G.R. No.

124382           August 16, 1999

PASTOR DIONISIO V. AUSTRIA, petitioner,

vs.
HON. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), CEBU CITY, CENTRAL PHILIPPINE UNION
MISSION CORPORATION OF THE SEVENTH-DAY ADVENTISTS, ELDER HECTOR V. GAYARES, PASTORS
REUBEN MORALDE, OSCAR L. ALOLOR, WILLIAM U. DONATO, JOEL WALES, ELY SACAY, GIDEON BUHAT,
ISACHAR GARSULA, ELISEO DOBLE, PORFIRIO BALACY, DAVID RODRIGO, LORETO MAYPA, MR. RUFO
GASAPO, MR. EUFRONIO IBESATE, MRS. TESSIE BALACY, MR. ZOSIMO KARA-AN, and MR. ELEUTERIO
LOBITANA, respondents.

KAPUNAN, J.:

Subject of the instant petition for certiorari under Rule 65 of the Rules of Court is the Resolution 1 of public respondent
National Labor Relations Commission (the "NLRC"), rendered on 23 January 1996, in NLRC Case No. V-0120-93, entitled
"Pastor Dionisio V. Austria vs. Central Philippine Union Mission Corporation of Seventh Day Adventists, et al.," which
dismissed the case for illegal dismissal filed by the petitioner against private respondents for lack of
jurisdiction.1âwphi1.nêt

Private Respondent Central Philippine Union Mission Corporation of the Seventh-Day Adventists (hereinafter referred to
as the "SDA") is a religious corporation duly organized and existing under Philippine law and is represented in this case
by the other private respondents, officers of the SDA. Petitioner, on the other hand, was a Pastor of the SDA until 31
October 1991, when his services were terminated.

The records show that petitioner Pastor Dionisio V. Austria worked with the SDA for twenty eight (28) years from 1963 to
1991.2 He began his work with the SDA on 15 July 1963 as a literature evangelist, selling literature of the SDA over the
island of Negros. From then on, petitioner worked his way up the ladder and got promoted several times. In January,
1968, petitioner became the Assistant Publishing Director in the West Visayan Mission of the SDA. In July, 1972, he was
elevated to the position of Pastor in the West Visayan Mission covering the island of Panay, and the provinces of
Romblon and Guimaras. Petitioner held the same position up to 1988. Finally, in 1989, petitioner was promoted as District
Pastor of the Negros Mission of the SDA and was assigned at Sagay, Balintawak and Toboso, Negros Occidental, with
twelve (12) churches under his jurisdiction. In January, 1991, petitioner was transferred to Bacolod City. He held the
position of district pastor until his services were terminated on 31 October 1991.

On various occasions from August up to October, 1991, petitioner received several communications3 from Mr. Eufronio
Ibesate, the treasurer of the Negros Mission asking him to admit accountability and responsibility for the church tithes and
offerings collected by his wife, Mrs. Thelma Austria, in his district which amounted to P15,078.10, and to remit the same to
the Negros Mission.

In his written explanation dated 11 October 1991,4 petitioner reasoned out that he should not be made accountable for the
unremitted collections since it was private respondents Pastor Gideon Buhat and Mr. Eufronio Ibesate who authorized his
wife to collect the tithes and offerings since he was very sick to do the collecting at that time.

Thereafter, on 16 October 1991, at around 7:30 a.m., petitioner went to the office of Pastor Buhat, the president of the
Negros Mission. During said call, petitioner tried to persuade Pastor Buhat to convene the Executive Committee for the
purpose of settling the dispute between him and the private respondent, Pastor David Rodrigo. The dispute between
Pastor Rodrigo and petitioner arose from an incident in which petitioner assisted his friend, Danny Diamada, to collect
from Pastor Rodrigo the unpaid balance for the repair of the latter's motor vehicle which he failed to pay to Diamada.5 Due
to the assistance of petitioner in collecting Pastor Rodrigo's debt, the latter harbored ill-feelings against petitioner. When
news reached petitioner that Pastor Rodrigo was about to file a complaint against him with the Negros Mission, he
immediately proceeded to the office of Pastor Buhat on the date abovementioned and asked the latter to convene the
Executive Committee. Pastor Buhat denied the request of petitioner since some committee members were out of town
and there was no quorum. Thereafter, the two exchanged heated arguments. Petitioner then left the office of Pastor
Buhat. While on his way out, petitioner overheard Pastor Buhat saying, "Pastor daw inisog na ina iya (Pador you are
talking tough)."6 Irked by such remark, petitioner returned to the office of Pastor Buhat, and tried to overturn the latter's
table, though unsuccessfully, since it was heavy. Thereafter, petitioner banged the attaché case of Pastor Buhat on the
table, scattered the books in his office, and threw the phone.7 Fortunately, private respondents Pastors Yonilo Leopoldo
and Claudio Montaño were around and they pacified both Pastor Buhat and petitioner.

1
On 17 October 1991, petitioner received a letter8 inviting him and his wife to attend the Executive Committee meeting at
the Negros Mission Conference Room on 21 October 1991, at nine in the morning. To be discussed in the meeting were
the non-remittance of church collection and the events that transpired on 16 October 1991. A fact-finding committee was
created to investigate petitioner. For two (2) days, from October 21 and 22, the fact-finding committee conducted an
investigation of petitioner. Sensing that the result of the investigation might be one-sided, petitioner immediately wrote
Pastor Rueben Moralde, president of the SDA and chairman of the fact-finding committee, requesting that certain
members of the fact-finding committee be excluded in the investigation and resolution of the case. 9 Out of the six (6)
members requested to inhibit themselves from the investigation and decision-making, only two (2) were actually excluded,
namely: Pastor Buhat and Pastor Rodrigo. Subsequently, on 29 October 1991, petitioner received a letter of
dismissal10 citing misappropriation of denominational funds, willful breach of trust, serious misconduct, gross and habitual
neglect of duties, and commission of an offense against the person of employer's duly authorized representative, as
grounds for the termination of his services.

Reacting against the adverse decision of the SDA, petitioner filed a complaint11 on 14 November 1991, before the Labor
Arbiter for illegal dismissal against the SDA and its officers and prayed for reinstatement with backwages and benefits,
moral and exemplary damages and other labor law benefits.

On 15 February 1993, Labor Arbiter Cesar D. Sideño rendered a decision in favor of petitioner, the dispositive portion of
which reads thus:

WHEREFORE, PREMISES CONSIDERED, respondents CENTRAL PHILIPPINE UNION MISSION

CORPORATION OF THE SEVENTH-DAY ADVENTISTS (CPUMCSDA) and its officers, respondents herein, are
hereby ordered to immediately reinstate complainant Pastor Dionisio Austria to his former position as Pastor of
Brgy. Taculing, Progreso and Banago, Bacolod City, without loss of seniority and other rights and backwages in
the amount of ONE HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED THIRTY PESOS (P115,830.00)
without deductions and qualificatioons.

Respondent CPUMCSDA is further ordered to pay complainant the following:

A. 13th month pay — P 21,060.00

B. Allowance — P 4,770.83

C. Service Incentive

Leave Pay — P 3,461.85

D. Moral Damages — P 50,000.00

E. Exemplary

Damages — P 25,000.00

F. Attorney's Fee — P 22,012.27

SO ORDERED.12

The SDA, through its officers, appealed the decision of the Labor Arbiter to the National Labor Labor Relations
Commission, Fourth Division, Cebu City. In a decision, dated 26 August 1994, the NLRC vacated the findings of the Labor
Arbiter. The decretal portion of the NLRC decision states:

WHEREFORE, the Decision appealed from is hereby VACATED and a new one ENTERED dismissing this case
for want of merit.

SO ORDERED.13

Petitioner filed a motion for reconsideration of the above-named decision. On 18 July 1995, the NLRC issued a Resolution
reversing its original decision. The dispositive portion of the resolution reads:

2
 WHEREFORE, premises considered, Our decision dated August 26, 1994 is VACATED and the decision of the
Labor Arbiter dated February 15, 1993 is REINSTATED.

SO ORDERED.14

In view of the reversal of the original decision of the NLRC, the SDA filed a motion for reconsideration of the above
resolution. Notable in the motion for reconsideration filed by private respondents is their invocation, for the first time on
appeal, that the Labor Arbiter has no jurisdiction over the complaint filed by petitioner due to the constitutional provision
on the separation of church and state since the case allegedly involved an ecclesiastical affair to which the State cannot
interfere.

The NLRC, without ruling on the merits of the case, reversed itself once again, sustained the argument posed by private
respondents and, accordingly, dismissed the complaint of petitioner. The dispositive portion of the NLRC resolution dated
23 January 1996, subject of the present petition, is as follows:

WHEREFORE, in view of all the foregoing, the instant motion for reconsideration is hereby granted. Accordingly,
this case is hereby DISMISSED for lack of jurisdiction.

SO ORDERED.15

Hence, the recourse to this Court by petitioner.

After the filing of the petition, the Court ordered the Office of the Solicitor General (the "OSG") to file its comment on
behalf of public respondent NLRC. Interestingly, the OSG filed a manifestation and motion in lieu of comment 16 setting
forth its stand that it cannot sustain the resolution of the NLRC. In its manifestation, the OSG submits that the termination
of petitioner from his employment may be questioned before the NLRC as the same is secular in nature, not
ecclesiastical. After the submission of memoranda of all the parties, the case was submitted for decision.

The issues to be resolved in this petition are:

1) Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner
against the SDA;

2) Whether or not the termination of the services of petitioner is an ecclesiastical affair, and, as such, involves the
separation of church and state; and

3) Whether or not such termination is valid.

The first two issues shall be resolved jointly, since they are related.

Private respondents contend that by virtue of the doctrine of separation of church and state, the Labor Arbiter and the
NLRC have no jurisdiction to entertain the complaint filed by petitioner. Since the matter at bar allegedly involves the
discipline of a religious minister, it is to be considered a purely ecclesiastical affair to which the State has no right to
interfere.

The contention of private respondents deserves scant consideration. The principle of separation of church and state finds
no application in this case.

The rationale of the principle of the separation of church and state is summed up in the familiar saying, "Strong fences
make good-neighbors."17 The idea advocated by this principle is to delineate the boundaries between the two institutions
and thus avoid encroachments by one against the other because of a misunderstanding of the limits of their respective
exclusive jurisdictions.18 The demarcation line calls on the entities to "render therefore unto Ceasar the things that are
Ceasar's and unto God the things that are God's."19 While the state is prohibited from interfering in purely ecclesiastical
affairs, the Church is likewise barred from meddling in purely secular matters.20

The case at bar does not concern an ecclesiastical or purely religious affair as to bar the State from taking cognizance of
the same. An ecclesiastical affair is "one that concerns doctrine, creed, or form of worship of the church, or the adoption
and enforcement within a religious association of needful laws and regulations for the government of the membership, and
the power of excluding from such associations those deemed unworthy of membership. 21 Based on this definition, an

3
ecclesiastical affair involves the relationship between the church and its members and relate to matters of faith, religious
doctrines, worship and governance of the congregation. To be concrete, examples of this so-called ecclesiastical affairs to
which the State cannot meddle are proceedings for excommunication, ordinations of religious ministers, administration of
sacraments and other activities with attached religious significance. The case at bar does not even remotely concern any
of the abovecited examples. While the matter at hand relates to the church and its religious minister it does not ipso
facto give the case a religious significance. Simply stated, what is involved here is the relationship of the church as an
employer and the minister as an employee. It is purely secular and has no relation whatsoever with the practice of faith,
worship or doctrines of the church. In this case, petitioner was not ex-communicated or expelled from the membership of
the SDA but was terminated from employment. Indeed, the matter of terminating an employee, which is purely secular in
nature, is different from the ecclesiastical act of expelling a member from the religious congregation.

As pointed out by the OSG in its memorandum, the grounds invoked for petitioner's dismissal, namely: misappropriation of
denominational funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties and commission of
an offense against the person of his employer's duly authorized representative, are all based on Article 282 of the Labor
Code which enumerates the just causes for termination of employment.22 By this alone, it is palpable that the reason for
petitioner's dismissal from the service is not religious in nature. Coupled with this is the act of the SDA in furnishing NLRC
with a copy of petitioner's letter of termination. As aptly stated by the OSG, this again is an eloquent admission by private
respondents that NLRC has jurisdiction over the case. Aside from these, SDA admitted in a certification23 issued by its
officer, Mr. Ibesate, that petitioner has been its employee for twenty-eight (28) years. SDA even registered petitioner with
the Social Security System (SSS) as its employee. As a matter of fact, the worker's records of petitioner have been
submitted by private respondents as part of their exhibits. From all of these it is clear that when the SDA terminated the
services of petitioner, it was merely exercising its management prerogative to fire an employee which it believes to be
unfit for the job. As such, the State, through the Labor Arbiter and the NLRC, has the right to take cognizance of the case
and to determine whether the SDA, as employer, rightfully exercised its management prerogative to dismiss an employee.
This is in consonance with the mandate of the Constitution to afford full protection to labor.

Under the Labor Code, the provision which governs the dismissal of employees, is comprehensive enough to include
religious corporations, such as the SDA, in its coverage. Article 278 of the Labor Code on post-employment states that
"the provisions of this Title shall apply to all establishments or undertakings, whether for profit or not." Obviously, the cited
article does not make any exception in favor of a religious corporation. This is made more evident by the fact that the
Rules Implementing the Labor Code, particularly, Section 1, Rule 1, Book VI on the Termination of Employment and
Retirement, categorically includes religious institutions in the coverage of the law, to wit:

Sec. 1. Coverage. — This Rule shall apply to all establishments and undertakings, whether operated for profit or
not, including educational, medical, charitable and religious institutions and organizations, in cases of regular
employment with the exception of the Government and its political subdivisions including government-owned or
controlled corporations.24

With this clear mandate, the SDA cannot hide behind the mantle of protection of the doctrine of separation of church and
state to avoid its responsibilities as an employer under the Labor Code.

Finally, as correctly pointed out by petitioner, private respondents are estopped from raising the issue of lack of
jurisdiction for the first time on appeal. It is already too late in the day for private respondents to question the jurisdiction of
the NLRC and the Labor Arbiter since the SDA had fully participated in the trials and hearings of the case from start to
finish. The Court has already ruled that the active participation of a party against whom the action war brought, coupled
with his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending, is tantamount to
an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later
on impugning the court or body's jurisdiction.25 Thus, the active participation of private respondents in the proceedings
before the Labor Arbiter and the NLRC mooted the question on jurisdiction.

The jurisdictional question now settled, we shall now proceed to determine whether the dismissal of petitioner was valid.

At the outset, we note that as a general rule, findings of fact of administrative bodies like the NLRC are binding upon this
Court. A review of such findings is justified, however, in instances when the findings of the NLRC differ from those of the
labor arbiter, as in this case.26 When the findings of NLRC do not agree with those of the Labor Arbiter, this Court must of
necessity review the records to determine which findings should be preferred as more comfortable to the evidentiary
facts.27

4
We turn now to the crux of the matter. In termination cases, the settled rule is that the burden of proving that the
termination was for a valid or authorized cause rests on the employer.28 Thus, private respondents must not merely rely on
the weaknesses of petitioner's evidence but must stand on the merits of their own defense.

The issue being the legality of petitioner's dismissal, the same must be measured against the requisites for a valid
dismissal, namely: (a) the employee must be afforded due process, i.e., he must be given an opportunity to be heard and
to defend himself, and; (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code. 29 Without
the concurrence of this twin requirements, the termination would, in the eyes of the law, be illegal.30

Before the services of an employee can be validly terminated, Article 277 (b) of the Labor Code and Section 2, Rule XXIII,
Book V of the Rules Implementing the Labor Code further require the employer to furnish the employee with two (2)
written notices, to wit: (a) a written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side; and, (b) 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.

The first notice, which may be considered as the proper charge, serves to apprise the employee of the particular acts or
omissions for which his dismissal is sought.31 The second notice on the other hand seeks to inform the employee of the
employer's decision to dismiss him.32 This decision, however, must come only after the employee is given a reasonable
period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend
himself with the assistance of a representative, if he so desires.33 This is in consonance with the express provision of the
law on the protection to labor and the broader dictates of procedural due process.34 Non-compliance therewith is fatal
because these requirements are conditions sine qua non before dismissal may be validly effected.35

Private respondent failed to substantially comply with the above requirements. With regard to the first notice, the
letter,36 dated 17 October 1991, which notified petitioner and his wife to attend the meeting on 21 October 1991, cannot be
construed as the written charge required by law. A perusal of the said letter reveals that it never categorically stated the
particular acts or omissions on which petitioner's impending termination was grounded. In fact, the letter never even
mentioned that petitioner would be subject to investigation. The letter merely mentioned that petitioner and his wife were
invited to a meeting wherein what would be discussed were the alleged unremitted church tithes and the events that
transpired on 16 October 1991. Thus, petitioner was surprised to find out that the alleged meeting turned out to be an
investigation. From the tenor of the letter, it cannot be presumed that petitioner was actually on the verge of dismissal.
The alleged grounds for the dismissal of petitioner from the service were only revealed to him when the actual letter of
dismissal was finally issued. For this reason, it cannot be said that petitioner was given enough opportunity to properly
prepare for his defense. While admittedly, private respondents complied with the second requirement, the notice of
termination, this does not cure the initial defect of lack of the proper written charge required by law.

In the letter of termination,37 dated 29 October 1991, private respondents enumerated the following as grounds for the
dismissal of petitioner, namely: misappropriation of denominational funds, willful breach of trust, serious misconduct,
gross and habitual neglect of duties, and commission of an offense against the person of employer's duly authorized
representative. Breach of trust and misappropriation of denominational funds refer to the alleged failure of petitioner to
remit to the treasurer of the Negros Mission tithes, collections and offerings amounting to P15,078.10 which were
collected by his wife, Mrs. Thelma Austria, in the churches under his jurisdiction. On the other hand, serious misconduct
and commission of an offense against the person of the employer's duly authorized representative pertain to the 16
October 1991 incident wherein petitioner allegedly committed an act of violence in the office of Pastor Gideon Buhat. The
final ground invoked by private respondents is gross and habitual neglect of duties allegedly committed by petitioner.

We cannot sustain the validity of dismissal based on the ground of breach of trust. Private respondents allege that they
have lost their confidence in petitioner for his failure, despite demands, to remit the tithes and offerings amounting to
P15,078.10, which were collected in his district. A careful study of the voluminous records of the case reveals that there is
simply no basis for the alleged loss of confidence and breach of trust. Settled is the rule that under Article 282 (c) of the
Labor Code, the breach of trust must be willful. A 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. 38 It
must rest on substantial grounds and not on the employer's arbitrariness, whims, caprices or suspicion; otherwise the
employee would eternally remain at the mercy of the employer. 39 It should be genuine and not simulated.40 This ground
has never been intended to afford an occasion for abuse, because of its subjective nature. The records show that there
were only six (6) instances when petitioner personally collected and received from the church treasurers the tithes,
collections, and donations for the church.41 The stenographic notes on the testimony of Naomi Geniebla, the Negros
Mission Church Auditor and a witness for private respondents, show that Pastor Austria was able to remit all his
collections to the treasurer of the Negros Mission.42

5
Though private respondents were able to establish that petitioner collected and received tithes and donations several
times, they were notable to establish that petitioner failed to remit the same to the Negros Mission, and that he pocketed
the amount and used it for his personal purpose. In fact, as admitted by their own witness, Naomi Geniebla, petitioner
remitted the amounts which he collected to the Negros Mission for which corresponding receipts were issued to him.
Thus, the allegations of private respondents that petitioner breached their trust have no leg to stand on.

In a vain attempt to support their claim of breach of trust, private respondents try to pin on petitioner the alleged non-
remittance of the tithes collected by his wife. This argument deserves little consideration. First of all, as proven by
convincing and substantial evidence consisting of the testimonies of the witnesses for private respondents who are church
treasurers, it was Mrs. Thelma Austria who actually collected the tithes and donations from them, and, who failed to remit
the same to the treasurer of the Negros Mission. The testimony of these church treasurers were corroborated and
confirmed by Ms. Geniebla and Mr. Ibesate, officers of the SDA. Hence, in the absence of conspiracy and collusion, which
private respondents failed to demonstrate, between petitioner and his wife, petitioner cannot be made accountable for the
alleged infraction committed by his wife. After all, they still have separate and distinct personalities. For this reason, the
Labor Arbiter found it difficult to see the basis for the alleged loss of confidence and breach of trust. The Court does not
find any cogent reason, therefore, to digress from the findings of the Labor Arbiter which is fully supported by the evidence
on record.

With respect to the grounds of serious misconduct and commission of an offense against the person of the employer's
duly authorized representative, we find the same unmeritorious and, as such, do not warrant petitioner's dismissal from
the service.

Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule
of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment.43 For misconduct to be considered serious it must be of such grave and aggravated character and not merely
trivial or unimportant.44 Based on this standard, we believe that the act of petitioner in banging the attaché case on the
table, throwing the telephone and scattering the books in the office of Pastor Buhat, although improper, cannot be
considered as grave enough to be considered as serious misconduct. After all, as correctly observed by the Labor Arbiter,
though petitioner committed damage to property, he did not physically assault Pastor Buhat or any other pastor present
during the incident of 16 October 1991. In fact, the alleged offense committed upon the person of the employer's
representatives was never really established or proven by private respondents. Hence, there is no basis for the allegation
that petitioner's act constituted serious misconduct or that the same was an offense against the person of the employer's
duly authorized representative. As such, the cited actuation of petitioner does not justify the ultimate penalty of dismissal
from employment. While the Constitution does condone wrongdoing by the employee, it nevertheless urges a moderation
of the sanctions that may be applied to him in light of the many disadvantages that weigh heavily on him like an albatross
on his neck.45 Where a penalty less punitive would suffice, whatever missteps may have been committed by the worker
ought not be visited with a consequence so severe such as dismissal from employment. 46 For the foregoing reasons, we
believe that the minor infraction committed by petitioner does not merit the ultimate penalty of dismissal.

The final ground alleged by private respondents in terminating petitioner, gross and habitual neglect of duties, does not
require an exhaustive discussion. Suffice it to say that all private respondents had were allegations but not proof. Aside
from merely citing the said ground, private respondents failed to prove culpability on the part of petitioner. In fact, the
evidence on record shows otherwise. Petitioner's rise from the ranks disclose that he was actually a hard-worker. Private
respondents' evidence,47 which consisted of petitioner's Worker's Reports, revealed how petitioner travelled to different
churches to attend to the faithful under his care. Indeed, he labored hard for the SDA, but, in return, he was rewarded with
a dismissal from the service for a non-existent cause.

In view of the foregoing, we sustain the finding of the Labor Arbiter that petitioner was terminated from service without just
or lawful cause. Having been illegally dismissed, petitioner is entitled to reinstatement to his former position without loss of
seniority right48 and the payment of full backwages without any deduction corresponding to the period from his illegal
dismissal up to actual reinstatement.46

WHEREFORE, the petition for certiorari is GRANTED. The challenged Resolution of public respondent National Labor
Relations Commission, rendered on 23 January 1996, is NULLIFIED and SET ASIDE. The Decision of the Labor Arbiter,
dated 15 February 1993, is REINSTATED and hereby AFFIRMED.1âwphi1.nêt

SO ORDERED.

6
G.R. No. 137795            March 26, 2003

COLEGIO DE SAN JUAN DE LETRAN – CALAMBA, petitioner,

vs.
BELEN P. VILLAS, respondent.

CORONA, J.:

This is a petition for review on certiorari of the decision 1 of the former Eleventh Division2 of the Court of Appeals affirming
the decision3 of Voluntary Arbitrator (VA) Apolonio S. Mayuga that respondent Belen P. Villas was illegally dismissed by
petitioner Colegio de San Juan de Letran (School) and thus, entitled to reinstatement and full backwages.

The antecedent facts show that respondent Belen Villas was employed by the petitioner School as high school teacher in
September 1985. On May 15, 1995, she applied for a study leave for six months, from June to December 31, 1995. In a
letter dated June 2, 1995, Mrs. Angelina Quiatchon, principal of the high school department, told Villas that her request for
study leave was granted for one school year subject to the following conditions:

1. The requested study leave takes effect on June 5, 1995 and ends on March 31, 1996;

2. The requested study leave involves no remuneration on the part of the School;

3. The documents that justify the requested study leave should be submitted upon return on April 1, 1996;

4. Faculty Manual – Section 40 Special Provisions on the Granting of Leave of Absence should be observed:

a. Once proven beyond reasonable doubt during the period of the approved leave of absence that the
faculty member shall engage himself in employment outside the institution, the administration shall regard
the faculty member on leave as resigned;

b. The maximum length of leave of absence that may be applied for by the faculty member and granted
by administration is twelve (12) months. If, at the lapse of the period, the faculty member fails to return for
work, the administration shall regard the faculty member as resigned.4

Respondent alleged that she intended to utilize the first semester of her study leave to finish her masteral degree at the
Philippine Women’s University (PWU). Unfortunately, it did not push through so she took up an Old Testament course in a
school of religion and at the same time utilized her free hours selling insurance and cookware to augment her family’s
income. However, during the second semester of her study leave, she studied and passed 12 units of education subjects
at the Golden Gate Colleges in Batangas City. In response to the letters sent her by petitioner to justify her study leave,
she submitted a certification from Golden Gate Colleges and a letter explaining why she took up an Old Testament course
instead of enrolling in her masteral class during the first semester.

On June 3, 1996, the President and Rector of the School, Fr. Ramonclaro G. Mendez, O. P., wrote her, stating that her
failure to enroll during the first semester was a violation of the conditions of the study leave and that the reasons she
advanced for failure to enroll during the first semester were not acceptable, thus:

In the first place, prudence dictates that you should have ascertained first that you are still eligible to study at
PWU to finish your masteral degree before applying and securing the approval of your leave by the School. In the
second place, you should have informed the School at once that you could not enroll in the first semester so that
your leave could have been adjusted for only one-half (1/2) year. Thirdly, your engaging in some part-time
business instead of studying in the first semester of your leave is sufficient justification for the School to consider

7
 you as resigned under the Faculty Manual. And lastly, your failure to study in the first semester of your study
leave without informing the School beforehand constitutes deception, to say the least, which is not a good
example to the other teachers.5

Her case was subsequently referred to the grievance committee, as provided for in the collective bargaining agreement,
and the report was submitted on July 12, 1996, both to the union and the School. However, since the grievance
committee could not reach a decision, the case was referred for voluntary arbitration.

Respondent then filed a case for illegal dismissal and the case was assigned to VA Mayuga who found that respondent
was illegally dismissed, thus:

WHEREFORE premises considered, we rule that complainant Mrs. BELEN P. VILLAS was illegally dismissed
from her employment by respondent, and as prayed for, respondent COLEGIO DE SAN JUAN DE LETRAN-
CALAMBA is hereby ordered to reinstate Mrs. Belen P. Villas to her former position or job in said school without
loss of seniority and with full backwages and other monetary benefits effective the start of school year 1996-1997
up to the time she is reinstated.6

Upon denial of its motion for reconsideration, petitioner filed a petition for review with the Court of Appeals. This was
denied. Thus, this petition for review. The sole issue is whether or not respondent’s alleged violation of the conditions of
the study grant constituted serious misconduct which justified her termination from petitioner School.

Petitioner alleges that the dismissal of respondent was lawful inasmuch as (a) the requirements of due process were
followed and (b) she not only violated several lawful regulations but also breached her contractual obligations to the
School. All this constituted a valid ground for her dismissal. In assailing the decision of the Court of Appeals, petitioner
School basically questions the court a quo’s findings of fact on respondent’s alleged violation of petitioner School’s policy
on study leave grants.

The petition has no merit.

Under the Labor Code, there are twin requirements to justify a valid dismissal from employment: (a) the dismissal must be
for any of the causes provided in Article 282 of the Labor Code (substantive aspect) and (b) the employee must be given
an opportunity to be heard and to defend himself (procedural aspect).7 The procedural aspect requires that the employee
be given two written notices before she is terminated consisting of a notice which apprises the employee of the particular
acts/omissions for which the dismissal is sought and the subsequent notice which informs the employee of the employer’s
decision to dismiss him.8

In the case at bar, the requirements for both substantive and procedural aspects were not satisfied.

According to petitioner, respondent violated the following conditions of her study leave: (a) she failed to report for work on
April 1, 1996, the day after the lapse of her leave period, which was violative of Section 40 of the Faculty Manual; (b) she
failed to submit proof of her studies during the first semester of her leave period, suggesting that she was not enrolled
during this period; and (c) she engaged in employment outside the School. In sum, petitioner School argues that the
conduct of respondent breached not only the provisions of the study grant (which was a contractual obligation) but also
the Faculty Manual. Respondent was thus guilty of serious misconduct which was a ground for termination.

We affirm the findings of the Court of Appeals that there was no violation of the conditions of the study leave grant. Thus,
respondent could not be charged with serious misconduct warranting her dismissal as a teacher in petitioner School.
Petitioner has failed to convince us that the three alleged violations of the study leave grant constituted serious
misconduct which justified the termination of respondent’s employment.

Misconduct is improper or wrongful conduct. It is the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. 9 Under
Article 282 of the Labor Code, the misconduct, to be a just cause for termination, must be serious. This implies that it must
be of such grave and aggravated character and not merely trivial or unimportant. 10 Examples of serious misconduct
justifying termination, as held in some of our decisions, include: sexual harassment (the manager’s act of fondling the
hands, massaging the shoulder and caressing the nape of a secretary); 11 fighting within company premises;12 uttering
obscene, insulting or offensive words against a superior;13 misrepresenting that a student is his nephew and pressuring
and intimidating a co-teacher to change that student’s failing grade to passing.14

In this light, the alleged infractions of the respondent could hardly be considered serious misconduct.

8
With regard to respondent’s alleged failure to report for work on April 1, 1996 and failure to enroll during the first semester,
the Court of Appeals and the Voluntary Arbitrator found that she did in fact report for work on April 1, 1996 and that she
was in fact enrolled during the first semester. Well–settled is the rule that the factual findings of the Court of Appeals are
conclusive on the parties and are not reviewable by the Supreme Court. And they carry even more weight when the Court
of Appeals affirms the factual findings of a lower fact-finding body, in this case the Voluntary Arbitrator.15 Likewise, findings
of fact of administrative agencies and quasi-judicial bodies which have acquired expertise because their jurisdiction is
confined to specific matters, are generally accorded not only great respect but even finality. They are binding upon this
Court unless there is a showing of grave abuse of discretion or where it is clearly shown that they were arrived at
arbitrarily or in utter disregard of the evidence on record.16

Assuming arguendo that she did fail to report for work on April 1, 1996 and enroll during the first semester, the most
respondent could be charged with was simple misconduct. In both instances, there was evidence of substantial
compliance by respondent.

Her alleged failure to report for work exactly on April 1, 1996 is not equivalent to "failure to return for work," a sanctionable
offense under the Faculty Manual. As correctly pointed out by the VA, petitioner failed to establish that there was a distinct
and definite assignment that needed to be done personally by respondent, and specifically on April 1, 1996, which she
failed to do on said date. Although we give credence to petitioner’s argument that a private high school teacher still has
work at the end of the schoolyear – to assist in the graduation preparations – and in the beginning of the school year – to
assist in the enrollment – such tasks cannot be considered a teacher’s main duties, the failure to perform which would be
tantamount to dereliction of duty or abandonment. Besides, there is no disagreement that respondent reported for work on
May 15, 1996 at which time petitioner School could have asked her to assist in the enrollment period. At most, respondent
failed to help out during the preparations for graduation and this, to us, was not a significant reason for terminating or
dismissing her from her job.

With regard to her alleged failure to enroll during the first semester, although we agree with the President and Rector, Fr.
Mendez, that respondent should have first ascertained whether she was still eligible to study at the PWU before applying
for a study leave,17 such lapse was more of an error in judgment rather than an act of serious misconduct. If respondent
intended to use her study leave for other unauthorized purposes, as petitioner would like us to believe, she would not
have enrolled at the Golden Gate Colleges during the second semester. Yet she did, as borne out by the
certification18 prepared by the Registrar of Golden Gate Colleges.

Furthermore, we find that respondent did not violate the prohibition on engaging in employment outside the school as
specified in her study leave grant and as provided in the Faculty Manual. Section 40 (a) of the Manual19 states:

a. Once proven beyond reasonable doubt during the period of the approved leave of absence that the faculty
member shall engage himself in employment outside the institution, the administration shall regard the faculty
member on leave resigned. (Emphasis supplied)

We find the provision of the Faculty Manual ambiguous as the term "employment" connotes a number of meanings.
Employment in its general sense connotes any work or service rendered in exchange for money. The loose connotation of
employment may therefore cover jobs without an employer-employee relationship. However, inasmuch as in this case,
petitioner School drafted the said policy, the term "employment" should be strictly construed against it. 20 Moreover, it is a
settled rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writings should be resolved in the former’s favor.21 The act of respondent in selling
insurance and cookware was not the "employment" prohibited by the Faculty Manual. The prohibition against outside
employment was enacted to prevent the teacher from using the study leave period for unsanctioned purposes since the
School pays the teacher while pursuing further studies. That rationale was not violated by respondent for the reason that
her part-time activity of selling insurance and cookware could not have prevented her in any way from studying and, more
importantly, she was not being paid by the School while on leave. How did the school expect her and her family to survive
without any income for one whole year?

Petitioner also failed to comply with the procedural requirements for a valid dismissal. As earlier noted, the law requires
the employer to give the worker to be dismissed two written notices before terminating his employment. Considering that
these notices are mandatory, the absence of one renders any management decision to terminate null and void. Petitioner
failed to give respondent the first notice which should have informed the latter of the former’s intention to dismiss her.
Petitioner argues that it complied with this requirement as there were several exchanges of communication between the
School and respondent regarding the cause of her termination. However, we find that these letters did not apprise
respondent that her dismissal was being sought by petitioner School as said letters only required respondent to submit
proof of enrollment. The letter of Principal Angelina Q. Quiatchon dated April 17, 199622 was worded as follows:

9
 In accordance with the terms of your study leave from June 5, 1995 to March 31, 1996, you must submit
credentials/proofs of your study to justify the approved leave.

To this date, April 17, this office has not received your credentials. Please do so within the next three days from
receipt hereof so that this office can act accordingly.

Similarly, the May 10, 1996 letter23 of the Academic Affairs Director, Dr. Rhodora G. Odejar, was worded thus:

The Academic Affairs Office has received your certification of graduate studies completed in the second semester
of Schoolyear 1995-1996. However, there is no report as to how you utilized your leave in the first semester. You
are therefore instructed to submit your report on the matter within three days from receipt hereof.

The next letter from the petitioner, dated June 3, 1996, already informed respondent that she was considered resigned
effective schoolyear 1996-1997.

These letters did not comply with the requirements of the law that the first written notice must apprise the employee that
his termination is being considered due to a certain act or omission. These letters merely required petitioner to submit
proof of her studies and respondent could not have reasonably inferred from them that her dismissal was being
considered by the petitioner. The fact that there was a hearing conducted by the grievance committee pursuant to the
collective bargaining agreement did not work in petitioner’s favor because this was done after petitioner had informed
respondent that she was already considered resigned from her teaching job. Besides, the rights of an employee to be
informed of his proposed dismissal are personal to him24 and, therefore, the notice to the union was not notice to the
employee.

With regard to the respondent’s claim for the six-month study leave and vacation pay, we affirm the decision25 of the
Voluntary Arbitrator that respondent is not entitled to such benefits:

While it is true that the collective bargaining agreement between respondent and complainant’s union provides for
six months’ pay for qualified teachers who will go on sabbatical or study leave, the same was expressly waived by
complainant when she signed conforme to the letter dated June 2, 1995 approving her study leave which states
among others, to wit: ‘2. The requested study leave involves no remuneration on the part of the school.’ And
considering that her leave of absence for the whole school year 1995-1996 was presumed to be a leave of
absence without pay, then she did not earn her vacation leave incentive for the next coming summer. We find it
just, fair and reasonable to grant vacation pay on April and May of every calendar as additional incentive only to
those teachers who rendered continuous service to the Collegio the preceding school year.

We similarly affirm the Voluntary Arbitrator’s decision that respondent is not entitled to moral and exemplary damages and
attorney’s fees because there is no evidence showing that bad faith or malice attended the dismissal of respondent. Moral
damages are recoverable only where the dismissal is attended by bad faith or fraud, or constitutes an act oppressive to
labor, or is done in a manner contrary to morals, good customs or public policy. A dismissal may be contrary to law but, by
itself alone, it does not necessarily establish bad faith.26

WHEREFORE, the petition is DENIED.

SO ORDERED.

10
G.R. No. 86000 September 21, 1990

GOLD CITY INTEGRATED PORT SERVICES, INC. (INPORT), petitioner,

vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (NLRC) and JOSE L. BACALSO, respondents.

Jerry M. Pacuribot for petitioner.

Francisco D. Alas for private respondent.

FELICIANO, J.:

Private respondent Jose Bacalso was employed as an admeasurer by the petitioner Gold City Integrated Port Services,
Inc. ("Gold City"). He was suspected by management of under measuring cargo. Hence, on 23 January 1987, the cargo
control officer ordered two (2) other admeasurers to re-measure three (3) pallets of bananas which had already been
measured by private respondent. 1 The re-measurement revealed that respondent had under-measured the bananas by
1.427 cubic meters. 2

Private respondent felt insulted by the re-measurement and so the next day he went to the office of the Chief Admeasurer,
Rolando Guanaco, and there confronted Nigel Mabalacad, one of the two (2) admeasurers who had re-checked his work,
regarding the matter. Private respondent quarreled with Mabalacad in the presence of Guanaco, their immediate superior,
inside the latter's office. Guanaco directed private respondent to stop provoking Mabalacad and told both that being in his
office, they should behave properly. Private respondent ignored this oral directive and a fistfight erupted then and there
between him and Mabalacad. Both were eventually pacified by their co-workers. 3

Private respondent Bacalso was then charged with assaulting a co-employee and falsifying reports and records of the
company relative to the performance of his duties, and was preventively suspended pending investigation of his case by
the union-management grievance committee. 4 In a letter dated 20 March 1987, the grievance committee referred the
disposition of the matter to management in view of the objections of the aggrieved parties to the proposal that private
respondent be meted out a penalty of forty-five (45) days suspension. 5 Apparently, Guangco and Mabalacad did not
consider suspension an adequate sanction considering private respondent's alleged inability to get along with the other
admeasurers and with the company's customers. On 11 April 1987, private respondent received a notice of termination of
services upon the grounds of assaulting a co-employee and of insubordination. 6

Private respondent Bacalso filed a complaint for illegal dismissal with the Regional Arbitration Branch No. 10 of the
Department of Labor and Employment on 25 May 1987. He controverted the finding of insubordination, contending that
there was no evidence he had wilfully disobeyed any order given by his superior during the incident. He admitted
assaulting his co-employee but claimed that that did not constitute just cause for his dismissal under Article 282 (d) of the
Labor Code because that act was not an offense committed against his employer's duly authorized representative. He
prayed for reinstatement with backwages and damages. 7

Petitioner Gold City in its answer argued that Bacalso's failure to heed Guangco's order to stop provoking Mabalacad
constituted insubordination or disrespect towards a superior officer punishable by dismissal under the Schedule of
disciplinary sanctions and norms of conduct, incorporated in the existing Collective Bargaining Agreement ("CBA") with
the union. 8

The Labor Arbiter rendered an award in favor of private respondent Bacalso holding that the dismissal was illegal because
there was no evidence to support the charge of insubordination, and that assault on a co-employee was punishable only

11
with fifteen (15) days suspension under the CBA's Schedule of penalties. In view of the strained relations between the
parties, however, the Labor Arbiter did not order reinstatement and awarded Bacalso separation pay and attorney's fees
instead. 9

Both parties appealed to the National Labor Relations Commission ("NLRC").

The NLRC, in a decision dated 30 August 1988, held that only Bacalso's appeal was meritorious. It declined to
characterize the assailed conduct of Bacalso as insubordination under Article 282 (a) of the Labor Code because
Guangco's order was "not connected with" Bacalso's work, and did not amount to wilful or gross disrespect. The NLRC
modified the Labor Arbiter's decision by ordering private respondent Bacalso's reinstatement with backwages. 10

Petitioner, having moved for reconsideration without success, is before this Court on certiorari. On 20 February 1989, the
Court issued a temporary restraining order enjoining execution of the NLRC's decision pending resolution of this Petition,
effective upon petitioner's posting of a cash or surety bond in the amount of P60,000.00. 11 Petitioner Gold City posted a
cash deposit in the required amount. 12

In its Petition, Gold City emphasizes management's prerogative to promulgate rules of discipline and to enforce the
Schedule of disciplinary sanctions providing for dismissal of an employee who commits gross disrespect of a superior
officer. 13

In his Comment on the Petition, private respondent Bacalso alleged that he was apprised of the charge of insubordination
only in his notice of termination, and that he was thereby denied an opportunity to be heard on this charge before being
dismissed, in violation of Sections 2 and 5 of Rule 14 of the Omnibus Rules Implementing the Labor Code. 14

Two (2) issues are posed for resolution in this case; (a) whether private respondent was denied due process in the course
of his dismissal; and (b) whether private respondent was dismissed for a just cause.

In respect of the first issue, it must be noted that petitioner did not properly inform private respondent of all the infractions
of company regulations which subsequently became the justification for his dismissal. After being preventively suspended,
he was charged with assaulting a co-employee and falsifying reports and records of the company relating to the
performance of his duties. Consequently, throughout the investigation conducted at the company level, private
respondent's explanations in defense were shaped to meet only those charges. Petitioner discovered it could not sustain
the charge of falsification of company records against private respondent. Since assault upon a co-employee, the charge
admitted by private respondent, is punishable only with fifteen (15) days suspension under the CBA's Schedule of
penalties, it in effect became necessary for petitioner to characterize said assault as an act of "insubordination or
disrespect towards a superior officer", an offense punishable with dismissal under the Schedule. 15 So it came to pass that
when private respondent received his notice of termination, the causes therefor were stated as assault on a co-employee
and insubordination.

The Court considers that there was here at least a partial deprivation of private respondent's right to procedural due
process. He could not be expected adequately to defend himself as he was not fully or correctly informed of the charges
against him which management intended to prove. It is less than fair for management to charge an employee with one
offense and then to dismiss him for having committed another offense with which he had not been charged and against
which he was therefore unable adequately to defend himself. Correct specification of private respondent's alleged
wrongdoing was obviously important here, since the penalty that could appropriately be meted out depended upon what
offense was charged and proven. It has been stressed by the Court that the right of an employee to procedural due
process consists of the twin rights of notice and hearing. 16 The purpose of the requirement of notice is obviously to enable
the employee to defend himself against the charge preferred against him by presenting and substantiating his version of
the facts. Since Gold City here in effect charged private respondent with a second offense other than falsification of
company records, it was incumbent upon petitioner employer to have given private respondent additional time and
opportunity to meet the new charge against him of insubordination. Gold City failed to do that here. In so failing, Gold City
failed to accord to private respondent the full measure of his right to procedural due process. The fact that in the
proceedings before the Labor Arbiter the conduct of private respondent that petitioner regarded as insubordination was
substantiated, does not militate against this conclusion.

Coming to the second issue, Article 282 of the Labor Code provides in part:

Art. 282. Termination by Employer.-An employer may terminate an employment for any of the following
causes: a) Serious misconduct or wilful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work.

12
 xxx xxx xxx

(Emphasis supplied)

Wilful disobedience of the employer's lawful orders, as a just cause for the dismissal of an employee, envisages the
concurrence of at least two (2) requisites: the employee's assailed conduct must have been wilful or intentional, the
wilfulness being characterized by a "wrongful and perverse attitude"; and the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. 17 Both
requisites are present in the instant case.

By private respondent Bacalso's own admission, he felt insulted by the re-measurement of the cargo he had already
measured. He was apparently much offended by the implication he perceived that management was uncertain either
about his honesty or his competence or possibly both. He determined to lose his temper, became very angry and picked a
fight with one of the co-workers who had been instructed by their common superior to carry out the re-measurement of
private respondent's pallets of bananas. In the process, private respondent Bacalso completely disregarded the courtesy
and respect due from a subordinate to his superior. Indeed, he may have been, consciously or otherwise, precisely
sending a signal to his superior officer in whose presence he provoked and then engaged in physical violence with his co-
worker. Prior to the fistfight, Guangco had warned Bacalso to desist from further provoking his co-worker with insulting
language. This warning constituted an order from private respondent's immediate superior not to breach the peace and
order of the Surveyors'(Admeasurers') Division; Guangco was obviously attempting to maintain basic employee discipline
in the workplace.

It is thus not easy to understand how public respondent NLRC could have reasonably concluded that Guangco's order
and warning were "not connected" with private respondent's work. We believe and so hold that private respondent's act
constituted wilful disobedience to a lawful order of petitioner's representative obviously connected with private
respondent's work.

It does not follow, however, that private respondent Bacalso's services were lawfully terminated either under Article 282
(a) of the Labor Code or under the CBA Schedule of penalties. We believe that not every case of insubordination or wilful
disobedience by an employee of a lawful work-connected order of the employer or its representative is reasonably
penalized with dismissal. For one thing, Article 282 (a) refers to "serious misconduct or wilful disobedience". There must
be reasonable proportionality between, on the one hand, the wilful disobedience by the employee and, on the other hand,
the penalty imposed therefor. Examination of the circumstances surrounding private respondent's assault upon his co-
employee shows that no serious or substantial danger had been posed by that fistfight to the well-being of his other co-
employees or of the general public doing business with petitioner employer; and neither did such behavior threaten
substantial prejudice for the business of his employer. The fistfight occurred inside the offices of the Surveyors' Division,
more particularly, Mr. Guangco's office, away from the view of petitioner's customers or of the general public. In Lausa v.
National Labor Relations Commission, 18 petitioner Lausa exhibited disorderly and pugnacious behavior in the course of
an argument with his immediate superior, in the presence of passengers and other crewmen on board the inter-island
vessel of which Lausa was a crew-member. In that case, the Court sustained the dismissal of petitioner Reynaldo Lausa
considering that his "behavior could easily have provoked or triggered off a brawl and mindless panic on board the vessel,
and endangered the safety of people and crew-members, and under certain conditions, the safety of the vessel itself."
In Wenphil Corporation v. National Labor Relations Commission, 19 the Court also sustained the dismissal of private
respondent Roberto Mallare who, while tending the salad bar of a fast food restaurant, engaged in an altercation a co-
worker slapping the latter on the head, stepping on his foot, brandishing an ice scooper against him and refusing to be
pacified, right in front and in plain sight of customers dining in the restaurant, thus posing a substantial threat of disorder in
the restaurant. In the instant case, private respondent Bacalso's disorderly behavior did not present a comparable threat
to the safety or peace of mind of his co-workers or that of the customers of Gold City.

Considering that private respondent Bacalso's unruly temper did not become an effective threat to his co-workers or the
safety of the customers dealing with his employer, or to the goodwill of his employer, and considering further that he had
been quite candid in admitting that he had been at fault as soon as the investigation began in the company level, we
agree with the NLRC that termination of his services was a disproportionately heavy penalty. We believe that suspension
without pay for three (3) months would be an adequate penalty for the assault on a co-worker and act of insubordination
that private respondent Bacalso actually committed.

It follows that private respondent Bacalso is entitled to reinstatement. 20 Should reinstatement to his previous position not
be feasible because of his relationship or lack of relationship with his fellow admeasurers, he should be reinstated to a
substantially equivalent position in another division of the company. If that is not possible or feasible either, then in lieu of
such reinstatement, petitioner shall pay private respondent separation pay equivalent to one-month's pay for every year of

13
service. 21 Private respondent is also entitled to his backwages; however, an amount equivalent to his three (3) months
pay shall be deducted from such backwages. The award of attorney's fees stays.

WHEREFORE, the Petition for certiorari is hereby DISMISSED for lack of merit, and the Decision dated 30 August 1988
of public respondent NLRC is hereby AFFIRMED with the modifications that: (1) from private respondent's backwages,
there shall be deducted an amount equivalent to his three-month's pay corresponding to the penalty properly imposable
upon him; and (2) should reinstatement to private respondent Bacalso's former position, or to a substantially equivalent
position in another division of petitioner Gold City, not be feasible, petitioner shall pay private respondent Bacalso, in lieu
of such reinstatement, separation pay equivalent to one-month's pay for every year of service. The temporary restraining
order dated 20 February 1989 is hereby LIFTED. No pronouncement as to costs. SO ORDERED.

G.R. No. 162994             September 17, 2004

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners,

vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.

RESOLUTION

TINGA, J.:

Confronting the Court in this petition is a novel question, with constitutional overtones, involving the validity of the policy of
a pharmaceutical company prohibiting its employees from marrying employees of any competitor company.

This is a Petition for Review on Certiorari assailing the Decision1 dated May 19, 2003 and the Resolution  dated March 26,
2004 of the Court of Appeals in CA-G.R. SP No. 62434.2

Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as medical
representative on October 24, 1995, after Tecson had undergone training and orientation.

Thereafter, Tecson signed a contract of employment which stipulates, among others, that he agrees to study and abide by
existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies and should management find that such relationship poses a
possible conflict of interest, to resign from the company.

The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any
existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies.
If management perceives a conflict of interest or a potential conflict between such relationship and the employee’s
employment with the company, the management and the employee will explore the possibility of a "transfer to another
department in a non-counterchecking position" or preparation for employment outside the company after six months.

Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines Norte sales area.

Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals 3 (Astra), a
competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in Albay. She supervised the district managers and medical
representatives of her company and prepared marketing strategies for Astra in that area.

Even before they got married, Tecson received several reminders from his District Manager regarding the conflict of
interest which his relationship with Bettsy might engender. Still, love prevailed, and Tecson married Bettsy in September
1998.

In January 1999, Tecson’s superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecson’s
superiors reminded him that he and Bettsy should decide which one of them would resign from their jobs, although they
told him that they wanted to retain him as much as possible because he was performing his job well.

Tecson requested for time to comply with the company policy against entering into a relationship with an employee of a
competitor company. He explained that Astra, Bettsy’s employer, was planning to merge with Zeneca, another drug
company; and Bettsy was planning to avail of the redundancy package to be offered by Astra. With Bettsy’s separation

14
from her company, the potential conflict of interest would be eliminated. At the same time, they would be able to avail of
the attractive redundancy package from Astra.

In August 1999, Tecson again requested for more time resolve the problem. In September 1999, Tecson applied for a
transfer in Glaxo’s milk division, thinking that since Astra did not have a milk division, the potential conflict of interest
would be eliminated. His application was denied in view of Glaxo’s "least-movement-possible" policy.

In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked
Glaxo to reconsider its decision, but his request was denied.

Tecson sought Glaxo’s reconsideration regarding his transfer and brought the matter to Glaxo’s Grievance Committee.
Glaxo, however, remained firm in its decision and gave Tescon until February 7, 2000 to comply with the transfer order.
Tecson defied the transfer order and continued acting as medical representative in the Camarines Sur-Camarines Norte
sales area.

During the pendency of the grievance proceedings, Tecson was paid his salary, but was not issued samples of products
which were competing with similar products manufactured by Astra. He was also not included in product conferences
regarding such products.

Because the parties failed to resolve the issue at the grievance machinery level, they submitted the matter for voluntary
arbitration. Glaxo offered Tecson a separation pay of one-half (½) month pay for every year of service, or a total of
₱50,000.00 but he declined the offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB)
rendered its Decision declaring as valid Glaxo’s policy on relationships between its employees and persons employed
with competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.

Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB Decision.

On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for Review  on the ground that the
NCMB did not err in rendering its Decision. The appellate court held that Glaxo’s policy prohibiting its employees from
having personal relationships with employees of competitor companies is a valid exercise of its management
prerogatives.4

Tecson filed a Motion for Reconsideration of the appellate court’s Decision, but the motion was denied by the appellate
court in its Resolution dated March 26, 2004.5

Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in affirming the NCMB’s finding that
the Glaxo’s policy prohibiting its employees from marrying an employee of a competitor company is valid; and (ii) the
Court of Appeals also erred in not finding that Tecson was constructively dismissed when he was transferred to a new
sales territory, and deprived of the opportunity to attend products seminars and training sessions.6

Petitioners contend that Glaxo’s policy against employees marrying employees of competitor companies violates the
equal protection clause of the Constitution because it creates invalid distinctions among employees on account only of
marriage. They claim that the policy restricts the employees’ right to marry.7

They also argue that Tecson was constructively dismissed as shown by the following circumstances: (1) he was
transferred from the Camarines Sur-Camarines Norte sales area to the Butuan-Surigao-Agusan sales area, (2) he
suffered a diminution in pay, (3) he was excluded from attending seminars and training sessions for medical
representatives, and (4) he was prohibited from promoting respondent’s products which were competing with Astra’s
products.8

In its Comment on the petition, Glaxo argues that the company policy prohibiting its employees from having a relationship
with and/or marrying an employee of a competitor company is a valid exercise of its management prerogatives and does
not violate the equal protection clause; and that Tecson’s reassignment from the Camarines Norte-Camarines Sur sales
area to the Butuan City-Surigao City and Agusan del Sur sales area does not amount to constructive dismissal.9

Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products, it has a genuine interest
in ensuring that its employees avoid any activity, relationship or interest that may conflict with their responsibilities to the
company. Thus, it expects its employees to avoid having personal or family interests in any competitor company which

15
may influence their actions and decisions and consequently deprive Glaxo of legitimate profits. The policy is also aimed at
preventing a competitor company from gaining access to its secrets, procedures and policies.10

It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing or future relationships with
employees of competitor companies, and is therefore not violative of the equal protection clause. It maintains that
considering the nature of its business, the prohibition is based on valid grounds.11

According to Glaxo, Tecson’s marriage to Bettsy, an employee of Astra, posed a real and potential conflict of interest.
Astra’s products were in direct competition with 67% of the products sold by Glaxo. Hence, Glaxo’s enforcement of the
foregoing policy in Tecson’s case was a valid exercise of its management prerogatives. 12 In any case, Tecson was given
several months to remedy the situation, and was even encouraged not to resign but to ask his wife to resign form Astra
instead.13

Glaxo also points out that Tecson can no longer question the assailed company policy because when he signed his
contract of employment, he was aware that such policy was stipulated therein. In said contract, he also agreed to resign
from respondent if the management finds that his relationship with an employee of a competitor company would be
detrimental to the interests of Glaxo.14

Glaxo likewise insists that Tecson’s reassignment to another sales area and his exclusion from seminars regarding
respondent’s new products did not amount to constructive dismissal.

It claims that in view of Tecson’s refusal to resign, he was relocated from the Camarines Sur-Camarines Norte sales area
to the Butuan City-Surigao City and Agusan del Sur sales area. Glaxo asserts that in effecting the reassignment, it also
considered the welfare of Tecson’s family. Since Tecson’s hometown was in Agusan del Sur and his wife traces her roots
to Butuan City, Glaxo assumed that his transfer from the Bicol region to the Butuan City sales area would be favorable to
him and his family as he would be relocating to a familiar territory and minimizing his travel expenses.15

In addition, Glaxo avers that Tecson’s exclusion from the seminar concerning the new anti-asthma drug was due to the
fact that said product was in direct competition with a drug which was soon to be sold by Astra, and hence, would pose a
potential conflict of interest for him. Lastly, the delay in Tecson’s receipt of his sales paraphernalia was due to the mix-up
created by his refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his new sales area
instead of Naga City because the supplier thought he already transferred to Butuan).16

The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals erred in ruling that Glaxo’s policy
against its employees marrying employees from competitor companies is valid, and in not holding that said policy violates
the equal protection clause of the Constitution; (2) Whether Tecson was constructively dismissed.

The Court finds no merit in the petition.

The stipulation in Tecson’s contract of employment with Glaxo being questioned by petitioners provides:

10. You agree to disclose to management any existing or future relationship you may have, either by
consanguinity or affinity with co-employees or employees of competing drug companies. Should it pose a possible
conflict of interest in management discretion, you agree to resign voluntarily from the Company as a matter of
Company policy.

…17

The same contract also stipulates that Tescon agrees to abide by the existing company rules of Glaxo, and to study and
become acquainted with such policies.18 In this regard, the Employee Handbook of Glaxo expressly informs its employees
of its rules regarding conflict of interest:

1. Conflict of Interest

Employees should avoid any activity, investment relationship, or interest that may run counter to the
responsibilities which they owe Glaxo Wellcome.

16
 Specifically, this means that employees are expected:

a. To avoid having personal or family interest, financial or otherwise, in any competitor supplier or other
businesses which may consciously or unconsciously influence their actions or decisions and thus deprive
Glaxo Wellcome of legitimate profit.

b. To refrain from using their position in Glaxo Wellcome or knowledge of Company plans to advance
their outside personal interests, that of their relatives, friends and other businesses.

c. To avoid outside employment or other interests for income which would impair their effective job
performance.

d. To consult with Management on such activities or relationships that may lead to conflict of interest.

1.1. Employee Relationships

Employees with existing or future relationships either by consanguinity or affinity with co-employees of competing
drug companies are expected to disclose such relationship to the Management. If management perceives a
conflict or potential conflict of interest, every effort shall be made, together by management and the employee, to
arrive at a solution within six (6) months, either by transfer to another department in a non-counter checking
position, or by career preparation toward outside employment after Glaxo Wellcome. Employees must be
prepared for possible resignation within six (6) months, if no other solution is feasible.19

No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s policy prohibiting an employee from
having a relationship with an employee of a competitor company is a valid exercise of management prerogative.

Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs
and information from competitors, especially so that it and Astra are rival companies in the highly competitive
pharmaceutical industry.

The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s
employees is reasonable under the circumstances because relationships of that nature might compromise the interests of
the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility
that a competitor company will gain access to its secrets and procedures.

That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution
recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth.20 Indeed, while our laws endeavor to give life to the constitutional policy on
social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers.
The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of
fair play.21

As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard business confidentiality and protect a
competitive position by even-handedly disqualifying from jobs male and female applicants or employees who are married
to a competitor. Consequently, the court ruled than an employer that discharged an employee who was married to an
employee of an active competitor did not violate Title VII of the Civil Rights Act of 1964. 23 The Court pointed out that the
policy was applied to men and women equally, and noted that the employer’s business was highly competitive and that
gaining inside information would constitute a competitive advantage.

The challenged company policy does not violate the equal protection clause of the Constitution as petitioners erroneously
suggest. It is a settled principle that the commands of the equal protection clause are addressed only to the state or those
acting under color of its authority.24 Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the
equal protection clause erects no shield against merely private conduct, however, discriminatory or wrongful.25 The only
exception occurs when the state29 in any of its manifestations or actions has been found to have become entwined or
involved in the wrongful private conduct.27 Obviously, however, the exception is not present in this case. Significantly, the
company actually enforced the policy after repeated requests to the employee to comply with the policy. Indeed, the
application of the policy was made in an impartial and even-handed manner, with due regard for the lot of the employee.

17
In any event, from the wordings of the contractual provision and the policy in its employee handbook, it is clear that Glaxo
does not impose an absolute prohibition against relationships between its employees and those of competitor companies.
Its employees are free to cultivate relationships with and marry persons of their own choosing. What the company merely
seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships. As
succinctly explained by the appellate court, thus:

The policy being questioned is not a policy against marriage. An employee of the company remains free to marry
anyone of his or her choosing. The policy is not aimed at restricting a personal prerogative that belongs only to
the individual. However, an employee’s personal decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and business success. . .28

The Court of Appeals also correctly noted that the assailed company policy which forms part of respondent’s Employee
Code of Conduct and of its contracts with its employees, such as that signed by Tescon, was made known to him prior to
his employment. Tecson, therefore, was aware of that restriction when he signed his employment contract and when he
entered into a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of employment with
Glaxo, the stipulations therein have the force of law between them and, thus, should be complied with in good faith." 29 He
is therefore estopped from questioning said policy.

The Court finds no merit in petitioners’ contention that Tescon was constructively dismissed when he was transferred from
the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur sales area, and when he
was excluded from attending the company’s seminar on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in
pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. 30 None
of these conditions are present in the instant case. The record does not show that Tescon was demoted or unduly
discriminated upon by reason of such transfer. As found by the appellate court, Glaxo properly exercised its management
prerogative in reassigning Tecson to the Butuan City sales area:

. . . In this case, petitioner’s transfer to another place of assignment was merely in keeping with the policy of the
company in avoidance of conflict of interest, and thus valid…Note that [Tecson’s] wife holds a sensitive
supervisory position as Branch Coordinator in her employer-company which requires her to work in close
coordination with District Managers and Medical Representatives. Her duties include monitoring sales of Astra
products, conducting sales drives, establishing and furthering relationship with customers, collection, monitoring
and managing Astra’s inventory…she therefore takes an active participation in the market war characterized as it
is by stiff competition among pharmaceutical companies. Moreover, and this is significant, petitioner’s sales
territory covers Camarines Sur and Camarines Norte while his wife is supervising a branch of her employer in
Albay. The proximity of their areas of responsibility, all in the same Bicol Region, renders the conflict of interest
not only possible, but actual, as learning by one spouse of the other’s market strategies in the region would be
inevitable. [Management’s] appreciation of a conflict of interest is therefore not merely illusory and wanting in
factual basis…31

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,32 which involved a complaint filed by a

medical representative against his employer drug company for illegal dismissal for allegedly terminating his employment
when he refused to accept his reassignment to a new area, the Court upheld the right of the drug company to transfer or
reassign its employee in accordance with its operational demands and requirements. The ruling of the Court therein,
quoted hereunder, also finds application in the instant case:

By the very nature of his employment, a drug salesman or medical representative is expected to travel. He should
anticipate reassignment according to the demands of their business. It would be a poor drug corporation which
cannot even assign its representatives or detail men to new markets calling for opening or expansion or to areas
where the need for pushing its products is great. More so if such reassignments are part of the employment
contract.33

As noted earlier, the challenged policy has been implemented by Glaxo impartially and disinterestedly for a long period of
time. In the case at bar, the record shows that Glaxo gave Tecson several chances to eliminate the conflict of interest
brought about by his relationship with Bettsy. When their relationship was still in its initial stage, Tecson’s supervisors at
Glaxo constantly reminded him about its effects on his employment with the company and on the company’s interests.
After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by either resigning from the company or asking
his wife to resign from Astra. Glaxo even expressed its desire to retain Tecson in its employ because of his satisfactory
performance and suggested that he ask Bettsy to resign from her company instead. Glaxo likewise acceded to his
repeated requests for more time to resolve the conflict of interest. When the problem could not be resolved after several

18
years of waiting, Glaxo was constrained to reassign Tecson to a sales area different from that handled by his wife for
Astra. Notably, the Court did not terminate Tecson from employment but only reassigned him to another area where his
home province, Agusan del Sur, was included. In effecting Tecson’s transfer, Glaxo even considered the welfare of
Tecson’s family. Clearly, the foregoing dispels any suspicion of unfairness and bad faith on the part of Glaxo.34

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

SO ORDERED.

[G.R. No. 162994.  September 19, 2005]

DUNCAN ASSOCIATION vs. GLAXO

SECOND DIVISION

Sirs/Mesdames:

Quoted hereunder, for your information, is a resolution of this Court dated SEP 19 2005.

G.R. No. 162994 (Duncan Association Of Detailman-PTGWO and Pedro A. Tecson vs. Glaxo Wellcome Philippines, Inc.)

For resolution is a Motion for Reconsideration dated 8 October 2004, filed by petitioners who seek the reversal of the
Court's Resolution1 dated 17 September 2004 denying the instant Petition for Review.

A brief recapitulation of the facts is in order. Petitioner Pedro Tecson ("Tecson") was employed in 1995 by respondent
Glaxo Wellcome Philippines, Inc. ("Glaxo") as a medical representative. He was assigned to market Glaxo's products in
the Camarines Sur-Camarines Norte sales area. Upon his employment, Tecson signed an employment contract, wherein
he agreed, among others, to study and abide by existing company rules; to disclose to management any existing or future
relationship by consanguinity or affinity with co-employees or employees of competing drug companies; and if
management found that such relationship posed a possible conflict of interest, to resign from the company.

Nonetheless, Tecson became romantically involved with Bettsy, an employee of a rival pharmaceutical firm Astra
Pharmaceuticals ("Astra"). The two eventually married in September of 1998. The relationship, including the subsequent
marriage, was cause for consternation to Glaxo. On January 1999, Tecson's superiors informed him that his marriage to
Bettsy had given rise to a conflict of interest. Negotiations ensued, with Tecson adverting to his wife's possible resignation
from Astra, and Glaxo making it known that they preferred to retain his services owing to his good performance. Yet no
resolution came to pass. In September 1999, Tecson applied for a transfer to Glaxo's milk division, but his application was
denied in view of Glaxo's "least-movement-possible" policy. Then in November 1999, Glaxo transferred Tecson to the
Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his request was
denied.

The matter was then brought to the Glaxo Grievance Committee, and subsequently to a voluntary arbitrator. On 15
November 2000, the National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxo's
policy on relationships between its employees and persons employed with competitor companies, and affirming Glaxo's
right to transfer Tecson to another sales territory. This Decision was assailed by petitioners before the Court of Appeals
and this Court, but for naught.

The present Motion for Reconsideration advances four main arguments: that the Court erroneously relied on a conjectural
presumption that Tecson's relationship might compromise the interest of the company or allow a competitor to gain
access to Glaxo's secrets and procedures; that Glaxo's policy regarding the marriage of its employees to employees of

19
rival companies is contrary to public policy, morals and good customs; that Glaxo violated its own policy which authorized
the transfer of the subject employee to another department when it denied Tecson's application to transfer to the milk
division; and that Tecson was constructively dismissed when he was transferred to the Butuan City-Surigao City-Agusan
del Sur sales area.

One of the central anchors of the assailed Resolution was the holding that Glaxo's policy on marriage did not violate the
equal protection clause of the Constitution,2 as the constitutional guarantee does not encompass discriminatory behavior
engaged by private individuals.3 Petitioners do not challenge this holding of the Court, and we see no reason to revisit this
issue.

But before we engage in a renewed discussion on the validity of Glaxo's policy itself, we should examine the claim that
Tecson was constructively dismissed. After all, assuming that the policy itself were declared invalid, a finding nonetheless
that Tecson was not constructively dismissed would still render this petition futile. The Court has ruled Tecson was not
actually dismissed, and the Motion for Reconsideration adduces no substantial reasons why this holding should be
reversed.

The Resolution cited Abbott Laboratories (Phils.), Inc. v. NLRC4 wherein the Court upheld the prerogative of a drug
company to reassign a medical representative under its employ to a new territory. In the same vein, the Court has
consistently affirmed as a valid prerogative of the employer the reasonable reassignment or transfer of an employee. As
held in Philippine Japan Active Carbon Corp. v. NLRC:5

It is the employer's prerogative, based on its assessment and perception of its employees' qualifications, aptitudes, and
competence, to move them around in the various areas of its business operations in order to ascertain where they will
function with maximum benefit to the company. An employee's right to security of tenure does not give him such a vested
right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he
will be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve
a demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee may not complain that it
amounts to a constructive dismissal.6

In Philippine Telegraph and Telephone Corp. v. Laplana,7 the Court again upheld the prerogative of management to
reassign an employee to a different locality, despite the "personal inconvenience or hardship that will be caused to the
employee by reason of the transfer."

Tecson was not relieved of his employment with Glaxo. Neither was he transferred to a different position of lower rank or
remuneration. The alleged constructive dismissal pertained to his transfer to Butuan from Naga City, a reassignment that
would fall within the ambit of management's prerogative to transfer employees.

Petitioners, in their Motion for Reconsideration, purport that constructive dismissal was proved by the allegation that
Tecson's commissions for January and February were withheld from him, and that he was forced to surrender his sales
paraphernalia. Yet the veracity of these factual allegations were not acknowledged by either the voluntary arbitrator or the
Court of Appeals. This Court, which is not a trier of facts, could not very well at this late stage reverse the established
factual conclusions on the basis of mere allegations which have not been previously substantiated but which in fact have
been consistently rebutted by the respondents.8

In case of a constructive dismissal, the employer has the burden of proving that the transfer and demotion of an employee
are for valid and legitimate grounds, i.e., that the transfer is not unreasonable, inconvenient, or prejudicial to the
employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.9 In this
case, Glaxo did not opt to terminate or demote Tecson, but transferred him to a sales region that included the respective
home provinces of himself and his wife, and offered monetary assistance to shoulder his family's relocation.10. Certainly,
the choice of location was not selected with petty malice aforethought, but even designed for the easier palatability of the
employee.

The fact that the employee may be displaced from established roots by reason of the transfer is not sufficient to deny the
valid management prerogative to transfer its employees. Tecson himself had acknowledged this prerogative when he
signed the contract of employment which expressly agreed "to be assigned any work or work station for such periods as
may be determined by the company and whenever the operations require such assignment."

This finding that Tecson was not actually dismissed is determinative of this case, especially considering that his transfer
by Glaxo from Naga to Butuan would have been a valid exercise of an employer's prerogative, whether or not the
company policy on marriage subsists. Nonetheless, it would be specious to assume that Tecson's transfer had nothing to

20
do with his marriage to an employee from a rival drug company. Moreover, questions on the validity, if not
appropriateness of Glaxo's policy itself, has attracted comment on the various triers of this case, as well as the public at
large.

May an employer impose conditions, restrictions or consequences on an employee by reason of the latter's choice to
marry or choice of spouse? The answer would really all depend on the particular circumstances in each case.

The governing legal framework should be established. Under Article 136 of the Labor Code, it is illegal for an employer to
prohibit a female employee from getting married or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage. This provision addresses a concern, particularly gender
discrimination, with no direct relevance to this case. Nonetheless, it can be invoked by a female employee who finds
herself prohibited by her employer from contracting marriage, or otherwise dismissed or discriminated upon by reason of
her marriage, and the employer faces the unenviable burden of establishing the inapplicability of Article 136.11

Of more general application is Article 282 of the Labor Code, which governs the termination by employers for "just
causes." Had Tecson been actually terminated in this case, Article 282 would have necessarily found application, since
Articles 282 to 284 stand as the only basis in law for the valid termination of an employee by an employer.12

Under Article 282, the employer may dismiss the employee for any of the following causes: (a) serious misconduct or
willful disobedience by the employee of the lawful order 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 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. Assuming that there is a company policy allowing the dismissal, constructive13 or otherwise, of an
employee by reason of the employee's marriage or choice of spouse, such policy alone cannot justify the dismissal. The
employer will have to establish not only the existence of the policy, but the presence of any of the grounds enumerated in
Article 282. Our Constitution and Labor Code guarantee an employee's security of tenure. For regular employees as
defined under the Labor Code, security of tenure is assured by the prohibition against termination except for the causes
enumerated under Articles 282 to 284.

Thus, the validity of a company policy on marriage such as that maintained by Glaxo would not necessarily be
determinative of the question of whether an employee who violated such policy may be terminated. Still, there may be
instances wherein the validity of the policy, whether standing by itself or as incorporated into an employment contract,
would be the decisive factor. Such may arise if for example, the employee is sought to be dismissed on the ground of loss
of confidence,14 and such loss of confidence developed due to the marriage to an employee from a rival company. In
such cases wherein it is necessary to pass judgment on the employer's policy itself, the following points should be
considered.

Both the Constitution and our body of statutory laws accord special status and protection to the contract of marriage. Our
Constitution recognizes that "marriage, as an inviolable social institution, is the foundation of the family, and shall be
protected by the State,"15 and our Family Code acknowledges that marriage is "a special contract of permanent union ...
an inviolable social institution whose nature, consequences and incidents are governed by law."16 It may be debatable
whether these provisions, by themselves, may be the source of operative and executory rights, but at the very least, they
establish a pervasive public policy that frowns upon acts that encumber any person's freedom to marry.

Moreover, if such encumbrance is contained in an employment contract, the stipulation can be declared void under Article
1409(1) of the Civil Code, which provides that a contract whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy is inexistent and void from the beginning.17 The standard is of great utility, as it
allows a measure of relief for persons laboring under private contractual obligations that, while insusceptible to the
traditional constitutional challenge under the Bill of Rights, nonetheless stand as onerous to the obligor and noxious to our
general body of laws.

Still, it would be injudicious, if not irresponsible, to judicially enforce a universal position that disencumbers marriage from
adverse consequences, if the encumbrance stands to protect third persons inevitably affected by an act of marital union.
For much as we may want to see and regard marriage in a vestal state, it may be a source of negativity for third persons,
and not just the jilted. This is apparent even on the most visceral level, as anybody who dislikes an immediate family
member's choice of bride or groom can attest to. The statutory protections accorded to marriage do not translate to a legal
compulsion on people to favor another person's choice in spouse.

21
The thesis is harmless enough if the consequence of such disapproval extends merely into the personal sphere and not
the legal. Yet, such as in this case, the consequences may be economic as well. For example, an aunt who voluntarily
extends regular financial benefits to a nephew may refuse to continue the doleout by reason of the relative's marriage or
choice of wife. In such a case, the nephew would have no cause of action to compel his aunt to continue the
remuneration, even if the aunt's reasons for disliking the new wife are noxious, such as bigotry. The invocation of the
inviolability of marriage or its protection under law will not suffice to legally compel the aunt to extend her largesse to her
nephew, for this act of charity arises solely from private volition. The State may protect marriage, but it cannot compel
private persons to give away money out of their pockets to the bride and groom.

If the prohibitions or restrictions are contained in a private employment policy or contract, the norms that would govern
their review are such as those contained in the Labor Code, and to an extent, the "public policy" clauses of the Civil
Code.18 However, the sanctity of the marital vow should not be the only relevant consideration at hand. The
considerations which may have impelled the employer to impose such conditions on the employee's absolute right to
marry warrant examination as well.

We can surmise that if the restrictions or conditions on the employee's right to marry bear no relevance to any interests
that the employer should be concerned with, then they should be voided if they are of obligatory import. In that regard, it is
difficult to foresee an instance wherein an absolute prohibition on any marriage imposed on the employees may be
sanctioned.19 Even if the prohibition is premised on the belief that a married employee would be able to devote less time
to the job, whatever causal economic concerns hardly outweigh the right of an individual to get married. Employees this
day and age have long transcended the yoke of serfdom and absolute fealty to master and the expense of the marital
bind.

If the prohibition or restriction pertains to the choice of spouse, rather than the choice to marry at all, there should be an
examination of the rationale behind the constraint. Again, if the restrictions or conditions bear no relevance to any
interests that the employer should be concerned with, then they should not be upheld. Restrictions that are nothing more
than the enforcement of personal biases, such as prohibitions on marrying members of a particular race or ethnic group,
may be struck down.

Nonetheless, while generalities may be sufficient to strike down the most obnoxious of prohibitions, those restrictions that
are geared towards maintaining valid economic concerns of the employer have to be assessed on a case to case basis.
Our fundamental law respects the right of enterprises to adopt and enforce such a policy to protect its right to reasonable
returns on investments and to expansion and growth.20

If the rationale in question relates to a consideration so vital to the interests of the employer as to warrant legal protection,
it should then be determined whether the means employed by the employer are reasonable enough as to allow a measure
of balance between these key interests of the employer and the fundamental right of the employee to marry.

Let us pay particular attention to Glaxo's policy. As noted in the Resolution, Glaxo belongs to the highly competitive
pharmaceutical industry. The competitive nature of the business is further highlighted by the fact that pharmaceutical
drugs are indispensable to modern society, and that the rival companies tend to produce drugs of like effect but marketed
under respective brand names. Thus, within the pharmaceutical industry, the hazard of industrial espionage looms largely,
more so than most other competitive industries. To that end, Glaxo is entitled to guard its trade secrets, manufacturing
formulas, marketing strategies and other confidential programs and information from competitors, concomitant to its right
to protect its own economic interests.

This in mind, it is but reasonable for Glaxo to be cautious about the social interaction of its employees with those of
companies which it directly competes with. If the employee goes as far as sharing hearth and home with the employee of
the rival company, there is greater cause of concern on the part of Glaxo. The fear may not so much arise from the
possibility of willful betrayal by its employees of trade secrets, but from the myriad opportunities in the course of shared
lives that one may inadvertently divulge to the spouse confidential information that the rival drug company may benefit
from. After all, the employer has no control over pillow talk. Neither could it be expected that the employee maintain a
higher fidelity to the employer than to the spouse.

It may be so, as petitioners argue, much of the fear is hypothetical in nature. Yet Glaxo, as with any other industry, is
allowed to take reasonable steps in order to prevent potential damage from becoming actual, especially if the economic
consequences are substantial. Glaxo is hardly a small-scale industry, and the pharmaceutical business seldom
characterized by old-fashioned rectitude.

22
Still, these concerns aside, the steps that Glaxo may employ to avoid the undue divulgence of its trade secrets should be
within reason. If termination is to be considered as an option, it should be only as a final resort, if there is no other way to
avoid the conflict of interest.

In this case, Glaxo's assailed policy does not call for automatic termination, providing as it does a process that allows for
all the opportunities for a mutually agreeable solution. Per the Employee Handbook, "every effort shall be made, together
by management and the employee, to arrive at a solution within six (6) months, either by transfer to another department in
a non-counter checking position, or by career preparation toward outside employment after Glaxo Wellcome. Employees
must be prepared for possible resignation within six (6) months, if no other solution is feasible."21

This procedure is extremely reasonable under the circumstances, and we have no problems in upholding its validity. As
noted in the Resolution: "[i]n any event, from the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and
those of competitor companies. Its employees are free to cultivate relationships with and marry persons of their own
choosing."22 It recognizes the concern arising from the possible conflict of interest, yet dissuades the enforcement of a
hasty, unilateral solution. It appears from the record of this case that such a procedure was adopted in good faith by both
parties. Tecson may find fault with the fact that Glaxo refused his request for transfer to the milk division, a step which, if
resorted to, may have resolved the perceived conflict of interest. Yet the procedure involved allows the transfer only if
mutually agreed upon, and besides, employees cannot generally compel the employer to transfer them from one division
to another, this being a management prerogative.

And finally, if no mutual resolution is arrived at, termination and voluntary resignation remain as viable options. Neither
obtained in this case, and we have already ruled that the transfer was valid and did not constitute constructive dismissal. If
Glaxo, or any employer with a similarly drawn-out procedure, were to ultimately resort to termination, the burden would
still fall upon it to establish that such termination is in accordance with the just causes as provided in Article 282 of the
Labor Code. Without such linkage, the termination would be invalid.

The fact that there was no actual termination in this case obviates the need for us to further apply Article 282 or the
jurisprudential rules on illegal termination to this case.

Still, should Glaxo retain the said policy, and another employee trek the same trail as Tecson did, it cannot be
foreordained that the Court would similarly rule for Glaxo and against the said employee. As repeatedly emphasized, it all
depends on the particular circumstances of each case. And ultimately, if dismissal, constructive or otherwise, is resorted
to, the standards for termination set by the Labor Code must still be complied with.

WHEREFORE, petitioner's Motion for Reconsideration is DENIED WITH FINALITY.

23
G.R. No. 166152 October 4, 2005

VILLAMOR GOLF CLUB, Brigadier General FILAMER J. ARTAJO, AFP (Ret.), Colonel RUBEN C. ESTEPA,
Lieutenant Colonel JULIUS A. MAGNO, and Lieutenant MILAGROS A. AGUILLON, jointly represented by Major
General ROBERTO I. SABULARSE, AFP (Ret.), Petitioners
vs.
RODOLFO F. PEHID, Respondent.

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 77654 reversing
the decision of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. CA-031296-02 and affirming
the Labor Arbiter’s decision.

On September 20, 1975, Rodolfo F. Pehid was employed by the Villamor Golf Club (VGC) as an attendant in the men’s
locker room, and, thereafter, he became the Supervisor-in-Charge. His subordinates included Juanito Superal, Jr.,
Patricio Parilla, Ricardo Mendoza, Cesar Velasquez, Vicente Casabon, Pepito Buenaventura and Carlito Modelo.

On May 1, 1998, the afore-named employees agreed to establish a common fund from the tips they received from the
customers, guests and members of the club for their mutual needs and benefits. Each member was to contribute the
amount of ₱100.00 daily. By October 31, 1998, the contributions of the employees had reached the aggregate amount of
₱17,990.00 based on the logbook maintained in the locker room. This agreement, however, was not known to the VGC
management.

An audit of the Locker Room Section of the golf club was conducted on February 7, 1999. On February 19, 1999, an
additional Audit Report2 was submitted by Ludy Capuyan, the audit clerk, to the Administrative Department of the club
stating, among others, that based on the information relayed to her, there was an undeclared and unrecorded aggregate
amount of ₱17,990.00 for the fund during the period of May 1998 to October 1998. Further, not one in the said section
admitted custody of such amount and there was no record that the money had been distributed among those employed in
the locker room. In said report, Capuyan recommended that an investigation be conducted to determine the whereabouts
of said amount and who was accountable therefor.

In the meantime, an administrative complaint was filed by Juanito Superal, Jr., Patricio Parilla, Ricardo Mendoza, Cesar
Velasquez, and Vicente Casabon charging Pehid with misappropriating the ₱17,990.00.

24
An investigation of the matter was conducted by the Head of the Security Department, who then submitted a Report dated
May 10, 1999 with the following recommendations:

10. Mr. Rodolfo Pehid should produce the common fund amounting allegedly to ₱17,990.00.

11. If unable to produce the money, a case of Swindling (ESTAFA) be filed against him by the locker room employees.

12. Separation from the service if found guilty of the charge by an administrative body convened by the VGC. 3

The Legal Officer of the VGC made a similar recommendation. In a Letter 4 dated May 19, 1999, Col. Ruben Estepa, the
Head of the Administrative Department, directed Pehid to submit his explanation on the said complaint and the reason
why he should not be dismissed from the club for violation of VGC Rules of Conduct No. IV-E(d).

On May 31, 1999, a certain Mil Raymundo, a VGC member, filed a letter-complaint against Pehid for misappropriating
₱3,000.00 from the common fund. On the same day, Pehid submitted his verified Explanation 5 to Col. Estepa denying the
charges against him and alleging that it was Pepito Buenaventura who had custody of the fund. He also alleged that the
charges filed against him stemmed from his strict management of the men’s locker room and that his co-employees
wanted to install Carlito Modelo as the person-in-charge in his stead. Pehid demanded that a formal investigation of the
matter be conducted.

After the requisite formal investigation by the Administrative Board of Inquiry, Pehid received Office Order No. 11-99 from
the General Manager of the club informing him that his employment was terminated effective July 1, 1999. Based on its
findings, Pehid committed gross misconduct in the performance of his duties in violation of Paragraph IV-E(d) of the VGC
Rules and Regulations.6 He was also informed that he committed acts of dishonesty which caused and tend to cause
prejudice to the club for misappropriating the common fund of ₱17,990.00 for his personal benefit.7

Pehid filed a complaint for illegal dismissal, unfair labor practice, separation pay/retirement benefits, damages and
attorney’s fees against petitioners VGC and/or Brig. Gen. Filamer Artajo (Ret. AFP), Col. Ruben Estepa, Lt. Milagros
Aguillon, and the VGC Administrative Board of Inquiry.

Pehid averred that he was dismissed without just cause and due process of law; that there was no basis or evidence to
show that he had custody of the common fund which was used for his own benefit; that he incurred the ire of his superiors
for testifying in support of Asterio Tansiongco, a former Director of Personnel who was dismissed by VGC; and that one of
Tansiongco’s accusers was Dario Velasquez, the brother of Cesar Velasquez, one of the locker boys who complained
against him.

In their Position Paper,8 the petitioners alleged that when confronted with the letter-complaint against him, Pehid admitted
that his accountability arose from the proceeds of the sale of the golf club and golf shares entrusted to him, which he used
for his personal needs without the knowledge of the persons concerned.

On February 28, 2002, the Labor Arbiter rendered judgment in favor of Pehid. 9 The dispositive portion of the decision
reads:

WHEREFORE, judgment is hereby rendered finding the dismissal of the complainant from his employment as illegal and
concomitantly respondent[s] are ordered to pay complainant full backwages and separation pay in lieu of reinstatement in
the amounts of ₱299,000.00 and ₱239,200.00, respectively.

Respondents are further ordered to pay complainant 10% attorney’s fees based on the total judgment award.

The complaint for moral and exemplary damages are hereby dismissed for lack of merit.

SO ORDERED.10

The Labor Arbiter ruled that Pehid was dismissed from his employment without any just cause. He declared that there
was no formal official publication among the members of the locker room personnel designating Pehid as the custodian of
the fund. Worse, the witnesses who testified against Pehid failed to prove that he was the custodian of the said mutual
fund since they only concluded the same by the mere fact that he was the officer-in-charge of the locker room. Moreover,
the Labor Arbiter declared that the acts attributed to Pehid were not committed in connection with his work as officer-in-
charge of the locker room.11

25
The petitioners appealed the decision to the NLRC. They averred that there was substantial evidence on record that the
complainant was the custodian of the fund. The matter of keeping in custody the token tips necessarily involved trust and
confidence among the personnel of the locker room. Pehid’s custody of the fund was intertwined with his duties as the
officer-in-charge; hence, there was justification for his dismissal from employment for loss of confidence.

On December 6, 2002, the NLRC set aside and reversed the decision of the Labor Arbiter. 12 The NLRC declared that
Pehid was lawfully dismissed from his employment for loss of trust and confidence on account of his misappropriation of
the funds in his custody. The NLRC ruled that such misappropriation constituted serious misconduct meriting dismissal
from his employment.13 Pehid filed a motion for the reconsideration of the decision, which the NLRC denied on April 2,
2003.14

Pehid then filed with the CA a petition for certiorari under Rule 65 of the Rules of Civil Procedure, assailing the decision
and resolution of the NLRC. The respondent maintained that no evidence was adduced to prove that he was the
custodian of the fund. He insisted that the fund subject matter of the complaint came from the voluntary contributions of
the locker room personnel to be used for their own benefit in times of need, and had no connection whatsoever with his
work as personnel in the locker room. If there was any misappropriation of the said fund, the same could not in any way
prejudice the club.

On February 11, 2004, the CA rendered a Decision 15 granting the petition. It reversed and set aside the decision of the
NLRC and reinstated the decision of the Labor Arbiter. The CA declared that Paragraph IV-E(a) and (d) of the VGC Rules
expressly provide that the funds referred to therein are funds of the club and that the ₱17,990.00 did not form part of such
fund but belonged to the locker room personnel. The CA also declared that the management of the VGC had no personal
knowledge about the funds and, in fact, had not sanctioned its existence. Moreover, VGC was not prejudiced by the loss
of the fund.

The petitioners filed a motion for reconsideration of the decision but the CA denied the same on November 22,
2004,16 hence, the present petition.

The petitioners raise the following issues:

1. Whether or not the process/proceeding undertaken by the Villamor Golf Club and the VGC [Administrative] Board of
Inquiry is legally and factually sustainable?

2. Whether or not the Decision of the Honorable Court of Appeals is contrary to law and jurisprudence and therefore
reversible?

3. Whether or not the incident of the case shall, likewise, fall within the provision of Article 282 paragraph (e) of the Labor
Code?17

The petitioners insist that there is substantial evidence on record that the respondent was the custodian of fund belonging
to the members of the locker room and that his misappropriation of the same constituted gross misconduct. They insist
that it is an act of manifest dishonesty within the context of Paragraph IV-E(d) of the Rules of Conduct of the club, in
relation to Article 282(e)18 of the Labor Code of the Philippines, tending to prejudice the VGC. The petitioners further insist
that, based on the substantial evidence on record, the respondent misappropriated the fund as his co-employees in the
locker room even positively identified him as the custodian thereof.

The petitioners aver that the respondent’s failure to account for and distribute the common fund which the locker
personnel had established for their mutual aid and benefit is a manifest dishonesty falling within the scope of the proviso
"(d.) All other acts of dishonesty which cause or tend to cause prejudice to Villamor Golf Club ."  The petitioners claim that
this conduct caused prejudice to VGC’s smooth operation and performance of services to its clientele.

According to the petitioners, the bare fact that the membership in the club is exclusive makes such members the
employers of VGC employees, including the respondent. Personnel who manage the daily affairs and activities of the
club, like the respondent, are imbued with a high level of trust and confidence. Moreover, the respondent was expected to
observe the diligence required in the maintenance of order, camaraderie, trust and confidence within the confines of his
assignment. Hence, the termination of his employment for failure to deliver the cash entrusted to him as the head of the
club’s locker room personnel and the custodian of the collective tips was a valid cause.

The petition is denied for lack of merit.

26
Paragraph IV-E(a) and (d) of the VGC Rules and Regulation cited by the petitioners reads:

E. Dishonesty

1. The following shall constitute violation of this section.

a) Misappropriation or malversation of Club funds.

d) All other acts of dishonesty which cause or tend to cause prejudice to Villamor Golf Club.19

The CA ruled that the petitioners cannot rely on the afore-quoted rule, thus:

Suffice it to state, that public respondent NLRC had overlooked and misapplied certain facts and circumstances of
substance, which, if properly appreciated, would affect the disposition of the case. Foremost, contrary to the finding of
respondent NLRC, VGC does not only cater its golf services to its club members who are purely officers of the Armed
Forces of the Philippines.

This is belied by no less than the allegations contained in the respondents’ REPLY TO THE POSITION PAPER OF THE
COMPLAINANT xxx, the membership of VGC is categorized as follows: a) Service member; b) Special members; c)
Associate member; and d) Honorary member. It is noteworthy to emphasize that under the categories of special member,
honorary member and partly an associate member, they are not officers of the Armed Forces of the Philippines. In fact,
even golfers who are not within the category of the memberships specified above, could make use of the course and the
facilities of the club as long as they pay the necessary fees. Secondly, the golfers, be they members of the respondent
VGC or simply walk-in paying golfers are not the employers of the personnel of respondent VGC; and lastly, in no
uncertain terms that the personnel of respondent VGC are members of the Club.

Prescinding therefrom, there is no doubt in our minds that the funds alleged to have been embezzled by the petitioner,
belonged to the personnel of respondent VGC and not to respondent VGC. In fact, the latter had not sanctioned the
purpose upon which the said funds were established. Along this line, We adhere to the Labor Arbiter’s disquisition
ratiocinated in this wise:

xxx xxx xxx.

In the case at bench, the voluntary contribution by the locker personnel amongst themselves to a mutual fund for their
own personal benefit in times of need is not in any way connected with the work of the locker boys and the complainant. If
ever there was misappropriation or loss of the said mutual fund, the respondent will not and cannot be in any way "tend or
cause to prejudice the club." Such mutual fund is a separate transaction among the employees and is not in any way
connected with the employee’s work. Thus, if a co-employee "A" owes employee "B" ₱100,000.00 and the former
absconds with the money, the employer cannot terminate the employment of employee "A" for dishonesty and/or serious
misconduct since the same was not committed in connection with the employee’s work.20

The ruling of the CA is correct. Under the afore-quoted VGC rule, the dishonesty of an employee to be a valid cause for
dismissal must relate to or involve the misappropriation or malversation of the club funds, or cause or tend to cause
prejudice to VGC. The substantial evidence on record indicates that the ₱17,990.00, which was accumulated from a
portion of the tips given by the golfers from May 1998 to October 1998 and was allegedly misappropriated by the
respondent as the purported custodian thereof, did not belong to VGC but to the forced savings of its locker room
personnel. The truth is, the separate affidavits of Pepito Buenaventura, 21 Juanito Superal, Jr.,22 Ricardo Mendoza,23 Cesar
Velasquez,24 and Vicente Casabon,25 as well as the allegations in the petitioners’ Position Paper,26 show that even the
VGC management did not know about the mutual fund or sanctioned its existence. Hence, the claim that the petitioners’
interest was prejudiced has no factual basis.

Company policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally valid and
binding and must be complied with by the parties unless finally revised or amended, unilaterally or preferably through
negotiation.27 However, while an employee may be validly dismissed for violation of a reasonable rule or regulation
adopted for the conduct of the company’s business,28 an act allegedly in breach thereof must clearly and convincingly fall
within the express intendment of such order.

27
Neither may the petitioners rely on Article 282 of the Labor Code. As the CA succinctly ruled:

Clearly, based on the grounds of termination provided under Article 282 of the Labor Code and the VGC Rules and
Regulations, the common denominator thereof to constitute gross misconduct as a ground for a valid termination of the
employee, is that – it is committed in connection with the latter’s work or employment. In the instant case, as previously
pointed out, the alleged petitioner’s misappropriation or malversation was committed, assuming it to be true, against the
common funds of the Locker Room personnel, which did not belong nor sanctioned by respondent VGC. A fortiori,
respondent VGC was not prejudiced or damaged by the loss or misappropriation thereof. Undoubtedly, the parties who
were prejudiced or damaged by the alleged embezzlement, were locker room personnel, who may ventilate any proper
civil or criminal action to whomsoever responsible therefor. Applying the principle in statutory construction of ejusdem
generis, i.e., "where general words follow an enumeration of persons or things, by words of a particular and specific
meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons
or things of the same kind or class as those specifically mentioned" (United Residents of Dominican Hill, Inc. vs.
Commission on Settlement of Land Problems, 352 SCRA 782). Elementary is the rule that when laws or rules are clear, it
is incumbent upon the judge to apply them regardless of personal belief or predilections - when the law is unambiguous
and unequivocal, application not interpretation thereof is imperative (De Guzman vs. Sison, 355 SCRA 69).

"Serious misconduct" as a valid cause for the dismissal of an employee is defined as improper or wrong conduct; the
transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. To be serious within the meaning and intendment of the law, the
misconduct must be of such grave and aggravated character and not merely trivial or unimportant. 29 However serious
such misconduct, it must,
nevertheless, be in connection with the employee’s work to constitute just cause for his separation. The act complained of
must be related to the performance of the employee’s duties such as would show him to be unfit to continue working for
the employer.30

IN LIGHT OF ALL THE FOREGOING, the instant petition is DENIED for lack of merit. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 77654 are AFFIRMED. Costs against the petitioners.

SO ORDERED.

28
G.R. No. 124617             April 28, 2000

PHILIPPINE AEOLUS AUTO-MOTIVE UNITED CORPORATION and/or FRANCIS CHUA, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ROSALINDA C. CORTEZ, respondents.

BELLOSILLO, J.:

This petition seeks to set aside the Decision of 15 February 1996 and the Resolution of 28 March 1996 of public
respondent National Labor Relations Commission in NLRC NCR CA No. 009753-95 (NLRC NCR Case No. 00-12-08759-
94) which modified the decision of the Labor Arbiter finding petitioners not guilty of illegal dismissal.

Petitioner Philippine Aeolus Automotive United Corporation (PAAUC) is a corporation duly organized and existing under
Philippine laws, petitioner Francis Chua is its President while private respondent Rosalinda C. Cortez was a company
nurse1 of petitioner corporation until her termination on 7 November 1994.

On 5 October 1994 a memorandum was a issued by Ms. Myrna Palomares, Personnel Manager of petitioner corporation,
addressed to private respondent Rosalinda C. Cortez requiring her to explain within forty-eight (48) hours why no
disciplinary action should be taken against her (a) for throwing a stapler at Plant Manager William Chua, her superior, and
uttering invectives against him on 2 August 1994; (b) for losing the amount of P1,488.00 entrusted to her by Plant
Manager Chua to be given to Mr. Fang of the CLMC Department on 23 August 1994; and, (c) for asking a co-employee to
punch-in her time card thus making it appear that she was in the office in the morning of 6 September 1944 when in fact
she was not. The memorandum however was refused by private respondent although it was read to her and discussed
with her by a co-employee. She did not also submit the required explanation, so that while her case pending investigation
the company placed her under preventive suspension for thirty (30) days effective 9 October 1994 to 7 November 1994.

On 20 October 1994, while Cortez was still under preventive suspension, another memorandum was issued by petitioner
corporation giving her seventy-two (72) hours to explain why no disciplinary action should be taken against her for
allegedly failing to process the ATM applications of her nine (9) co-employees with the Allied Banking Corporation. On 21
October 1994 private respondent also refused to receive the second memorandum although it was read to her by a co-
employee. A copy of the memorandum was also sent by the Personnel Manager to private respondent at her last known
address by registered mail.

Meanwhile, private respondent submitted a written explanation with respect to the loss of the P1,488.00 and the
punching-in of her time card by a co-employee.

29
On 3 November 1994 a third memorandum was issued to private respondent, this time informing her of her termination
from the service effective 7 November 1994 on grounds of gross and habitual neglect of duties, serious misconduct and
fraud or willful breach of trust.2

On 6 December 1994 private respondent filed with the Labor Arbiter a complaint for illegal dismissal, non-payment of
annual service incentive leave pay, 13th month pay and damages against PAAUC and its president Francis Chua.3

On 10 July 1995 the Labor Arbiter rendered a decision holding the termination of Cortez as valid and legal, at the same
time dismissing her claim for damages for lack of merit.4

On appeal to the NLRC, public respondent reversed on 15 February 1996 the decision of the Labor Arbiter and found
petitioner corporation guilty of illegal dismissal of private respondent Cortez. The NLRC ordered petitioner PAAUC to
reinstate respondent Cortez to her former position with back wages computed from the time of dismissal up to her actual
reinstatement.5

On 11 March 1996 petitioners moved for reconsideration. On 28 March 1996 the motion was denied;6 hence, this petition
for certiorari challenging the NLRC Decision and Resolution.

The crux of the controversy may be narrowed down to two (2) main issues: whether the NLRC gravely abused its
discretion in holding as illegal the dismissal of private respondent, and whether she is entitled to damages in the event
that the illegality of her dismissal is sustained.

The Labor Code as amended provides specific grounds by which an employer may validly terminate the services of an
employee 7 which grounds should be strictly construed since a person's employment constitutes "property" under the
context of the constitutional protection that "no person shall be deprived of life, liberty or property without due process of
law" and, as such, the burden of proving that there exists a valid ground for termination of the employment rests upon the
employer.8 Likewise, in light of the employee's right to security of tenure, where a penalty less punitive than dismissal will
suffice, whatever missteps may have been committed by labor ought not to be visited with a consequence so severe.9

A perusal of the termination letter indicates that private respondent was discharged from employment for "serious
misconduct, gross and habitual neglect of duties and fraud or willful breach of trust." Specifically —

1. On August 2, 1994, you committed acts constituting gross disrespect to your superior Mr. William Chua, the
Plant Manager.

2. On August 23, 1994, the Plant Manager entrusted you the amount of P1,488.00 to be sent to CLMC for Mr.
Fang but the money was allegedly lost in your possession and was not recovered.

3. On September 6, 1994, you caused someone else to punch-in your time card to show that you were at work
when in fact you were doing a personal errand for Richard Tan. As per time card you were in at 8:02 A.M. but you
only arrived at 12:35 P.M.

4. On July 28, 1994, you received an amount of P900.00 from Miss Lucy Lao to open an ATM card of nine (9)
employees. On September 24, 1994, one of the employees complained by the name of Tirso Aquino about the
status of his ATM Card and upon query from the bank it was found out that no application and no deposit for said
person has been made. Likewise, it was found out that you did not open the ATM Card and deposit the P800.00
for the 8 other employees. It turned out that said deposit was made after a month later. 10

As to the first charge, respondent Cortez claims that as early as her first year of employment her Plant Manager, William
Chua, already manifested a special liking for her, so much so that she was receiving special treatment from him who
would oftentimes invite her "for a date," which she would as often refuse. On many occasions, he would make sexual
advances — touching her hands, putting his arms around her shoulders, running his fingers on her arms and telling her
she looked beautiful. The special treatment and sexual advances continued during her employment for four (4) years but
she never reciprocated his flirtations, until finally, she noticed that his attitude towards her changed. He made her
understand that if she would not give in to his sexual advances he would cause her termination from the service; and he
made good his threat when he started harassing her. She just found out one day that her table which was equipped with
telephone and intercom units and containing her personal belongings was transferred without her knowledge to a place
with neither telephone nor intercom, for which reason, an argument ensued when she confronted William Chua resulting
in her being charged with gross disrespect. 11

30
Respondent Cortez explains, as regards the second charge, that the money entrusted to her for transmittal was not lost;
instead, she gave it to the company personnel in-charge for proper transmittal as evidenced by a receipt duly signed by
the latter. 12

With respect to the third imputation, private respondent admits that she asked someone to punch-in her time card
because at that time she was doing an errand for one of the company's officers, Richard Tan, and that was with the
permission of William Chua. She maintains that she did it in good faith believing that she was anyway only
accommodating the request of a company executive and done for the benefit of the company with the acquiescence of
her boss, William Chua. Besides, the practice was apparently tolerated as the employees were not getting any reprimand
for doing so. 13

As to the fourth charge regarding her alleged failure to process the ATM cards of her co-employees, private respondent
claims that she has no knowledge thereof and therefore denies it. After all, she was employed as a company nurse and
not to process ATM cards for her co-employees.

The Supreme Court, in a litany of decisions on serious misconduct warranting dismissal of an employee, has ruled that for
misconduct or improper behavior to be a just cause for dismissal (a) it must be serious; (b) must relate to the performance
of the employee's duties; and, (c) must show that the employee has become unfit to continue working for the
employer. 14 The act of private respondent in throwing a stapler and uttering abusive language upon the person of the
plant manager may be considered, from a lay man's perspective, as a serious misconduct. However, in order to consider
it a serious misconduct that would justify dismissal under the law, it must have been done in relation to the performance of
her duties as would show her to be unfit to continue working for her employer. The acts complained of, under the
circumstances they were done, did not in any way pertain to her duties as a nurse. Her employment identification card
discloses the nature of her employment as a nurse and no other. 15 Also, the memorandum informing her that she was
being preventively suspended pending investigation of her case was addressed to her as a nurse. 16

As regards the third alleged infraction, i.e., the act of private respondent in asking a co-employee to punch-in her time
card, although a violation of company rules, likewise does not constitute serious misconduct. Firstly, it was done by her in
good faith considering that she was asked by an officer to perform a task outside the office, which was for the benefit of
the company, with the consent of the plant manager. Secondly, it was her first time to commit such infraction during her
five (5)-year service in the company. Finally, the company did not lose anything by reason thereof as the offense was
immediately known and corrected.

On alleged infraction No. 4, as may be gleaned from and admitted in the memorandum of petitioners to private
respondent dated 20 October 1994 17 and the notice of termination dated 3 November 1994, the money entrusted to her
was in fact deposited in the respective accounts of the employees concerned, although belatedly. We agree with the
submission of the Solicitor General that —

The mere delay/failure to open an ATM account for nine employees is not sufficient, by itself, to support a
conclusion that Rosalinda is guilty of gross and habitual neglect of duties. First, petitioner did not show that
opening an ATM is one of her primary duties as company nurse. Second, petitioner failed to show that Rosalinda
intentionally, knowingly, and purposely delayed the opening of ATM accounts for petitioner's employees. It is of
common knowledge that a bank imposes upon an applicant certain requirements before an ATM account can be
opened, i.e. properly filled up application forms, identification cards, minimum deposit etc. In the instant case,
petitioner did not prove that the delay was caused by Rosalinda's neglect or willful act (emphasis supplied). 18

Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care.
It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. 19 The negligence, to warrant
removal from service, should not merely be gross but also habitual. Likewise, the ground "willful breach by the employee
of the trust reposed in him by his employer" must be founded on facts established by the employer who must clearly and
convincingly prove by substantial evidence the facts and incidents upon which loss of confidence in the employee may
fairly be made to rest. 20 All these requirements prescribed by law and jurisprudence are wanting in the case at bar.

On the issue of moral and exemplary damages, the NLRC ruled that private respondent was not entitled to recover such
damages for her failure to prove that petitioner corporation had been motivated by malice or bad faith or that it acted in a
wanton, oppressive or malevolent manner in terminating her services. In disbelieving the explanation proffered by private
respondent that the transfer of her table was the response of a spurned lothario, public respondent quoted the Labor
Arbiter —

31
 Complainant's assertion that the cause of the altercation between her and the Plant Manager where she threw a
stapler to him and uttered invectives against him was her refusal to submit to his advances to her which started
from her early days of employment and lasted for almost four years, is hardly believable. For indeed, if there was
such harassment, why was there no complaints (sic) from her during that period? Why did she stay there for so
long? Besides, it could not have taken that period for the Plant Manager to react. This assertion of the
complainant deserves no credence at all. 21

Public respondent in thus concluding appears baffled why it took private respondent more than four (4) years to expose
William Chua's alleged sexual harassment. It reasons out that it would have been more prepared to support her position if
her act of throwing the stapler and uttering invectives on William Chua were her immediate reaction to his amorous
overtures. In that case, according to public respondent, she would have been justified for such outburst because she
would have been merely protecting her womanhood, her person and her rights.

We are not persuaded. The gravamen of the offense in sexual harassment is not the violation of the employee's sexuality
but the abuse of power by the employer. Any employee, male or female, may rightfully cry "foul" provided the claim is well
substantiated. Strictly speaking, there is no time period within which he or she is expected to complain through the proper
channels. The time to do so may vary depending upon the needs, circumstances, and more importantly, the emotional
threshold of the employee.

Private respondent admittedly allowed four (4) years to pass before finally coming out with her employer's sexual
impositions. Not many women, especially in this country, are made of the stuff that can endure the agony and trauma of a
public, even corporate, scandal. If petitioner corporation had not issued the third memorandum that terminated the
services of private respondent, we could only speculate how much longer she would keep her silence. Moreover, few
persons are privileged indeed to transfer from one employer to another. The dearth of quality employment has become a
daily "monster" roaming the streets that one may not be expected to give up one's employment easily but to hang on to it,
so to speak, by all tolerable means. Perhaps, to private respondent's mind, for as long as she could outwit her employer's
ploys she would continue on her job and consider them as mere occupational hazards. This uneasiness in her place of
work thrived in an atmosphere of tolerance for four (4) years, and one could only imagine the prevailing anxiety and
resentment, if not bitterness, that beset her all that time. But William Chua faced reality soon enough. Since he had no
place in private respondent's heart, so must she have no place in his office. So, he provoked her, harassed her, and finally
dislodged her; and for finally venting her pent-up anger for years, he "found" the perfect reason to terminate her.

In determining entitlement to moral and exemplary damages, we restate the bases therefor.1âwphi1 In moral damages, it
suffices to prove that the claimant has suffered anxiety, sleepless nights, besmirched reputation and social humiliation by
reason of the act complained of. 22 Exemplary damages, on the other hand, are granted in addition to, inter alia, moral
damages "by way of example or correction for the public good" 23 if the employer ''acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner." 24

Anxiety was gradual in private respondent's five (5)-year employment. It began when her plant manager showed an
obvious partiality for her which went out of hand when he started to make it clear that he would terminate her services if
she would not give in to his sexual advances. Sexual harassment is an imposition of misplaced "superiority" which is
enough to dampen an employee's spirit in her capacity for advancement. It affects her sense of judgment; it changes her
life. If for this alone private respondent should be adequately compensated. Thus, for the anxiety, the seen and unseen
hurt that she suffered, petitioners should also be made to pay her moral damages, plus exemplary damages, for the
oppressive manner with which petitioners effected her dismissal from the service, and to serve as a forewarning to
lecherous officers and employers who take undue advantage of their ascendancy over their employees.

All told, the penalty of dismissal is too excessive and not proportionate to the alleged infractions committed considering
that it does not appear that private respondent was an incorrigible offender or that she inflicted serious damage to the
company, nor would her continuance in the service be patently inimical to her employer's interest. 25 Even the suspension
imposed upon her while her case was pending investigation appears to be unjustified and uncalled for.

WHEREFORE, the Decision of public respondent National Labor Relations Commssion finding the dismissal of private
respondent Rosalinda C. Cortez to be without just cause and ordering petitioners Philippine Aeolus Automotive United
Corporation and/or Francis Chua to pay her back wages computed from the time of her dismissal, which should
be  full back wages, is AFFIRMED. However, in view of the strained relations between the adverse parties, instead of
reinstatement ordered by public respondent, petitioners should pay private respondent separation pay equivalent to one
(1) month salary for every year of service until finality of this judgment. In addition, petitioners are ordered to pay private
respondent P25,000.00 for moral damages and P10,000.00 for exemplary damages. Costs against petitioners.

32
SO ORDERED.

G.R. No. 155279 October 11, 2005

MICRO SALES OPERATION NETWORK and WILLY BENDOL, Petitioners,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION), LARRY HERMOSA, LEONARDO G. DE
CASTRO and RAMIL BASINILLO, Respondents.

DECISION

QUISUMBING, J.:

For review on certiorari are the Resolutions1 dated November 28, 2001 and September 3, 2002, respectively, of the
Court of Appeals, in CA-G.R. SP No. 67755. The said Resolutions dismissed petitioners’ special civil action for certiorari
against the National Labor Relations Commission (NLRC) Resolution,2 which affirmed the Labor Arbiter’s
Decision3 finding petitioners herein liable for illegal dismissal.

The antecedent facts are as follows:

Petitioner Micro Sales Operation Network ("company" for brevity) is a domestic corporation engaged in local
transportation of goods by land. Petitioner Willy 4 Bendol was the company’s operations manager at the time of the
controversy.

Private respondents Larry Hermosa, Leonardo de Castro, and Ramil Basinillo were employed by the company as driver,
warehouseman, and helper, respectively. Hermosa was hired on November 17, 1997, de Castro on February 1, 1996, and
Basinillo on February 4, 1998.

Hermosa failed to promptly surrender the ignition key of the company’s vehicle after discharging his duties. Such failure
was allegedly contrary to the company’s standard operating procedure. Thus, he was asked to explain within 24 hours
why disciplinary action should not be meted on him. He explained that he kept the ignition key because the vehicle was
stalled when its battery broke down.5 Unsatisfied with Hermosa’s explanation, the company dismissed him on January 9,
1999.

De Castro was suspected of firing a gun during the blessing of the company’s warehouse on December 10, 1998. The
next day, he was placed under preventive suspension and temporarily banned from entering the company’s premises. He

33
was also asked to explain within 24 hours why he should not be terminated. He explained that he had no knowledge of
the said incident.6 As his suspension was indefinite and he received no recall order from petitioners, he no longer reported
for work.

Basinillo alleged that sometime in September 1998, the company’s security guard scolded him for not wearing the
employee ID. On October 17, 1998, he was dismissed.

Thus, on February 10, 1999, Hermosa, de Castro, and Basinillo collectively filed a Complaint 7 for illegal dismissal before
the Regional Arbitration Branch No. IV, docketed as NLRC Case No. RAB-IV-2-10765-99-C.

In his Decision8 dated February 21, 2000, Labor Arbiter Antonio R. Macam found that private respondents were illegally
dismissed. The fallo of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of all complainants herein
illegal and ordering respondents to reinstate them to their former or equivalent positions and to pay them full backwages,
plus ten percent (10%) attorney’s fees, computed as follows:

LARRY HERMOSA

From January 9, 1999 to Feb. 21, 2000

= 1 yr. 1 mo. & 12 days or 13.36 mos.

₱220.00 x 26 x 13.36 = ₱76,419.20

₱76,419.20/12 = 6,368.27

₱220.00 x 5 = 1,100.00 ₱83,887.47

----------------

LEONARDO DE CASTRO

From Dec. 12, 1998 to Feb. 21, 2000

= 1 yr. 2 mos. & 9 days or 14.30 mos.

₱7,280.00 x 14.30 = ₱104,104.00

₱104,104.00/12 = 8,675.33

₱7,280.00/26 x 5 = 1,400.00 ₱114,179.33

----------------

RAMIL BASINILLO

From Oct. 17, 1998 to Feb. 21, 2000

= 1 yr., 4 mos. & 4 days or 16.13 mos.

₱200.00 x 26 x 16.13 = ₱83,876.00

₱83,876.00/12 = 6,989.67

₱200.00 x 5 = 1,000.00 ₱ 91,865.67

34
---------------- ---------------

Total Full Backwages = ₱289,932.47

Plus 10% Attorney’s Fees = 28,993.25

---------------

GRAND TOTAL = ₱318,925.72

SO ORDERED.9

On appeal, the NLRC affirmed the Labor Arbiter’s decision. It also denied petitioners’ motion for reconsideration.

Undaunted, petitioners filed with the Court of Appeals a special civil action for certiorari. However, the appellate court
dismissed the petition for being defective in form. It found that only the company signed the verification and certification on
non-forum shopping. Petitioner Willy Bendol did not sign the same.

Petitioners’ motion for reconsideration was denied. The appellate court reasoned that even if petitioner Willy Bendol was
not impleaded as a real party in interest, records showed that he was impleaded as a co-respondent before the Labor
Arbiter. Thus, the appellate court ruled, his failure to sign the verification and certification on non-forum shopping is a
ground for the dismissal of the petition.

Hence, the instant petition anchored on the following grounds:

A. THE HONORABLE COURT OF APPEALS PLAINLY ERRED AND ACTED CONTRARY TO EXISTING LAW AND
JURISPRUDENCE IN DISMISSING THE PETITION FOR CERTIORARI  ON A MERE TECHNICALITY CONSIDERING
THAT WILLY BENDOL WAS JOINED MERELY AS A NOMINAL PARTY TO THE PETITION.

B. MORE IMPORTANTLY, JUSTICE WOULD BE BEST SERVED IF THE PETITION WAS GIVEN DUE COURSE
CONSIDERING THAT THE PUBLIC RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DECISION OF LABOR ARBITER
MACAM CONSIDERING THAT:

1. THERE IS NO FACTUAL OR EVIDENTIARY BASIS TO SUPPORT THE FINDING OF ILLEGAL DISMISSAL. DUE
PROCESS AND FAIR PLAY DICTATE THAT THE PUBLIC RESPONDENT COMMISSION POINT OUT THE
PARTICULAR FACTUAL FINDING OF THE LABOR ARBITER WHICH JUSTIFIED THE FINDING OF ILLEGAL
DISMISSAL.

2. THE PUBLIC RESPONDENT COMMISSION IGNORED THE FACT THAT THE LABOR ARBITER’S FINDING OF
ILLEGAL DISMISSAL RESTS ON PURE SPECULATION, CONJECTURE AND SURMISES.

3. PRIVATE RESPONDENT BASINILLO HIMSELF DENIED THAT HE WAS DISMISSED BY PETITIONERS.

4. THE ACTS OF HERMOSA CONSTITUTE WILLFUL DISOBEDIENCE JUSTIFYING HIS DISMISSAL.

5. THE HONORABLE COMMISSION COMPLETELY IGNORED THE FACT THAT PRIVATE RESPONDENTS’
SINGULAR CAUSE OF ACTION IS THAT FOR ILLEGAL DISMISSAL. THUS, THE LABOR ARBITER’S AWARD OF
SEPARATION PAY AND ATTORNEY’S FEES WAS UTTERLY WITHOUT BASIS.10

Petitioners insist Willy Bendol was impleaded merely because he was the immediate supervisor of private respondents.
They argue that the real party in interest in this case is the company. In any case, petitioners point out that Bendol was no
longer connected with the company when the special civil action for certiorari was filed.

Private respondents, however, maintain that formal requirements must be strictly complied with. Thus, they posit, the
Court of Appeals correctly dismissed the petition for failure of one of the petitioners to sign the verification and certification
on non-forum shopping.

35
Further, petitioners contend that Hermosa’s omission constituted willful disobedience justifying his dismissal. With respect
to de Castro, petitioners claim that he was merely suspended. As for Basinillo, petitioners point to an unsworn
statement,11 where he denied filing any complaint for illegal dismissal against the company.

Private respondents, however, counter that petitioners failed to prove willful disobedience as a just cause for Hermosa’s
termination. Moreover, they posit that de Castro’s preventive suspension constituted constructive dismissal because it
was for an indefinite period and no recall order was issued by the company. Private respondents also argue that
Basinillo’s purported unsworn statement has no probative value.

Lastly, petitioners contend the Labor Arbiter erroneously awarded separation pay and attorney’s fees not prayed for. On
this point, private respondents quickly point out that, contrary to petitioners’ claim, separation pay was not awarded at all.
They also claim that the award of attorney’s fees was in accordance with law.

We resolve to give due course to the petition.

The requirement regarding verification of a pleading is not jurisdictional. Such requirement is simply a condition affecting
the form of the pleading, non-compliance with which does not necessarily render the pleading fatally defective.12

The Court of Appeals relied on Loquias v. Office of the Ombudsman,13 which held that a certification on non-forum
shopping signed by only one of two or more petitioners is defective, unless he was duly authorized by his co-petitioner.
However, the said ruling applies when the co-parties are being sued in their individual capacities. Note that the petitioners
in Loquias14 are the mayor, vice-mayor, and three members of the municipal board of San Miguel, Zamboanga del Sur.
The said co-parties were charged with violation of Republic Act No. 301915 in their various capacities.

In the instant case, the petitioners are the company and its operations manager, Willy Bendol. The latter was impleaded
simply because he was a co-respondent in the illegal dismissal complaint. He has no interest in this case separate and
distinct from the company, which was the direct employer of private respondents. Any award of reinstatement,
backwages, and attorney’s fees in favor of private respondents will be enforced against the company as the real party in
interest in an illegal dismissal case. Petitioner Bendol is clearly a mere nominal party in the case. His failure to sign the
verification and certification on non-forum shopping is not a ground for the dismissal of the petition. The appellate court
erred in dismissing outright petitioners’ special civil action for certiorari solely on that ground.

The logical course of action now is to direct the Court of Appeals to give due course to the special civil action for certiorari.
However, to obviate further delay in the resolution of this case, we shall bring the present controversy to rest.

After weighing the parties’ arguments and carefully reviewing the records of this case, we agree with the findings and
conclusions of the Labor Arbiter as affirmed by the NLRC.

Hermosa was unjustly dismissed. For willful disobedience to be a valid cause for dismissal, the following twin elements
must concur: (1) the employee's assailed conduct must have been willful, that is, characterized by a wrongful and
perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge.16

Both elements are lacking. We find no hint of perverse attitude in Hermosa’s written explanation.17 On the contrary, it
appears that the alleged company procedure for leaving the ignition key of the company’s vehicles within office premises
was not even made known to him.18 Petitioners failed to prove Hermosa willfully disobeyed the said company procedure.
At any rate, dismissal was too harsh a penalty for the omission imputed to him.

De Castro was likewise unlawfully terminated. Contrary to petitioner’s claim, records show that de Castro was not merely
suspended. He was dismissed for alleged abandonment of work. 19 To constitute abandonment as a just cause for
dismissal, there must be: (a) absence without justifiable reason; and (b) a clear intention, as manifested by some overt
act, to sever the employer-employee relationship.20

Petitioners failed to prove that de Castro abandoned his job. A clear intention to end the employer-employee relationship
is missing. He did not report for work simply because he was indefinitely suspended. Moreover, the fact that de Castro
filed a case for illegal dismissal against petitioners belies abandonment.21

36
In the case of Basinillo, petitioners rely solely on his purported unsworn statement alleging he was never dismissed.
However, not having been sworn to, the said document has no probative value. While the Court is liberal in the conduct of
proceedings for labor cases, proof of authenticity as a condition for the admission of documents is nonetheless required.22

Petitioners failed to present evidence of Basinillo’s continuous contribution to SSS or uninterrupted pay slips to prove he
remained under the company’s employ. Hence, the complaint23 for illegal dismissal filed by Basinillo stands and speaks for
itself. Once a case for illegal dismissal is filed, the burden is on the employer to prove that the termination was for valid
cause.24 Petitioners failed to discharge this burden persuasively.

Finally, petitioners lament that the Labor Arbiter erred in granting respondents separation pay and attorney’s fees. We
note, however, that separation pay was not awarded at all; thus, any discussion on this matter would be futile. On the
other hand, the award of attorneys’ fees, though not prayed for, is sanctioned by law25 and must be upheld.

WHEREFORE, the assailed Resolutions dated November 28, 2001 and September 3, 2002, respectively, of the Court of
Appeals, in CA-G.R. SP No. 67755, are SET ASIDE. The NLRC Resolution affirming the Labor Arbiter’s Decision, finding
petitioners liable for illegal dismissal, is AFFIRMED. Costs against petitioners.

SO ORDERED.

G.R. No. 111934 April 29, 1998

JUDY PHILIPPINES, INC., Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and VIRGINIA

ANTIOLA, Respondents.

MARTINEZ, J.:

This petition for certiorari assails the Decision 1 dated June 30, 1993 of the National Labor Relations Commission ordering
petitioner to reinstate private respondent Virginia Antiola, with one year backwages; and the Order 2 dated August 30,
1993 denying the motion for reconsideration. The challenged ruling reversed the decision dated April 26, 1990 of Labor
Arbiter Arturo V. Casuco dismissing the complaint for unfair labor practice and illegal dismissal for lack of merit. 3

The facts which gave rise to this petition are as follows:

Virginia Antiola was employed by petitioner Judy Philippines, Inc. in the latter's export business since January 1985. In the
course of such employment, she worked as an assorter of baby infant dresses with a daily salary of P69.00 up to January
11, 1989.

On November 15, 1988, Virginia Antiola was directed by Marietta Elizon, her supervisor, to sort out baby infant dresses
pursuant to an instruction sheet.

On January 4, 1989, petitioner, thru its Personnel Manager, Mrs. Lolita Agus, required private respondent to explain in
writing why she should not be meted disciplinary sanctions for her erroneous assortment and packaging of 2,680 dozens
of infant wear. On the same day, she submitted her written explanation, admitting her error and pleading that "Kaya
inihihingi ko po nang paumanhin ang aking pagkakamali." 4

37
Similarly on January 24, 1989, Marietta Elizon, private respondent's supervisor and Ester Rellesiva, the packer, received
a memo requiring them to explain why they should not be penalized, Marietta Elizon submitted her explanation on
February 2, 1989 5 and Ester Rellesiva on January 25, 1989. 6

Petitioner found private respondent guilty of negligence and she was dismissed from employment effective January 11,
1989, Marietta Elizon, on the other hand, was suspended from employment for one (1) month effective February 12, 1989
on the ground of negligence through command responsibility. Ester Rellesiva was found innocent on the ground that when
she undertook the packing of the infant wear, the same were already sealed in black plastic bags and could no longer be
checked.

The National Federation of Labor Union (NAFLU), in behalf of Virginia Antiola, filed a complaint for unfair labor practice
and illegal dismissal against Judy Philippines, Inc. and Lolita Z. Agus.

NAFLU alleged that the dismissal of Virginia Antiola was unjustified because the infant wear erroneously assorted by
Antiola should not have been shipped to the buyer had the company's supervisor and the buyer's quality comptroller
exercised due diligence in the performance of their duties in ensuring that the goods were properly assorted. NAFLU
assert that the act of petitioner in dismissing private respondent Antiola is a manipulative scheme designed to support its
deliberate attempt to get rid of her from the service.

Petitioner countered that instead of following the written instruction of her supervisor, private respondent deviated
therefrom which resulted in erroneous packaging of the infant wear. Thus, petitioner, avers that the dismissal of private
respondent Antiola was valid and lawful, premised on the ground of negligence.

The Labor Arbiter's decision rendered on April 26, 1990 found the dismissal justified, viz:

Upon careful study and perusal of the entire records of the instant case this office is inclined to uphold the act of the
petitioner on dismissing individual complainant, as lawful, premise on the ground of fault and negligence causing an
irreparable damage to the goodwill of the petitioners' business, especially considering that the latter is an export oriented
entity. For more than one and one half months (1 1/2) from November 15, 1988 up to January 4, 1989 while she,
individual complainant, was in the process of sorting the finished products she failed to notice the errors she had been
committing. She had neglected her duty to check for herself her accomplishment whether or not it tallys with the written
instruction of her supervisor in her possession. She admitted in her own written admission that she failed to check her
errors and that she really committed the erroneous assortment since the very beginning.

The claim of complainants that the act of petitioner in dismissing individual claimant is discriminatory, tainted with unfair
labor practice, on the ground that supervisor, Marietta Elizon, was made to suffer only one month suspension while
individual claimant was punished too severely by dismissal, is untenable. The degree responsibility between individual
claimant and supervisor can not be the same. The wrongful act was committed by complainant while her supervisor was
merely remiss of her duty to supervise complainant. In the case of Edwin Estabillo, the buyer's quality controller, he is
checking the quality of the infants wear and not specification. In addition, he is not an employee of the herein petitioner
under which the latter may impose appropriate discipline.

Concerning complainants claim that Virginia Antiola was not accorded due process before she was dismissed, records
show that complainant Antiola was required to explain in writing within (20) hours why she should not be meted any
disciplinary action for her negligence, that of having assorted the goods erroneously and contrary to the instruction given
her. Complainant Antiola in compliance with the memorandum, submitted her written admission of guilt, which in turn
became the basis of the petitioner in terminating her service. On the basis of the foregoing circumstance, this Labor
Arbiter is of the view that due process mandated under B.P. 130 is substantially satisfied. There is no need for a hearing
because herein individual claimant has pleaded guilty.

While it is true that individual complainant has committed the infraction for the first time, as the records will show, and that
she has voluntarily admitted guilt, it could not likewise be denied that respondent company suffered substantial losses
brought about by individual complainant's wrongful act. She should have checked her accomplishment against the written
instruction of her supervisor, before turning over the same to the packer for the packing. Let it be recalled that before
turning over the assorted goods to the packer, it is already packed in black plastic bags presumably by individual
complainant herself. Regrettably, the latter failed to exercise due diligence in the performance of her assigned tasks.
Much as we are bound to uphold the right of workers to security of tenure, we cannot, as in this case, deny capital its
prerogative to exercise its inherent power to discipline its workers.

WHEREFORE, premises considered, let the instant case be, as it is hereby DISMISSED for lack of merit.

38
SO ORDERED. 7

Private respondent appealed to the National Labor Relations Commission. In reversing the decision of the labor arbiter,
the NLRC said that:

The most, arguendo, that may be said against complainant here is that in failing "to exercise due diligence in the
performance of her assigned task(s),' she committed "Gross . . . neglect" in the performance of her duty. But pertinently,
Article 282(b) of the Labor Code requires that to qualify as a valid cause for dismissal such neglect must not only be
gross, it should be "Gross and habitual neglect" in character.

Noting that the Labor Arbiter, himself admits that "individual complainant has committed the infraction for the first time, as
the records will show" (Decision, p. 6 Record, p. 54), we thus rule that the penalty of dismissal is quite severe here.

Against the backdrop that the complainant was dismissed on January 12, 1989 and has been deprived by petitioner
company of wages for about three years and four months, we opine that an award of reinstatement plus one year
backwages will suffice.

WHEREFORE, the appealed decision is hereby set aside. The respondents are hereby directed to reinstate complainant
with backwages limited to one year.

SO ORDERED. 8

Petitioner's motion for reconsideration and/or appeal was denied in an Order dated August 30, 1993.

Hence, this petition for review, the petitioner contending that:

THE NLRC SERIOUSLY ERRED, AS A MATTER OF LAW, IN NOT HOLDING THAT UNDER ARTICLE 223 OF THE
LABOR CODE THE APPEAL FILED BY PRIVATE RESPONDENT TO THE NATIONAL LABOR RELATIONS
COMMISSION FROM THE DECISION OF LABOR ARBITER ARTURO V. CASUCO WAS FILED BEYOND THE
REGLEMENTARY PERIOD AND THAT THE SAID DECISION OF LABOR ARBITER CASUCO HAD ALREADY
BECOME FINAL AND EXECUTORY.

II

ASSUMING FOR THE SAKE OF ARGUMENT THAT THE DECISION OF LABOR ARBITER ARTURO CASUCO HAD
NOT YET BECOME FINAL AND EXECUTORY AND THAT PRIVATE RESPONDENT'S APPEAL COULD BE
ENTERTAINED, THE NATIONAL LABOR RELATIONS COMMISSION SERIOUSLY ERRED AS A MATTER OF LAW IN
HOLDING THAT THE OFFENSE COMMITTED BY PRIVATE RESPONDENT DID NOT CONSTITUTE A JUST CAUSE
FOR DISMISSAL UNDER ARTICLE 282 OF THE LABOR CODE.

On the question of whether or not the appeal before the National Labor Relations Commission had been seasonably
made, we rule in favor of private respondent.

Petitioner contends that private respondent received a copy of the Decision of Labor Arbiter Arturo Casuco on May 2,
1990. She had therefore, ten calendar days therefrom, or until May 12, 1990, to file her appeal to the NLRC. However,
she filed her appeal only on May 14, 1990, or two days beyond the reglementary period. 9 Petitioner points out that the
appeal was filed out of time and should be dismissed.

It is admitted that private respondent Antiola received the labor arbiter's decision on May 2, 1990. Under Article 223 of the
Labor Code, as amended, the period to appeal to the Commission is ten (10) calendar days, to wit:

Art. 223. Appeal. - Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards or orders.

xxx xxx xxx

39
Since the 10-day period provided in Article 223 of the Labor Code refers to ten calendar days and not to ten working days,
this means that Saturdays, Sundays and Legal Holidays are not to be excluded, but included, in the computation of the
10-day period. This is in line with the objective of the law for speedy disposition of labor cases with the end in view of
protecting the interest of the working man. 10 In subsequent cases, We ruled that if the tenth day to perfect an appeal from
the decision of the Labor Arbiter to the NLRC falls on a Saturday, the appeal shall be made on the next working day, 11 as
embodied in Section 1, Rule VI of the NLRC Rules of Procedure promulgated on January 14, 1992. This conclusion
arrived at by the Court recognizes the fact that on Saturdays the offices of NLRC and certain post offices are closed.

Private respondent filed her appeal on the twelfth calendar day following receipt of the copy of the labor arbiter's decision,
since the tenth day, May 12, 1990, is a Saturday. 12 Following the above enunciated doctrine, the filing of the appeal on
May 14, 1990, the next working day, is considered to be within the reglementary period provided for by law, hence,
seasonably made.

Even assuming arguendo that the appeal was filed beyond the period allowed by law, We have at times overlooked this
particular procedural lapse. In the case of Firestone Tire and Rubber Co. v. Larosa 13 and reiterated in Chong Guan
Trading vs. NLRC 14 this Court allowed the filing of appeals from the decisions of the labor arbiter to the NLRC, even if
filed beyond the reglementary period, in the interest of justice. Thus, technical rules of procedure in labor cases are not to
be strictly applied if the result would be detrimental to the working man. 15 Technicality should not be permitted to stand in
the way of equitably and completely resolving the rights and obligations of the parties. 16 Moreover, under Article 218 (c) of
the Labor Code, the Commission is empowered to "correct, amend, or waive any error, defect or irregularity whether in
substance or form," in the exercise of its appellate jurisdiction. Therefore, We find no grave abuse of discretion on the part
of the NLRC in entertaining the appeal of private respondents, even if, as alleged by petitioner, it was filed two days late.

The Constitution guarantees the right of workers to "security of tenure." 17 In upholding the same, Article 277 (b) in relation
to Section 1 of Rule XIV (Book Five) of the Labor Code, requires the existence of a valid to justify the termination of an
employee. Without a valid cause, dismissal of employees may not properly be done.

While it is true that the decision to dismiss or lay off an employee is management's prerogative, it must be made without
abuse of discretion, for what is at stake is not only the employee's position but also his means of livelihood. 18 Therefore,
he should be protected against any arbitrary deprivation of his job.  19 At any rate, where a penalty less punitive would
suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe. It is not only
because of the law's concern for the workingmen. There is, in addition, his family to consider. Unemployment brings about
hardships and sorrows on those dependent on the wage-earner. The misery and pain attendant to the loss of jobs then
could be avoided if there be acceptance of the view that under all circumstances of a case the workers should not be
deprived of their means of livelihood. 20

Petitioner anchors its right to terminate the employment of Virginia Antiola on the ground of "gross neglect of duties,"
under Article 282 (b) of the Labor Code. Gross negligence implies a want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to
avoid them. 21

We affirm the finding of the NLRC that "Article 282 (b) of the Labor Code requires that . . . such neglect must not only be
gross, it should be 'Gross and habitual neglect' in character." As aptly pronounced by the NLRC, "the penalty of dismissal
is quite severe here" noting that the labor arbiter himself admits that she committed the infraction for the first time.

Considering that private respondent worked with the company for four years with no known previous bad record, the ends
of social and compassionate justice would be better served if she was merely suspended from work rather than
terminated.

We are not, however, unmindful of the negligence committed by respondent Antiola. The employer's obligation to give his
workers just compensation and treatment carries with it the corollary right to expect from the workers adequate work,
diligence and good conduct. Nonetheless, private respondent's wrongdoing does not warrant dismissal inasmuch as
dismissal is the ultimate penalty that can be meted to an employee. 22

In view of the foregoing, We rule that Judy Philippines, Inc. had no valid cause to dispense with the services of private
respondent.

We shall now deal with the consequences that should visit the petitioner for illegally dismissing private respondent Virginia
Antiola.

40
Under the law, 23 an employee is entitled to reinstatement and to his full backwages when he is unjustly dismissed. Note,
however, that reinstatement and backwages are separate and distinct reliefs given to an illegally dismissed employee. 24

Reinstatement means restoration to a state or condition from which one had been removed or separated. 25 One who is
reinstated assumes the position he had occupied prior to the dismissal and is, as an ordinary rule, entitled only to the last
salary in that position. 26

Backwages, on the other hand, is a form of relief that restores the income that was lost by reason of unlawful dismissal. 27

Public respondent NLRC deemed it proper to order the reinstatement of private respondent Virginia Antiola. We find no
cogent reason to set aside public respondent's findings on this matter. Be that as it may, we cannot sustain the ruling of
public respondent in awarding backwages limited to one year.

Republic Act No. 6715, which took effect on March 21, 1989, amended Article 279 of the Labor Code, provides that an
illegally dismissed employee is entitled to full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement. 28 We have ruled, however, that this amendment has no retroactive effect. In such case, theaward of
backwages to an employee whose illegal dismissal occurred before March 21, 1989, is limited to a period of three (3)
years without deduction or qualification. 29

Following the above enunciated doctrine, the dismissal of Virginia Antiola having been effected on January 11, 1989,
entitles her to backwages for a period of three (3) years, without deduction or qualification.

WHEREFORE, the decision of public respondent National Labor Relations Commission dated June 30, 1993 is hereby
AFFIRMED subject, however, to modification that petitioner Judy Philippines, Inc. be ordered to pay private respondent
Virginia Antiola backwages for a period of three (3) years, without qualification or deduction.

SO ORDERED.

CHALLENGE SOCKS' G.R. NO. 165268

CORPORATION,

Petitioner, Present:

Davide, Jr., C.J . (Chairman),*

- versus - Quisumbing,**

Ynares-Santiago,

Carpio, and

Azcuna, JJ.

COURT OF APPEALS (Former

First Division), NATIONAL LABOR

RELATIONS COMMISSION

(First Division), HON. ANTONIO

R. MACAM, in his capacity as Promulgated:

41
Labor Arbiter and ELVIE BUGUAT,

Respondents. November 8, 2005

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J  .:

This petition for review on certiorari under Rule 45 of the Rules of Court assails the May 11, 2004 Decision [1] of the Court
of Appeals in CA-G.R. SP No. 75761, and its September 13, 2004 Resolution [2] denying the motion for reconsideration.

The antecedent facts show that respondent Elvie Buguat was hired on January 17, 1997 by petitioner Challenge Socks
Corporation as knitting operator. [3] In the course of her employment, she incurred absences and tardiness without prior
approval and had been neglectful of her duties. [4] On May 25, 1998, she failed to check the socks she was working on
causing excess use of yarn and damage to the socks' design. She was suspended for five days and warned that a
repetition of the same act would mean dismissal from the service. [5] On February 2, 1999, she committed the same
infraction and was given a warning. [6] Despite the previous warnings, Buguat continued to be habitually absent and
inattentive to her task. On March 1, 1999, she again failed to properly count the bundle of socks assigned to her. Thus,
on March 2, 1999, petitioner terminated her services on grounds of habitual absenteeism without prior leave, tardiness
and neglect of work. [7]

Thereafter, Buguat filed a complaint for illegal dismissal. [8]

On February 11, 2000, the labor arbiter [9] rendered a Decision [10] holding that Buguat was illegally dismissed. The
dispositive portion of the decision reads:

 
WHEREFORE, following the pronouncement in the case of ALU-TUCP v. NLRC (G.R. No. 120450,
February 10, 1999), judgment is hereby rendered ordering respondents to reinstate complainants without
loss of seniority rights and benefits, but without backwages.
 
SO ORDERED. [11]
 
 

The labor arbiter found Buguat's dismissal too harsh and disproportionate to the infraction committed. It was observed that
counting volumes of socks is tedious and the worker is prone to commit mistakes especially if the counting is done on a

42
regular basis. The labor arbiter ruled that mistake in counting bundles of socks is tolerable and should be punished by
suspension only. [12]

The National Labor Relations Commission (NLRC) adopted the findings of the labor arbiter. It denied [13] petitioner's
appeal and motion for reconsideration.

Petitioner filed a petition for certiorari before the Court of Appeals which rendered a Decision on May 11, 2004 reversing
and setting aside that of the labor arbiter and the NLRC, the dispositive portion of which provides:

WHEREFORE, the Decision dated October 30, 2001 and the Order of December 19, 2002 of the National
Labor Relations Commission are hereby REVERSED and SET ASIDE and a new one entered herein.
 
CHALLENGE SOCKS CORPORATION, having terminated private respondent with just and valid cause
but without observing the proper procedure in terminating private respondent's services, is ordered to pay
ELVIE BUGUAT full backwages from the time her employment was terminated on March 2, 1999 up to
the time the herein decision becomes final. For this purpose, this case is REMANDED to the Regional
Labor Arbiter for the computation of the backwages due private respondent.
 
SO ORDERED. [14]

The appellate court found that there was just cause for terminating the services of Buguat considering the series of
infractions she committed. [15] However, it was noted that petitioner failed to comply with the twin-notice requirement in
terminating an employee hence, the dismissal was considered ineffectual. [16] Petitioner was ordered to pay Buguat her
back wages computed from the time of her dismissal up to the finality of the decision. [17]

Petitioner sought reconsideration of the appellate court's decision but the same was denied on September 13, 2004.

Hence, this petition.

The issue for resolution is the validity of Buguat's termination.

One of the just causes for terminating an employment under Article 282 of the Labor Code is gross and habitual neglect
by the employee of her duties. This cause includes gross inefficiency, negligence and carelessness. Such just causes is
derived from the right of the employer to select and engage his employees. [18]

In the instant case, there is no doubt that Buguat was habitually absent, tardy and neglectful of her duties. We agree with
the Court of Appeals that:

43
 

Elvie's commission of three (3) violations of the company's rules and regulations, including her
unauthorized absences and tardiness, all committed in the span of two years, shows that she did not only
fail to observe due diligence in performing her job, but she has little regard for the consequences of her
acts and inactions. She repeatedly committed error in counting the socks to be given to the Looping
Section. As a knitting operator, Elvie was required to check the socks she was working on and to count
the bundles of socks she had to pack to be forwarded to the Looping Section. Elvie did not question the
authenticity of the May 25, 1998 suspension letter and the February 2, 1999 memorandum.
 
While a first violation could be considered excusable, repeated commission of the same offense could be
considered willful disobedience. Elvie, despite the suspension and warning, continued to disregard the
company rules and regulations' . [19]
 
 

Habitual neglect implies repeated failure to perform one's duties for a period of time. Buguat's repeated acts of absences
without leave and her frequent tardiness reflect her indifferent attitude to and lack of motivation in her work. Her repeated
and habitual infractions, committed despite several warnings, constitute gross misconduct. Habitual absenteeism without
leave constitute gross negligence and is sufficient to justify termination of an employee. [20]

We find the penalty of dismissal from the service reasonable and appropriate to Buguat's infraction. Her repeated
negligence is not tolerable; neither should it merit the penalty of suspension only. The record of an employee is a relevant
consideration in determining the penalty that should be meted out. [21] Buguat committed several infractions in the past
and despite the warnings and suspension, she continued to display a neglectful attitude towards her work. An employee's
past misconduct and present behavior must be taken together in determining the proper imposable penalty. [22] 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 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. [23] It is the totality, not the
compartmentalization, of such company infractions that Buguat had consistently committed which justified her
dismissal. [24]

Besides, terminating an employment is one of petitioner's prerogatives. As the employer, petitioner has the right to
regulate, according to its discretion and best judgment, all aspects of employment, including work assignment, working
methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers and
the discipline, dismissal and recall of workers. Management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company rules and regulations. [25]

This Court has upheld a company's management prerogatives so long as they are exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements. [26]

In the case at bar, petitioner exercised in good faith its management prerogative as there is no dispute that Buguat had
been habitually absent, tardy and neglectful of her work, to the damage and prejudice of the company. Her dismissal was
therefore proper.

44
 

The law imposes many obligations on the employer such as providing just compensation to workers, observance of the
procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also
recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence,
but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons whose
continuance in the service will patently be inimical to his interests. [27]

The employer has the burden of proving that the dismissed worker has been served two notices: (1) one to apprise him of
the particular acts or omissions for which his dismissal is sought, and (2) the other to inform him of his employer's decision
to dismiss him. [28]

As found by the Court of Appeals, petitioner failed to comply with this requirement, thus:

A review of the records shows that private respondent was served a written termination notice on the very
day she was actually dismissed from the service. The case records are bereft of any showing that
Challenge Socks Corporation notified Elvie in advance of the charge or charges against her. Likewise,
she was not given an opportunity to refute the charges made against her, thus, depriving her of the right
to defend herself. In other words, petitioner fell short in observing the two-notice rule required by law. [29]
 

In Agabon v. National Labor Relations Commission, [30] we upheld as valid the dismissal for just cause although it did not
comply with the requirements of procedural due process. We ruled that while the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural
requirements of due process. [31] The violation of Buguat's right to statutory due process by the petitioner warrants the
payment of indemnity in the form of nominal damages in the amount of P30,000, which is appropriate under the
circumstances. [32]

 Conformably, the award of backwages in the present case should be deleted.  Instead, private respondent should be
indemnified in the amount of P30,000.00 as nominal damages. [33]

          WHEREFORE, the May 11, 2004 Decision and the September 13, 2004 Resolution of the Court of Appeals in CA-
G.R. SP No. 75761, which declared that petitioner Challenge Socks Corporation did not comply with the statutory due
process requirements in terminating the employment of private respondent Elvie Buguat, are AFFIRMED with
the MODIFICATION that the award of backwages is DELETED.  Petitioner is ordered to pay private respondent Elvie
Buguat nominal damages in the amount of P30,000.00.

No costs.

SO ORDERED .

45
G.R. No. 146621             July 30, 2004

RENE P. VALIAO, petitioner,
vs.
HON. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION-FOURTH DIVISION (Cebu City), WEST
NEGROS COLLEGE, respondents.

DECISION

QUISUMBING, J.:

For review on certiorari is the Decision1 dated August 22, 2000 of the Court of Appeals in CA-G.R. SP No. 55133, and
its Resolution2 dated November 22, 2000 denying the motion for reconsideration. The Court of Appeals dismissed the
petition for certiorari filed by petitioner and affirmed the Resolution dated July 7, 1999 of the National Labor Relations
Commission (NLRC)-Fourth Division in NLRC Case No. V-000134-98 (RAB Case No. 06-01-10026-95), which sustained
the Decision of Labor Arbiter Benjamin E. Pelaez, directing private respondent West Negros College (WNC) to pay
petitioner Rene P. Valiao’s salary during the period of his preventive suspension and attorney’s fees, while dismissing all
other claims.

The facts, as culled from records, are as follows:

46
On February 5, 1990, petitioner Rene Valiao was appointed by private respondent West Negros College (WNC) as
Student Affairs Office (SAO) Director, with a starting salary of P2,800 per month. On May 14, 1990, he was assigned as
Acting Director, Alumni Affairs Office.

On July 29, 1990, petitioner was transferred to a staff position and designated as Records Chief at the Registrar’s Office
but was again re-assigned as a typist on June 24, 1991.

The latest re-assignment was due to his tardiness and absences, as reflected in the summary of tardiness and absences
report, which showed him to have been absent or late for work from a minimum of seven (7) to a maximum of seventy-five
(75) minutes for the period March to October 31, 1991, and to have reported late almost every day for the period
November to December 1991.

Copies of his tardiness/absences reports were furnished petitioner, along with memoranda requiring him to explain but his
explanations were either unacceptable or unsatisfactory. Subsequent reports also showed that he did not change his
habits resulting in tardiness and absences. He was even caught one time manipulating the bundy clock, thus
necessitating another memorandum to him asking him to explain his dishonest actuations in accomplishing the daily
attendance logbook and in using the bundy clock.

On December 10, 1991, petitioner received a suspension order without pay for fifteen (15) days effective January 1, 1992,
because of dishonesty in reporting his actual attendance. After serving the suspension, the petitioner reported back to
office on January 16, 1992.

On June 15, 1992, another adverse report on tardiness and absences from the Registrar was made against the petitioner
prompting WNC to send him another memorandum with an attached tardiness and absences report, calling his attention
on his tardiness and absences for the period February to April 1992.

On June 20, 1992, petitioner sent a letter of appeal and explained his side to the new college president, Suzette Arbolario-
Agustin, who gave petitioner another chance. The petitioner was then appointed as Information Assistant effective
immediately. However, the petitioner did not immediately assume the post of Information Assistant prompting the
President of private respondent WNC to call his attention. When the petitioner finally assumed his post, he was allowed a
part-time teaching job in the same school to augment his income.

Sometime in December 1992, WNC won a case against the officials of the union before the NLRC. Petitioner was ordered
to prepare a media blitz of this victory but the petitioner did not comply with the order on the ground that such a press
release would only worsen the already aggravated situation and strained relations between WNC management and the
union officials.

When petitioner reported for work on the first day of January 1993, he was relieved from his post and transferred to the
College of Liberal Arts as Records Evaluator. Not for long, the Dean of the Liberal Arts sent a letter to the Human
Resources Manager complaining about the petitioner’s poor performance and habitual absenteeism, as shown in the daily
absence reports.

On January 18, 1993, petitioner was again absent from work without permission or notice to his immediate superior. It
turned out that he went to Bacolod City and on January 28, 1993, the petitioner was one of those arrested during a raid in
the house of one "Toto Ruiz," a suspected drug pusher and was brought to the Bacolod Police Station along with four (4)
other suspects. Upon further search and investigation by the Narcotics Control Division, the petitioner was found
possessing two (2) suspected marijuana roaches (butts) which were placed inside his left shoe. The event was widely
publicized, focusing on petitioner’s position as an Economics teacher of WNC, and considering further that one of his
fellow suspects was a member of the Philippine Army, who was caught with an unlicensed firearm, a tooter and other
"shabu" paraphernalia. The petitioner and other suspects were then charged with violation of the Dangerous Drugs Act of
1972 (Republic Act No. 6425, as amended).

Petitioner was asked to explain within 24 hours why he should not be terminated as a result of the raid and the charges
against him for violation of Rep. Act No. 6425 as amended. Petitioner allegedly was not able to answer immediately since
he was in jail and received said memorandum only on January 30, 1993, although his wife had earlier received the
memorandum on January 28, 1993.

On January 29, 1993, the petitioner was dismissed for failure to answer said memorandum.

47
On February 1, 1993, the petitioner wrote to the President of WNC explaining his side and asking for due process. WNC
cancelled its Notice of Termination dated January 29, 1993, and granted the petitioner’s request. The petitioner was
notified through a memorandum about the grant of his request and that a hearing would be conducted. He was then
placed under preventive suspension and an investigation committee was organized to conduct the probe. On March 6,
1993, a notice of hearing/investigation was sent to the petitioner.

After the investigation attended by the petitioner and his counsel, with proceedings duly recorded, the investigation
committee recommended the dismissal of petitioner. A notice of termination was then sent to petitioner informing him of
his termination from the service for serious misconduct and gross and habitual neglect of duty. The petitioner received the
notice on March 25, 1993, but did not file a grievance concerning the notice of termination.

On January 19, 1995, petitioner filed a Complaint against WNC for illegal suspension, illegal dismissal, backwages, salary
differential for salary increases and other benefits granted after his dismissal as well as for moral and exemplary damages
and attorney’s fees.

In its Answer, WNC alleged that petitioner was dismissed on charges of serious misconduct, and gross and willful neglect
of duty. WNC said his dismissal was effected after due notice and prior hearing. It claimed also that since petitioner was
terminated for a valid cause after a due hearing, the latter’s claim for moral and exemplary damages, and attorney’s fees
had no basis in fact and in law.

After due proceedings, the Labor Arbiter rendered a decision, the decretal portion of which reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered DIRECTING respondent West Negros College
to pay complainant Rene P. Valiao – (a) P3,300.00 as salary for the period of his preventive suspension, and (b)
P330.00 as attorney’s fees, or the total amount of THREE THOUSAND SIX HUNDRED THIRTY PESOS
(P3,630.00).

Further, all other claims are DISMISSED for lack of merit.

SO ORDERED.3

The Labor Arbiter found no justifiable reason to place the petitioner under preventive suspension as there was no serious
or imminent threat to the life or property of his employer or co-workers.

However, the Labor Arbiter found the dismissal of the petitioner from WNC to be valid due to absenteeism and tardiness
and after he was accorded the procedural due process aspect of the law as reflected in the records showing that the
petitioner was formally investigated and given the opportunity to refute the alleged findings by the management of WNC.
The Labor Arbiter held that frequent absenteeism and tardiness of the petitioner constituted not only willful disobedience
but also gross and habitual neglect of duties, which are valid grounds for termination of employment. He stressed that the
petitioner’s frequent absences without proper leave of absence was not only unfair to WNC and the petitioner’s co-
employees but also set an undesirable example to the employees under his supervision, considering that the petitioner
was not a mere rank-and-file employee but one who owed more than the usual fealty to the organization.

On appeal to the NLRC, the latter affirmed the decision of the Labor Arbiter, sustained the latter’s findings of facts, and
made its own findings on the apprehension of the petitioner for possession of prohibited drugs. The decretal portion of the
decision reads as follows:

WHEREFORE, premises considered, the appeal is DISMISSED and the decision of the Executive Labor Arbiter is
AFFIRMED in its entirety.

SO ORDERED.4

Petitioner then filed a Petition for Certiorari under Rule 65 before the Court of Appeals but this was dismissed for lack of
merit. The decretal portion of the decision reads as follows:

WHEREFORE, the questioned Decision and Resolution dated December 11, 1998 and July 7, 1999, respectively,
of public respondent National Labor Relations Commission are hereby AFFIRMED.

SO ORDERED.5

48
The Court of Appeals held that the petitioner was validly dismissed for serious misconduct and gross habitual neglect of
duties, which was aggravated by his arrest for violation of Rep. Act No. 6425, as amended [the January 28, 1993 incident]
and that he was afforded the twin requirements of notice and hearing and the opportunity to defend himself by the
investigating committee. The appellate court noted that WNC had presented sufficient evidence to support petitioner’s
termination from employment after taking into consideration the totality of the infractions or the number of violations
committed by petitioner during the period of employment and stressed that it properly exercised its management
prerogative by observing due process. Finally, the Court of Appeals ruled that the NLRC correctly denied the claim for
damages and attorney’s fees for lack of evidentiary support.

Petitioner duly filed a Motion of Reconsideration, which was denied by the Court of Appeals.

Hence, this petition alleging that:

A. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT THE
DISMISSAL OF PETITIONER WAS VALID, DESPITE THE FACT THAT THERE IS CLEAR AND BLATANT
VIOLATION OF THE BASIC CONSTITUTIONAL RIGHTS OF THE HEREIN PETITIONER BOTH SUBSTANTIVE
AND PROCEDURAL DUE PROCESS.

B. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS IN (SIC) DISMISSING THE RELIEFS FOR
MORAL AND EXEMPLARY DAMAGES AND ATTORNEY’S FEES.6

In our view, the only relevant issue for our resolution is whether or not the petitioner was validly dismissed from
employment on the ground of serious misconduct and gross habitual neglect of duties, including habitual tardiness and
absenteeism.

Petitioner claims that his outright dismissal from employment was not valid and too harsh and that he was not dismissed
from employment because of tardiness or absences but because he was among those apprehended in a raid. Also, he
was not accorded due process because although his wife received the show cause notice, he did not have the proper
mind to reply as he was in jail and was psychologically disturbed.

Considering the submissions of the parties as well as the records before us, we find the petition without merit. Petitioner’s
dismissal from employment is valid and justified.

For an employee’s dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee must be
afforded due process.7

Serious misconduct and habitual neglect of duties are among the just causes for terminating an employee under the
Labor Code of the Philippines. Gross negligence connotes want of care in the performance of one’s duties. Habitual
neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances.8 The
Labor Arbiter’s findings that petitioner’s habitual absenteeism and tardiness constitute gross and habitual neglect of duties
that justified his termination of employment are sufficiently supported by evidence on record. Petitioner’s repeated acts of
absences without leave and his frequent tardiness reflect his indifferent attitude to and lack of motivation in his work. More
importantly, his repeated and habitual infractions, committed despite several warnings, constitute gross misconduct
unexpected from an employee of petitioner’s stature. This Court has held that habitual absenteeism without leave
constitute gross negligence and is sufficient to justify termination of an employee.9

However, petitioner claims that he was dismissed not for his tardiness or absences but for his arrest as a suspected drug
user. His claim, however, is merely speculative. We find such contention devoid of basis. First, the decisions of the Labor
Arbiter, the NLRC, and the Court of Appeals are indubitable. They show that indeed petitioner had incurred numerous and
repeated absences without any leave. Moreover, he was not punctual in reporting for work. These unexplained absences
and tardiness were reflected on the summary reports submitted by WNC before the labor arbiter, but petitioner failed to
controvert said reports. Second, contrary to petitioner’s assertion, the NLRC did not base its conclusions on the fact of the
arrest of petitioner for violation of Rep. Act No. 6425 but on the totality of the number of infractions incurred by the
petitioner during the period of his employment in different positions he occupied at WNC. Thus:

In the case of petitioner Valiao, his services were terminated by private respondent after having been found guilty
of serious misconduct and gross habitual neglect of duty which was aggravated by the January 28, 1993
incident. In exercising such management prerogative, due process was properly observed. Private respondent
presented sufficient evidence to support its act in terminating the services of petitioner. Private respondent took
into consideration the totality of the infractions or the number of violations committed by petitioner

49
 during the period of employment. Furthermore, it hardly needs reminding that, in view of petitioner’s position
and responsibilities, he must demonstrate a scrupulous regard for rules and policies befitting those who would be
role models for their young charges.10 (Emphasis and italics supplied)

Indeed, even without the arrest incident, WNC had more than enough basis for terminating petitioner from employment. It
bears stressing that petitioner’s absences and tardiness were not isolated incidents but manifested a pattern of habituality.
In one case, we held that where the records clearly show that the employee has not only been charged with the offense of
highgrading but also has been warned 21 times for absences without official leave, these repeated acts of misconduct and
willful breach of trust by an employee justify his dismissal and forfeiture of his right to security of tenure. 11 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 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.12

Needless to say, so irresponsible an employee like petitioner does not deserve a place in the workplace, and it is within
the management’s prerogative of WNC to terminate his employment. Even as the law is solicitous of the welfare of
employees, it must also protect the rights of an employer to exercise what are clearly management prerogatives. As long
as the company’s exercise of those rights and prerogative is in good faith to advance its interest and not for the purpose
of defeating or circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld.13

Still, petitioner claims that he was not afforded due process so that his dismissal from employment should be declared
invalid. This contention deserves scant consideration. The Court of Appeals held that "the records reveal that petitioner
was afforded the twin requirements of notice and hearing and was likewise given the opportunity to defend himself before
the investigating committee." We find no reason to set aside these factual findings of the Court of Appeals as they are
supported by evidence on record. Besides, we may not review the appellate court’s findings of fact in an appeal
via certiorari,14 since as a rule, the Supreme Court’s review is limited to errors of law allegedly committed by the appellate
court.15 Judicial review of labor cases does not go as far as to evaluate the sufficiency of evidence upon which the Labor
Arbiter and National Labor Relations Commission based their determinations.16

In this case, petitioner was asked to explain his several absences and tardiness on many occasions. A notice to explain
was sent to him regarding the arrest incident wherein he was able to reply. An investigation committee was formed by
WNC to investigate the arrest incident and the absences and tardiness of petitioner. It must be emphasized that
proceedings of the committee were duly recorded, and petitioner actively participated therein by answering the various
questions interposed by the panel members. Finally, a notice of his termination was sent to petitioner, although he claims
to have received it late as he was in jail. It is an undeniable fact, however, that his wife had actually received the notice in
his house earlier, even before petitioner’s termination and this matter was later communicated to him.

At any rate, petitioner was given enough opportunity to be heard, and his dismissal was based on valid grounds. The
essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity
to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. A formal or trial-type
hearing is not at all times and in all instances essential, as the due process requirements are satisfied where the parties
are afforded fair and reasonable opportunity to explain their side of the controversy at hand. What is frowned upon is the
absolute lack of notice and hearing.17

Finally, the Labor Arbiter found that petitioner is entitled to salary differentials for the period of his preventive suspension,
as there is no sufficient basis shown to justify his preventive suspension. During the pendency of the investigation, the
employer may place the worker concerned under preventive suspension if his continued employment poses a serious and
imminent threat to life or property of the employer or of his co-workers.18 But in this case, there is no indication that
petitioner posed a serious threat to the life and property of the employer or his co-employees. Neither was it shown that
he was in such a position to unduly influence the outcome of the investigation. Hence, his preventive suspension could
not be justified, and the payment of his salary differentials is in order.

However, the award of attorney’s fees to him cannot be sustained, in view of our findings that petitioner was validly
dismissed from employment. Said award lacks legal basis and could not be granted properly in this case.

WHEREFORE, the assailed Decision dated August 22, 2000 and Resolution dated November 22, 2000 of the Court of
Appeals in CA-G.R. SP No. 55133 are AFFIRMED with MODIFICATION in that the award of attorney’s fees is deleted. No
pronouncement as to costs.

SO ORDERED.

50
G.R. No. 111222 January 18, 1995

CITIBANK, N.A., petitioner,
vs.
DR. JOSE C. GATCHALIAN, in his capacity as Voluntary Arbitrator, CITIBANK PHILIPPINES EMPLOYEES UNION
(CPEU) and EMY LLONILLO, respondents.

PUNO, J.:

Petitioner Citibank N.A. prays for the reversal of the decision of voluntary arbitrator Dr. Jose C. Gatchalian reinstating
respondent Emerita "Emy" Llonillo to her former position as clerk-typist/maker without backwages.

Respondent Llonillo, together with Teresita Supnad, her co-employee and Florence Verendia, an employee of Asian-
Pacific Broadcasting Company, Inc. (APBCI), were implicated in a scheme to defraud petitioner bank in the amount of
P740,000.00. The administrative investigation conducted by petitioner bank, with the assistance of the PNP Crime
Laboratory, revealed the following:

Petitioner bank received thirty-one (31) applications from alleged APBCI employees 1 for the issuance of Citibank credit
cards, popularly known as Mastercard.

A Citibank employee verified by phone the data which appeared on the application forms. It was Florence Verendia, as
secretary of the APBCI General Manager, who answered the check calls. The applications were then approved and the
corresponding new and unsigned credit cards were issued.

Petitioner bank's policy is for new and unsigned credit cards to be released only to the cardholders concerned or their duly
authorized representatives. However, a Citibank employee may himself take delivery of new and unsigned credit cards
after accomplishing a Card Pull-Out Request Form wherein the employee assumes the responsibility of delivering the
same to the cardholder concerned.

51
Teresita Supnad, an employee of petitioner bank and Florence Verendia, took delivery of nineteen (19) credit cards
issued in the name of the said alleged APBCI credit applicants.

On the other hand, on five (5) separate occasions, respondent Llonillo personally picked up the newly approved and
unsigned credit cards issued to the other seven (7) alleged APBCI employee and delivered them to Verendia.

In July 1992, petitioner bank discovered that the credit card applications of the alleged APBCI employees were fictitious.
Per report of the PNP-Crime Laboratory, Supnad and Verendia falsified the signature of the alleged
applicants.2 After getting the credit cards, the two used them to purchase goods and avail of services from accredited
commercial establishments worth more than P200,000.00.

Petitioner bank required respondent Llonillo to explain. In her reply, Llonillo admitted she personally picked up seven (7)
credit cards issued to Anjenette Caballa, Miriam Ramiro, Alen Malic, Caroline Ramiro, Cecilia Ibañez, Lalaine Perez and
Marife Bacuetes. She allegedly wanted to help the bank deliver "fast, competent and problem-free service to clients." She
disclaimed knowledge that the APBCI applicants were fictitious. She also denied participation in the fraudulent use of said
credit cards.

Petitioner bank then formed a committee to investigate. Respondent Llonillo and the president of the Citibank Philippines
Employees Union (of which respondent was a member) were invited for a conference. Respondent revealed that on five
(5) occasions,3 she was asked by Verendia to take delivery of newly approved and unsigned credit cards issued to some
of the latter's alleged officemates, namely: Anjenette Caballa, Miriam Ramiro, Allen Malic, Caroline Ramiro, Cecilia
Ibañez, Lalaine Perez and Marife Bacuetes.4 On said occasions, Verendia informed her by telephone she was on the way
to the bank to pick up some of the newly approved credit cards issued to her alleged co-employees at APBCI. Each time,
she acceded to Verendia's request and delivered the newly approved and unsigned credit cards to the latter without
knowing that the cardholders were fictitious. In every case, respondent signed the Card Pull-Out Request Form,
acknowledging receipt of the credit cards and taking responsibility for their delivery to the cardholder concerned.
Respondent further disclosed that Verendia was introduced to her by a mutual friend.

On November 19, 1992, the committee recommended the termination of respondent's employment with the bank for loss
of trust and confidence and gross negligence. Petitioner bank adopted the committee's recommendation and notified
respondent of her immediate dismissal.5 The bank also terminated the services of Supnad. In addition, it filed a case for
estafa through falsification of private/commercial documents against both Supnad and Verendia.

Pursuant to their existing Collective Bargaining Agreement, petitioner bank and respondent union referred Llonillo's
dismissal to the Grievance Machinery but the latter failed to resolve the controversy. As a next step, the parties submitted
the case for resolution to voluntary arbitrator Dr. Jose C. Gatchalian.

During the arbitration, a term of reference (stipulation of facts)6 was agreed upon by the parties. Petitioner bank then
presented its evidence. When it was the turn of the union to adduce evidence, the union officers and counsel refused to
reveal the purpose of their request to subpoena as a witness one of petitioner bank's officers. The subpoena was not
issued7 and respondent refused to adduce evidence.

On the basis of the record and the evidence presented by petitioner bank, voluntary arbitrator Dr. Gatchalian rendered a
decision8 ordering the reinstatement of respondent Llonillo without payment of backwages.

Hence this petition for certiorari  where petitioner contends:

THE DECISION OF THE VOLUNTARY ARBITRATOR IS PATENTLY IN CONTRAVENTION OF

APPLICABLE LAWS AND DECISIONS OF THIS HONORABLE COURT.

THE DECISION OF THE VOLUNTARY ARBITRATOR IS NOT SUPPORTED BY, NAY, IGNORED, THE
EVIDENCE ON RECORD.

THE DECISION OF THE VOLUNTARY ARBITRATOR CONSTITUTES GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION ON HIS PART.

We find for the petitioner.

52
In ordering the reinstatement of respondent Llonillo, the voluntary arbitrator ruled that the law 9 requires that an employee's
negligence, to be a valid ground for dismissal, must be both gross and habitual. He did not find the negligence of
respondent Llonillo as within this category.

Respondent arbitrator's ruling disregards tha fact that Llonillo was dismissed on two (2) grounds, viz: loss of confidence
and gross negligence. Petitioner's loss of confidence was anchored on its suspicion that Llonillo conspired with Supnad
and Verendia in the fraud. On the other hand, its finding of gross negligence was grounded on Llonillo's act of carelessly
delivering seven (7) newly approved and unsigned Mastercards to Verendia and the latter's messenger. Thus, petitioner
bank's Notice of Termination to respondent Llonillo stated:

In any event, even assuming that you (respondent Llonillo) were not connivance with Florence (Verendia)
and Tess (Supnad), the bank finds your deliberate action of releasing 7 unsigned Mastercards to
complete strangers, without even asking receipt from them, as gross negligence on your part . As you
know by know, because you released said 7 unsigned Mastercards to Florence and Tess, the two were
able to falsify, and did falsify the signatures of the cardholders therein (on the spaces labeled "Authorized
Signature") and fraudulently used the same to buy goods and services from the bank's accredited
establishments, the total value of which is at least P201,795.34. In this regard, the bank finds the
statement you gave by way of explanation, that you did not notice the provisions of the Card Pull-Out
Requests,  you ought to have known/realized that it was totally negligent for anyone to deliver unsigned
Mastercards to total strangers.

We have carefully examined the records and we find no substantial evidence that would clearly and convincingly prove
that respondent Llonillo conspired with Verendia and Supnad in defrauding petitioner bank over P200,000.00. The Report
submitted by the PNP Crime Laboratory10 revealed that it was Supnad and Verendia who falsified the signatures of the
fictitious cardholders and fraudulently used the same in purchasing goods and services from accredited commercial
establishments. Respondent Llonillo's participation was limited to picking-up seven (7) of the newly-approved and unused
credit cards from the bank's releasing officer and turning them over to Verendia. 11

It was precisely on the basis of the above findings that only Verendia and Supnad (excluding Llonillo) were charged with
estafa through falsification of private/commercial documents. The alleged close association of respondent Llonillo to her
co-employee Supnad, even if true, does not establish her complicity in the scheme to defraud the bank. By itself and
without more, it is insufficient to implicate her in the fraud committed by Supnad and Verendia.

Be that as it may, we find that respondent arbitrator gravely abused his discretion in finding that Llonillo did not commit
gross negligence in the performance of her duty.

Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care.
It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. 12

The evidence on record succinctly established the gross negligence of respondent Llonillo. She admitted that the first time
she was asked by Verendia to pick up one of the newly approved and unused credit cards, she immediately acceded. Yet
at that time, she had not personally met nor previously seen Verendia. When asked how she came to know to whom she
would give the card, respondent Llonillo responded that Verendia described herself over the phone and that was how she
was able to identify Verendia when she first met her. Thus, on the basis of a mere description over the telephone,
respondent Llonillo delivered the credit cards to Verendia.

The succeeding occasions when she delivered the other newly approved and unused credit cards to Verendia also
revealed respondent Llonillo's gross lack of care. Again, she admitted that Verendia would call her up at the office to say
she was enroute to the bank to get some of the newly approved and unused credit cards. Under the pretext that Verendia
had difficulty in finding a parking space within the bank's premises, Verendia would request her to get the credit cards
instead. Respondent Llonillo accede to the requests. She got the new and unused credit cards and gave them to Verendia
at the mezzanine floor of the bank. It did not strike respondent Llonillo as strange that while Verendia allegedly found
difficulty in finding a parking space within the bank premises, yet she was always able to meet her at the mezzanine floor
of the bank to get the credit cards.

Respondent Llonillo's gross negligence also showed when she delivered the credit card issued to Marife Bacuetes,
another fictitious APBCI employee. She admitted that she gave the card to Verendia's messenger, a person whom she
had not seen before but who merely represented to her that he was the messenger sent by Verendia to pick up the card .
When queried about the identity of the said messenger, respondent replied that she did not ask for the messenger's

53
name. Neither did she ask the alleged messenger or Verendia herself to sign a receipt evidencing their acceptance of the
credit cards.

All of the above acts and omissions of respondent Llonillo were in patent violation of petitioner bank's policy that an
employee may take delivery of newly approved and unused credit cards issued in another's name, but in doing so, he/she
assumes the responsibility of delivering the credit card to the cardholder concerned or to the latter's duly authorized
representative.

Respondent Llonillo claims as a defense that even if she did not pick up the seven (7) newly approved and unused credit
cards and deliver the same to Verendia, still, the latter could have gotten hold of the same by herself. Respondent
stresses that Verendia herself and bank employee Supnad were able to personally pick up the other credit cards issued
to fictitious APBCI employees. The possibility is beside the point. It cannot obliterate the truth that she committed gross
negligence in the delivery of the seven (7) newly approved and unused credit cards to Verendia and her messenger.

Neither are we impressed with respondent Llonillo's claim that she was singled out as negligent in her taking delivery of
the seven unused credit cards. The bank's releasing officer acted well within the bank's rules when it released the subject
credit cards to respondent Llonillo. As previously noted, the bank allows, as an exception, any of its employees to take
delivery of newly approved and unused credit cards but in doing so, the said employee undertakes to deliver the same to
the cardholder concerned and assumes responsibility for its fraudulent use. Respondent Llonillo failed in this undertaking.

We also rule that respondent Llonillo's negligence is both gross and habitual. It was proved that she picked up the newly
approved credit cards on five (5) separate occasions and delivered the same to Verendia and the latter's messenger.
Certainly, these repetitive acts and omissions bespeak of habituality.

Finally, respondent Llonillo's employment service for twenty-two (22) years would not, by itself, mitigate her negligence,
especially in view of the substantial loss incurred by petitioner bank. As correctly pointed out by respondent voluntary
arbitrator:

The Union's claim for compassionate justice on Emy's 22 years of service and as first offender merit scant
consideration. The longer an employe(e) stays in the service of the company, the greater is his
responsibility for knowledge and compliance with the norms of conduct, and the code of discipline of the
company. . . .

IN VIEW WHEREOF, the appealed decision of voluntary arbitrator Dr. Jose C. Gatchalian is set aside. Respondent
Emerita "Emy" Llonillo is found guilty of gross negligence and is hereby dismissed from service. Accordingly, the
temporary restraining order issued by this Court in its Resolution, dated August 18, 1993, is made permanent. No
pronouncement as to costs.

SO ORDERED.

54
G.R. No. 119500. August 28, 1998

PAGUIO TRANSPORT CORPORATION, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION and

WILFREDO MELCHOR, Respondents.

DECISION

PANGANIBAN, J.:

In dismissing the petition, this Court reiterates the following doctrines: (1) the boundary system used in taxi (and jeepney)
operations presupposes an employer-employee relation; (2) the employer must prove just (or authorized) cause and due
process to justify dismissal of an employee; (3) strained relations must be demonstrated as a fact; and (4) back wages
and reinstatement are necessary consequences of illegal dismissal.

The Case

Before us is a petition for certiorari and prohibition with preliminary injunction, assailing the December 16, 1994 Decision
of the National Labor Relations Commission 1 in NLRC NCR Case No. 00-02-01564-94 entitled Wilfredo Melchor vs.
Paguio Transport Corporation/Serafin Paguio. The dispositive portion of the challenged Decision reads:

WHEREFORE, premises considered, the appeal insofar as it seeks reversal of the finding on illegal dismissal is denied for
lack of merit. The decision declaring that complainant was illegally dismissed is affirmed. The decision is however partially
modified insofar as liability therefor is concerned. The liability shall inure against PAGUIO TRANSPORT CORPORATION,
subject to the provision of the Corporation Code and the Rules of Court on matters taken herein. The backwages as
computed in the assailed decision is set aside, and a new one is hereby provided in the amount of P86,400.00 as
computed in the immediately preceding paragraph.

55
Petitioner also impugns the February 21, 1995 NLRC Resolution2 denying the motion for reconsideration.

The June 28, 1994 Decision of the labor arbiter,3 which the NLRC modified as to the amount of back wages, disposed as
follows:

WHEREFORE, the respondents are hereby ordered to reinstate the complainant with full backwages from the time his
salaries were withheld from him until his actual reinstatement.

The respondents are further ordered to pay him his 13th month pay in the amount of P5,600.00.

Complainants backwages up to the date of this Decision as computed by LEILANI E. CALALANG of the Commissions
NLRC NCR Branch is:

11/28/93 - 6/28/94 = 7 mos.

P 800.00 x 3 days x 4 weeks = P9,600.00

P 9,600.00 x 7 mos. = P67,200.00

The aspect of reinstatement either in the job or payroll at the option of the employers being immediately executory
pursuant to Article 223 of the Labor Code, the respondents are hereby directed to so reinstate him when he reports for
work by virtue of this Decision.

Other claims are hereby dismissed for lack of evidence.

The Facts

The facts, as summarized in the challenged Decision, are as follows:

Complainant Wilfredo Melchor was hired by respondent company as a taxi driver on 25 December 1992 under the
[b]oundary [s]ystem. He [was] engaged to drive the taxi unit assigned to him on a 24-hour schedule per trip every two (2)
days, for which he used to earn an average income from P500 to P700 per trip, exclusive of the P650.00 boundary and
other deductions imposed on him. On 24 [sic] November 1993, complainant allegedly met a vehicular accident along
Quirino Avenue near the PNR Station and Plaza Dilao when he accidentally bumped a car which stopped at the
intersection even when the traffic light was green and go. After he submitted the traffic accident report to the office of
respondents, he was allegedly advised to stop working and have a rest. After several days[,] he allegedly reported for
work only to be told that his service was no longer needed. Hence, the complaint for illegal dismissal, among others.

Respondent[s] for their part maintained that complainant was not illegally dismissed, there being in the first place no
employer-employee relationship between them. In amplification, it was argued that the element of control which [was] a
paramount test to determine the existence of such a relationship [was] lacking. So too, it argued the element of the
payment of compensation. Considering that in lieu of the latter, payment of boundary is instead made allegedly makes the
relationship between them of a wase-agreement [sic]. Respondents then argued that even if an employer-employee
relationship were to be presumed as present, still complainants termination arose out of a valid cause and after he
refused to articulate his stand on the investigation being conducted on him. Respondents then harped on the supposed
three occasions when complainant figured in a vehicular accident involving the taxi unit he was driving, viz: On August 3,
which resulted in damages to the respondent in the amount of P150.00; On August 4 which again resulted [in] the
damages to the respondent in the amount of P615.00; and again on 4 November 1993, the mishap costing the
respondents this time P25,370.00 in damages. As a result of the alleged compounded damages which the respondents
had to shoulder on account of the supposed reckless driving of the complainant, the former was allegedly left with no
alternative but to ask complainants explanation why he should still be allowed to drive. Complainant, despite several
chances, allegedly failed to do so.4

Ruling of the NLRC

The NLRC held that private respondent was an illegally dismissed employee of petitioner. Upholding the existence of an
employer-employee relationship, it cited Doce v. WCC,5 in which the Supreme Court ruled that the relationship created
between the parties operating under a boundary system is one of an employer and employee, and not of a lessor and a
lessee.6cräläwvirtualibräry

56
The NLRC sustained the ruling of the labor arbiter that the private respondent was illegally dismissed, for he was not
afforded the twin requirements of due process x x x.7 It rejected petitioners claim that private respondent had figured in
three vehicular incidents because of his reckless driving. It found that except for petitioners bare statements, no proof was
presented to establish with particularity the circumstances being claimed. x x x The guilt and culpability of [private
respondent] which would give [petitioner] valid ground to effect his dismissal cannot be established by a mere allegation of
his reckless driving.8cräläwvirtualibräry

Public Respondent NLRC found petitioner liable for back wages in the amount of P86,400, and not P67,200 as computed
by the labor arbiter. It found, however, that this liability should be imposed on Petitioner Corporation only, and not on its
president who was also impleaded by private respondent.

Hence, this petition.9

Issues

Petitioner raises the following issues:

a. Whether or not public respondent Commission acted in excess of jurisdiction and/or with grave abuse of discretion
amounting to lack of jurisdiction in ordering the reinstatement of private respondent with full backwages, despite its
strained relations with the petitioner and the reinstatement would, in effect, be inimical to the interest of the latter in
particular, and to the riding public in general;

b. Whether or not public respondent acted in excess of jurisdiction and/or with grave abuse of discretion in refusing to
reconsider its decision and resolution complained of despite the facts prevailing to support the
reconsideration.10cräläwvirtualibräry

In resolving the petition, we shall address the following points: (1) employer-employee relation, (2) presence of just cause,
(3) due process, (4) strained relationship, and (5) propriety of reinstatement and back wages.

The Courts Ruling

The petition is not meritorious.

First Issue:

Employer-Employee Relation

Under the boundary system, private respondent was engaged to drive petitioners taxi unit on a 24-hour schedule every
two days. On each such trip, private respondent remitted to petitioner a boundary of P650. Whatever he earned in excess
of that amount was considered his income.

Petitioner argues that under said arrangement, he had no control over the number of hours private respondent had to
work and the routes he had to take. Therefore, he concludes that the employer-employee relationship cannot be deemed
to exist.

Petitioners contention is not novel. In Martinez v. National Labor Relations Commission,11 this Court already ruled that the
relationship of taxi owners and taxi drivers is the same as that between jeepney owners and jeepney drivers under the
boundary system. In both cases, the employer-employee relationship was deemed to exist, viz.:

The relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary
system is that of employer-employee and not of lessor-lessee. x x x In the lease of chattels[,] the lessor loses complete
control over the chattel leased x x x. In the case of jeepney owners/operators and jeepney drivers, the former exercise
supervision and control over the latter. The fact that the drivers do not receive fixed wages but get only the excess of that
so-called boundary they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of
employer and employee. The doctrine is applicable in the present case. Thus, private respondents were employees x x x
because they had been engaged to perform activities which were usually necessary or desirable in the usual trade or
business of the employer.12

Second Issue:

57
Just Cause

Petitioner also asserts that private respondents involvement in three vehicular accidents within a span of several months
constitutes just cause for his dismissal. It alleges that, according to the police report concerning the most recent and
serious vehicular mishap, it was private respondent who was at fault and that the city prosecutor of Quezon City
recommended that an Information for reckless imprudence resulting in damage to property be filed against
him.13cräläwvirtualibräry

Petitioner, however, did not submit any proof to support these allegations. Well-settled is the rule that the employer has
the burden of proving that the dismissal of an employee is for a just cause. The failure of the employer to discharge this
burden means that the dismissal is not justified and that the employee is entitled to reinstatement and back wages.14 In
this case, petitioner failed to prove any just or authorized cause for his dismissal. Private respondent, therefore, must be
deemed illegally dismissed.15cräläwvirtualibräry

Petitioner contends that he submitted and presented material and competent documentary evidence consisting of police
reports of vehicular accidents of taxicab units owned by petitioner and driven by private respondent, the repairs and
expenses suffered by the petitioner as a result thereof and the resolution of the [c]ity [p]rosecutor of Quezon City finding
private respondent at fault for the November 4, 1993 vehicular accident caused by the latter.16 Adding that the submission
of these documents only on appeal does not diminish their probative value, petitioner cites Article 221 of the Labor Code
which reads:

Article 221. Technical rules not binding and prior resort to amicable settlement. -- In any proceeding before the
Commission or any of the Labor Arbiters, the rules of procedure prevailing in courts of law and equity shall not be
controlling and it is the spirit and intention of the Code that the Commission and its members and the Labor Arbiters shall
use every and all reasonable means to ascertain the facts in each case speedily and objectively without regard to
technicalities of law and procedure, all in the interest of due process. In any proceeding before the Commission or any
Labor Arbiter, the parties may be represented by legal counsel but it shall be the duty of the Chairman, any Presiding
Commissioner or Commissioner or any Labor Arbiter to exercise complete control of the proceedings at all stages.

Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exert all efforts towards [t]he amicable
settlement of a labor dispute within his jurisdiction on or before the first hearing. The same rule shall apply to the
Commission in the exercise of its original jurisdiction.

However, a careful examination of both the original Complaint and the Petitioners Memorandum of Appeal from the labor
arbiters Decision reveals that said pieces of documentary evidence were not mentioned or included therein, 17 but were
submitted by petitioner only when he filed his present petition with this Court. These pieces of evidence were attached
and referred to as Annexes G, H, I, J, K and L of the said petition. Such factual issues cannot be resolved in a petition for
certiorari like the present case, because the Courts review of NLRC decisions is limited to questions of jurisdiction and
grave abuse of discretion. In PMI Colleges v. NLRC,18 the Court held:

This Court is definitely not the proper venue to consider this matter for it is not a trier of facts. x x x Certiorari is a remedy
narrow in its scope and inflexible in character. It is not a general utility tool in the legal workshop. Factual issues are not a
proper subject for certiorari, as the power of the Supreme Court to review labor cases is limited to the issue of jurisdiction
and grave abuse of discretion. x x x.

Of the same tenor was our disquisition in Ilocos Sur Electric Cooperative, Inc. v. NLRC where we made plain that:

In certiorari proceedings under Rule 65 of the Rules of Court, judicial review by this Court does not go so far as to
evaluate the sufficiency of evidence upon which the Labor Arbiter and the NLRC based their determinations, the inquiry
being limited essentially to whether or not said public respondents had acted without or in excess of [their] jurisdiction or
with grave abuse of discretion.

x x x Our deference to the expertise acquired by quasi-judicial agencies and the limited scope granted us in the exercise
of certiorari jurisdiction restrain us from going so far as to probe into the correctness of a tribunals evaluation of evidence,
unless there is a palpable mistake and complete disregard thereof in which case certiorari would be proper. In plain terms,
in certiorari  proceedings, we are concerned with mere errors of jurisdiction and not errors of judgment.

Equally devoid of correctness is petitioners claim that the documents should be considered, pursuant to Article 221 of the
Labor Code which states that technical rules are not binding in proceedings before the labor arbiters and the NLRC. The
Supreme Court is not a trier of facts; as earlier stated, its jurisdiction in a petition for certiorari, like the present case, is

58
confined to questions of jurisdiction and grave abuse of discretion. The unexplained failure of petitioner to present its
evidence before the labor arbiter and the NLRC cannot compel this Court to expand the scope of its review. Indeed,
petitioner has not proffered a sufficient reason for this Court to do so.

Petitioners reliance on Canete v. National Labor Relations Commission 19 is misplaced. In that case, the documents were
submitted to the NLRC before they were tackled by the Supreme Court.

Private respondents admission that he was involved in the November 4, 1993 accident did not give petitioner a just cause
to dismiss him. Mere involvement in an accident, absent any showing of fault or recklessness on the part of an employee,
is not a valid ground for dismissal.

Third Issue:

No Due Process

Petitioner insists that private respondent was accorded due process, because he was allowed to explain his side and to
show cause why he should still be allowed to act as one of petitioners drivers.

This does not persuade. The Court has consistently held that in the dismissal of employees, the twin requirements of
notice and hearing are essential elements of due process. The employer must furnish the worker two written notices: (1)
one to apprise him of the particular acts or omissions for which his dismissal is sought; and (2) the other to inform him of
his employers decision to dismiss him. As to the requirement of a hearing, the essence of due process lies simply in an
opportunity to be heard, and not always and indispensably in an actual hearing.20cräläwvirtualibräry

In the present case, petitioner failed to present proof, other than its bare allegations, that it had complied with these
requirements.21 We reiterate: the burden of proof rests on the employer. Private respondent, in fact, was not given notice
that he was being dismissed. When ordered to explain the vehicular accident that happened on November 4, 1993, he
was not informed that petitioner was contemplating his dismissal and that his involvement in said vehicular accident was
the cause thereof. Private respondent was merely asked to explain the vehicular accident per se, not his defense against
a charge of dismissal arising from the vehicular accident. He became aware of his employers intention to dismiss him only
when he was actually told not to report for work anymore.

Fourth Issue:

Strained Relations

Notwithstanding its failure to prove just cause and due process in the dismissal of private respondent, petitioner seeks to
bar his reinstatement by invoking the doctrine of strained relations. It contends that as a result of private respondents
reckless and incompetent manner of driving x x x, compounded by the damages suffered by petitioner in terms of repairs,
related expenses, and the institution of the instant case, the relationship between the parties are so strained as to
preclude a harmonious working atmosphere to the prejudice of the petitioner as well as private
respondent.22cräläwvirtualibräry

We are not persuaded. Strained relations must be demonstrated as a fact. Petitioner failed to do so. Its allegation that
private respondent was incompetent and reckless in his manner of driving, which led to the his involvement in three
vehicular accidents, is not supported by the records. As earlier noted, no evidence was properly submitted by petitioner to
prove or give credence to his assertions. Thus, Respondent NLRC ruled:

Despite allegation on the matter, not an iota of proof was presented to establish the claim. This observation equally
applies to the allegation that complainants, in three (3) occasions had figured in [a] vehicular accident due to his reckless
driving x x x.23cräläwvirtualibräry

Because the claim of petitioner has no factual basis, the doctrine on strained relations cannot be applied in this case.
Moreover, the filing of the Complaint for illegal dismissal does not by itself justify the invocation of this doctrine. As the
Court held in Capili vs. NLRC:24cräläwvirtualibräry

xxx [T]he doctrine on strained relations cannot be applied indiscriminately since every labor dispute almost invariably
results in strained relations; otherwise, reinstatement can never be possible simply because some hostility is engendered
between the parties as a result of their disagreement. That is human nature.

59
Fifth Issue:

Reinstatement and Back Wages

Because he was illegally dismissed, private respondent is entitled to reinstatement and back wages pursuant to Section
279 of the Labor Code, which reads:

Art. 279. Security of Tenure. -- In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement.

Interpreting this provision, the Court held in Bustamante v. NLRC25 that illegally dismissed employees are entitled to full
back wages without conditions or limitations, viz.:

xxx [A] closer adherence to the legislative policy behind Rep. Act No. 6715 points to full backwages as meaning exactly
that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period
of his illegal dismissal. In other words, the provision calling for full backwages to illegally dismissed employees is clear,
plain and free from ambiguity and, therefore, must be applied without attempted or strained interpretation.

The labor arbiter awarded back wages in the sum of P67,200 based on the following computation:

11/28/93 - 6/28/94 = 7 mos.

P 800.00 x 3 days x 4 weeks = P9,600.00

P 9,600 x 7 mos. = P67,200.0026cräläwvirtualibräry

In modifying the foregoing award, the NLRC relied on this other formula:

11/28/93 - 11/28/94 = 12 months

P 600.00 x 3 days x 4 weeks = P 7,200.00

P 7,200 x 12 months = P86,400.00.27cräläwvirtualibräry

Although the NLRC adjusted the amount of private respondents monthly income and the period during which back wages
may be awarded, neither the petitioner nor the private respondent questioned the new computation. Accordingly, we
sustain the award but stress that the back wages ought to be computed from the time of the illegal dismissal to the time of
reinstatement, either actual or in the payroll, without any deduction or qualification.

WHEREFORE, the petition is hereby DISMISSED for utter lack of merit, and the assailed Decision and Resolution are
hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

60