in this regard was to merely
transfer funds from one of petitioner’s accounts to another in the same bank; (3) she allowed the
Treasury Department to encash the checks issued to WUP personnel rather than requiring the latter
to have said checks encashed by the bank, in violation of the imprest system of accounting; (4) she
caused the disbursement of checks without supporting check vouchers; (5) there were unliquidated
cash advances; and (6) spurious duplicate checks bearing her signature were encashed causing
damage to petitioner.

We disagree with the CA’s finding that respondent has sufficiently countered all inculpatory
allegations and accusations against her. On the contrary, We find that here, there was anadmitted,
actual and real breach of duty committed by respondent, which translates into a breach of trust and
confidence in her. For perspective, respondent’s explanation as to the charges against her is as
follows:

1. That the alleged crossed check issued by her payable to THE TREASURER – WUP was
done in the exercise of her duty and function as such, and not with her name and not to
herself and personal favor, and that said check had been prepared passing through the
usual system; 2. That the University heads were the beneficiaries of said amount who
strongly requested that their love giftbe given, hence, the encashment;

3. That the amount of the check was properly disposed of as evidenced by the document
bearing the signatures of recipients;

4. That the Office to pointto if vouchers and supporting documents will have to be checked
concerning payments made is the Accounting Office;

5. That cash advances to various University personnel pass through her office in the
exercise of her duties assuch but the office who follow up the liquidation of payments
received is the Office of the University Auditor;
 6. That respondent Reyes adopted her reply on the show-cause order in the investigation
previously conducted by Dr. Jeremias Garcia about the duplicated checks alleging among
others:

a) She and her staff confirmed that only the checks issued to General Capulong and
Leodigario David were encashed by the University Teller;

b) The check issued to Norma de Jesus was encashed by the Pick-up Chinabank
Teller on December 5, 2008 while collecting deposits from the University with the
assistance of the University teller;

c) That the check issued to Mercedes was not encashed with the University teller but
with WEMCOOP;

d) As to the encashment and accommodation of checks to personnel, it has been the

practice of previousand present administration moreso when employees cannot
anymore go to Chinabank to transact business as it is mostly beyond banking hours
when checks are ready for disbursement;

e) That Respondent’s department has no control over fraudulent transactions done

outside the University, that it is the Bank’s duty to protect its clients as tothe proper
procedures to secure our account;

f) That the computer system program of the University’s depository bank has very
limited capabilities to detect fraudulent entries;

g) That the signature verifier also had been remiss in carefully checking the
authenticity ofprevious signatories. 27

a. Respondent’s encashment of checks

As it were, respondent did not deny, in fact admitted, the encashment of the three hundred thousand
peso (PhP 300,000) crossed check payable to the University Treasurer which covered the total
amount of the "love gift" for administrative and academic officials of WUP. Neither did she deny the
fact that the Treasury Department encashed checks issued to WUP personnel rather than requiring
them to have the checks encashed by the bank. Instead, she explained that the beneficiaries of the
amounts strongly requested that their love gifts be given in cash, hence the encashment of the PhP
300,000 crossed check and, thereafter, the accommodation and encashment of their checks directly
by the Treasury Department. Moreover, she submitted a document bearing the signatures of the
recipients of the "love gift" as proof that the amount was disposed properly.  She further insisted that
28

this was the usual practice of the University and that she merely accommodated the requests of
WUP personnel especially when Chinabank was already closed.

Jurisprudence has pronounced that the crossing of a check means that the check may not be
encashed but only deposited in the bank.  As Treasurer, respondent knew or is at least expected to
29

be aware of and abide by this basic banking practice and commercial custom. Clearly, the issuance
of a crossed check reflects management’s intention to safeguard the funds covered thereby, its
special instruction to have the same deposited to another account and its restriction on its
encashment.
Here, respondent, as aptly detailed inthe auditor’s report, disregarded management’s intentions and
ignored the measures in place to secure the handling of WUP’s funds. By encashing the crossed
checks, respondent put the funds covered thereby under the riskof being lost, stolen, co-mingled
with other funds or spent for other purposes. Furthermore, the accommodation and encashment by
the Treasury Department of checks issued to WUP personnel were highly irregular. First, WUP, not
being a bank, had no business encashing the checks of its personnel.  More importantly, in
30

encashing the said checks, the Treasury Department made disbursements contrary to the wishes
ofmanagement because, in issuing said checks, management has madeclear its intention that
monies therefor would be sourced from petitioner’s deposit with Chinabank, under a specific
account, and not from the cash available in the Treasury Department.

That the encashment of crossed checks and payment of checks directly to WUP personnel had been
the practice of the previous and present administration of petitioner is of no moment. To Our mind,
this was simply respondent’s convenient excuse, a poorlydisguised afterthought, when her
unbecoming carelessness in managing WUP’s finances was exposed. Moreover, the prevalence of
this practice could have been contained if only respondent consistently observed the regular
procedure for encashing crossed checks and properly handled requests for accommodation of
checks issued to the WUP personnel.

b. Unliquidated cash advances

On the matter of unliquidated cash advances in the aggregate amount of nine million seven hundred
thousand pesos (PhP 9,700,000), respondent explained that while it was true that cash advances to
WUP personnel passed through her office in the exercise of her duties as University Treasurer, the
office that follows up the liquidation of advances received is the office of the University
Auditor.  However, granting that the responsibility of handling the liquidation of cash advances is no
31

longer lodged in her office, there is proof showing that before the Treasury Department was relieved
of said responsibility, the total unliquidated cash advances was even bigger, amounting to eleven
million five hundred thirty-three thousand two hundred thirty pesos and thirty-seven centavos (PhP
11,533,230.37). There is nothing in the records before us showing that respondent denied the
following findings in the Investigation Report of the WUP’s Human Resource Development Office
(HRDO)on this matter, to wit:

In the matter of unliquidated cash advances in the aggregate amount of Php9.7million as found by
the External Auditors, respondent’s contention was that cash advances tovarious University
personnel pass through her office in the exercise of her duties as such but the office who follows up
the liquidation of payments received is the Office of the University Auditor.

On the inquiry done x x x of the Internal Auditor, Treasury and Accounting officer on July 1, 2009, it
was found out that the responsibility of handling cash advances and liquidation report was
transferred from Treasury Office to Accounting Office on August 2008, when Ms. Luzviminda Torres,
the personnel handling the same detailed at the Treasury Office went on leave. It was transferred to
Ms. Julieta Mateo. What was surprising was that as per certification and summary submitted by Ms.
Mateo, the amount of unliquidated cash advances previous to August 2008, when the same was
under the responsibility of the Treasury Office, was even bigger with the total amount of ELEVEN
MILLION FIVE HUNDRED THIRTY THREE THOUSAND, TWO HUNDRED THIRTY PESOS AND
THIRTY SEVEN CENTAVOS (Attached as Annex "G")

Even if there is truth in the contention of herein Respondent that she was no longer the one in
charge of the liquidation proceedings, the same would not absolve her from gross negligence of
duties. The fact that the said function was with her office until August 2008, with unliquidated cash
advances even bigger, still showed that she reneged in her duties which she had overlooked for so
long. She now mistakenly points the responsibility to the Office of the University Auditor. These
informations are enough to be considered as Respondent’s acts constitutive of breach of trust and
confidence.32

xxx

c. Other irregularities inrespondent’s performance

In all, We find the Investigation Report of the HRDO a credible, extensive and thorough account of
respondent’s involvementin incidents which are sufficient grounds for petitioner’s loss of trust and
confidence in her, to wit:

Respondent Nowella C. Reyes has committed breach of trust and confidence in the conduct of her
office.

In her answer, Respondent admitted the encashment of the crossed check with the defense that the
same was done in the performance of her duty, not for her personal use but because of the request
of University heads who wanted their love gifts begiven. She alsoadmitted habitual encashment of
checks issued by the University to its personnel on the basis of practice of previous administration.

The charge against Respondent of the act of improper encashment of a check, which aside from
being irregular is clearly violative of imprest system of cash management. Moreover, the same being
a crossed check, should not be negotiated for encashment to Chinabank – Cabanatuan Branch
because of the restriction indicated on its face, which Mrs. Reyes, by reason of her office knew very
well.

During the investigation conducted, it was revealed that the check disbursement voucher attached
by Respondent on her answer to justify the regularity of its issuance and eventual encashment was
not exactly the same as the one filed at the Accounting Office. It showed that the photocopy of the
original CDV which was attached by Respondent (attached as Annex "E"of this report) bear some
material alterations, namely:

1. The absence of entry of the Board Resolution which was reflected as a sort of inquiry by
the Internal Auditor, and which at present was left blank on the original, as compared to the
photocopy submitted by respondent bearing an entry of the Board Resolution number;

2. The word ATM on the payee portion of the CDV in the original as compared to the
photocopy wherein the entry ATM was crossed out.

During a discussion with the external auditors, it was categorically stated by them that during the
courseof external audit, said document was inexistent in the records presented by the Accounting
and Treasurer’s Offices. The production of the photocopy by Respondent already altered only after
the suspension was effected cast doubt on the regularity of its issuance, negating her otherwise
claim. Another significant observation was that the original copy of CDV (attached as Annex "F" of
this report) and corresponding signatures of administrative heads who received payments showed
folded marks halfways, with the fastener holes unmatched, showing that those two documents were
not really filed together, as regularly done, and the same were not filed in the regular course and
must have been kept previously on a different manner in possession of person other than the office
which must file the same.

xxxx
On the last charge in the show cause order specifically the existence of duplicate checks in the
account of the University amounting to Php 1.050 Million, included in Respondent’s defenses were
that among the checks duplicated, only two of them were encashed with the University Teller, and
the check originally named to Norma de Jesus as payee was paid by the pick-up teller only through
the assistance of the University teller.

Again, Respondent’s defense were void of truth and merit. The act of encashing checks issued by
the Treasury Office, clearly violative of imprest system of cash management which Mrs. Reyes by
reason of her office knew very well, showed that Respondent directly reneged in her duty to observe
economic security measures.

As found on the documents attachedto the Investigation report of Dr. Garcia which had been
expressly adopted by herein respondent in her answer is an Affidavit of Norma de Jesus stating that
she actually encashed the check with the personnel of the Treasury Office particularly Shirley
Punay, who gave her the amountequivalent days after the check was handed to the Treasury office.

However noble the intention of herein Respondent in helping her fellow workers in the University by
her acts of accommodation by encashing their checks directly withthe Treasury Office when
Chinabank was already closed, the same still reneged in her duty to protect the economic security of
the University. An act of misconduct which caused [sic]33

An employer cannot be compelled toretain an employee who is guilty of acts inimical to the interests
of the employer. A company has the right to dismiss its employees if only as a measure of self-
protection. This is all the more true in the case of supervisors or personnel occupying positions of
responsibility.  In this case, let it be remembered that respondent was not an ordinary rank-and-file
34

employee as she was no less the Treasurer who was in charge of the coffers of the University. It
would be oppressive to require petitioner to retain in their management an officer who has admitted
to knowingly and intentionally committing acts which jeopardized its finances and who was
untrustworthy in the handling and custody of University funds.

WHEREFORE, premises considered, we GRANTthe petition. The assailed Decision of the Court of
Appeals in CA-G.R. SP No. 122536 is, thus, SET ASIDE. The Decision of the National Labor
Relations Commission in NLRC RAB III Case No. 07-15131-09 is REINSTATED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Baguio
FIRST DIVISION

PURE BLUE INDUSTRIES, INC., 

                Petitioner,
G. R. No. 115879

April 16, 1997

      -versus- 

NATIONAL LABOR RELATIONS COMMISSION and 

EMPLOYEES  OF  PURE  BLUE  INDUSTRIES,  INC., 
represented by SABADO SANTOS, 
                                              Respondents. 

DECISION

KAPUNAN, J.:

Twice thwarted, petitioner Pure Blue Industries, Inc. comes to this Court
through a Petition for Certiorari under Rule 65 of the Revised Rules of Court
to nullify the resolutions issued by the NLRC dated 29 November 1993 and 8
April 1994, dismissing petitioner's appeal and denying its motion for
reconsideration, respectively.
Petitioner is a corporation engaged in the industrial laundry business. It
offers services such as garment washing, bleaching, pressing, dyeing and
finishing. [1] Employed with petitioner as machine operators, stone
preparators, utility helpers, drivers, duality controllers and retouchers were
the private respondents. [2]
In December 1990, private respondents demanded from petitioner the
payment of their thirteenth month pay, wage increases and other benefits
under existing laws. [3] Petitioner, however, failed to comply.
cralaw

On 27 December 1990, petitioner terminated private respondents' services.

Private respondents contended that their dismissal was brought about by
their decision to join a union [PSSLU] and enlist its assistance to obtain the
aforementioned claims. When petitioner got wind of private respondents'
plan, it allegedly forced them to sign employment contracts for casual and
contractual workers. Private respondents refused, hence, they were
summarily dismissed. [4]
Consequently, on 3 January 1991, private respondents filed a complaint with
the NLRC for illegal dismissal, underpayment of wages, non-payment of
overtime pay, night differential pay, premium for rest day and holiday,
service incentive leave and thirteenth month pay. [5]
For its part, petitioner indignantly denied that private respondents were
dismissed. Although it admitted its failure to pay their [private respondents']
thirteenth-month pay, petitioner claimed that it was financially hard up and
thus could not immediately comply with its obligation. Petitioner then
countered by filing a Complaint-Affidavit dated 28 January 1991 against
private respondents for abandonment. It alleged that private respondents
left their jobs on 22 December 1990 after petitioner failed to produce their
thirteenth month pay. [6]
On 25 November 1991, Labor Arbiter Manuel P. Asuncion rendered a
decision in favor of private respondents. He declared that:
The complainants' entitlement to the wage differentials and 13th month pay
is not disputed by the respondents. An exemption from the coverage of the
Wage Orders NCR No. 01 and NCR No. 01-A is pending action before the
Regional Tripartite Wage and Productivity Board, hence, this Office must
desist from acting on the issue. The 13th month pay is due for payment a
long time ago. Satisfaction must be enforced.
There are information on the record which dispute the claim of the
respondents that the complainants abandoned their job. For one, it defies
reason that a group of people would leave their job and then fight
adds (sic)to win them back. In abandonment, the intent to return to the job
is absent, but here, that was manifested as the desire of all. And they
submitted their grievances, almost immediately, after they were terminated.
They just allowed the new year celebration to pass and they filed the
complaint. The complaint-affidavit of the respondent was filed only as an
after thought (sic). It was prepared almost one month after the complaint
was filed with this Office. Its alleged filing is evendoubtful (sic), because,
there was no indication in the complaint-affidavit submitted that it was
received by any section in the Department. Indications are, that the
respondents terminated the complainants' employment and illegally at that.
There was no cause on the part of the complainants to deserve such action.
If there was any, the respondents should have notify (sic) the complainants
of the nature of their infractions, and, thereafter, conduct an investigation
on the matter. Obviously, this procedure was not undertaken. On the other
hand, it is something for thought that the dismissal came right after the
complainants made demands for the correct payment of their benefits. That
makes the dismissal all the more uncalled for.
WHEREFORE, the respondents are hereby ordered to reinstate the
complainants to their former positions, without loss of seniority rights and
other benefits and with full backwages from the date their salaries were
withheld, until they are actually reinstated. Respondents are further directed
to pay the complainants their 13th month benefits for 1990, the claim for
salary differential must be set aside because the respondents' application for
exemption is still pending action before the Regional Tripartite Wage and
Productivity Board. The rest of the complaints are dismissed for lack of
merit.
SO ORDERED. [7]
Petitioner's appeal to the NLRC was likewise unsuccessful. On 29 November
1993, the NLRC issued a resolution affirming the Labor Arbiter's decision and
dismissing petitioner's appeal for lack of merit. [8] 
Unwilling to concede, petitioner filed a motion for reconsideration but the
same was denied in the NLRC's resolution dated 8 April 1994.
Hence the present recourse. cralaw

Petitioner submits the following issues for resolution:

ISSUES
Hereunder are the issues that Petitioner submits to the Honorable Supreme
Court for consideration:
(a) Are the Private Respondents really dismissed from employment by the
Petitioner;
(b) Is the Decision dated November 25, 1991 [Annex "C"] rendered by Labor
Arbiter Manuel Asuncion, supported by evidence;
(c) Are the Resolutions dated November 29, 1993 [Annex "F"] and dated
April 7, 1994 [Annex "H"] issued by Public Respondent NLRC, supported by
evidence;
(d) Has Public Respondent NLRC committed grave abuse of discretion in
issuing said Resolutions [Annex "F" and Annex "H"]. [9]
Simply put, however, the real issue for our determination is whether or not
private respondents abandoned their employment as alleged by petitioner.
It is elementary that a special civil action for certiorari is limited to
correcting errors of jurisdiction or grave abuse of discretion. Accordingly,
borne out of this principle, is the time-tested rule that findings of facts of
administrative agencies [in this case the NLRC], when supported by
substantial evidence, are final and binding upon this Court. [10]
Whether or not an employee has abandoned his job is essentially a factual
issue [11] and in the case at bar, after a prudent study of the contentions of
both sides, we find no cogent reason to disturb the findings of the Labor
Arbiter which have been affirmed by the NLRC. cralaw

Petitioner admits that it is quite aware of the foregoing doctrines.

Nonetheless, it takes exception to the same by contending that the decision
of the Labor Arbiter and the NLRC [declaring unmeritorious petitioner's claim
of abandonment and instead finding private respondents to have been
illegally dismissed] was not supported by substantial evidence, being based
merely on speculations and erroneous findings of facts. It asserts that:
In order to support his patently erroneous findings of facts, Labor Arbiter
Manuel Asuncion engaged in purely baseless speculations by saying that,
"For one, it defies reason that a group of people would leave their job and
then fight odds to win them back." [12]

and concludes therefrom that the decision of the Labor Arbiter and
corresponding resolutions of the NLRC were rendered with grave abuse of
discretion.
Jurisprudence has established able judicial yardsticks to determine whether
or not an employee has abandoned his work. In Labor v. NLRC, [13] We held:
To constitute abandonment, two elements must concur: [1] the failure to
report for work or absence without valid or justifiable reason; and [2] a clear
intention to sever the employer-employee relationship, with the second
element as the more determinative factor and being manifested by some
overt acts. Mere absence is not sufficient. It is the employer who has the
burden of proof to show a deliberate and unjustified refusal of the employee
to resume his employment without any intention of returning. Gold City
failed to discharge this burden. It did not adduce any proof of some overt act
of the petitioners that clearly and unequivocally show their intention to
abandon their posts. On the contrary, the petitioners lost no time in filing
the case for illegal dismissal against them, taking only four days from the
time most of them were prevented from entering their work place on 22
August 1991 to the filing of the complaint on 26 August 1991. They cannot,
by any reasoning, be said to have abandoned their work, for as we have also
previously ruled, the filing by an employee of a complaint for illegal dismissal
is proof enough of his desire to return to work, thus negating the employer's
charge of abandonment. [Emphasis ours].

Similarly in Canete v. NLRC, [14] We ruled that:

We find it incongruous for petitioner to give up his job after receiving a mere
reprimand from his employer. What is more telling is that on August 19,
1992 or less than a month from the time he was dismissed from service,
petitioner immediately filed a complaint against his employer for illegal
dismissal with a prayer for reinstatement. Petitioner's acts negate any
inference that he abandoned his work. Abandonment is a matter of intention
and cannot be lightly inferred or legally presumed from certain equivocal
acts. To constitute abandonment, there must be clear proof of deliberate and
unjustified intent to discontinue the employment. The burden of proving
abandonment of work as a just cause for dismissal is on the employer.
Private respondent failed to discharge this burden.

Measured against these standard rules, We find no merit in petitioner's

assertions. The Labor Arbiter correctly applied the afore-quoted doctrines in
the case at bar and We agree with the latter's findings that private
respondents did not abandon their employment.
Petitioner tells its tale in this wise: private respondents left work on 19
December 1990 to pressure and "scare" petitioner into giving their thirteenth
month pay but after a dialogue with them, private respondents returned to
work on 21 December 1990. The following day, however, or on 22 December
1990 private respondents failed to come back to work. [15] Unfortunately,
petitioner's story is hardly convincing and utterly insufficient to prove the
elements of abandonment, particularly the second. We fail to discern from
such a general narration that private respondents indeed intended to leave
their jobs permanently. If private respondents' aim is to secure the benefits
due them from petitioner, abandonment would surely be an illogical and
impractical recourse, especially for simple laborers such as private
respondents. In Judric Canning Corp. v. Inciong, [16] this Court astutely
observed:
Moreover, there was no reason at all and none has been suggested by the
petitioner, for the private respondents to abandon their work. No employee
with a family to support, like the private respondents, would abandon their
work knowing fully well of the acute unemployment and underemployment
problem and the difficulty of looking for a means of livelihood. As the
Solicitor General stated: "To get a job is difficult; to run from it is foolhardy."

In addition, strongly contradicting petitioner's charge of abandonment, is the

immediate filing by the private respondents of a complaint against petitioner
clamoring for their jobs back. Thus, contrary to petitioner's allegations, the
Labor Arbiter's decision is based on plain facts and settled jurisprudence and
not on mere speculation.
We agree, likewise, with the keen observation of the Labor Arbiter that the
complaint for abandonment [17]   was filed by petitioner almost a month after
the complaint for illegal dismissal was filed by private respondents and that
it was not shown that said complaint was actually filed with and received by
the NLRC. Petitioner's alleged complaint, therefore, hardly bolsters its charge
of abandonment. cralaw

Petitioner then takes a different tack and argues that private respondents'
complaint for illegal dismissal was spurious as shown by the failure of private
respondents to specifically describe how they were dismissed. Says
petitioner:
If indeed they were dismissed, they could have alleged that they received a
letter of termination or at least were told not to report for work anymore.
The absence of such a material allegation could only mean that the
Petitioner never terminated their services. More importantly, the absence of
such a material allegation means that Private Respondents have not proved
with substantial evidence that they were in fact dismissed from
employment. [18]

Petitioner's contention is bereft of merit.

In their position paper, private respondents clearly explained how they were
dismissed:
6. Respondents called the attention of the complainants upon learning that
they had joined the PSSLU union, and forced them to sign a contract which
they prepared, for those contractual and casual workers, when complainants
refused to sign those papers, respondents got angry and terminated their
services on December 27, 1990. [19]

and in their Comment private respondents retorted that they "simply found
themselves out of (a) job as petitioner simply refused to let them work
again." [20]
Finally, in his Counter-Affidavit, Engr. Ireneo Leyritana, Jr., petitioner's Vice
President for Production, unwittingly revealed that:
9. On December 20, 1990, myself and the other officers of Pure Blue
Industries, Inc. had an open dialogue with all of them, during which, one of
our financiers got disgusted with their unreasonable approaches and told
them that they can leave if they want to. They took that statement
seriously.[21]

WHEREFORE, premises considered, the petition for certiorari is hereby

DISMISSED. As to the award of backwages, pursuant to Our ruling in
Bustamante v. NLRC, [22] private respondents are "entitled to their full
backwages, inclusive of allowances and other benefits or their monetary
equivalent, from the time their actual compensation was withheld from them
up to the time of their actual reinstatement."
SO ORDERED. cralaw

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 202158               September 25, 2013

ERIC ALVAREZ, substituted by ELIZABETH ALVAREZ-CASAREJOS, Petitioner, 

vs.
GOLDEN TRI BLOC, INC. and ENRIQUE LEE, Respondents.

DECISION

REYES, J.:

This is a petition for review1 from the Decision2 dated January17, 2012 of the Court of Appeals (CA)
in CA-G.R. SP No. 120968 dismissing the complaint for illegal dismissal tiled by petitioner Eric
Alvarez (petitioner) against respondents Golden Tri Bloc, Inc. (GTBI)and its owner, Enrique Lee.

The Facts

Sometime in November 1996, respondent GTBI hired the petitioner as a Service Crew in one of its
Dunkin Donuts franchise store in Antipolo City, Rizal. Six (6) months later, he attained the status of a
regular employee. He was thereafter promoted as Shift Leader and served as such for four (4)years.
Sometime in 2001, he was again promoted as Outlet Supervisor and was assigned to three (3)
Dunkin Donuts outlets located at San Roque, Cogeo and Super 8, Masinag, all in Antipolo City. He
received a monthly salary of P10,000.00.

On May 27, 2009, the petitioner reported for duty at around 12:30 in the afternoon at Dunkin Donuts,
Super 8, Masinag branch. Since his timecard was at the San Roque branch, he telephoned
Chastine3 Kaye Sambo (Sambo), shift leader, and requested her to "punch-in" his time card to reflect
that he is already on duty. She obliged. Roland Salindog (Salindog),the petitioner’s senior officer
called the Super 8, Masinag branch and verified that he has indeed reported for work.

The following day, however, the petitioner was informed by Sambo that both of them are suspended
and that he had to prepare an incident report regarding his time card.

In his incident report4 dated May 29, 2009, the petitioner admitted instructing Sambo to punch-in his
timecard. He explained that he went straight to and arrived at the Super 8, Masinag branch at
around 12:35 p.m. He inspected the stocks in the branch and taught a certain ‘Ritz’ on how to
prepare stocks acquisition report for June 2009. He owned up to his fault and stated that he should
have instead recorded the time of his arrival by writing on the time card and that he should have
brought it with him. He apologized and promised that a similar incident will not happen again.

On June 5, 2009, GTBI sent him a letter directing him to report to the main office for a dialogue on
June 9, 2009 failing which would amount to the waiver of his right to be heard and the management
may make a decision based only on his written explanation. 5 The dialogue pushed through. After
which the petitioner was placed on preventive suspension for 30 days without pay.

On June 23, 2009, GTBI notified the petitioner of its decision to terminate his employment effective
that day on the ground of loss of trust.6

Feeling aggrieved, the petitioner filed, on July 9, 2009, before the Labor Arbiter (LA), a complaint for
illegal dismissal with claims for sick leave pay, separation pay and moral and exemplary damages. 7

In his Position Paper 8, the petitioner averred that in his 12 years of service with the company, he
was never subjected to any disciplinary action. He argued that the ground relied upon for his
termination is not applicable to him because he is a supervisor and not a managerial employee. He
is not entrusted with the company’s money or property and that his duties pertained to the
preparation and submission of daily and monthly reports and organization of manpower schedules.
Even assuming that the ground applies to him, it still does not validate his termination because the
alleged offense is not related to his work duties. He asserted that he did not lie to or defraud GTBI
because he was, in truth, already on duty as verified by his senior officer, Salindog. He contended
that dismissal is not commensurate with the offense he committed considering his lengthy and
satisfactory service with the company as shown in his several rank promotions.

For its part, GTBI maintained that it had justifiable reason to lose trust in and dismiss the petitioner
for having committed a dishonest act punishable under the company’s Code of Conduct and
Discipline9 with termination from employment.10

GTBI further claimed that the petitioner’s dismissal from employment was attended with the requisite
procedural due process. He was notified of his offense and afforded the chance to explain his side.
His explanation was, however, found unacceptable and he was deemed unfit to hold the position of
Outlet Supervisor because his continued employment with the company will be detrimental to its
interests. The company’s decision to terminate him was likewise made known to him through a
notice sent on June 26, 2009.11

His monetary claims were debunked for lack of factual basis in as much as he is also not entitled to
moral and exemplary damages since his dismissal was valid and that it was carried out without bad
faith and fraud, nor was it attended with act oppressive to labor or contrary to morals, good customs
or public policy.12

Ruling of the Labor Arbiter

In a Decision13 dated April 29, 2010, the LA found the petitioner to have been illegally dismissed. The
LA held that the transgression imputed to the petitioner was not willful in character neither did not
imply any wrongful intent so as to bring it within the ambit of gross misconduct as a just cause for
termination. His wrongdoing was trivial in nature and a mere error in judgment since he acted in
good faith and had no intention to defraud GTBI. Also, the offense of dishonesty stated in GTBI’s
Code of Conduct and Discipline imply a conscious and deliberate wrongful intent to defraud, which is
not present in that ascribed to the petitioner. The LA conferred great weight to his length of service
with GTBI and his unblemished record and held that such considerations render dismissal a
disproportionate and harsh penalty to the mistake he committed. The LA further ruled that his
reinstatement is no longer a viable option and as such, an award of separation pay, in addition to
backwages, is proper computed atone (1) month salary for every year of service, with a fraction of
six (6)months being considered as one (1) whole year.14 Accordingly, the LA disposed as follows:

WHEREFORE, premises considered, the dismissal of the petitioner is hereby declared illegal.
Respondent Golden Tri Bloc, Inc. is hereby ordered to pay the petitioner the total amount of Two
Hundred Sixty Thousand Nine Hundred Twenty-Nine Pesos and 49/100 (P260,929.49) representing
his separation pay and full backwages.

All other claims are ordered dismissed for lack of merit.

SO ORDERED.15

Ruling of the NLRC

Dismayed, GTBI appealed to the National Labor Relations Commission (NLRC). To bolster its
position that the petitioner was not illegally dismissed, GTBI submitted records of infractions
committed by the petitioner before the incident in issue, viz:

(1) Tardiness for which he was given corrective counseling on October 25, 1997;

(2) Product shortages for which he was sternly warned on July12, 1999;

(3) Negligence resulting in disruption of business operations on July 29, 1999 for which he
was suspended for three (3) days;

(4) Habitual tardiness for which he was given another corrective counseling on January 9,
2000;

(5) Product shortages and inconsistencies in his inventory, for which he was reprimanded on
January 17, 2000;
 (6) Product shortages and inconsistencies in his inventory for which he was suspended for
one (1) week from January 26, 2000;

(7) Product shortages and inconsistencies in his inventory for which he was suspended for
three (3) days starting May 9, 2003;

(8) Dishonesty for causing a co-employee to punch-in his timecard for which he was
suspended for 45 days instead of dismissal on July 4, 2003, with a stern warning that a
repetition of the same offense shall be punished with dismissal;

(9) Habitual tardiness for which he was meted three (3) days suspension;

(10) Failure to punch-out for which he was suspended for three(3) days on May 16, 2004;

(11) Negligence resulting in product shortages causing disruption of business operations;

(12) Negligence resulting in product oversupply;

(13) Tardiness for which he was reprimanded; 16

(14) Dishonesty for causing a subordinate to punch in his timecard for which he was
dismissed from service effective June 23,2009.

GTBI explained that it found no need to present the foregoing records before the LA considering that
the petitioner’s last offense of dishonesty was sufficiently serious to justify his dismissal.

In its Decision17 dated December 15, 2010, the NLRC denied the appeal and held that the
petitioner’s act of requesting his subordinate to "punch-in" his timecard does not fall within the ambit
of serious misconduct because it was not willful in character. On the contrary, the petitioner acted in
good faith for reporting his arrival at the workplace. The records of petitioner’s previous infractions
were rejected by the NLRC since they were raised for the first time on appeal.

On motion for reconsideration, the NLRC reversed its initial ruling and gave credence to records of
the petitioner’s previous infractions and based thereon, found his dismissal valid. The NLRC applied
the "totality rule" which states that: "the totality of infractions or number of violations committed
during the period of employment shall be considered in determining the penalty to be imposed on
the erring employee. The offenses committed by him should not be taken singly and separately but
in their totality. Fitness for continued employment cannot be compartmentalized into tight little
cubicles of aspects of character, conduct and ability separate and independent of each other." 18 The
NLRC’s Resolution19 dated May 30,2011 disposed thus:

WHEREFORE, Our Decision dated December 15, 2010 is hereby vacated and set aside and a new
one rendered dismissing the instant Complaint for lack of merit.

SO ORDERED.20

On June 20, 2011, the petitioner passed away due to myocardialinfarction secondary to skin
tuberculosis. His sister, Elizabeth Alvarez Casajeros, survived him and she was thereby substituted
in his stead in the case.21

Ruling of the CA
The petitioner elevated the case to the CA in a special civil action for certiorari under Rule 65 of the
Rules of Court. In its Decision22 dated January 17, 2012, the CA upheld the NLRC’s conclusions
adding that it had the power to receive evidence of the petitioner’s previous infractions and based
thereon there is satisfactory basis for GTBI to impose on him the ultimate penalty of dismissal. The
CA disposed thus:

WHEREFORE, premises considered, the Petition is DENIED.  No pronouncement as to costs.

1âwphi1

SO ORDERED.23

The petitioner moved for reconsideration,24 but his motion was denied in CA’s Resolution 25 dated
May 18, 2012. Hence, the present recourse ascribing that the CA erred in upholding the evidence
belatedly submitted by GTBI and in ruling that the petitioner committed serious misconduct despite
the absence of a wrongful intent in the transgression that led to his dismissal.

The Court’s Ruling

The petition is bereft of merit.

At the outset, it bears emphasizing that the inconsistent factual findings and conclusions of the LA
and NLRC have already been addressed and settled by the CA when it affirmed the latter
tribunal.26 Hence, the Court, not being a trier of facts, ought to accord respect if not finality to the
findings of the CA especially when the same are amply substantiated by the records, 27 as in this
case.

Under Article 293 (formerly Article 279) of the Labor Code, 28 an employer shall not terminate the
services of an employee except only for a just or authorized cause. A dismissal not anchored on a
just or authorized cause is considered illegal and it entitles the employee to reinstatement or in
certain instances, separation pay in lieu thereof, as well as the payment of backwages.

Article 296(c) (formerly Article 279[c]) of the same Code29 codifies the just causes of termination,
among which is the employer’s loss of trust and confidence in its employee, the ground cited by
GTBI in dismissing the petitioner.

Loss of trust and confidence will validate an employee’s dismissal only upon compliance with certain
requirements, namely: (1) the employee concerned must be holding a position of trust and
confidence; and (2) there must be an act that would justify the loss of trust and confidence. 30

There are two classes of positions of trust. First, are the managerial employees whose primary duty
consists of the management of the establishment in which they are employed or of a department or
a subdivision thereof, and to other officers or members of the managerial staff. The second class
consists of the fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or
those who, in the normal exercise of their functions, regularly handle significant amounts of money
or property. These employees, though rank-and-file, are routinely charged with the care and custody
of the employer’s money or property, and are thus classified as occupying positions of trust and
confidence.31

It is undisputed that at the time of his dismissal, the petitioner was holding supervisory position after
having risen from the ranks since the start of his employment. His position is unmistakably one
imbued with trust and confidence as he is charged with the delicate task of overseeing the
operations and manpower of three stores owned by GTBI. As a supervisor, a high degree of honesty
and responsibility, as compared with ordinary rank-and-file employees, was required and expected
of him. The fact that he was not charged with the custody of the company’s money or property is in
consequential because he belongs to the first class of employees occupying position of trust and not
to the fiduciary rank and file class.

The second requirement for dismissal due to loss of trust and confidence is further qualified by
jurisprudence. The complained act must be work related such as would show the employee
concerned to be unfit to continue working for the employer and it must be based on a willful breach
of trust and founded on clearly established facts.32 The basis for the dismissal must be clearly and
convincingly established but proof beyond reasonable doubt is not necessary. 33

The analogous factual findings of the CA and the NLRC conform to the foregoing guidelines.  The 1âwphi1

punching of time card is undoubtedly work related. It signifies and records the commencement of
one’s work for the day. It is from that moment that an employee dons the cape of duties and
responsibilities attached to his position in the workplace. It is the reckoning point of the employer’s
corresponding obligation to him – to pay his salary and provide his occupational and welfare
protection or benefits. Any form of dishonesty with respect to time cards is thus no trivial matter
especially when it is carried out by a supervisory employee like the petitioner.

The transgression imputed to the petitioner was likewise attended with willfulness. It must be noted
that the petitioner misled the labor tribunals in claiming that during his entire 12-year stint with GTBI,
he was never meted with any disciplinary action. Records, however, disprove such claim. Additional
evidence were submitted by GTBI before the NLRC on appeal 34 and as correctly ruled by the CA, the
same may be allowed as the rules of evidence prevailing in courts of law or equity are not controlling
in labor proceedings.35

The said evidence shows at least three (3) different offenses – ranging from tardiness, negligence in
preparing inventory to dishonesty relating to his timecard – repeatedly committed by the petitioner
over the years and for which he has been constantly disciplined. On July 4, 2003, the petitioner was
found guilty of asking an employee to punch-in his time card for him. He was suspended for 45 days
with a warning that a recurrence of the same act will merit dismissal from service. 36 He, however,
disregarded this incident and the corrective intention of disciplinary action taken on him when he
repeated the same act on May 27, 2009.

A repetition of the same offense for which one has been previously disciplined and cautioned
evinces deliberateness and willful intent; it negates mere lapse or error in judgment. While it may be
assumed that the petitioner has become stubborn or has forgotten the 2003 episode, it should not
work to his advantage, because either cause demonstrates his in difference to GTBI’s policies on
employees’ conduct and discipline. Based on this consideration, taken together with his numerous
other offenses, GTBI had compelling reasons to conclude that the petitioner has become unfit to
remain in its employ.

In Merin v. MRC,37 the Court rules that in determining the sanction imposable to an employee, the
employer may consider and weight his other past infractions, thus:

The totality of infractions or the number of violations committed during the period of employment
shall be considered in determining the penalty to be imposed upon an erring employee. The
offenses committed by petitioner should not be taken singly and separately. Fitness for continued
employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct
and ability separate and independent of each other. While it may be true that petitioner was
penalized for his previous infractions, this does not and should not mean that his employment record
would be wiped clean of his infractions. After all, the record of an employee is a relevant
consideration in determining the penalty that should be meted out since an employee's past
misconduct and present behavior must be taken together in determining the proper imposable
penalty. Despite the sanctions imposed upon petitioner, he continued to commit misconduct and
exhibit undesirable behavior onboard. Indeed, the employer cannot be compelled to retain a
misbehaving employee, or one who is guilty of acts inimical to its interests. It has the right to dismiss
such an employee if only as a measure of self-protection. 38 (Citations omitted)

The NLRC and the CA were thus correct in applying the totality of infractions rule and in adjudging
that the petitioner's dismissal was grounded on a just and valid cause. The standards of procedural
due process were likewise observed in effecting the petitioner's dismissal. As ascertained by the
NLRC and CA, GTBI sent the petitioner a Notice to Explain dated May 27, 2009. On May 29, 2009,
he reported to GTBI's office and submitted his written explanation as shown in his letter bearing the
same date. On August 26, 2009, he received GTBI's Notice of Termination dated June 23, 2009. 39

WHEREFORE, premises considered, the petition is hereby DENIED. The Decision dated January
17, 2012 and Resolution dated May 18, 2012 of the Court of Appeals in CA-G.R. SP No. 120968 are
AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 198620               November 12, 2014

P.J. LHUILLIER, INC. and MARIO RAMON LUDENA, Petitioners, 

vs.
FLORDELIZ VELAYO, Respondent.

DECISION

REYES, J.:

Before this Court is a petition for review on certiorari  under Rule 45 of the Decision  dated June 30,
1 2

2011 of the Court of Appeals (CA) in CA-GR. SP No. 03069, affirming the finding of the National
Labor Relations Commission (NLRC) that respondent Flordeliz Velayo (respondent) was illegally
dismissed. The Resolution  dated September 14, 2011 denied the motion for reconsideration thereof.
3

The Facts

The essential antecedent facts are summarized in the assailed CA decision, to wit:

On June 13, 2003, (herein petitioner) PJ (CEBU) LHUILLIER, INC. (PJ LHUILLIER for brevity) hired
FLORDELIZ M. ABATAYO [sic] as Accounting Clerk at the LH-4, Cagayan de Oro City Branch with
a basic monthly salary ofP9,353.00. On February 9, 2008 appellant (herein private respondent) was
served with a Show Cause Memo by MARIO RAMON LUDEÑA, Area Operations Manager of PJ
Lhuillier (herein petitioner), ordering her to explain within 48 hours why no disciplinary action should
be taken against her for dishonesty, misappropriation, theft or embezz[le]ment of company funds
inviolation of Item 11, Rule V of the Company Code of Conduct. Thereafter, (s)he was placed under
preventive suspension from February 9 to March 8, 2008 while her case was under investigation.

The charges against the appellant (herein private respondent) were based on the Audit Findings
conducted on October 29, 2007, where the overage amount of P540.00 was not reported
immediately to the supervisor, not recorded atthe end of that day.

On February 11, 2008, complainant (herein private respondent) submitted her reply and admitted
that she was not able to report the overage to the supervisor since the latter was on leave on that
day and that she was still tracing the overage; and that the omission or failure to report immediately
the overage (sic) was just a simple mistake without intent to defraud her employer. On March 10,
2008, after the conduct of a formal investigation and after finding complainant’s (herein private
respondent’s) [explanations] without merit, PJ LHUILLIER (herein petitioner) terminated her
employment as per Notice of Termination on grounds of serious misconduct and breach of
trust. (Citation omitted)
4

On March 14, 2008, the respondent filed a complaint for illegal dismissal, separation pay and other
damages against P.J. Lhuillier, Inc. (PJLI) and Mario Ramon Ludeña, Area Operations Manager
(petitioners). On July 23, 2008, the Labor Arbiter (LA) rendered judgment, the dispositive portion of
which reads as follows:

WHEREFORE, in view of all the foregoing, judgment is hereby entered ordering the dismissal of the
instant complaint for lack of merit.

SO ORDERED. 5

The LA found that the respondent’s termination was valid and based not on a mere act of simple
negligence in the performance of her duties as cashier:

This is not a case of simple negligence as the facts show that complainant, instead of reporting the
matter immediately, had set aside the P540.00 for her personal use instead of reporting the overage
or recording it in the operating system of the company.

Complainant is not entitled to moral as well as exemplary damages for lack of basis. 6

On appeal, the NLRC in its Decision dated March 19, 2009 countermanded the LA, holding that the
respondent was illegally dismissed since the petitioners failed to prove a just cause of serious
misconduct and willful breach of trust:

In fine, the Labor Arbiter a quoutterly disregarded the rule on proportionality that has been observed
in a number of cases, that is, "the penalty imposed should be commensurate to the gravity of his
offense." x x x

xxxx

In the instant case, PJ LHUILLIER was not able to discharge the burden of proving that the dismissal
of the complainant was for valid or just causes of serious misconduct and willful breach of trust.
Thus, We disagree with the Labor Arbiter’s findings and conclusion that complainant was validly
dismissed from service.

xxxx
... Significantly, the complainant’s omission or procedural lapse did not cause any loss or damage to
the company. 7

Nonetheless, finding that the relations between the petitioners and the respondent have become
strained, the NLRC did not order the reinstatement of the respondent. Thus:

WHEREFORE, the instant appealis GRANTED. The assailed decision is hereby SET ASIDE and
REVERSED, and a new one entered declaring that complainant was ILLEGALLY DISMISSED.
Accordingly, respondent PJ (CEBU) LHUILLIER, INC. is hereby ORDERED:

(a) to pay complainant separation pay equivalent to one (1) month salary for every year of
service, a fraction of at least six (6) months being considered as one (1) whole year in lieu of
reinstatement due to strained relationship, computed from June13, 2003 up to the finality of
the promulgation of this judgment;

(b) to pay complainant FULL BACKWAGES in accordance with Bustamante vs. NLRC ruling
(265 SCRA 061); and

(c) to pay ten percent (10%) of the total money award as attorney’s fees.

SO ORDERED. 8

The NLRC subsequently denied the petitioners’ motion for reconsideration thereof. On July 31,2009,
the petitioners filed a petition for certiorariin the CA with prayer for issuance of a temporary
restraining order (TRO) and/or writ of preliminary injunction, invoking the following issues:

WHETHER OR NOT THE RESPONDENT [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHENIT DEVIATED FROM THE
FINDINGS OF FACTS OF THE HONORABLE LABOR ARBITER.

II

WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE ISSUANCE OF A TEMPORARY

RESTRAINING ORDER AND/OR WRIT OF PRELIMINARY INJUNCTION PENDING THE
RESOLUTION OF THE INSTANT PETITION. 9

The respondent filed her comment on August 19, 2009. On October 8, 2009, the petitioners filed an
urgent motion to resolve their petition for certiorari and prayer for TRO and/or writ of preliminary
injunction. On November 9, 2009, the CA denied the petitioners’ prayerfor TRO stating that they
have not shown that they stood to suffer grave and irreparable injury if the TRO was denied. The
remaining issue in the CA, then, was whether the NLRC acted with grave abuse of discretion
amounting to lack or excess of jurisdiction when it set aside the factual conclusion and ruling of the
LA. The CA ruled in the negative:

We concur with the NLRC in finding for private respondent. Time and again, the Supreme Court has
held that it is cruel and unjust to impose the drastic penalty of dismissal if not commensurate to the
gravity of the misdeed.
In employee termination disputes, the employer bears the burden of proving that the employee’s
dismissal was for just and valid cause. In the instant case, the evidence does not support the finding
of the Labor Arbiter that private respondent is guilty of serious misconduct.

In this jurisdiction, the Supreme Court has consistently defined misconduct as an improper or wrong
conduct, a transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, implies wrongful intent and not mere error of judgment. To be
a just cause for termination under Article 282 of the Labor Code of the Philippines, the misconduct
must be serious, that is, it must be of such grave and aggravated character and not merely trivial or
unimportant. However serious, such misconduct must nevertheless be in connection with the
employee’s work; the act complained of must be related to the performance of the employee’s duties
showing him to be unfit to continue working for the employer.

Private respondent’s lapse was not a "serious" one, let alone indicative of serious misconduct. In
fact, she (herein private respondent) admitted that she was not able to report the overage to the
supervisor since the latter was on leave on that day and that she was still tracing the overage; and
that the omission or failure to report immediately the overage was just a simple mistake without
intent to defraud her employer. As found by the NLRC, private respondent worked for petitioner for
almost six (6) years, and it is not shown that she committed any infraction of company rules during
her employment. In fact, private respondent was once awarded by petitioner due to her heroic act of
defending her Manager, Ms. Lilibeth Cortez, while resisting a hold-upper.

The settled rule is 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. These
findings are not infallible, though; when there is a showing that they were arrived at arbitrarily or in
disregard of the evidence on record, they may be examined by the courts. Hence, when factual
findings of the Labor Arbiter and the NLRC are contrary to each other, there is a necessity to review
the records to determine which conclusions are more conformable to the evidentiary facts. The case
before Us shows that the finding of the NLRC is supported by substantive evidence as compared to
the finding of the Labor Arbiter with respect to the issue of illegal dismissal. Moreover, in case of
doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of labor
laws and the Constitution.

Finally, it is a time-honored principle that although it is the prerogative of management to employ the
services of a person and likewise to discharge him, such is not without limitations and restrictions.
The dismissal of an employee must be done with just cause and without abuse of discretion. It must
not bedone in an arbitrary and despotic manner. To hold otherwise would render nugatory the
security of tenure clause enshrined in the Constitution. (Citations omitted and emphasis ours)
10

Invoking Article 279  of the Labor Code, the CA agreed with the NLRC that the respondent should
11

have been reinstated without loss of seniority rights and other privileges, with payment of her full
backwages, inclusive of allowances and other benefits or their monetary equivalent computed from
the time her compensation was withheld up to the time of actual reinstatement. However, with the
parties’ relations now strained, the CA conceded that the payment of a separation pay, along with
backwages as a separate and distinct relief, is an acceptable alternative to reinstatement. The CA
further awarded the respondent attorney’s fees since she was forced to litigate and incur expenses
to protecther rights and interests by reason of the unjustified acts of the petitioners.

Petition for Review in the Supreme Court

In this petition, the petitioners raise the following issues:

 I. WHETHER OR NOT THE MISAPPROPRIATION BY A PAWNSHOP PERSONNEL IN
THE AMOUNT OF [P]540.00, COUPLED WITH SUBSEQUENTDENIALS, AMOUNT TO A
SERIOUS MISCONDUCT IN OFFICE?

II. WHETHER OR NOT THE IMPOSITION OF THE PENALTY OF TERMINATION FROM

OFFICE [UPON] A PAWNSHOP PERSONNEL WHO MISAPPROPRIATED AN AMOUNT
OF P540.00 FROM THE COFFERS OF THE PAWNSHOP, AND WHO MADE
SUBSEQUENT DENIALS, IS CRUEL AND UNJUST? 12

The appellate court agreed with the NLRC that the respondent’s lapse was "just a simple mistake
without intent to defraud her employer;"  that the incident was neither serious norindicative of
13

serious misconduct; and that her dismissal was disproportionate to her offense. It accepted the
respondent’s explanation that her failure to report her cash overage of P540.00 on October 29, 2007
to the branch manager, who was her immediate superior, was because the latter was then on leave,
and that for days thereafter, she was hard-pressed in trying to trace and determine the cause
thereof. The CA noted that the respondent had worked for PJLI for almost six years without any
previous infractions of company rules, and that she was once commended for a heroic act of
defending her former branch manager, Ms. Lilibeth Cortez, during a branch holdup.

On the other hand, the petitioners strongly maintain that under Rule V(A)(11) of its Code of Conduct
on "Dishonesty, Misappropriation, Theft or Embezzlement of Company Funds or Property," the
respondent committed a "First Level Offense" which is punishable by outright dismissal. According to
the petitioners, the respondent committed the following acts which constitute dishonesty and serious
misconduct:

1. The respondent did not enter the discovered cash overage in the "operating system"
(computerized cash ledger) of the branch on October 29, 2007 notwithstanding that she was
fully aware of the company’s policy that such unexplained receipt should be recorded at the
end of the business day;

2. The respondent did not report the cash overage to her immediate superior, Branch
Manager Violette Grace Tuling (Tuling), upon the latter’s return from a leave ofabsence on
November 3, 2007. Neither did the respondent seek Tuling’s help concerning the matter, and
just averred that she was afraid to be scolded by Tuling;

3. The respondent deliberately lied about her cash overage after Tuling confronted her on
December 17, 2007;

4. Again, the respondent falsely denied the cash overage when the company auditor asked
her to explain how it happened; and

5. The respondent concocted a cover-up by claiming that a computer glitch occurred when
she was about to post the cash overage in the operating system. 14

Ruling of the Court

There is merit in the petition.

Breach of trust and confidence as ground for
dismissal - G.R. No. 181974
G.R. No. 181974

"x x x.

In the first assignment of error, Lynvil contends that the filing of a criminal case
before the Office of the Prosecutor is sufficient basis for a valid termination of
employment based on serious misconduct and/or loss of trust and confidence
relying onNasipit Lumber Company v. NLRC.[29]
Nasipit is about a security guard who was charged with qualified theft which
charge was dismissed by the Office of the Prosecutor. However, despite the
dismissal of the complaint, he was still terminated from his employment on the
ground of loss of confidence. We ruled that proof beyond reasonable doubt of an
employee's misconduct is not required when loss of confidence is the ground for
dismissal. It is sufficient if the employer has "some basis" to lose confidence or
that the employer has reasonable ground to believe or to entertain the moral
conviction that the employee concerned is responsible for the misconduct and that
the nature of his participation therein rendered him absolutely unworthy of the trust
and confidence demanded by his position.[30] It added that the dropping of the
qualified theft charges against the respondent is not binding upon a labor tribunal.
[31]

In Nicolas v. National Labor Relations Commission, [32]we held that a

criminal conviction is not necessary to find just cause for employment termination.
Otherwise stated, an employee’s acquittal in a criminal case, especially one that is
grounded on the existence of reasonable doubt, will not preclude a determination in
a labor case that he is guilty of acts inimical to the employer’s interests. [33] In the
reverse, the finding of probable cause is not followed by automatic adoption of
such finding by the labor tribunals.
In other words, whichever way the public prosecutor disposes of a
complaint, the finding does not bind the labor tribunal.
Thus, Lynvil cannot argue that since the Office of the Prosecutor found
probable cause for theft the Labor Arbiter must follow the finding as a valid reason
for the termination of respondents’ employment. The proof required for purposes
that differ from one and the other are likewise different.
 Nonetheless, even without reliance on the prosecutor’s finding, we find that
there was valid cause for respondents’ dismissal.
In illegal dismissal cases, the employer bears the burden of proving that the
termination was for a valid or authorized cause.[34]
Just cause is required for a valid dismissal. The Labor Code [35] provides that
an employer may terminate an employment based on fraud or willful breach of
the trust reposed on the employee. Such breach is considered willful if it is done
intentionally, knowingly, and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. It must also be based on substantial evidence and not on the
employer’s whims or caprices or suspicions otherwise, the employee would
eternally remain at the mercy of the employer. Loss of confidence must not be
indiscriminately used as a shield by the employer against a claim that the
dismissal of an employee was arbitrary. And, in order to constitute a just cause for
dismissal, the act complained of must be work-related and shows that the
employee concerned is unfit to continue working for the employer. In addition,
loss of confidence as a just cause for termination of employment is premised on
the fact that the employee concerned holds a position of responsibility, trust and
confidence or that the employee concerned is entrusted with confidence with
respect to delicate matters, such as the handling or care and protection of the
property and assets of the employer. The betrayal of this trust is the essence of
the offense for which an employee is penalized.[36]
Breach of trust is present in this case.
We agree with the ruling of the Labor Arbiter and Court of Appeals that the
quantity of tubs expected to be received was the same as that which was loaded.
However, what is material is the kind of fish loaded and then unloaded. Sameness
is likewise needed.
We cannot close our eyes to the positive and clear narration of facts of the
three witnesses to the commission of qualified theft. Jonathan Distajo, a crew
member of the Analyn VIII, stated in his letter addressed to De Borja [37] dated 8
August 1998, that while the vessel was traversing San Nicolas, Cavite, he saw a
small boat approach them. When the boat was next to their vessel, Alcovendas
went inside the stockroom while Sebullen pushed an estimated four tubs of fish
away from it. Ariola, on the other hand, served as the lookout and negotiator of
the transaction. Finally, Bañez and Calinao helped in putting the tubs in the small
boat. He further added that he received P800.00 as his share for the transaction.
Romanito Clarido, who was also on board the vessel, corroborated the narration
of Distajo on all accounts in his 25 August 1998 affidavit. [38] He added that
Alcovendas told him to keep silent about what happened on that day. Sealing
tight the credibility of the narration of theft is the affidavit [39] executed by Elorde
Bañez dated 3 May 1999. Bañez was one of the dismissed employees who actively
participated in the taking of the tubs. He clarified in the affidavit that the four
tubs taken out of the stockroom in fact contained fish taken from the eight tubs.
He further stated that Ariola told everyone in the vessel not to say anything and
instead file a labor case against the management. Clearly, we cannot fault Lynvil
and De Borja when it dismissed the employees.
The second to the fifth assignment of errors interconnect.
The nature of employment is defined in the Labor Code, thus:

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
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.
Lynvil contends that it cannot be guilty of illegal dismissal because the
private respondents were employed under a fixed-term contract which expired at
the end of the voyage. The pertinent provisions of the contract are:
xxxx

1. NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-

ayon sa patakarang “por viaje” na magmumula sa pagalis sa Navotas papunta
sa pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila;
xxxx
 1. NA ako ay nakipagkasundo na babayaran ang aking paglilingkod sa paraang
“por viaje” sa halagang P__________ isang biyahe ng kabuuang araw xxxx.[40]
Lynvil insists on the applicability of the case of Brent School,[41]  to wit:
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.

Contrarily, the private respondents contend that they became regular

employees by reason of their continuous hiring and performance of tasks
necessary and desirable in the usual trade and business of Lynvil.
Jurisprudence,[42] laid two conditions for the validity of a fixed-contract
agreement between the employer and employee:
First, 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

Second, 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.[43]

Textually, the provision that: “NA ako ay sumasang-ayon na maglingkod at

gumawa ng mga gawain sang-ayon sa patakarang “por viaje” na magmumula sa
pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa pondohan ng lantsa
sa Navotas, Metro Manila” is for a fixed period of employment. In the context,
however, of the facts that: (1) the respondents were doing tasks necessarily to
Lynvil’s fishing business with positions ranging from captain of the vessel
to bodegero; (2) after the end of a trip, they will again be hired for another trip
with new contracts; and (3) this arrangement continued for more than ten years, the
clear intention is to go around the security of tenure of the respondents as regular
employees. And respondents are so by the express provisions of the second
paragraph of Article 280, thus:
xxx 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 same set of circumstances indicate clearly enough that it was the need for a
continued source of income that forced the employees’ acceptance of the “por
viaje” provision.
Having found that respondents are regular employees who may be,
however, dismissed for cause as we have so found in this case, there is a need to
look into the procedural requirement of due process in Section 2, Rule XXIII, Book
V of the Rules Implementing the Labor Code. It is required that the employer
furnish the employee with two written notices: (1) a written notice served on the
employee specifying the ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his side; and (2) a
written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify
his termination.
From the records, there was only one written notice which required
respondents to explain within five (5) days why they should not be dismissed from
the service. Alcovendas was the only one who signed the receipt of the notice.
The others, as claimed by Lynvil, refused to sign. The other employees argue that
no notice was given to them. Despite the inconsistencies, what is clear is that no
final written notice or notices of termination were sent to the employees.
The twin requirements of notice and hearing constitute the elements of
[due] process in cases of employee's dismissal. The requirement of notice is
intended to inform the employee concerned of the employer's intent to dismiss
and the reason for the proposed dismissal. Upon the other hand, the requirement
of hearing affords the employee an opportunity to answer his employer's charges
against him and accordingly, to defend himself therefrom before dismissal is
effected.[44] Obviously, the second written notice, as indispensable as the first, is
intended to ensure the observance of due process.
Applying the rule to the facts at hand, we grant a monetary award of P50,000.00 as
nominal damages, this, pursuant to the fresh ruling of this Court in Culili v.
Eastern Communication Philippines, Inc.[45] Due to the failure of Lynvil to follow
the procedural requirement of two-notice rule, nominal damages are due to
respondents despite their dismissal for just cause.
Given the fact that their dismissal was for just cause, we cannot grant
backwages and separation pay to respondents. However, following the findings of
the Labor Arbiter who with the expertise presided over the proceedings below,
which findings were affirmed by the Court of Appeals, we grant the 13 thmonth pay
and salary differential of the dismissed employees.
x x x."

REQUIREMENTS FOR LAWFUL DISMISSAL: A JUST CAUSE

There are two basic requirements for a lawful dismissal “a just cause or authorized cause as
prescribed by law, and observance of due process.” The former comprises the substantive
requirement, and the latter constitutes the procedural requirement for a valid dismissal.

The Philippine Labor Code, in Article 283, enumerates the just (as differentiated from authorized)
causes for termination. One of them is fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative. This includes such acts as competing with the
employer, making clandestine profits, accepting bribes, as well as other acts that result in loss of trust
and confidence on the part of the employer. There is no question that fraud committed by an
employee against his employer is a just cause for dismissal, but loss of trust (and confidence) of the
employer in his employee requires further elaboration.
It has been held that the basic premise for loss of confidence as a just cause for dismissal is that the
employee concerned holds a position of trust and confidence, otherwise it is not a valid ground
(Quezon Electric Corp. vs. NLRC, 172 SCRA 88).

In another case, the observation was made that interpretation of the term “trust and confidence”
should be restricted to managerial employees (Marina Port Services vs. NLRC, 193 SCRA 420). This
seems to be the later trend. However, there are decisions that have considered this cause as it applies
to rank-and-file and to managerial employees, leading to a distinction between the two.

Thus the rule has been laid that in rank-and-file employees, loss of trust and confidence requires proof
of involvement in the events in question, and that mere-uncorroborated assertions and accusations of
the employer will not suffice (Midtown Ramada vs. NEWHRAIN, 159 SCRA 212).

But with respect to managerial employees proof beyond reasonable doubt is not required, it being
sufficient that there is some basis for such loss of confidence, or if the employer has reasonable
ground to believe or to entertain the moral conviction that the employee concerned is responsible for
the misconduct, and that the nature of his participation therein renders him unworthy of the trust and
confidence demanded by his position (Sajonas vs. NLRC, 183 SCRA 667; Citytrust Finance Corp. vs.
NLRC, 157 SCRA 87; Tabacalera Insurance Corp. vs. NLRC, 152 SCRA 667; Ricker vs. Ople, 155 SCRA
85; Villadolid vs. Inciong, 121 SCRA 205; Reynolds Phils., Inc. vs. Eslava, June 27, 1985).

Mere existence of a basis for believing that the employee has breached the trust of his employer is
sufficient, and does not require proof beyond reasonable doubt (Kwikway Engineering Works vs. NLRC,
195 SCRA536). In any event, loss of confidence as a ground for dismissal should not be simulated nor
used as a subterfuge. It may not be asserted in the face of overwhelming evidence to the contrary. It
must be genuine, not a mere afterthought to justify earlier action taken in bad faith (General Bank vs.
Court of Appeals; April 9, 1985).

Where dismissal for loss of confidence is based on suspected theft of company property on the part of
the employee, it remains a valid cause for dismissal even if the employee is subsequently acquitted
(Dole Phil. vs. NLRC, July 25, 1983) or his case is dropped by the fiscal for insufficient evidence.

The employee concerned cannot successfully seek reinstatement. Conviction in a criminal case is not
indispensable to warrant dismissal in these cases. The fact that the complaint is dropped by the fiscal
is not binding on a labor tribunal. It is sufficient that the employer have a basis for believing that the
employee breached the trust and confidence reposed in him (Sea-Land vs. NLRC, May 24, 1985).
Theft is not a basis for loss of confidence, nor is it a just cause for dismissal if the property involved is
of negligible value, and the worker concerned is a long-service employee (PAL vs. PALEA; Stanford
Microsystems vs. NLRC, January 28, 1988).