2.3.3.

Immortality/Sexual Harrasment

218. SANTOS VS. NATIONAL LABOR RELATIONS COMMISSION

ISSUE RULING

Whether or not the illicit To constitute immorality, the circumstances of each particular case must be holistically considered and evaluated in light of the prevailing norms of conduct and applicable laws.
relationship between the American jurisprudence has defined immorality as a course of conduct which offends the morals of the community and is a bad example to the youth whose ideals a teacher is
petitioner and Mrs. Martin supposed to foster and to elevate, the same including sexual misconduct. Thus, in petitioner’s case, the gravity and seriousness of the charges against him stem from his being
could be considered a married man and at the same time a teacher.
immoral as to constitute
just cause to terminate an Having an extra-marital affair is an afront to the sanctity of marriage, which is a basic institution of society. Even our Family Code provides that husband and wife must live
employee under Article together, observe mutual love, respect and fidelity. This is rooted in the fact that both our Constitution and our laws cherish the validity of marriage and unity of the family. Our
282 of the Labor Code. laws, in implementing this constitutional edict on marriage and the family underscore their permanence, inviolability and solidarity.
As a teacher, petitioner serves as an example to his pupils, especially during their formative years and stands in loco parentis to them. To stress their importance in our society,
teachers are given substitute and special parental authority under our laws.

Consequently, it is but stating the obvious to assert that teachers must adhere to the exacting standards of morality and decency. There is no dichotomy of morality. A teacher,
both in his official and personal conduct, must display exemplary behavior. He must freely and willingly accept restrictions on his conduct that might be viewed irksome by
ordinary citizens. In other words, the personal behavior of teachers, in and outside the classroom, must be beyond reproach.

Accordingly, teachers must abide by a standard of personal conduct which not only proscribes the commission of immoral acts, but also prohibits behavior creating a suspicion
of immorality because of the harmful impression it might have on the students. Likewise, they must observe a high standard of integrity and honesty.
From the foregoing, it seems obvious that when a teacher engages in extra-marital relationship, especially when the parties are both married, such behavior amounts to
immorality, justifying his termination from employment. Having concluded that immorality is a just cause for dismissing petitioner, it is imperative that the private respondent
prove the same. Since the burden of proof rests upon the employer to show that the dismissal was for a just and valid cause, the same must be supported by substantial
evidence.
Undoubtedly, the question of immorality by the petitioner is factual in nature. Thus, we reiterate the well-settled rule that factual findings by the NLRC, particularly when it
coincides with those by the Labor Arbiter, are accorded respect, even finality, and will not be disturbed for as long as such findings are supported by substantial evidence. A
scrutiny of the records of the instant petition leads us to concur with the NLRC’s finding that petitioner indeed entered into an illicit relationship with his co-teacher. This fact
was attested to by the testimonies of nine witnesses (a fourth year student, a security guard, a janitor and six co-teachers) which petitioner failed to rebut.

In fact, the petitioner’s only recourse was to deny the accusation and insinuate that these witnesses were coerced by the private respondent to give their testimonies. However,
under such circumstances, it is not enough for petitioner to simply cast doubt on the motives of the witnesses; he must present countervailing evidence to prove that no such
affair took place.

In short, we cannot just ignore the witnesses’ affidavits and their subsequent testimonies during the investigation as to the culpability of the petitioner on the sole basis of the
latter’s denial. In any event, we have held that denial, if unsubstantiated by clear and convincing evidence, is a negative and self-serving evidence which has no weight in law and
cannot be given greater evidentiary value over the testimony of credible witnesses who testified on affirmative matters.

Further bolstering the witnesses’ testimonies is the the absence of any motive on their part to falsely testify against the petitioner. Thus, since there is nothing to indicate that
the witnesses were moved by dubious or improper motives to testify falsely against the petitioner, their testimonies are hereby accorded full faith and credit.

Likewise, petitioner cannot take comfort from the letter dated November 7, 1990 signed by 28 of his co-teachers, expressing their unequivocal support for Mrs. Arlene Martin. It
must be noted that the said letter did not in any way absolve Mrs. Martin from any wrongdoing. It merely affirmed the fact that when she was forcibly asked to take a leave of
absence on November 3, 1990 the same was done in a precipitous manner, without the benefit of due process. Moreover, it must be stressed that the expression of support was
 personal to Mrs. Martin, and the same should not redound to the benefit of the petitioner. Indeed, if petitioner really had the support of his peers, then it should have been easy
for him to obtain a similar letter from them in the course of his administrative investigation. However, not only did he not get such support, but six of his co-teachers even
testified against him during the inquiry.

Finally, petitioner cannot invoke in his favor the ruling in the Arlene Martincase, wherein the NLRC ruled that her dismissal was illegal. It must be noted that the reason for
declaring Martin’s dismissal as illegal was the failure by the private respondent to accord her the required due process.

As aptly observed by the NLRC in its decision:

“In the case at bar, the complainant was amply afforded the due process requirements of law. He was dismissed only on June 1, 1991 after an exhaustive
investigation. A committee was formed to conduct an inquiry. An administrative charge for immorality was filed against him. He was even required to testify in
said case. He was given the opportunity to answer said accusation. (Rollo, p. 47) He was in fact present during the hearing on January 17, 1991 and gave his side.
x x x In fine, herein complainant (petitioner) cannot successfully seek refuge in the cited case of Martin.”

In view of our finding that petitioner’s dismissal was for a just and valid cause, the grant of financial assistance by the NLRC is without any factual and legal basis. In PLDT v. NLRC,
we held that:

“We hold henceforth separation pay shall be as a measure of social justice only in these instances where the employee is validly dismissed for cause other than
serious misconduct or those reflecting his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving
moral turpitude, like theft or illicit sexual relationship with a fellow worker, the employer may not be required to give the dismissed employee separation pay,
or financial assistance, or whatever other name it is called, on the ground of social justice.”

The above ruling has consistently been applied in terminating an employee when it involves his moral character.

219. CHUA-QUA VS. CLAVE

ISSUE RULING

Whether or not petitioner We do not agree. There is no denial of due process where a party was afforded an opportunity to present his side. Also, the procedure by which issues are resolved based on
right to due process was position papers, affidavits and other documentary evidence is recognized as not violative of such right. Moreover, petitioner could have insisted on a hearing to confront and
violated. cross-examine the affiants, but she did not do so, obviously because she was convinced that the case involves a question of law. Besides, said affidavits were also cited and
discussed by her in the proceedings before the Ministry of Labor.

Whether or not there is To constitute immorality, the circumstances of each particular case must be holistically considered and evaluated in the light of prevailing norms of conduct and the applicable
substantial evidence to law. Contrary to what petitioner had insisted on from the very start, what is before us is a factual question, the resolution of which is better left to the trier of facts.
prove that the antecedent We rule that public respondent acted with grave abuse of discretion. As vividly and forcefully observed by him in his original decision:
facts which culminated in
the marriage between "Indeed, the records relied upon by the Acting Secretary of Labor (actually the records referred to are the affidavits attached as Annexes ‘A' to 'D' of the position
petitioner and her student paper dated August 10, 1976 filed by appellee at the arbitration proceedings) in arriving at his decision are unbelievable and unworthy of credit, leaving many
constitute immorality questions unanswered by a rational mind. For one thing, the affidavits refer to certain times of the day during off-school hours when appellant and her student
and/or grave misconduct. were found together in one of the classrooms of the school. But the records of the case present a ready answer: appellant was giving remedial instruction to her
student and the school was the most convenient place to serve the purpose. What is glaring in the affidavits is the complete absence of specific immoral acts
allegedly committed by appellant and her student. For another, and very important at that, the alleged acts complained of invariably happened from September
to December, 1975, but the disciplinary action imposed by appellee was sought only in February, 1976, and what is more, the affidavits were executed only in
August, 1976 and from all indications, were prepared by appellee or its counsel. The affidavits heavily relied upon by appellee are clearly the product of after-
thought. x x x The action pursued by appellee in dismissing appellant over one month after her marriage, allegedly based on immoral acts committed even much
 earlier, is open to question. The basis of the action sought is seriously doubted; on the contrary, we are more inclined to believe that appellee had certain
selfish, ulterior and undisclosed motives known only to itself."
As earlier stated, from the outset even the labor arbiter conceded that there was no direct evidence to show that immoral acts were committed. Nonetheless, indulging in a
patently unfair conjecture, he concluded that "it is however enough for a sane and credible mind to imagine and conclude what transpired during those times." [25] In reversing
his decision, the National Labor Relations Commission observed that the assertions of immoral acts or conducts are gratuitous and that there is no direct evidence to support
such claim, a finding which herein public respondent himself shared.

We are, therefore, at a loss as to how public respondent could adopt the volte-face in the questioned resolution, which we hereby reject, despite his prior trenchant
observations hereinbefore quoted. What is revealing, however, is that the reversal of his original decision is inexplicably based on unsubstantiated surmises and non sequiturs
which he incorporated in his assailed resolution in this wise:

"x x x While admittedly, no one directly saw Evelyn Chua and Bobby Qua doing immoral acts inside the classroom, it seems obvious and this Office is convinced
that such a happening indeed transpired within the solitude of the classroom after regular class hours. The marriage between Evelyn Chua and Bobby Qua is the
best proof which confirms the suspicion that the two indulged in amorous relations in that place during those times of the day. x x x."

With the finding that there is no substantial evidence of the imputed immoral acts, it follows that the alleged violation of the Code of Ethics governing school teachers would
have no basis. Private respondent utterly failed to show that petitioner took advantage of her position to court her student. If the two eventually fell in love, despite the
disparity in their ages and academic levels, this only lends substance to the truism that the heart has reasons of its own which reason does not know. But, definitely, yielding to
this gentle and universal emotion is not to be so casually equated with immorality. The deviation of the circumstances of their marriage from the usual societal pattern cannot
be considered as a defiance of contemporary social mores.

It would seem quite obvious that the avowed policy of the school in rearing and educating children is being unnecessarily bannered to justify the dismissal of petitioner. This
policy, however, is not at odds with and should not be capitalized on to defeat the security of tenure granted by the Constitution to labor. In termination cases, the burden of
proving just and valid cause for dismissing an employee rests on the employer and his failure to do so would result in a finding that the dismissal is unjustified.

The charge against petitioner not having been substantiated, we declare her dismissal as unwarranted and illegal. It being apparent, however, that the relationship between
petitioner and private respondent has been inevitably and severely strained, we believe that it would neither be to the interest of the parties nor would any prudent purpose be
served by ordering her reinstatement.

3. Special circumstances

3.1. Preventive suspension

220. JRS BUSINESS CORPORATION VS. NATIONAL LABOR RELATIONS COMMISSION

ISSUE RULING

Also presented as an issue was petitioner's directive to private respondent of October 12, 1988 to go on leave without pay to pave the way for the investigation of the charges
against him.

Sections 3 and 4, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code, Termination of Employment, provide:

"Section 3. Preventive suspension. The employer may place the worker concerned under preventive suspension if his continued employment poses a serious
and imminent threat to the life or property of the employer or of his co-workers.
 "Section 4. Period of suspension. No preventive suspension shall last longer than 30 days. The employer shall thereafter reinstate the worker in his former or in
a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and
other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer
decides, after completion of the hearing, to dismiss the worker."

Petitioner having violated the maximum 30-day preventive suspension under Section 4, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code, a sanction is
imposed on him in consonance with our ruling in Great Pacific Life Assurance Corporation v. National Labor Relations Commission, 187 SCRA 694 (1990). Petitioner must
indemnify private respondent in the amount of One Thousand Pesos (P1,000.00).
3.2. Constructive dismissal

221. GACO VS. NATIONAL LABOR RELATIONS COMMISSION

ZENAIDA GACO, PETITIONER, VS. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION AND ORIENT LEAF TOBACCO CORPORATION, RESPONDENTS.

FACTS Petitioner was hired by private respondent for the position of Picker. After a year of service, she was promoted to the position of Production Recorder. She held this position for
a period of fourteen (14) years until the end of private respondent's working season in 1989. In April, 1990, when petitioner reported for work at the start of the working
season for that year, she found out that her position was already occupied by another employee and that she was being demoted to the position of Picker.

Petitioner believed that, having been with private respondent for fifteen (15) years without any derogatory record, her demotion was not justified. Considering it as constructive
dismissal, petitioner thus refused to report for work and filed a complaint before the Labor Arbiter for payment of separation pay.

Private respondent raised the defense that the demotion of petitioner was effected on a valid ground, that is, gross inefficiency. It described her work, as follows:

"x x x she was assigned as the production recorder. This job assignment is not too difficult nor complicated. All she has to do is to record correctly and accurately
weights on tags placed inside tobacco containers as against the Production Reports which she accomplishes. In other words, the weights appearing on the tags
must be correctly recorded on her Production Report. This is very important because the said Production Report, among other things, will be the basis in the
preparation of the delivery Orders when the Respondent corporation effects the delivery of its tobacco to its buyers, both local and foreign. To illustrate, if the
weight appearing on the Delivery Order is less than what appears on the tags inside the container, the difference in the weight represents the loss to the
respondent. Conversely, if the weight appearing on the Delivery Order is more than what appears on the tags inside the container the difference can be the
basis for the respondent's customer to demand a refund and a possible damage suit. In both cases, the respondent corporation stands to lose, particularly its
own credibility. This is how serious mistakes in the weights may result."

It is in this particular job assignment that she manifested said gross inefficiency, committing the same mistakes frequently in spite of her attention being called repeatedly and
advised to take the necessary corrective measures.

On July 31, 1991, the Labor Arbiter rendered judgment favorable to petitioner. The Labor Arbiter declared that petitioner's demotion was unjustified and she was not accorded
due process by private respondent:

"x x x The evidence, consisting of a series of memoranda, are all dated March 20, 1990, before complainant reported for the next working season. This would
indicate that these memoranda were prepared as an afterthought. And this observation is bolstered by the fact that the reported inaccurate recording of
complainant, which was made (the) basis for the claimed inefficiency, is not substantially supported. The alleged reports made by complainant's supervisor and
the Senior Accounting Clerk of the Production Department, being both dated March 20, 1990, can very well be merely simulated reports done to justify the
otherwise unjustified action they were about to implement. Respondent failed to submit even a single copy of the alleged erreneous (sic), 'dirty and untidy'
reports of complainant.

We cannot rely on the documentary evidence presented by the respondent as the same were (sic) but communications between the officers of the company.
True, there were reports made by complainant's direct superiors regarding her gross inefficiency from which respondent based its action. Yes, management's
decision to approve the recommendation to demote complainant was based on valid grounds. Indeed, there was union agreement on her demotion (Annex "D",
Ibid.). But the truthfulness of the supposed valid grounds is here being attacked. And all of these transpired -- from the initial report to the time the
management decided to implement its decision to demote her -- without complainant's participation and knowledge at any stage. The records are bereft of any
showing that complainant was notified in advance of respondent's impending action and the reason or reasons thereof before it was actually effected. Neither
does the record show that complainant was afforded any opportunity to be heard.

xxx xxx xxx


ISSUE
Whether or not it was
petitioner who terminated
her employment by
refusing to report for work
despite several demands
made upon her by private
respondent to do so.
While due process required by law is applied on dismissals, the same is also applicable to demotions as demotions likewise affect the employment of a worker
whose right to continued employment, under the same terms and conditions, is protected by law. Moreover, considering that demotion is, like dismissal, also a
punitive action, the employee being demoted should as in cases of dismissals, be given a chance to contest the same.
xxx xxx xxx
Gauged against the foregoing well-established factual and settled legal considerations, the demotion of complainant is definitely unjustified and, having been
found to be have been done in bad faith, must be declared as constituting constructive dismissal.
This finds further support in the fact that when complainant Gaco refused to report for work as Picker, they immediately promoted somebody to that position
and offered her the lower position of Reject Piler and, when complainant again refused to report, they offered a much lower position from the Relief Crew, a
very positive indication of constructive dismissal.
Unjustified demotion, in effect, constitutes constructive dismissal, which is illegal, and which would entitle complainant to reinstatement and payment of
backwages."
On appeal before public respondent National Labor Relations Commission by private respondent, the aforementioned decision was modified.
While it concurred with the finding of the Labor Arbiter that the demotion of petitioner was unjustified, it expressed the contrary view that there was no constructive dismissal:
"x x x We could not countenance the arbitrary and unilateral declaration of complainant not to report for work for what she perceived to be unjust. Such open
defiance against the exercise of management's prerogative even if it be conceded to be unjust would wreck havoc on the natural and orderly business structure
and would encourage anarchism. An employee should recognize the prerogative of management to transfer, demote or even to dismiss to protect its business
subject however, to such restraints as the law provides."
RULING
The case of Philippine Japan Active Carbon Corporation, et al. v. NLRC, et al., which was cited in the recent case of Lemery Savings and Loan Bank, et al. v. NLRC, et al., defines
constructive dismissal as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as, an offer involving a demotion in rank and a
diminution in pay. As we have stated previously, both the Labor Arbiter and respondent NLRC arrived at a factual finding that petitioner was demoted to her former position
without any justifiable cause. However, they differed in the conclusions they derived therefrom: the Labor Arbiter considered petitioner's demotion as constructive dismissal
whereas respondent NLRC held that constructive dismissal could not be deduced from the circumstances.
On the basis of the foregoing jurisprudence defining the term constructive dismissal, we sustain the ruling of the Labor Arbiter and his rationalization thereon. Consequently,
petitioner is entitled to her full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time her compensation was
withheld from her up to the time of her actual reinstatement. In ascertaining the total amount of backwages payable to her, we enunciated in the case of Pines City Educational
Center, et al. v. NLRC, et al. the doctrine that:
"x x x we go back to the rule prior to the Mercury Drug rule that the total amount derived from employment elsewhere by the employee from the date of
dismissal up to the date of reinstatement, if any, should be deducted therefrom. x x x."
However, we shall not follow Article 279 of the Labor Code to the letter regarding the period of backwages in view of the peculiar circumstances of the present case, namely,
"there is now a strained relationship between (petitioner) and (private respondent) and (petitioner) prays for payment of separation pay in lieu of reinstatement." Instead, the
period thereof shall be reckoned from the time her compensation was withheld from her, or in April, 1990 up to the finality of our decision.
Respondent NLRC reduced the amount of separation pay, as follows:
"Under the foregoing circumstances, complainant should be reinstated without backwages; however, since she already manifested her desire not to work for
respondent anymore, she should instead be granted separation pay in lieu of reinstatement, further taking into consideration her long service with respondent.
 It appearing that the work at the respondent's company is seasonal in nature, the separation pay should be computed on the basis of one-half (1/2) month pay
for every twelve (12) months of service, or a total of eleven (11) constructive years.".

Again, we sustain the ruling of the Labor Arbiter granting separation pay in the amount of one (1) month pay for every year of service. This has been our consistent ruling in
numerous decisions awarding separation pay to an illegally dismissed employee in lieu of reinstatement. It should be emphasized that separation pay is being awarded in this
case for this reason, a fact which the Office of the Solicitor General overlooked.

We note that the issue regarding award of moral damages and attorney's fees to petitioner is being raised only in the proceedings before this Court, thus, she cannot impute
grave abuse of discretion on the part of respondent NLRC on this aspect.

222.

FEDERICO M. LEDESMA, JR., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION (NLRC-SECOND DIVISION) HONS. RAUL T. AQUINO, VICTORIANO R. CALAYCAY AND ANGELITA A. GACUTAN ARE THE
COMMISSIONERS, PHILIPPINE NAUTICAL TRAINING INC., ATTY. HERNANI FABIA, RICKY TY, PABLO MANOLO, C. DE LEON AND TREENA CUEVA, RESPONDENTS.

FACTS Petitioner was employed as a bus/service driver by the private respondent on probationary basis, as evidenced by his appointment. As such, he was required to report at private
respondent’s training site in Dasmariñas, Cavite, under the direct supervision of its site administrator, Pablo Manolo de Leon (de Leon). Petitioner filed a complaint against de
Leon for allegedly abusing his authority as site administrator by using the private respondent’s vehicles and other facilities for personal ends. In the same complaint, petitioner
also accused de Leon of immoral conduct allegedly carried out within the private respondent’s premises. A copy of the complaint was duly received by private respondent’s
Chief Accountant, Nita Azarcon (Azarcon).

De Leon filed a written report against the petitioner addressed to private respondent’s Vice-President for Administration, Ricky Ty (Ty), citing his suspected drug use. In view of
de Leon’s report, private respondent’s Human Resource Manager, Trina Cueva (HR Manager Cueva), served a copy of a Notice to petitioner requiring him to explain within 24
hours why no disciplinary action should be imposed on him for allegedly violating Section 14, Article IV of the private respondent’s Code of Conduct.

Petitioner filed a complaint for illegal dismissal against private respondent before the Labor Arbiter.

In his Position Paper, petitioner averred that in view of the complaint he filed against de Leon for his abusive conduct as site administrator, the latter retaliated by falsely
accusing petitioner as a drug user. VP for Administration Ty, however, instead of verifying the veracity of de Leon’s report, readily believed his allegations and together with
HR Manager Cueva, verbally dismissed petitioner from service on 29 November 2000.

Petitioner alleged that he was asked to report at private respondent’s main office in España, Manila, on 29 November 2000. There, petitioner was served by HR Manager Cueva
a copy of the Notice to Explain together with the copy of de Leon’s report citing his suspected drug use. After he was made to receive the copies of the said notice and report,
HR Manager Cueva went inside the office of VP for Administration Ty. After a while, HR Manager Cueva came out of the office with VP for Administration Ty. To petitioner’s
surprise, HR Manager Cueva took back the earlier Notice to Explain given to him and flatly declared that there was no more need for the petitioner to explain since his drug test
result revealed that he was positive for drugs. When petitioner, however, asked for a copy of the said drug test result, HR Manager Cueva told him that it was with the
company’s president, but she would also later claim that the drug test result was already with the proper authorities at Camp Crame.

Petitioner was then asked by HR Manager Cueva to sign a resignation letter and also remarked that whether or not petitioner would resign willingly, he was no longer
considered an employee of private respondent. All these events transpired in the presence of VP for Administration Ty, who even convinced petitioner to just voluntarily resign
with the assurance that he would still be given separation pay. Petitioner did not yet sign the resignation letter replying that he needed time to think over the offers. When
petitioner went back to private respondent’s training site in Dasmariñas, Cavite, to get his bicycle, he was no longer allowed by the guard to enter the premises.
On the following day, petitioner immediately went to St. Dominic Medical Center for a drug test and he was found negative for any drug substance. With his drug result on
hand, petitioner went back to private respondent’s main office in Manila to talk to VP for Administration Ty and HR Manager Cueva and to show to them his drug test result.
 Petitioner then told VP for Administration Ty and HR Manager Cueva that since his drug test proved that he was not guilty of the drug use charge against him, he decided to
continue to work for the private respondent.

On 2 December 2000, petitioner reported for work but he was no longer allowed to enter the training site for he was allegedly banned therefrom according to the guard on
duty. This incident prompted the petitioner to file the complaint for illegal dismissal against the private respondent before the Labor Arbiter.

For its part, private respondent countered that petitioner was never dismissed from employment but merely served a Notice to Explain why no disciplinary action should be filed
against him in view of his superior’s report that he was suspected of using illegal drugs. Instead of filing an answer to the said notice, however, petitioner prematurely lodged a
complaint for illegal dismissal against private respondent before the Labor Arbiter.

Private respondent likewise denied petitioner’s allegations that it banned the latter from entering private respondent’s premises. Rather, it was petitioner who failed or refused
to report to work after he was made to explain his alleged drug use. Indeed, on 3 December 2000, petitioner was able to claim at the training site his salary for the period of 16-
30 November 2000, as evidenced by a copy of the pay voucher bearing petitioner’s signature. Petitioner’s accusation that he was no longer allowed to enter the training site
was further belied by the fact that he was able to claim his 13th month pay thereat on 9 December 2000, supported by a copy of the pay voucher signed by petitioner.

On 26 July 2002, the Labor Arbiter rendered a Decision, in favor of the petitioner declaring illegal his separation from employment. The Labor Arbiter, however, did not order
petitioner’s reinstatement for the same was no longer practical, and only directed private respondent to pay petitioner backwages.

Both parties questioned the Labor Arbiter’s Decision before the NLRC. Petitioner assailed the portion of the Labor Arbiter’s Decision denying his prayer for reinstatement, and
arguing that the doctrine of strained relations is applied only to confidential employees and his position as a driver was not covered by such prohibition. On the other hand,
private respondent controverted the Labor Arbiter’s finding that petitioner was illegally dismissed from employment, and insisted that petitioner was never dismissed from his
job but failed to report to work after he was asked to explain regarding his suspected drug use.

On 15 April 2003, the NLRC granted the appeal raised by both parties and reversed the Labor Arbiter’s Decision. The NLRC declared that petitioner failed to establish the fact of
dismissal for his claim that he was banned from entering the training site was rendered impossible by the fact that he was able to subsequently claim his salary and 13th month
pay. Petitioner’s claim for reinstatement was, however, granted by the NLRC. The Motion for Reconsideration filed by petitioner was likewise denied by the NLRC in its
Resolution dated 29 August 2003.

The Court of Appeals dismissed petitioner’s Petition for Certiorari under Rule 65 of the Revised Rules of Court, and affirmed the NLRC Decision giving more credence to private
respondent’s stance that petitioner was not dismissed from employment, as it is more in accord with the evidence on record and the attendant circumstances of the instant
case. Similarly ill-fated was petitioner’s Motion for Reconsideration, which was denied by the Court of Appeals in its Resolution issued.

ISSUE RULING

Whether or not the In the present case, there is hardly any evidence on record so as to meet the quantum of evidence required, i.e., substantial evidence. Petitioner’s claim of illegal dismissal is
petitioner was illegally supported by no other than his own bare, uncorroborated and, thus, self-serving allegations, which are also incoherent, inconsistent and contradictory.
dismissed from
employment. Petitioner himself narrated that when his presence was requested on 29 November 2000 at the private respondent’s main office where he was served with the Notice to Explain
his superior’s report on his suspected drug use, VP for Administration Ty offered him separation pay if he will just voluntarily resign from employment. While we do not
condone such an offer, neither can we construe that petitioner was dismissed at that instance. Petitioner was only being given the option to either resign and receive his
separation pay or not to resign but face the possible disciplinary charges against him. The final decision, therefore, whether to voluntarily resign or to continue working still,
ultimately rests with the petitioner. In fact, by petitoner’s own admission, he requested from VP for Administration Ty more time to think over the offer.

Moreover, the petitioner alleged that he was not allowed to enter the training site by the guard on duty who told him that he was already banned from the premises.
Subsequently, however, petitioner admitted in his Supplemental Affidavit that he was able to return to the said site on 3 December 2000, to claim his 16-30 November 2000
salary, and again on 9 December 2000, to receive his 13 th month pay. The fact alone that he was able to return to the training site to claim his salary and benefits raises doubt as
 to his purported ban from the premises.

Finally, petitioner’s stance that he was dismissed by private respondent was further weakened with the presentation of private respondent’s payroll bearing petitioner’s name
proving that petitioner remained as private respondent’s employee up to December 2000. Again, petitioner’s assertion that the payroll was merely fabricated for the purpose of
supporting private respondent’s case before the NLRC cannot be given credence. Entries in the payroll, being entries in the course of business, enjoy the presumption of
regularity under Rule 130, Section 43 of the Rules of Court. It is therefore incumbent upon the petitioner to adduce clear and convincing evidence in support of his claim of
fabrication and to overcome such presumption of regularity. Unfortunately, petitioner again failed in such endeavor.

223. PHIL AM LIFE VS. GRAMAJE

THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE CO., PETITIONER, VS. ANGELITA S. GRAMAJE, RESPONDENT.

FACTS Working as Assistant Vice President of Pensions Department of Philamlife, petitioner was offered an additional position by respondent Cuisia, which was then resolved and
approved by Philam Savings Bank’s Board of Directors, for the position of Head of Trust Banking Division or AVP-Trust Officer on a concurrent capacity and under a separate
compensation.

Effective January 1998, however, petitioner’s marketing manager and marketing officer were immediately transferred to Group Insurance Division. Petitioner, thereafter, was
never given replacements for the marketing manager and marketing officer, contrary to private respondent Cuisia’s assurance. Thus, petitioner ran the Pensions Department
single-handedly with only one administrative assistant as her staff. Petitioner did the field work, the desk work (administrative, legal, finance, marketing), the out of town
meetings, the client presentations, aside from her work with the Philam Savings Bank as fund manager, wherein private respondent Cuisia offered to her for a separate
compensation, but has still remain [sic] unpaid.

Sometime in November, 1998, petitioner availed of her housing and car benefits and applied for a car loan and housing loan.

On November 18, 1998, however, private respondent through Centeno and Sotelo, offered her P250,000.00 for her to vacate her position by December 1998. Petitioner
declined the offer considering that there was no valid reason for her to leave. Private respondents Centeno and Sotelo admonished her that her filing of suit would prompt
respondent Cuisia to blacklist her in companies where he holds directorships and advised her that Philamlife is big and can stand the long ordeal of justice system, whereas
she may not withstand the phase of the trial. Evidence that this meeting and matter took place was the formal letter of rejection dated November 25, 1998 sent by petitioner
and duly received by the offices of respondents Cuisia, Centeno and Sotelo.

Pertinent portion of the November 25, 1998 letter is hereby quoted:

[T]his shall summarize the discussion of meeting held at Mr. Centeno’s Office last November 18, 1998.

Briefly, an offer of Two Hundred Fifty Thousand [Pesos] (P250,000) has been made as Settlement fee so that Philamlife will not resort to transferring
undersigned to another department for reasons only known to management and which undersigned is still not fully aware in writing. In so doing, it
has been emphasized that Mr. Centeno and Mr. Sotelo is (sic) sparing undersigned of the hardships that undersigned will undergo in the said other
department which is intended to make undersigned inefficient and eventually serve as basis for her termination or as claimed “non-election” by March
1999. Further, it has been requested and categorically stated by Mr. Sotelo that undersigned forgive Maria Haas for whatever she has done…

On December 6, 1998, respondent Cuisia met with petitioner and cajoled her to reconsider and accept the offer of settlement. Cuisia even volunteered to help her look for
another job. Petitioner declined, and reiterated that the actuations of respondents clearly intended to harass and humiliate her and have caused her and her family extreme
emotional stress.
On December 8, 1998, two days after the aforesaid December 6 meeting, respondents issued her a memorandum instructing her to transfer to the Legal Department effective
December 14, 1998 and to make proper turnover and submit the status report not later than December 11, 1998.
 By her letter dated December 10, 1998, petitioner protested the sudden unexplained transfer, more so a non-existing position, and stressed that she was hired because of her
marketing, finance, and fund management skills, not her legal skills. She also made of record that her department surpassed the target fund level volume set by the company.
Also, on December 10, 1998, respondent Centeno declined the car loan benefit of petitioner.

On December 16, 1998, petitioner, while on Official Sick Leave, received a message in her pager that the Pensions Department, which was then holding office at the fifth floor of
the Philamlife Building at United Nations Avenue was assumed to be headed by Corine Moralda as her successor, and the Pensions Department was to be immediately physically
transferred on said date at the Philamlife Gammon Center in Makati City. Though sick and on official sick leave, petitioner went to the office on December 17, 1998 to verify, and
upon seeing the Pensions Department totally dark, without any staff and with left over fixtures, petitioner, emotionally shattered, opted to just leave the premises.

On December 18, 1998, respondent Cuisia through a memorandum appointed Ms. Corine Moralda as replacement of petitioner as Head of the Pensions Department effective
December 14, 1998. It was only at that time that petitioner learned that as early as August 23, 1998, respondents had advertised in the Manila Bulletin for her replacement.

Also, although, it is the tradition of Philamlife to give, during the Christmas Season, officers and employees a traditional Season’s giveaways, i.e., ham and queso de bola,
petitioner then, thru her authorized representatives, asked for her share, but she was not in the list of recipients. Petitioner’s name was not in the Legal Department, not in the
Pensions Department, and not in the list of employees of Philamlife when verified with the Personnel Department.

Hence, on December 23, 1998, petitioner filed the instant case for illegal or constructive dismissal against herein private respondents.

The Labor Arbiter, in his decision found that respondent was not illegally dismissed. The said decision held in part:

After a careful evaluation of the records, this Office finds and so holds that complainant’s “alleged” illegal dismissal seemed never to have taken place at all,
constructive or otherwise. Complainant’s insistence in holding onto her former position for which, as earlier assessed by the Company, she did not meet the
high standards expected of her, does not deserve support.

Complainant’s supposed transfer to the Legal Department cannot be considered to be unbearable, nor inconvenient, nor prejudicial to the employee, as it did
not even involve a demotion in rank or diminution of [her] salaries, benefits and other privileges. Complainant held the position of AVP-Pensions. Her supposed
transfer to the Legal Department, still with the rank of AVP, and most importantly, with the same salaries and benefits, cannot, by any stretch of imagination, be
considered as amounting to a constructive dismissal.

The NLRC, in its Decision, affirmed in toto the Decision of the Labor Arbiter.

Respondent appealed to the Court of Appeals, which reversed and set aside the decision of the NLRC.

Accordingly, private respondent is hereby ORDERED to pay petitioner separation pay in lieu of reinstatement, her full backwages inclusive of allowances and other
benefits or their monetary equivalent. For this purpose, the case is remanded to the Labor Arbiter for further proceedings solely for the purpose of determining
and/or computing the monetary liabilities of private respondents.

Additionally, considering that private respondents were proven to be in bad faith in the constructive dismissal of petitioner, the former are hereby ordered to pay the
latter exemplary damages in the amount of Fifty Thousand Pesos (P50,000) and moral damages also in the amount of Fifty Thousand Pesos (P50,000).

ISSUE RULING

Was respondent It may be true that in the transfer of respondent from the Pensions Department to the Legal Department, there was no demotion in rank nor diminution of the salaries, benefits
constructively dismissed or and privileges. But this is not the only standard that must be satisfied in order to substantiate the transfer. In the pursuit of its legitimate business interests, management has
was her transfer a the prerogative to transfer or assign employees from one office or area of operation to another – provided there is no demotion in rank or diminution of salary, benefits, and
legitimate exercise of other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause.
management prerogative?
Discrimination is the unequal treatment of employees, which is proscribed as an unfair labor practice by Art. 248(e) of the Labor Code. It is the failure to treat all persons equally
when no reasonable distinction can be found between those favored and those not favored.

Bad faith has been defined as a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for an ulterior purpose. It implies a
conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity.

In the case at bar, bad faith and discrimination on the part of petitioner are profusely perceived from its actions.

First, as early as 23 August 1998, unbeknown to respondent, petitioner had already advertised in the Manila Bulletin for the former’s replacement. Respondent was
not even notified in advance of an impending transfer.

Second, the President and CEO of petitioner corporation, Jose L. Cuisia, Jr., in his Memorandum dated 18 December 1998, announced the appointment of respondent’s
replacement effective 14 December 1998, or during the time that respondent was still on official sick leave. It is worthy to note that on 10 December 1998,
respondent, through a letter of even date, protested her sudden unexplained transfer, more so, to a non-existing position. Respondent, in said letter, likewise pointed
out that her department surpassed the target fund level volume set by the company (which negates petitioner’s allegation of ineptness on the part of respondent,
used as ground by the former to justify the transfer), and thereby requested for status quo, until all issues were resolved. No response was made.

Third, the transfer of respondent to the Legal Department was unreasonable, inconvenient and prejudicial to her. Petitioner must have known that respondent has no
adequate exposure in the field of litigation, and yet she was transferred to the Legal Department, and as AVP at that. The position of AVP-Legal would have placed
respondent in a very inopportune position because she would be heading a team of lawyers who are far more experienced than she was in the area of litigation. It was
a poor business decision and it is unlikely that the officers of petitioner would have made such a decision, except to inconvenience or prejudice respondent. Under the
circumstances, the decision to transfer was unreasonable.

Fourth, there was, likewise, discrimination against respondent, as shown from the following: (a) the Pensions Department was run by respondent with practically no
support from management. Respondent was left to fend for herself, and yet was required to bring in the numbers, i.e., generate and develop accounts. As found by
the Court of Appeals, effective January 1998, respondent’s marketing manager and marketing officer were transferred to Group Insurance Division. Respondent,
thereafter, was never given replacements for said positions, contrary to Cuisia’s assurance. Respondent herein ran the Pensions Department single-handedly and with
only one Administrative Assistant as her staff. Respondent did the field work, the desk work (administrative, legal, finance, marketing), out-of-town meetings, client
presentations, aside from her work with Philam Savings Bank as fund manager; (b) respondent tried to avail herself of her car loan benefit sometime in November
1998 by filing the appropriate application. However, action on this application was deferred by Reynaldo Centeno in his letter dated 10 December 1998, saying that
respondent’s employment status has been the subject of several discussions between the high ranking officers of petitioner; and (c) it is a tradition on the part of
petitioner, during the Christmas season, to give its officers and employees a season’s giveaway, i.e., ham and queso de bola. Respondent sent an authorized
representative to ask for her share, but, unfortunately, she was not in the list of recipients. Her name was not listed in the Legal Department, nor in the Pensions
Department. Respondent’s name, when verified with the Personnel Department, was not in the list of employees of Philamlife.
Fifth, as clearly pointed out by respondent, she formally rejected the offer of P250,000 for her to leave the company. The refutation was done in writing and duly
received by the three highest offices of petitioner, namely: the Office of the President; the Office of the Executive Vice-President; and the Office of the Senior Vice-
President and Head of Human Resources. Incongruously, taking into consideration the said contents of the formal letter of rejection, there was no response
whatsoever from the aforesaid offices. It may be true, as stated by petitioner, that “the alleged memorandum pertaining to the meeting held on 18 November 1998
on the alleged P250,000 settlement offer was prepared by respondent alone without any participation from the company,” but the fact remains that no formal
response was ever made by any of the three offices which received the same. The contents thereof, if untrue, would have elicited a stark and strong reaction from any
of the three offices.
Quite conspicuously, the Labor Arbiter, in his decision, did not thoroughly pass upon the matter involving an offer of P250,000 to respondent for the latter to vacate her position
as AVP-Pensions. Contemplation or consideration of this important detail would have been enough for the Labor Arbiter to see that there was palpable bad faith on the part of
petitioner when respondent was ordered to transfer from the Pensions Department to the Legal Department.
In a long line of decisions, we have held that the right and privilege of the employer to exercise the so-called management prerogative is recognized, and the courts will not
interfere with it. This privilege is inherent in the right of employers to control and manage their enterprise effectively. The right of employees to security of tenure does not give
them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. Managerial prerogatives,
however, are subject to limitations provided by law, collective bargaining agreements, and general principles of fair play and justice. In the case of Blue Dairy Corporation v.
NLRC, we explained the test for determining the validity of the transfer of employees, as follows:

But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in
mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be
used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.
Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal, which has been defined as a
quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay.
Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee
leaving him with no option but to forego with his continued employment.

The NLRC, in its decision dated 27 November 2000, found that respondent herein was hired by petitioner to head the Strategic Business Unit (SBU), and that she was specifically
engaged as such because of her representation that she was knowledgeable and experienced in the trust business. The records reveal otherwise. Herein respondent was not
hired to handle the so-called SBU. She was hired as Assistant Vice-President in charge of Pensions Department. This fact is further inveterated by the announcement of Cuisia in
his Memorandum dated 08 December 1997, that, indeed, respondent herein was appointed as such.

In petitioner’s Memorandum dated 29 December 2003, it was alleged that due to a change in the business strategy, the Pensions Department had to dispense with the position
of respondent who was specifically hired to perform trust work. This cannot be precise. As discussed above, respondent’s replacement was appointed effective 14 December
1998. If the position of AVP-Pensions Department was dispensed with, then why was a replacement hired by petitioner to assume such post on said date? Non sequitur. It does
not follow.

In fine, this Court rules that there was constructive dismissal, and therefore, the petition must fail.

Constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option
but to forego with his continued employment. The circumstances which prevailed in the working environment of the respondent clearly demonstrate this. The failure of the
Labor Arbiter to resolutely consider these prevailing circumstances before respondent was asked to transfer was a major flaw in his decision. Clearly, had the Labor Arbiter
considered them, he would have concluded that the transfer of respondent from the Pensions Department to the Legal Department was not a legitimate exercise of
management prerogative on the part of petitioner. Before the order to transfer was made, discrimination, bad faith, and disdain towards respondent were already displayed by
petitioner.

Petitioner has repeatedly asserted that the performance of respondent did not meet the expectation of the company and did not comply with accepted standards for a pension
profit center manager, as she lacked the skill, as well as the willingness, to perform her duties and responsibilities. Allegedly, based on the evaluation of her performance,
respondent proved to be so inept in the performance of her obligations, viz:

1. Failure to prepare and submit a budget plan;

2. Failure to prepare and submit a Pension Production Report on time;

3. Strained relations with clients;

 4. Failure to prepare an Operations Manual for the Department;

5. Inability to develop and maintain a good working relationship with her colleagues;

6. Inability to communicate her ideas; and

7. Others.

It is rather peculiar that the alleged ineptness of respondent did not prompt petitioner to issue any Inter-office Memorandum reprimanding, admonishing, or warning the former
about her performance. The solemnity of respondent’s alleged non-performance was so immense, considering that the Pensions Department is a profit center, which was so
imperative to the existence of petitioner in terms of raising revenue. The officers of petitioner should have been very much troubled about this.

This now puts into question the alleged ineptness of respondent as posited by petitioner. As aptly declared by the Court of Appeals:

. . . We recall that what triggered petitioner’s transfer was her alleged inefficiency and ineptness in her work in the Pensions Department. Records, however,
reveal otherwise. Petitioner produced a fund level of 1000% over the previous year (her predecessor’s year of 1997 with a fund level of about P2 Million
generated for two years or an average of P1 Million per year then) in the amount of P19,248,320.31 as a result of a meager 3 months marketing efforts,
although private respondents instructed her to stop marketing sometime in April 1998 for no apparent reason. All these were never rebutted nor disproved by
private respondents. They merely alleged her inefficiency without concrete and sufficient proof. But allegation is different from proof. Hence, we cannot
countenance their allegations.
Petitioner maintains that it was respondent who severed her working relationship with it. Per letter, dated 11 January 1999, issued by petitioner’s Legal Department, respondent
was asked to report immediately to her new assignment and submit to a medical examination, and that the latter took no heed of this. It seems that the point impliedly being
raised by petitioner is that respondent disengaged her employment relationship with petitioner by abandoning her work and failing to report accordingly. This argument is
apocryphal. Respondent, on 23 December 1998, already filed a case for illegal dismissal against petitioner. For petitioner to anticipate respondent to report for work after the
latter already filed a case for illegal dismissal before the NLRC, would be absurd. We have already laid down the rule that for abandonment to exist, it is essential (1) that the
employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) that there must have been a clear intention to sever the
employer-employee relationship manifested by some overt acts. Both these requisites are not present here. There was no abandonment as the latter is not compatible with
constructive dismissal.

3.3. Floating status

224. LUCKY TEXTILE MILLS VS. NATIONAL LABOR RELATIONS COMMISSION

LUCKY TEXTILE MILLS INCORPORATED, PETITIONER, VS. THE NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), AS PUBLIC RESPONDENT AND NESTOR J. NOLASCO, AS PRIVATE RESPONDENT,
RESPONDENTS.

FACTS Nestor J. Nolasco was employed for seventeen (17) years as property custodian of Eastern Textile Mills, Inc. (EASTEX), receiving a monthly salary of P852.00 and a monthly living
allowance of P320.00.

Sometime in 1982, EASTEX went on "temporary shutdown" and in the process, laid off some of its employees. Shortly thereafter, the company suffered reverses and could not
pay its indebtedness of P5 million to its banks. By virtue of a writ of attachment issued by the Court of First Instance ( Regional Trial Court) of Manila, the company's assets were
attached.
 In mid-February 1983, Nolasco was ordered to stop working, the reason given being "temporary shutdown."

EASTEX held a special meeting of its stockholders, during which a resolution was passed authorizing "the formation of a new corporation." This rehabilitation plan was approved
by the Development Bank of the Philippines, with the stated condition that the P30 million initial paid-up capital as required by the plan for the new corporation be offered to its
stockholders in proportion to their outstanding shares with EASTEX.
The Securities and Exchange Commission issued SEC Registration No. 119736 to the new corporation named Lucky Textile Mills, Inc. (LUCKY). The same firm was registered with
the Bureau of Domestic Trade. EASTEX completely ceased operations. LUCKY agreed to "operate the former business" utilizing the assets of EASTEX foreclosed by DBP. At the
resumption of operations, Nolasco was no hired by Lucky.

Nolasco filed NLRC case in the Department of Labor and Employment against both corporations (Eastex and Lucky), alleging that since 1984, normal operations had been
resumed but he was not given any notice to report back for duty, which amounted to his termination without cause.

ISSUE RULING

The following facts are undisputed:

(1) that Nolasco was simply told to stop working in mid-February 1983, not terminated with prior notice, for a shutdown of company operations which was "merely
temporary;" and
(2) Eastern Textile Mills, Inc. completely ceased operations on June 30, 1984 and admittedly, Lucky textile Mills, Inc. "resumed the operations of the factory," utilizing the
assets of the former company on July 1, 1984, which was the following day.

More than six (6) months had elapsed from the time the private respondent Nolasco was asked to stop working as property custodian in charge of Eastex's motor pool. Having
worked faithfully for Eastex for seventeen years without any degoratory record, he waited patiently for an advice to return to work. When no notice reached him, putting him on
a prolonged floating status, he was constrained to file the complaint for illegal dismissal in the Department of Labor. Applying Article 279 of the Labor Code, Nolasco, as a regular
employee who enjoyed security of tenure, cannot be dismissed except for a cause. Thus, he is entitled by law to the corresponding benefits from his illegal separation.

The Memorandum of Understanding having already existed at the time private respondent's complaint was filed, petitioner could have easily presented said document but
deliberately failed or omitted to do so. Besides, under that memorandum, although Lucky was not oblige to hire the rank-and-file employees of Eastex, the latter were paid
separation benefits in the form of "financial assistance."

It is settled that when the bonafide suspension of operations of a business or undertaking exceeds six (6) months, then the worker's employment shall be deemed
terminated. Indeed, Nolasco's "floating status" could not last for an unreasonable period. As it was established that he did not abandon his work, his dismissal without cause,
without prior notice and hearing, was illegal.

3.4. Totality of infractions rule

225. MENDOZA VS. NATIONAL LABOR RELATIONS COMMISSION

JOEL MENDOZA, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, SAN MIGUEL CORPORATION, MAGNOLIA DIVISION AND CONRAD YUMAN III, RESPONDENTS.

FACTS Petitioner was a regular employee (salesman) of private respondent San Miguel Corporation (SMC), Magnolia Division, assigned to its Baguio Sales Office.

On June 2, 1988, petitioner submitted to private respondent Conrad B. Yumang III, then Regional Sales Supervisor, an accident report that reads as follows:

"This is to inform you about the accident that happened last May 31, 1988 at around nine thirty to ten thirty in the evening along Holy Ghost in Imelda Village,
Baguio City.
 I left the sales office at about 7:05 in the evening after submitting my remittances on the said date, I was constrained to return to Lina's Mini-Mart along Marcos
Highway to collect my uncollected cash sales for the purpose that no short remittance will be reflected on my report due to month ending. Mr. Nick Villabona
came along with me.

While waiting for the owner of the said outlet, Mr. Nick Villabona recalled that there is a missing freezer, who at that time is conducting a physical freezer
inventory. I suggested that we have to look for it. We were informed that Mr. Roberto Tan of Bollian's brought the freezer at the vicinity of Imelda Village. And
then, while we were maneuvering a right turn curve, suddenly two men crossed the road coming from the left side. To avoid hitting them, I slowed down and
moved the truck a little to the left. Not knowing that the road was softened by the constant heavy downpour of rain. All of a sudden, the left shoulder gave way
and the truck with Plate No. SMC 408 slowly slipped down and turned-turtle in its left side. Hitting first the separate kitchen located infront of the house which
was badly damaged and then landed at the left portion of the house. Because of the incident, we were too confused and shocked that we proceeded first to the
house of Mr. Nick Villabona to inform his wife. Not knowing what to do, while Nick Villabona was experiencing pain due to the incident, we decided to go to
SLM Hospital for medical check-up and treatment. From there I called-up the police station to report the accident that happened.
When private respondent Yumang made his own inquiries pursuant to superior instructions to conduct a formal investigation, he found out that the police traffic report shows
that the date and time of the accident was on June 1, 1988 at 1:00 o'clock in the early morning thereof not at 7:00 o'clock in the evening of May 31, 1988 as per petitioner's
report. Hence, respondent Yumang conducted a formal investigation on June 16, 1988 to determine the truth about the accident. In a memorandum, petitioner was relieved by
private respondent SMC of the duties and responsibilities as tetra salesman of the Baguio Sales Office.

Petitioner was served a letter of termination. Consequently on August 23, 1988, petitioner filed a complaint for illegal dismissal with the labor arbiter. In due course a decision
was rendered by said arbiter that the complainant was illegally dismissed, hence respondents are directed to reinstate him to his former position without loss of seniority rights
and backwages to be computed from the time that it was withheld from him up to the time of his reinstatement; further, respondents are directed to pay 10% of the totality of
the award as attorneys fees.

Private respondent SMC appealed said decision to public respondent National Labor Relations Commission (NLRC). The appeal was opposed by petitioner. Public respondent
NLRC promulgated a resolution dismissing petitioner's complaint for lack of merit.

ISSUE RULING

Whether or not the
totality of the infractions
that petitioner has
committed justifies the
penalty of dismissal.
There can be no dispute about the requirement that before any regular employee or laborer may be dismissed from service by the employer he must be given due notice and an
opportunity to be heard.
Petitioner contends that the investigation conducted by private respondent Yumang was only to determine the truth about the reported accident and not to determine his
responsibility arising therefrom and to impose disciplinary action.

The Court is not impressed.

During the investigation it appears that he knew all the time that the investigation involves his administrative responsibility to his superior, as he made this statement. In no
uncertain terms he admitted the gravity of his offense and asked that a heavy penalty should not be imposed on him.

At such investigation private respondent SMC found that petitioner violated the company's policy on employees conduct on three counts, namely (1) driving under the
influence of liquor; (2) unauthorized use of company vehicle; and (3) damage to company vehicle which was a total wreck. As a matter of fact, Mr. and Mrs. Pablo Cognoden, the
owner of the house the kitchen of which was hit by the delivery truck driven by petitioner sought from SMC the amount of P50,000.00 for actual damages.

The rules laid down by the company for the investigation of an employee before his termination need not be observed to the letter. It is enough that there was due notice and a
hearing before a judgment or resolution thereof is made.

Due process contemplates freedom from arbitrariness. What it requires is fairness or justice; the substance rather than the form being paramount. When a party has been given
 the opportunity to be heard, then he was afforded due process.

Petitioner also assails the severity of the penalty imposed upon him alleging that he should have merited a suspension only considering his past performance.

Unfortunately, the petitioner does not appear to be a first offender. Aside from the infractions he was found to have committed, it appears that petitioner falsified the truth
when he made a false report about the incident to private respondent SMC to cover up for his misdeeds. Moreover, on previous occasions, the petitioner committed
violations of company rules and regulations concerning pricing as a salesman of the company in a way that is detrimental to his employer. On one occasion, he failed to remit
collections, so that in 1986 he was suspended for thirty days. Thus, the totality of the infractions that petitioner has committed justifies the penalty of dismissal.

226. MERALCO VS. NATIONAL LABOR RELATIONS COMMISSIONS

MANILA ELECTRIC COMPANY, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSIONS AND JEREMIAS G. CORTEZ, RESPONDENTS.

FACTS Characteristics of private respondent Jeremias C. Cortez, Jr.’s service with petitioner is his perennial suspension from work, viz:

Date of Memorandum Penalty Meted/Description

a. May 25, 1977 - Suspension of five (5) working days without pay for violation of Company Code on Employee Discipline, i.e., ‘drinking of alcoholic beverages
during working time xxx.’

b. March 28, 1984- Suspension of three (3) working days without pay for failure or refusal to report to J.F. cotton Hospital [where petitioner maintains a medical
clinic] as instructed by a company physician, while on sick leave.

C. June 13, 1984 - Suspension of ten (10) working days without pay for unauthorized extension of sick leave.

d. June 5, 1987 - Suspension of three (3) working days without pay for failure or refusal to report to J.F. Cotton Hospital [where petitioner maintains a medical
clinic] as instructed by a company physician, while on sick leave.

[Private respondents failed to report for work from Sept. 18, 1986 to Nov. 10, 1986].

e. December 16, 1988 - Preventive suspension for failure to submit the required Medical Certificate within 48 hours from the first date of the sick leave.

[Private respondent failed to report for work from Nov. 28, 1988 to the time such Memorandum was issued on December 16, 1988].

f. February 22, 1989 - After formal administrative investigation, suspension of five (5) working days without pay for unauthorized absences on November 28,
1988 to December 2, 1988. Absences from December 2, 1988. Absences from December 9-19, 1988 were charged to private respondent’s vacation leave credits
for the calendar year 1989.

g. May 30, 1989 - Suspension of ten (10) working days without pay for unauthorized absences from May 17-19 1989, with warning that penalty of dismissal will
be imposed upon commission of similar offense in the future.

Due to his numerous infractions, private respondent was administratively investigated for violation of Meralco’s Code on Employee Discipline, particularly his repeated and
unabated absence from work without prior notice his superior specifically from August 2 to September 19, 1989.

After such administrative investigation was conducted by petitioner, it concluded that the private respondent was found to have grossly neglected his duties by not attending to
 his work as lineman from Aug. 2, 1989 to September 19, 1989 without notice to his superiors.

In a letter, the private respondent was notified of the investigation result and consequent termination of his services effective January 19, 1990.

Private respondent filed a complaint for illegal dismissal against the petitioner. After both parties submitted their position papers and the documentary evidence attached
thereto, the case was submitted for resolution.

The Labor Arbiter rendered a Decision dismissing the case for lack of merit. Aggrieved with the decision of the Labor Arbiter, private respondent elevated his case on appeal to
public respondent. The NLRC set aside the decision of the Labor Arbiter and ordered petitioner to reinstate respondent with backwages. Petitioner then filed a Motion for
Reconsideration which was denied.

ISSUE RULING

Whether or not private Article 283 of the Labor Code enumerates the just causes for termination. Among such causes are the following:
respondent’s dismissal
from the service was "a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employers or representatives in connection with his work.
illegal.
b) Gross and habitual neglect by the employee of his duties.

xxx xxx xxx."

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. For indeed,
regulation of manpower by the company clearly falls within the ambit of management prerogative. This court had defined a valid exercise of management prerogative as one
which covers: hiring work assignment, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers, and the discipline, dismissal and recall of workers. Except as provided for, or limited by, special laws, an
employer is free to regulate, according to his own discretion and judgment, all aspects of employment.

Moreover, 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.

In the case at bar, the service record of private respondent with petitioner is perpetually characterized by unexplained absences and unauthorized sick leave extensions. The
nature of his job i.e. as a lineman-driver requires his physical presence to minister to incessant complaints often faulted with electricity. As aptly stated by the Solicitor General:

"Habitual absenteeism of an errant employee is not concordant with the public service that petitioner has to assiduously provide. To have delayed power failure
in a certain district simply because a MERALCO employee assigned to such area was absent and cannot immediately be replaced is a breach of public service of
the highest order. A deep sense of duty would, therefore, command that private respondent should, at the very least, limit his absence for justifiable reasons.

The penchant of private respondent to continually incur unauthorized absences and/or a violation of petitioner’s sick leave policy finally rendered his dismissal as imminently
proper. Private respondent cannot expect compassion from this Court by totally disregarding his numerous previous infractions and take into considerations only the period
covering August 2, 1989 to September 19, 1989. As ruled by this Court in the cases of Mendoza v. National Labor Relation Commissions, and National Service Corporation v.
Leogardo, Jr., it is the totality, not the compartmentalization, of such company infractions that private respondents had consistently committed which justified his penalty of
dismissal.

As correctly observed by the Labor Arbiter:

"In the case at bar, it was established that complainant violated respondent’s Code on Employee Discipline, not only once, but ten (10) times. On the first
 occasion, complainant was simply warned. On the second time, he was suspended for 5 days. With the hope of reforming the complainant, respondent
generously imposed penalties of suspension for his repeated unauthorized absences and violations of sick leave policy which constitute violations of the Code.
On the ninth time, complainant was already warned that the penalty of dismissal will be imposed for similar or equally serious violation (Annex "10").

In total disregard of respondent’s warning, complainant, for the tenth time did not report for work without prior authority from respondent; hence,
unauthorized. Worse, in total disregard of his duties as lineman, he did not report for work from August 1, 1989 to September 19, 1989; thus, seriously affected
(sic) respondent’s operations as a public utility. This constitute[s] a violation of respondent’s Code and gross neglect of duty and serious misconduct under
Article 283 of the labor Code."

Habitual absenteeism should not and cannot be tolerated by petitioner herein which is a public utility company engaged in the business of distributing and selling electric energy
within its franchise areas and that the maintenance of Meralco’s distribution facilities (electric lines) by responding to customer’s complaints of power failure, interruptions, line
trippings and other line troubles is of paramount importance to the consuming public.

Hence, an employee’s habitual absenteeism without leave, which violated company rules and regulation is sufficient to justify termination from the service.

In reversing the decision rendered by the Labor Arbiter, the NLRC made the following findings, viz:

"We perused the records of exact what transpired in the fateful August 1 to September 19, 1989 where complainant failed to report for work, and found out
that no less than Annex "12" (to respondent’s position paper which is labeled "Administrative Investigation" dated 14 October 1989) shows that during that
period, the complainant ‘went into hiding as he was engaged in a trouble with a neighbor.’

With such admission by respondent, that is, therefore, no way with which the complainant may be validly penalized for his absence during the period August 1
to September 19, 1989."

However, a meticulous perusal of Annex "12" readily shows that the statement "he went into hiding as he was engaged in trouble with a neighbor" was merely a defense
adduced by respondent employee and is tantamount to an alibi. The said defense only proved to be self-serving as the same had not been fully substantiated by private
respondent by means of a document or an affidavit executed to attest to the alleged incidents.

Furthermore, contrary to the findings of public respondent, petitioner never admitted private respondents "went into hiding as he was engaged in a trouble with a neighbor." As
found out by petitioner in the course of its investigation:

"Out of curiosity, we verified from the Barangay where [private respondent resides to find out the nature of [the] cases he was allegedly got (sic) involved.
Records of Barangay Captain of Bgy. Concepcion, Malabon, Metro Manila showed that Cortez’s wife has a pending complaint against a neighbor for physical
injury the complaint was filed on July 6, 1989."

xxx xxx xxx

We are also not convinced that he went into hiding as we met him at his known address at that time he said he was still beset with problems." ]

This report only bolstered the falsehood of private respondent’s alibi hence, petitioner had no other recourse but to mete the penalty of dismissal as an exercise of its
management prerogative.

227. VALIAO VS. COURT OF APPEALS

 RENE P. VALIAO, PETITIONER, VS. HON. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION-FOURTH DIVISION (CEBU CITY), WEST NEGROS COLLEGE, RESPONDENTS.

FACTS Petitioner Rene Valiao was appointed by private respondent West Negros College (WNC) as Student Affairs Office (SAO) Director. He was assigned as Acting Director, Alumni
Affairs Office. 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.

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.

Petitioner received a suspension order without pay for fifteen (15) days because of dishonesty in reporting his actual attendance. After serving the suspension, the petitioner
reported back to office. 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.

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.

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.

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.

ISSUE RULING

Whether or not the Petitioner’s dismissal from employment is valid and justified.
petitioner was validly
dismissed from 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.
employment on the 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
ground of serious 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. The
misconduct and gross 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
habitual neglect of duties, 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
including habitual motivation in his work. More importantly, his repeated and habitual infractions, committed despite several warnings, constitute gross misconduct unexpected from an employee
tardiness and 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.
absenteeism.
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 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.

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. 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.
 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.

4. PROCEDURE TO TERMINATE EMPLOYMENT

4.1. TWIN REQUIREMENTS OF NOTICE AND HEARING

228. CENTURY TEXTILE MILLS VS. NLRC

ISSUE RULING

Whether or not private The private respondent Calangi has been dismissed without just cause from his employment by petitioner Corporation.
respondent Calangi was
illegally dismissed from Public respondent Commission found that private respondent Calangi was effectively denied his right to due process in that, prior to his preventive suspension and the
his job as machine termination of his services, he had not been given the opportunity either to affirm or refute the charges proferred against him by petitioner Corporation. Petitioners allege
operator. however that private respondent Calangi had been previously informed of and given the chance to answer the company's accusations against him, but that he had "kept silent"
all the while.

Petitioners contend that the above Memorandum "clearly shows that prior investigation and consultation with the union was made," and "will therefore negate the theory of
respondents that respondent Calangi was not afforded the chance to present his side for the memo itself speaks otherwise."

The procedure that an employer wishing to terminate the services of an employee must follow, is spelled out in the Labor Code:

ART. 278. Miscellaneous provisions. —

xxx xxx xxx

However, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination
and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company
rules and regulations promulgated pursuant to guidelines set by the [Department] of Labor and Employment. Any decision taken by the employer shall be without
prejudice to the right of the worker to contest the validity and legality of his dismissing by filing a complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer . The [Department] may suspend the effects of
the termination pending resolution of the case in the event of a prima facie finding by the Ministry that the termination may cause a serious labor dispute or is in
implementation of a mass lay-off.

Rule XIV, Book V of the Rules and Regulations Implementing the Labor Code reiterates the above requirements:

xxx xxx xxx

Sec. 2. Notice of dismissal. — Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omissions constituting the
grounds for his dismissal. In case of abandonment of work, the notice shall be served at the worker's last known address.

xxx xxx xxx

Sec. 5. Answer and hearing. — The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such
 notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires.

SEC. 6. Decision to dismiss. — The employer shall immediately notify a worker in writing of a decision to dismiss him stating clearly the reasons therefor.

The twin requirements of notice and hearing constitute essential elements of due process in cases of employee dismissal: the requirement of notice is intended to inform the
employee concerned of the employer's intent to dismiss and the reason for the proposed dismissal; upon the other hand, the requirement of hearing affords the employee an
opportunity to answer his employer's charges against him and accordingly to defend himself therefrom before dismissal is effected. Neither of these two requirements can be
dispensed with without running afoul of the due process requirement of the 1987 Constitution.

The record of this case is bereft of any indication that a hearing or other gathering was in fact held where private respondent Calangi was given a reasonable opportunity to
confront his accuser(s) and to defend against the charges made by the latter. Petitioner Corporation's "prior consultation" with the labor union with which private respondent
Calangi was affiliated, was legally insufficient. So far as the record shows, neither petitioner nor the labor union actually advised Calangi of the matters at issue. The
Memorandum of petitioner's Personnel Manager certainly offered no helpful particulars. It is important to stress that the rights of an employee whose services are sought to be
terminated to be informed beforehand of his proposed dismissal (or suspension) as well as of the reasons therefor, and to be afforded an adequate opportunity to defend
himself from the charges levelled against him, are rights personal to the employee. Those rights were not satisfied by petitioner Corporation's obtaining the consent of or
consulting with the labor union; such consultation or consent was not a substitute for actual observance of those rights of private respondent Calangi. The employee can waive
those rights, if he so chooses, but the union cannot waive them for him. That the private respondent simply 'kept silent" all the while, is not adequate to show an effective waiver
of his rights. Notice and opportunity to be heard must be accorded by an employer even though the employee does not affirmatively demand them.

Investigation of the alleged attempt to poison the drinking water of the two (2) supervisors of the private respondent was conducted by the Cainta police authorities. These
authorities interrogated and took the sworn statements of Messrs. Marin, Torrena, Meliton and Santos who, in one way or another, had been involved in such incident.
Petitioners argue that the decision to place private respondent Calangi under preventive suspension and subsequently to terminate his services was arrived at only after the
incident complained of, and Mr. Calangi, had been investigated by the company. There is, once again, nothing in the record to show that private respondent Calangi been
interrogated by the Cainta police authorities or by anyone else; indeed, it appears that practically everybody, save Calangi, was so interrogated by the police. If petitioner
Corporation did notify and investigate private respondent and did hold a hearing, petitioners have succeeded in keeping such facts off the record. It needs no documentation,
but perhaps it should be stressed, that this Court can act only on the basis of matters which have been submitted in evidence and made part of the record.

Additionally, the Court notes that the application filed by petitioner Corporation with the Ministry of Labor and Employment for clearance to suspend or terminate the services
of Mr. Calangi, cited as ground therefor "[Calangi's] frustrated plan to poison Mr. Antonio Santos and Mr. Melchor Meliton last June 5, 1983." This ground, so far as can be
gathered from the allegations of petitioners in their pleadings and from the evidence of record, both in the public respondent Commission and in this Court, is anchored mainly,
if not wholly on Mr. Torrena's sworn statement, given to the Cainta police authorities, that both he (Torrena) and private respondent had conspired with each other to inflict
physical harm upon the persons of Messrs. Meliton and Santos. A finding of private respondent's participation in the alleged criminal conspiracy cannot, however, be made to
rest solely on the unilateral declaration of Mr. Torrena himself a confirmed "co-conspirator." Such declaration must be corroborated by other competent and convincing
evidence. In. the absence of such other evidence, Mr. Torrena's "confession" implicating Mr. Calangi must be received with considerable caution. The very least that petitioner
Corporation should have done was to confront private respondent with Torrena's sworn statement; the record does not show that petitioner Corporation did so. The burden of
showing the existence of a just cause for terminating the services of private respondent Calangi lay on the petitioners. Petitioners have not discharged that burden.
It remains only to note that the criminal complaint for attempted murder against Mr. Calangi was dismissed by the Provincial Fiscal of Rizal.

Assuming he was illegally Article 280 of the Labor Code, as amended states:
dismissed, whether or not
petitioner Corporation Art. 280. -Security of Tenure. — In case of regular employment, the employer shall not terminate the services of an employee except for a just cause or when
can be ordered legally authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to his backwages
computed from the time his compensation was withheld from him up to the time of his reinstatement.
(a) To reinstate private
respondent Calangi We have held in the past that both reinstatement, without loss of seniority rights, and payment of backwages are the normal consequences of a finding that an employee has
to his former been illegaly dismissed, and which remedies together make the dismissed employee whole. A finding of illegal dismissal having been correctly made in this case by public
 position in the respondent Commission, private respondent is, as a matter of right, entitled to receive both types of relief made available in Article 280 of the Labor Code, as amended. It
company, with full matters not that private respondent Calangi had omitted in his complaint filed in Case No. NLRC-NCR-10-4518-83 a claim for reinstatement without loss of seniority rights for he
backwages and is entitled to such relief as the facts alleged and proved warrant.
without loss of
seniority rights and In view of the finding of illegal dismissal in this case, petitioner Corporation is liable to private respondent Calangi for payment of the latter's backwages for three (3) years,
other benefits, without qualification and deduction. Considering the circumstances of this case, however, the Court beheves that reinstatement of private respondent to his former position—
considering that or to any other equivalent position in the company — will not serve the best interests of the parties involved. Petitioner Corporation should not be compelled to take back in its
such relief had not fold an employee who, at least in the minds of his employers, poses a significant threat to the lives and safety of company workers. Consequently, we hold that private
be sought by respondent should be given his separation pay in lieu of such reinstatement. The amount of separation pay shall be equal to private respondent's one-half (1/2) month's salary
private respondent for every year of service, to be computed from 13 December 1974 (date of first employment) until 10 June 1986 (three years after date of illegal dismissal).
in his complaint;
and
(b) To pay private
respondent an
amount for actual
damages in excess
of what has been
claimed by the
latter in his
complaint.

229. DEL MONTE PHILIPPINES, INC. VS. SALDIVAR

ISSUE RULING

230. KING OF KINGS TRANSPORT VS. MAMAC

ISSUE RULING

Whether or not petitioner Non-compliance with the Due Process Requirements

KKTI complied with the
due process requirements Due process under the Labor Code involves two aspects: first, substantive––the valid and authorized causes of termination of employment under the Labor Code; and second,
in terminating procedural––the manner of dismissal. In the present case, the CA affirmed the findings of the labor arbiter and the NLRC that the termination of employment of respondent was
respondent’s based on a "just cause." This ruling is not at issue in this case. The question to be determined is whether the procedural requirements were complied with.
employment.
Art. 277 of the Labor Code provides the manner of termination of employment, thus:

Art. 277. Miscellaneous Provisions.––x x x

(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause without
prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment.
Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the
 regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.

Accordingly, the implementing rule of the aforesaid provision states:

SEC. 2. Standards of due process; requirements of notice.––In all cases of termination of employment, the following standards of due process shall be substantially
observed:
I. For termination of employment based on just causes as defined in Article 282 of the Code:
a. A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within
which to explain his side.
b. A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to
the charge, present his evidence, or rebut the evidence presented against him.
c. 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.
In case of termination, the foregoing notices shall be served on the employee’s last known address.
To clarify, the following should be considered in terminating the services of employees:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees
are given the opportunity to submit their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind of
assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least
five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer,
gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A
general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain
and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or
counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment.

In the instant case, KKTI admits that it had failed to provide respondent with a "charge sheet." However, it maintains that it had substantially complied with the rules, claiming
that "respondent would not have issued a written explanation had he not been informed of the charges against him."
We are not convinced.

First, respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the charges against an
employee does not comply with the first notice requirement. In Pepsi Cola Bottling Co. v. NLRC, the Court held that consultations or conferences are not a substitute for the
actual observance of notice and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano, the Court, sanctioning the employer for disregarding the due process requirements, held
that the employee’s written explanation did not excuse the fact that there was a complete absence of the first notice.

Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of his offense, such would not comply with the requirements of
the law. We observe from the irregularity reports against respondent for his other offenses that such contained merely a general description of the charges against him. The
reports did not even state a company rule or policy that the employee had allegedly violated. Likewise, there is no mention of any of the grounds for termination of employment
under Art. 282 of the Labor Code. Thus, KKTI’s "standard" charge sheet is not sufficient notice to the employee.

Third, no hearing was conducted. Regardless of respondent’s written explanation, a hearing was still necessary in order for him to clarify and present evidence in support of his
 defense. Moreover, respondent made the letter merely to explain the circumstances relating to the irregularity in his October 28, 2001 Conductor’s Trip Report. He was unaware
that a dismissal proceeding was already being effected. Thus, he was surprised to receive the November 26, 2001 termination letter indicating as grounds, not only his October
28, 2001 infraction, but also his previous infractions.

Sanction for Non-compliance with Due Process Requirements

The petitioners failed to comply with the due process requirements, the CA awarded full backwages in favor of respondent in accordance with the doctrine in Serrano v. NLRC.
However, the doctrine in Serrano had already been abandoned in Agabon v. NLRC by ruling that if the dismissal is done without due process, the employer should indemnify
the employee with nominal damages.

4.2. AGABON DOCTRINE

231. WENPHIL VS. NLRC

ISSUE RULING

The failure of petitioner to give private respondent the benefit of a hearing before he was dismissed constitutes an infringement of his constitutional right to due process of law
and equal protection of the laws. The standards of due process in judicial as well as administrative proceedings have long been established. In its part minimum due process of
law simply means giving notice and opportunity to be heard before judgment is rendered.

The claim of petitioner that a formal investigation was not necessary because the incident which gave rise to, the termination of private respondent was witnessed by his co-
employees and supervisors is without merit. The basic requirement of due process is that which hears before it condemns. Which process upon inquiry and renders judgment
only after trial.

However, it is a matter of fact that when the private respondent filed a complaint against petitioner he was afforded the right to an investigation by the labor arbiter. He
presented his position paper as did the petitioner. If no hearing was had it was the fault of private respondent as his counsel failed to appear at the scheduled hearings. The labor
arbiter concluded that the dismissal of private respondent was for just cause. He was found guilty of grave misconduct and insubordination. This is borne by the sworn
statements of witnesses. The Court is bound by this finding of the labor arbiter.

By the same taken, the conclusion of the public respondent NLRC on appeal that private respondent was not afforded due process before he was dismissed in binding on this
Court. Indeed, it is well taken and supported by the records. However, it can not justify a ruling that private respondent should be reinstated with back wages as the public
respondent NLRC so ordered. Although belatedly, private respondent was afforded due process before the labor arbiter wherein the just cause of his dismissal had been
established. With finding, it would be arbitrary and unfair to order his reinstatement with back wages.

The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of seniority and the payment of his wages during the period of his
separation until his actual reinstatement but not exceeding three (3) years without qualification or when it appears he was not afforded due process, although his dismissal was
found to be for just and authorized cause in an appropriate proceeding in the Ministry of Labor and Employment should be re-examined. It will be highly prejudicial to the
interests of the employer to impose on him the services of an employee who has been shown to be guilty of the charges that warranted his dismissal from employment. Indeed,
it will demoralize the rank and file of the undeserving if not undesirable remains in the service.

Thus in the present case where private respondent who appears to be violent temper, caused trouble during office hours and even defied his superiors as they tried to pacify
him., should not be rewarded with re-employment and back wages. It may encourage him to do even worse and will render a mockery of the rules of discipline that employees
are required to observe. Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former
employment.

However, the petitioner must nevertheless be held to court for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is
 explicit as above discussed. The dismissal of an employee must be for just authorized cause and after due process. Petitioner committed an infraction of the second requirement.
Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment.
Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each
case and the gravity of the omission committed by the employer.

232. SERRANO VS. NLRC

ISSUE RULING

It is contended that payment of petitioner's salary for thirty (30) days, "even when [he is] no longer working, is effective notice and is much better than 30 days formal notice but
working until the end of the 30 day period." Private respondent's letter of October 11, 1991, so it is claimed, was a mere reiteration of the oral notice previously given to
petitioner in September that effective October 1, 1991, he and his fellow security checkers would no longer be required to work because they would be replaced by a security
agency, although they would be given their salary for the month of October 1991.

Private respondent's position has no basis in the law. The requirement to give a written notice of termination at least thirty (30) days in advance is a requirement of the Labor
Code. Art. 283 provides:

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

As pointed out in Sebuguero v. National Labor Relations Conmission:

. . . [W]hat the law requires is a written notice to the employees concerned and that requirement is mandatory. The notice must also be given at least one month
in advance of the intended date of retrenchment to enable the employees to look for other means of employment and therefore to ease the impact of the loss
of their jobs and the corresponding income.

Nothing in the law gives private respondent the option to substitute the required prior written notice with payment of thirty (30) days salary. It is not for private respondent to
make substitutions for a right that a worker is legally entitled to. For instance, as held in Farmanlis Farms, Inc. v. Minister of Labor, under the law, benefits in the form of food or
free electricity, assuming they were given, were not a proper substitute for the 13th month pay required by law.

Indeed, a job is more than the salary that it carries. Payment of thirty (30) days salary cannot compensate for the psychological effect or the stigma of immediately finding one’s
self laid off from work. It cannot be a fully effective substitute for the thirty (30) days written notice required by law especially when, as in this case, the fact is that no notice was
given to the Department of Labor and Employment (DOLE).

Besides, as we held in our decision in this case, the purpose of such previous notice is to give the employee some time to prepare for the eventual loss of his job as well as the
DOLE the opportunity to ascertain the verity of the alleged authorized cause of termination. Such purpose would not be served by the simple expedient of paying thirty (30) days
salary in lieu of notice of an employee’s impending dismissal, as by then the loss of employment would have been a fait accompli.

Private respondent nevertheless claims that payment of thirty (30) days salary in lieu of written notice given thirty (30) days before the termination of employment is in
 accordance with our ruling in Associated Labor Unions-VIMCONTU v. NLRC.
This claim will not bear analysis. In that case, the employees and the then Ministry of Labor and Employment (MOLE) were notified in writing on August 5, 1983 that the
employees' services would cease on August 31, 1983 but that they would be paid their salaries and other benefits until September 5, 1983. It was held that such written notice
was "more than substantial compliance" with the notice requirement of the Labor Code.

Indeed, there was "more than substantial compliance" with the law in that case because, in addition to the advance written notice required under Art. 284 (now Art. 283) of the
Labor Code, the employees were paid for five days, from September 1 to 5, 1993, even if they rendered no service for the period. But, in the case at bar, there was no written
notice given to petitioner at least thirty (30) days before the termination of his employment. Had private respondent given a written notice to petitioner on October 1, 1991, at
the latest, that effective October 31, 1991 his employment would cease although from October 1 he would no longer be required to work, there would be basis for private
respondent's boast that "[payment] of this salary even [if he is] no longer working is effective notice and is much better than 30 days formal notice but working until the end of
the 30 days period." This is not the case here, however. What happened here was that on October 11, 1991, petitioner was given a memorandum terminating his employment
effective on the same day on the ground of retrenchment (actually redundancy).

It is contended that private respondent's non-observance of the notice requirement should not be visited with a severe consequence in accordance with Art. III, §19(1) of the
Constitution.

The contention is without merit. In the first place, Art. III, §19(1) of the Constitution, prohibiting the imposition of excessive fines, applies only to criminal prosecutions. In the
second place, the decision in this case, providing for the payment of full backwages for failure of an employer to give notice, seeks to vindicate the employee's right to notice
before he is dismissed or laid off, while recognizing the right of the employer to dismiss for any of the just causes enumerated in Art. 282 or to terminate employment for any of
the authorized causes mentioned in Arts. 283-284. The order to pay full backwages is a consequence of the employer's action in dismissing an employee without notice which
makes said dismissal ineffectual. The employee is considered not to have been terminated from his employment until it is finally determined that his dismissal/termination of
employment was for cause and, therefore, he should be paid his salaries in the interim. This eliminates guesswork in determining the degree of prejudice suffered by an
employee dismissed with cause but without notice since the penalty is measured by the salary he failed to earn on account of his dismissal/termination of employment.

233. AGABON VS. NLRC

ISSUE RULING

The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code:

Standards of due process: requirements of notice. – In all cases of termination of employment, the following standards of due process shall be substantially
observed:

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity
within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination.

In case of termination, the foregoing notices shall be served on the employee’s last known address.

Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code
which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared
illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted.

Procedurally,

(1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if
requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard
and after hearing or opportunity to be heard, a notice of the decision to dismiss; and
(2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written
notices 30 days prior to the effectivity of his separation.

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

In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.

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

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be
held liable for non-compliance with the procedural requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for
another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been
useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice
requirements to the employee’s last known address. Thus, it should be held liable for non-compliance with the procedural requirements of due process.

A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various rulings on employment termination in the light of Serrano v. National
Labor Relations Commission.

Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations
Commission, we reversed this long-standing rule and held that the dismissed employee, although not given any notice and hearing, was not entitled to reinstatement and
backwages because the dismissal was for grave misconduct and insubordination, a just ground for termination under Article 282. The employee had a violent temper and caused
trouble during office hours, defying superiors who tried to pacify him. We concluded that reinstating the employee and awarding backwages “may encourage him to do even
worse and will render a mockery of the rules of discipline that employees are required to observe.” We further held that:

Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employment.

However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his
dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed
an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by
law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of
P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer.
The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be upheld but the
employer will be penalized to pay an indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule.

On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the violation by the employer of the notice requirement in termination for
just or authorized causes was not a denial of due process that will nullify the termination. However, the dismissal is ineffectual and the employer must pay full backwages
from the time of termination until it is judicially declared that the dismissal was for a just or authorized cause.

The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving dismissals without requisite notices. We concluded that
the imposition of penalty by way of damages for violation of the notice requirement was not serving as a deterrent. Hence, we now required payment of full backwages from
the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause.

Serrano was confronting the practice of employers to “dismiss now and pay later” by imposing full backwages.

We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code which states:

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.

This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of backwages and other benefits, including
reinstatement, is justified only if the employee was unjustly dismissed.

The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to revisit the doctrine.

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and
feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Due process is that which comports with the deepest notions of
what is fair and right and just. It is a constitutional restraint on the legislative as well as on the executive and judicial powers of the government provided by the Bill of Rights.

Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the
Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended,
otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10. Breaches of these due process requirements
violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due process.
Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process
found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing.

In Sebuguero v. National Labor Relations Commission, the dismissal was for a just and valid cause but the employee was not accorded due process. The dismissal was upheld by
the Court but the employer was sanctioned. The sanction should be in the nature of indemnification or penalty, and depends on the facts of each case and the gravity of the
omission committed by the employer.

In Nath v. National Labor Relations Commission, it was ruled that even if the employee was not given due process, the failure did not operate to eradicate the just causes for
dismissal. The dismissal being for just cause, albeit without due process, did not entitle the employee to reinstatement, backwages, damages and attorney’s fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations Commission, which opinion he reiterated in Serrano, stated:

C. Where there is just cause for dismissal but due process has not been properly observed by an employer, it would not be right to order either the
 reinstatement of the dismissed employee or the payment of backwages to him. In failing, however, to comply with the procedure prescribed by law in
terminating the services of the employee, the employer must be deemed to have opted or, in any case, should be made liable, for the payment of separation
pay. It might be pointed out that the notice to be given and the hearing to be conducted generally constitute the two-part due process requirement of law to be
accorded to the employee by the employer. Nevertheless, peculiar circumstances might obtain in certain situations where to undertake the above steps would
be no more than a useless formality and where, accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay,
nominal damages to the employee. x x x.

After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals for cause but without
observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just
cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair
result by dispensing justice not just to employees, but to employers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process may have far-reaching consequences.

This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process. This also creates absurd situations
where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught
stealing or threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or where serious business losses demand that operations be
ceased in less than a month. Invalidating the dismissal would not serve public interest. It could also discourage investments that can generate employment in the local
economy.

The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not
prevent us from sustaining the employer when it is in the right, as in this case. Certainly, an employer should not be compelled to pay employees for work not actually performed
and in fact abandoned.

The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued employment is patently
inimical to the employer. The law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer.
It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if the requirements of due process were complied with, would
undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. Social justice, as the term suggests,
should be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and
economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about “the
greatest good to the greatest number.”
This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set in stone. It has
to allow for changing times and circumstances.

Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management relations and dispense justice with an even hand in every case:

We have repeatedly stressed that social justice – or any justice for that matter – is for the deserving, whether he be a millionaire in his mansion or a pauper in his
hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy and
compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for justice must
always be served for the poor and the rich alike, according to the mandate of the law.

Justice in every case should only be for the deserving party. It should not be presumed that every case of illegal dismissal would automatically be decided in favor of labor, as
management has rights that should be fully respected and enforced by this Court. As interdependent and indispensable partners in nation-building, labor and management need
 each other to foster productivity and economic growth; hence, the need to weigh and balance the rights and welfare of both the employee and employer.

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However,
the employer should indemnify the employee for the violation of his statutory rights , as ruled in Reta v. National Labor Relations Commission. The indemnity to be imposed
should be stiffer to discourage the abhorrent practice of “dismiss now, pay later,” which we sought to deter in the Serrano ruling. The sanction should be in the nature of
indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer.

Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
As enunciated by this Court in Viernes v. National Labor Relations Commissions, an employer is liable to pay indemnity in the form of nominal damages to an employee who
has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The Court, after considering the circumstances therein,
fixed the indemnity at P2,590.50, which was equivalent to the employee’s one month salary. This indemnity is intended not to penalize the employer but to vindicate or
recognize the employee’s right to statutory due process which was violated by the employer.

The violation of the petitioners’ right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of
such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we
deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees.
At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules.

234. JAKA FOOD PROCESSING CORPORATION VS. PACOT

ISSUE RULING

What are the legal This, certainly, is not a case of first impression. In the very recent case of Agabon vs. NLRC, we had the opportunity to resolve a similar question. Therein, we found that the
implications of a situation employees committed a grave offense, i.e., abandonment, which is a form of a neglect of duty which, in turn, is one of the just causes enumerated under Article 282 of the Labor
where an employee is Code. In said case, we upheld the validity of the dismissal despite non-compliance with the notice requirement of the Labor Code. However, we required the employer to pay
dismissed for cause but the dismissed employees the amount of P30,000.00, representing nominal damages for non-compliance with statutory due process, thus:
such dismissal was
effected without the “Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual.
employer’s compliance However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta vs. National Labor Relations Commission. The
with the notice indemnity to be imposed should be stiffer to discourage the abhorrent practice of ‘dismiss now, pay later,’ which we sought to deter in the Serrano ruling. The
requirement under the sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the
Labor Code. due process violation of the employer.

xxx xxx xxx

The violation of petitioners’ right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The
amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing
circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future
violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the
latter under the Labor Code and its Implementing Rules,”

The difference between Agabon and the instant case is that in the former, the dismissal was based on a just cause under Article 282 of the Labor Code while in the present
case, respondents were dismissed due to retrenchment, which is one of the authorized causes under Article 283 of the same Code.
At this point, we note that there are divergent implications of a dismissal for just cause under Article 282, on one hand, and a dismissal for authorized cause under Article 283, on
the other.

A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has
committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself
initiated the dismissal process.

On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the
dismissal process is initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease
business operations or when, as in this case, he undertakes to implement a retrenchment program.

The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the
first, payment of separation pay, as a rule, is not required, while in the second, the law requires payment of separation pay.

For these reasons, there ought to be a difference in treatment when the ground for dismissal is one of the just causes under Article 282, and when based on one of the
authorized causes under Article 283.

Accordingly, it is wise to hold that:

(1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should
be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and
(2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because
the dismissal process was initiated by the employer’s exercise of his management prerogative.

The records before us reveal that, indeed, JAKA was suffering from serious business losses at the time it terminated respondents’ employment. As aptly found by the NLRC:

“A careful study of the evidence presented by the respondent-appellant corporation shows that the audited Financial Statement of the corporation for the
periods 1996, 1997 and 1998 were submitted by the respondent-appellant corporation, The Statement of Income and Deficit found in the Audited Financial
Statement of the respondent-appellant corporation clearly shows the following in 1996, the deficit of the respondent-appellant corporation was
P188,218,419.00 or 94.11% of the stockholder’s [sic] equity which amounts to P200,000,000.00. In 1997 when the retrenchment program of respondent-
appellant corporation was undertaken, the deficit ballooned to P247,222,569.00 or 123.61% of the stockholders’ equity, thus a capital deficiency or impairment
of equity ensued. In 1998, the deficit grew to P355,794,897.00 or 177% of the stockholders’ equity. From 1996 to 1997, the deficit grew by more that (sic) 31%
while in 1998 the deficit grew by more than 47%.

The Statement of Income and Deficit of the respondent-appellant corporation to prove its alleged losses was prepared by an independent auditor, SGV & Co. It
convincingly showed that the respondent-appellant corporation was in dire financial straits, which the complainants-appellees failed to dispute. The losses
incurred by the respondent-appellant corporation are clearly substantial and sufficiently proven with clear and satisfactory evidence. Losses incurred were
adequately shown with respondent-appellant’s audited financial statement. Having established the loss incurred by the respondent-appellant corporation, it
necessarily necessarily (sic) follows that the ground in support of retrenchment existed at the time the complainants-appellees were terminated. We cannot
therefore sustain the findings of the Labor Arbiter that the alleged losses of the respondent-appellant was [sic] not well substantiated by substantial proofs. It is
therefore logical for the corporation to implement a retrenchment program to prevent further losses.”

It is, therefore, established that there was ground for respondents’ dismissal, i.e., retrenchment, which is one of the authorized causes enumerated under Article 283 of the
Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the same Article. Considering the factual circumstances in the instant case
and the above ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00.

We likewise find the Court of Appeals to have been in error when it ordered JAKA to pay respondents separation pay equivalent to one (1) month salary for every year of service.
 This is because in Reahs Corporation vs. NLRC, we made the following declaration:

“The rule, therefore, is that in all cases of business closure or cessation of operation or undertaking of the employer, the affected employee is entitled to
separation pay. This is consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights as well as its
welfare. The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which
case, the right of affected employees to separation pay is lost for obvious reasons.”

4.3 Burden of Proof

235. SEGISMUNDO VS. NATIONAL LABOR RELATIONS COMMISSION

ROBERTO SEGISMUNDO AND ROGELIO MONTALVO, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) AND ASSOCIATED FREIGHT CONSOLIDATORS INC., RESPONDENTS.

FACTS Petitioners Roberto Segismundo and Rogelio Montalvo were regular employees of private respondent Associated Freight Consolidators, Inc., a corporation engaged in the air
freight forwarding business. It picks up parcels and packages from different parts of the globe and delivers them "door to door" to their consignees or addressees in the country.
Segismundo was a driver whereas Montalvo was a loader/helper. They worked as a team, delivering packages to their respective addressees or consignees.

Sometime in 1988, private respondent began receiving complaints from its client/consignees regarding missing items in their packages which were delivered by private
respondent's personnel. The number of complaints increased, to the point that some of private respondent's delivery arrangements were in danger of being discontinued by
disgruntled clients. This prompted private respondent to conduct an exhaustive investigation to determine whether its delivery personnel were involved in the pilferages
complained of. The investigation yielded the unfortunate result that the pilferages could only have taken place while the packages were in the custody of private respondent's
delivery personnel.

Based on tabulated records, private respondent discovered that of the 27 complaints of pilferages lodged during the period from August 1988 to February 1989, 6 of the
complaints involved packages delivered by petitioners' delivery team.

In view of the results of the investigation, private respondent's General Manager called a meeting on February 17, 1989 of all delivery personnel to discuss the pilferage
incidents. During the meeting, petitioners denied any involvement therein. They were allowed to inspect the records gathered in the course of the company investigation. On
the same day, petitioners were given notices by management, placing them under preventive suspension effective February 18, 1989. Private respondent formally terminated
petitioners' services without first conducting a hearing.

Consequently, petitioners filed on May 8, 1989 a complaint for illegal suspension and dismissal, alleging that their dismissal was not based on a just cause and was effected in
violation of their right to due process.

The Labor Arbiter rendered a decision in favor of petitioners, ordering their reinstatement with backwages, damages and attorney's fees. Not satisfied with the decision, private
respondent appealed, and on September 30, 1993, the public respondent reversed the decision of the Labor Arbiter, upholding petitioners' dismissal as valid.

ISSUE RULING

Private respondent's documentary evidence showing the culpability of petitioners should prevail over petitioners' uncorroborated explanations and self-serving denials
regarding their involvement in the pilferages. All administrative determinations require only substantial proof and not clear and convincing evidence. Proof beyond reasonable
doubt of the employee's misconduct is not required, it being sufficient that there is some basis for the same or that the employer has reasonable ground to believe that the
employee is responsible for the misconduct, and his participation therein renders him unworthy of the trust and confidence demanded by his position. Thus, petitioners cannot
assert that the public respondent closed its eyes to their evidence. The latter's findings are supported by substantial evidence which goes beyond the minimum evidentiary
support required by law.
5. Normal consequences of illegal dismissal
a. Reinstatement with full backwages
(Articles 229 and 294 of the Labor Code)

236. BUSTAMANTE VS. NATIONAL LABOR RELATIONS COMMISSION

OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L. BUSTAMANTE, MARIO D. SUMONOD, AND SABU J. LAMARAN, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, FIFTH
DIVISION AND EVERGREEN FARMS, INC., RESPONDENTS.

FACTS The Court (First Division) promulgated a decision in this case, the dispositive part of which states:

"WHEREFORE, the resolution of the National Labor Relations Commission dated 3 May 1993 is modified in that its deletion of the award for backwages in favor
of petitioners, is SET ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with the modification that backwages shall be paid to
petitioners from the time of their illegal dismissal on 25 June 1990 up to the date of their reinstatement. If reinstatement is no longer feasible, a one-month
salary shall be paid the petitioners as ordered in the labor arbiter's decision, in addition to the adjudged backwages.

Private respondent now moves to reconsider the decision on grounds that (a) petitioners are not entitled to recover backwages because they were not actually dismissed but
their probationary employment was not converted to permanent employment; and (b) assuming that petitioners are entitled to backwages, computation thereof should not
start from cessation of work up to actual reinstatement, and that salary earned elsewhere (during the period of illegal dismissal) should be deducted from the award of such
backwages.

ISSUE RULING

On 21 march 1989, Republic Act No. 6715 took effect, amending the Labor Code. Article 279 thereof states in part:

"ART. 279. Security of Tenure.- . . . An employee who 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."

In accordance with the above provision, an illegally dismissed employee is entitled to his full backwages from the time his compensation was withheld from him (which , as a
rule, is from the time of his illegal dismissal) up to the time of his actual reinstatement.

It is true that this Court had ruled in the case of Pines City Educational Center vs. NLRC (G.R. No. 96779, 10 November 1993, 227 SCRA 655) that "in ascertaining the total amount
of backwages payable to them (employees), we go back to the rule prior to the Mercury Drug rule that the total amount derived from employment elsewhere by the employee
from the date of dismissal up to the date of reinstatement, if any, should be deducted therefrom." The rationale for such ruling was that, the eraning derived elsewhere by the
dismissed employee while litigating the legality of his dismissal, should be deducted from the full amount of backwages which the law grants him upon reinstatement, so as not
to unduly or unjustly enrich the employee at the expense of the employer.

The Court deems it appropriate, however, to reconsider such earlier ruling on the computation of backwages as enunciated in said Pines City Educational Center case, by now
holding that conformably with the evident legislative intent as expressed in Rep. Act No. 6715, above-quoted, backwages to be awarded to an illegally dismissed employee,
should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this
ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid
by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give
more benefits to workers than was previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, 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.

Therefore, in accordance with R.A No. 6715, petitioners are entitled to their full backwages, inclusive of allowances and other benefits or their monetary equivalent, from
the time their actual compensation was with held from them up to the time of their actual reinstatement.

As to reinstatement of petitioners, this Court has already ruled that since reinstatement is no longer feasible, because the company would be unjustly prejudiced by the
continued employment of petitioners who at present are overage, a separation pay equal to one-month salary granted to them in the Labor Arbiter's decision was in order and,
therefore, affirmed in the Court's decision of 15 March 1996. Furthermore, since reinstatement in this case is no longer feasible, the amount of backwages shall be computed
from the time of their illegal termination on 25 June 1990 up to the time of finality of this decision.

237. PIONEER TEXTURIZING CORP. VS. NATIONAL LABOR RELATIONS COMMISSION

PIONEER TEXTURIZING CORP. AND/OR JULIANO LIM, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, PIONEER TEXTURIZING WORKERS UNION AND LOURDES A. DE JESUS, RESPONDENTS.

FACTS Private respondent Lourdes A. de Jesus is petitioners’ reviser/trimmer since 1980. As reviser/trimmer, de Jesus based her assigned work on a paper note posted by petitioners.
The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P.O. Number. On August 15, 1992, de Jesus worked on
P.O. No. 3853 by trimming the cloths’ ribs. She thereafter submitted tickets corresponding to the work done to her supervisor. Three days later, de Jesus received from
petitioners’ personnel manager a memorandum requiring her to explain why no disciplinary action should be taken against her for dishonesty and tampering of official records
and documents with the intention of cheating as P.O. No. 3853 allegedly required no trimming. The memorandum also placed her under preventive suspension for thirty days
starting from August 19, 1992. In her handwritten explanation, de Jesus maintained that she merely committed a mistake in trimming P.O. No. 3853 as it has the same style and
design as P.O. No. 3824 which has an attached price list for trimming the ribs and admitted that she may have been negligent in presuming that the same work was to be done
with P.O. No. 3853, but not for dishonesty or tampering Petitioners’ personnel department, nonetheless, terminated her from employment and sent her a notice of termination
dated September 18, 1992.

de Jesus filed a complaint for illegal dismissal against petitioners. The Labor Arbiter who heard the case noted that de Jesus was amply accorded procedural due process in her
termination from service. Nevertheless, after observing that de Jesus made some further trimming on P.O. No. 3853 and that her dismissal was not justified, the Labor Arbiter
held petitioners guilty of illegal dismissal. Petitioners were accordingly ordered to reinstate de Jesus to her previous position without loss of seniority rights and with full
backwages from the time of her suspension on August 19, 1992. Dissatisfied with the Labor Arbiter’s decision, petitioners appealed to the public respondent National Labor
Relations Commission (NLRC).

In its July 21, 1994 decision, the NLRC ruled that de Jesus was negligent in presuming that the ribs of P.O. No. 3853 should likewise be trimmed for having the same style and
design as P.O. No. 3824, thus petitioners cannot be entirely faulted for dismissing de Jesus. The NLRC declared that the status quo between them should be maintained and
affirmed the Labor Arbiter’s order of reinstatement, but without backwages. The NLRC further “directed petitioner to pay de Jesus her back salaries from the date she filed her
motion for execution on September 21, 1993 up to the date of the promulgation of [the] decision.” Petitioners filed their partial motion for reconsideration which the NLRC
denied, hence this petition anchored substantially on the alleged NLRC’s error in holding that de Jesus is entitled to reinstatement and back salaries. On March 6, 1996,
petitioners filed its supplement to the petition amplifying further their arguments. In a resolution dated February 20, 1995, the Court required respondents to comment
thereon. Private respondent de Jesus and the Office of the Solicitor General, in behalf of public respondent NLRC, subsequently filed their comments. Thereafter, petitioners
filed two rejoinders [should be replies] to respondents’ respective comments. Respondents in due time filed their rejoinders.

Petitioners insist that the NLRC gravely abused its discretion in holding that de Jesus is entitled to reinstatement to her previous position for she was not illegally dismissed in the
first place. In support thereof, petitioners quote portions of the NLRC decision which stated that “respondent [petitioners herein] cannot be entirely faulted for dismissing the
complaint” and that there was “no illegal dismissal to speak of in the case at bar”. Petitioners further add that de Jesus breached the trust reposed in her, hence her dismissal
from service is proper on the basis of loss of confidence.
 ISSUE RULING

Whether or not an order for Corollary to our determination that de Jesus was illegally dismissed is her imperative entitlement to reinstatement and backwages as mandated by law.
reinstatement needs a writ
of execution. Article 223 of the Labor Code, as amended by R.A. No. 6715 which took effect on March 21, 1989, pertinently provides:

“ART. 223. Appeal. --Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within
ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal maybe entertained only on any of the following grounds:

xxx xxx xxx

“In an event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reistated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.

xxx xxx xxx

We initially interpreted the aforequoted provision in Inciong v. NLRC. The Court made this brief comment:

“The decision of the Labor Arbiter in this case was rendered on December 18, 1988, or three (3) months before Article 223 of the Labor Code was amended by
Republic Act 6715 (which became law on March 21, 1989), providing that a decision of the Labor Arbiter ordering the reinstatement of a dismissed or separated
employee shall be immediately executory insofar as the reinstatement aspect is concerned, and the posting of an appeal bond by the employer shall not stay
such execution. Since this new law contains no provision giving it retroactive effect (Art. 4, Civil Code), the amendment may not be applied to this case.”

which the Court adopted and applied in Callanta v. NLRC. In Zamboanga City Water District v. Buat, the Court construed Article 223 to mean exactly what it says. We said:

“Under the said provision of law, the decision of the Labor Arbiter reinstating a dismissed or separated employee insofar as the reinstatement aspect is
concerned, shall be immediately executory, even pending appeal. The employer shall reinstate the employee concerned either by: (a) actually admitting him
back to work under the same terms and conditions prevailing prior to his dismissal or separation; or (b) at the option of the employer, merely reinstating him in
the payroll. Immediate reinstatement is mandated and is not stayed by the fact that the employer has appealed, or has posted a cash or surety bond pending
appeal.”

We expressed a similar view a year earlier in Medina v. Consolidated Broadcasting System (CBS) – DZWX and laid down the rule that an employer who fails to comply with an
order of reinstatement makes him liable for the employee’s salaries. Thus:

“Petitioners construe the above paragraph to mean that the refusal of the employer to reinstate an employee as directed in an executory order of
reinstatement would make it liable to pay the latter’s salaries. This interpretation is correct. Under Article 223 of the Labor Code, as amended, an employer has
two options in order for him to comply with an order of reinstatement, which is immediately executory, even pending appeal.

Firstly, he can admit the dismissed employee back to work under the same terms and conditions prevailing prior to his dismissal or separation or to a
substantially equivalent position if the former position is already filled up.

Secondly, he can reinstate the employee merely in the payroll. Failing to exercise any of the above options, the employer can be compelled under
pain of contempt, to pay instead the salary of the employee.
 This interpretation is more in consonance with the constitutional protection to labor (Section 3, Art. XIII, 1987 Constitution). The right of a person to his labor
is deemed to be property within the meaning of the constitutional guaranty that no one shall be deprived of life, liberty, and property without due process of
law. Therefore, he should be protected against any arbitrary and unjust deprivation of his job. The employee should not be left without any remedy in case the
employer unreasonably delays reinstatement. Therefore, we hold that the unjustified refusal of the employer to reinstate an illegally dismissed employee
entitles the employee to payment of his salaries x x x.”

We note that prior to the enactment of R.A. No. 6715, Article 223 of the Labor Code contains no provision dealing with the reinstatement of an illegally dismissed employee. The
amendment introduced by R.A. No. 6715 is an innovation and a far departure from the old law indicating therby the legislature’s unequivocal intent to insert a new rule that will
govern the reinstatement aspect of a decision or resolution in any given labor dispute. In fact, the law as now worded employs the phrase “shall immediately be executory”
without qualification emphasizing the need for prompt compliance. As a rule, “shall” in a statute commonly denotes an imperative obligation and is inconsistent with the idea of
discretion and that the presumption is that the word “shall”, when used in a statute, is mandatory. An appeal or posting of bond, by plain mandate of the law, could not even
forestall nor stay the executory nature of an order of reinstatement. The law, moreover, is unambiguous and clear. Thus, it must be applied according to its plain and obvious
meaning, according to its express terms.

And in conformity with the executory nature of the reinstatement order, Rule V, Section 16 (3) of the New Rules of Procedure of the NLRC strictly requires the Labor Arbiter to
direct the employer to immediately reinstate the dismissed employee.

A closer examination, however, shows that the necessity for a writ of execution under Article 224 applies only to final and executory decisions which are not within the coverage
of Article 223. For comparison, we quote the material portions of the subject articles:

“ART. 223. Appeal. x x x

“In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution
for reinstatement provided herein.

xxx xxx xxx

“ART. 224. Execution of decisions, orders, or awards. --(a) The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor
Arbiter, or med-arbiter or voluntary arbitrator may, motu propio or on motion of any interested party, issue a writ of execution on a judgment within five (5)
years from the date it becomes final and executory, requiring a sheriff or a duly deputized officer to execute or enforce final decicions, orders or awards of the
Secretary of Labor and Employment or regional director, the Commission, the arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall be the duty of
the responsible officer to separately furnish immediately the counsels of record and the parties with copies of said decisions, orders or awards. Failure to
comply with the duty prescribed herein shall subject such responsible officer to appropriate administrative sanctions."

Article 224 states that the need for a writ of execution applies only within five (5) years from the date a decision, an order or awards becomes final and executory. It cannot
relate to an award or order of reinstatement still to be appealed or pending appeal which Article 223 contemplates. The provision of Article 223 is clear that an award for
reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative
content is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of
execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i. e., the immediate
execution of a reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere continuance or
postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at
naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of Article 224 were to govern, as we so declared in Maranaw, then
the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual.
 Furthermore, the rule is that all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor. In ruling that an order or award for
reinstatement does not require a writ of execution the Court is simply adhering and giving meaning to this rule. Henceforth, we rule that an award or order for reinstatement is
self-executory. After receipt of the decision or resolution ordering the employee's reinstatement, the employer has the right to choose whether to re-admit the employee to
work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll. In either instance, the employer has to inform the
employee of his choice. The notification is based on practical considerations for without notice, the employee has no way of knowing if he has to report for work or not.

238. PIZZA INN/CONSOLIDATED FOODS CORPORATION VS. NLRC

PIZZA INN/CONSOLIDATED FOODS CORPORATION, PETITIONER, VS. NLRC, NLRC SHERIFF AND FELICIDAD FONTANILLA, RESPONDENTS.

FACTS Private respondent was employed by petitioner in its Quad Carpark Makati outlet on a probationary status with a monthly basic salary of P500.00. Before the expiration of the
6-month probationary period, Felicidad Fontanilla resigned. Claiming that she was forced to resign by the petitioner, the former filed a complaint against the latter.

Petitioner appealed from the decision of the Labor Arbiter favoring private respondent. Petitioner's appeal was dismissed by the NLRC for lack of merit in its resolution
promulgated on May 17, 1983. Petitioner filed its Motion for Reconsideration, a motion which was not entertained by the NLRC in its resolution dated August 15, 1983, thru
Labor Arbiter Pedro C. Ramos.

Petitioner came to Us by filing a petition for certiorari docketed as G.R. No. 65535. But before any responsive pleading was filed, petitioner withdrew said petition and instead
filed a second motion for reconsideration with the NLRC which was likewise denied by the NLRC.

Petitioner filed a motion to elevate the case to the Commission en bane which likewise denied said motion for lack of merit in its resolution dated May 23, 1984.

Petitioner filed anew before Us a petition for certiorari with preliminary injunction docketed as G.R. No. 67619. In Our resolution dated June 25, 1984 We resolved to dismiss the
petition for lack of merit. Petitioner filed a motion for reconsideration which was denied in Our resolution dated September 10, 1984, ordering entry of final judgment of Our
denial. Again, petitioner filed its second motion for reconsideration which We resolved to deny and to expunge from the records of this case (G.R. No. 67619). The order of
dismissal of the petition for certiorari (In G.R. No. 67619) became final and executory on September 25. 1984 as per Entry of Judgment.

Due to the finality of the judgment in this case, the Labor Arbiter below issued a second alias Writ of Execution dated September 8. 1984 against petitioner wherein the amount
involved (representing backwages of private respondent among others, from April 24, 1982 to September 30, 1984) amounted to P29.001.00 as per computation of the Socio-
Economic Analyst of the Commission.

Petitioner filed a Motion to Recompute and to quash/stay writ of execution, notice of garnishment under supersedeas bond on October 19, 1984. Respondent opposed said
motion in both their Urgent Ex-parteManifestation and ex-parte manifestation dated October 22, 1984 and December 5, 1984 respectively.

The Labor Arbiter Pelagio A. Carpio issued on January 21, 1985, an order dismissing the motion of petitioner for lack of merit and ordered it to proceed with the enforcement of
the second alias writ of execution dated October 8, 1984.

Petitioner filed an appeal from said order of the Labor Arbiter. In reply, respondent Felicidad Fontanilla stated that the petitioner was appealing only on the order of the Labor
Arbiter denying the motion to recompute which is only an interlocutory order and should not be entertained on appeal.

The third alias writ of execution of the original decision dated August 31, 1982 was partially satisfied on April 3, 1985, when complainant received the amount of P29.001.00 as
computed and prepared by the Socio-Economic Analyst covering the period from April 25, 1982 to September 30, 1984 which amount included the emergency allowance, 13th
month pay and other privileges which complainant would have received, had she not been dismissed.
 Thereafter counsel for petitioner filed a Manifestation dated September 16, 1985 seeking to stop the running of subsequent back wages from the time the business allegedly
closed shop on January 1984.

Felicidad Fontanilla filed her counter manifestation alleging that petitioner refused to reinstate complainant despite several representations of private respondent to the
petitioner by the NLRC Sheriff at the latter's outlet in Cinema Square, Legaspi Street, Makati, Metro Manila or Greenbelt Park Makati, contending that the Quad Park outlet
wherein Felicidad Fontanilla worked was merely transferred and not really closed contrary to the allegations of petitioner.

On October 10, 1985, the NLRC en banc denied appeal of petitioner. A motion for Reconsideration filed on October 31, 1985 by petitioner was likewise denied by the same body
for lack of merit. Such denial is now the subject on appeal by certiorari to Us raising the:

ISSUE RULING

May an employer be Be it noted that it would now be idle to dispute the legality of the order to reinstate and pay back wages to the complainant, it appearing that said order has become final. All
ordered to reinstate that remain to be determined are the matter of reinstatement, and the amount of backwages to be paid.
private respondent after
the closure of its branch or Petitioner maintains that complainant should not be paid her backwages beyond the date of closure of business on January 31, 1984. The records show that the petitioner's
outlet where private Pizza-Inn Quad Carpark outlet ceased its business operations due to poor business sales of pizzas. The fact of closure was properly reported to the Municipal Treasurer of Makati
respondent was employed, wherein petitioner paid the required closure fee under O.R. No. 7890507 on January 20, 1984. Their contract of lease with Ayala Corporation over said premises was also
and to pay private terminated as of January 31, 1984 as per letter of Mr. Simon C. Mossesgeld, Area Manager of the Ayala Corporation, Commercial Center Division. Subsequently, Pizza's only two
respondent back wages other remaining outlets in the Philippines were also closed and its franchise surrendered to Pizza-Inn Texas, U.S.A. as evidenced by a letter dated April 8, 1986. Hence, the
even after the date of closure of the' business rendered the reinstatement of complainant to her previous position impossible but she is still entitled to the payment of backwages up to the date of
closure and continuously dissolution or closure. We have ruled that:
without limit considering
that there was no way to "An employer found guilty of unfair labor practice in dismissing his employee may not be ordered so to pay backwages beyond the date of closure of business
reinstate the workers where such closure was due to legitimate business reasons and not merely an attempt to defeat the order of reinstatement.”
anymore?"
Claimant imputes bad faith on the part of petitioner in refusing to reinstate her in petitioner's other Pizza Inn outlets or branches then still existing. There is indeed authority for
the proposition that complainant be reinstated to her former position or substantially equivalent employment, if available. However, where an employer suffered business
recession, as in the case at bar such that its commercial or financial circumstances have changed forcing it to close one outlet or branch (and subsequently all other outlets also
closed shop), respondent Commission, assuming that petitioner was guilty of unfair labor practice cannot compel the employer to reinstate private respondent if such
reinstatement may exceed the petitioner's needs under the altered conditions. Normally each outlet had only a sufficient number of employees who served pizzas. It has its own
"plantilla" and by accommodating complainant, it might prejudice and displace other employees.

Reinstatement pre-supposes that the previous position from which one had been removed still exists or that there is an unfilled position more or less of similar nature as the
one previously occupied by the employee. Admittedly, no such position is available. Reinstatement therefore becomes a legal impossibility. The law cannot exact compliance
with what is impossible. Moreover an employer is privileged to go out of business by closing the same regardless of his reasons especially if done in good faith and due to causes
beyond his control like heavy business losses. To deprive him of such privilege would be oppressive and inhuman. In such cases, the dismissed employee can no longer be
reinstated but shall be entitled to backwages up to the date of dissolution or closure (but not exceeding three years).
It is on record that the Socio-Economic Analyst of the public respondent computed that award of P29,001.00 covering the period from April, 1982 to September, 1984, which
amount complainant admittedly received after the NLRC Sheriff garnished from the amount deposited at the Philippine Commercial and International Bank despite the
pendency of petitioner's appeal questioning the order of the Labor Arbiter's denial of petitioner's Motion to Recompute and to Quash/Stay Writ of Execution/ Notice of
Garnishment under Supersedeas Bond. Petitioner alleged in said appeal that it was not furnished a copy of such computation nor a chance to refute the same. Petitioner insisted
too that award of backwages should be reasonably limited up to January, 1984 only. Notwithstanding such contentions, private respondent immediately caused the further
computation of backwages from October 1, 1984 up to November 15, 1985 in the additional sum of P23,188.21 under the pretext that petitioner has not yet reinstated private
respondent.
 As aforementioned the order of reinstatement becomes a legal impossibility as the outlet closed on January 31, 1984. Computing backwages beyond January 1984, the date
of closure, would not only be unjust but confiscatory as well as violative of the Constitution depriving the petitioner of his property rights. The unlimited award would not
only prejudice the herein petitioner but would, as well, impose a crushing financial burden on the already financially distressed petitioner corporation. The fact that the
computation of the backwages was done ex-parte without giving petitioner a chance or opportunity to comment on said computation is clearly a denial of due process.

239. KUNTING VS. THE NATIONAL LABOR RELATIONS COMMISSION

CONSUELO B. KUNTING, PETITIONER, VS. THE NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION), CAGAYAN DE ORO CITY, ST. JOSEPH SCHOOL, FR. ALOYSIUS CHANG AND/OR JOSEFINA MANUEL,
RESPONDENTS.

FACTS Consuelo B. Kunting was employed as a teacher by respondent St. Joseph School in Gov. Camins Avenue, Zamboanga City. She was paid a basic pay and emergency cost of living
allowance (ECOLA) except during the summer period when she was paid only the basic pay. Effective January, 1988, her monthly salary was One Thousand Eight Hundred and
Twenty Pesos (P1,820.00) including the ECOLA integrated into the basic wage. She was also paid the 13th month pay up to 1987 but not her service incentive leave pay.

Every year from 1969 until the school year 1987-1988, Consuelo and St. Joseph School executed a Teacher's Contract. For the school year 1987-1988, her performance rating
was very satisfactory. In spite of this, St. Joseph School did not renew her employment contract for the school year 1988-1989, thereby terminating her employment with the
school.

On April 14, 1988, Consuelo filed a complaint against the St. Joseph School, its Director, Fr. Aloysius Chang, and Principal, Sister Josephine Manuel, for illegal dismissal,
reinstatement and backwages, wage differentials, 13th month pay, emergency cost of living allowance (ECOLA) and service incentive leave pay.

With only position papers and supporting documents submitted by the parties as basis, Executive Labor Arbiter Rhett Julius J. Plagata rendered the decision declaring that
Consuelo was illegally dismissed. The dispositive portion of the decision states:

(1) declaring the dismissal of Consuelo B. Kunting to be illegal, and ordering St. Joseph School to pay her backwages in the sum of TEN THOUSAND NINE HUNDRED
TWENTY PESOS (P10,920.00) and separation pay in the sum of FOURTEEN THOUSAND FIVE HUNDRED SIXTY PESOS (P14,560.00);

Dissatisfied, petitioner appealed to the respondent NLRC. She prayed that the Executive Labor Arbiter's decision be modified so as to include her re-instatement to her former
position without loss of seniority rights with option to accept separation benefits and payment of full backwages from April 4, 1988 up to the actual date of reinstatement, the
13th month pay to cover the period between April 4, 1988 and her actual reinstatement, and moral damages of P25,000.00 plus attorney's fees.

In its decision, the NLRC affirmed the finding of the Executive Labor Arbiter that Consuelo was illegally dismissed on the ground that the twin requirements of notice and
hearing, which constitute essential elements of due process in cases of dismissal of employees, were not complied with. Inasmuch as Consuelo was a regular employee under
Art. 280 of the Labor Code, the NLRC opined that her employment for more than sixteen (16) years could not be terminated by the school on the pretext that her "Teaching
Contract" had expired.

Notwithstanding its finding of illegal dismissal, the NLRC nonetheless sustained the Executive Labor Arbiter's ruling as regards the payment of separation pay in lieu of
reinstatement due to the alleged "strained relations" between the parties which existed as a result of the illegal dismissal, and the alleged failure of Consuelo to refute the
accusations leveled against her by her employer. However, the NLRC modified the grant of six (6) months backwages and ordered instead the payment of backwages without
qualification and deduction, computed from the date of dismissal on April 4, 1988 up to the date of promulgation of its decision, i.e., October 20, 1989. It further ordered that
petitioner's length of service be reckoned from 1969 up to the promulgation of its decision.

ISSUE RULING

Whether or not the NLRC An illegally dismissed employee's right to reinstatement is not absolute. The Court has a long line of decisions concerning non-reinstatement of illegally dismissed employees
gravely abused its
discretion in ordering the
payment of separation pay
in lieu of reinstatement
notwithstanding its finding
that she had been illegally
dismissed.
240. CONGSON VS. NATIONAL LABOR RELATIONS COMMISSION
DOMINICO C. CONGSON, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, NOE BARGO, ROGER HIMENO, RAYMUNDO BADAGOS, PATRICIO SALVADOR, SR., NEHIL BARGO, JOEL MENDOZA, AND
FACTS
on various grounds. One of these grounds is when there is a finding that the relationship between the parties has become so strained and ruptured as to preclude a
harmonious working relationship. In the case at bar, however, the peculiar circumstances surrounding the dismissal of petitioner simply do not show such kind of strained
relationship as to warrant the severance of the working relationship between the parties.
The order to grant petitioner separation pay instead of reinstatement is predicated on the following finding of "strained relations" by the Executive Labor Arbiter which was
sustained by the NLRC:
"x x x. In the instant case, while the manner of dismissal was patently illegal, still complainant failed to refute the charges or lapses in her conduct as a teacher,
i.e. disrespectful at time, acts of insubordination; non-improvement in her teaching methods, etc. As aptly put by the Executive Labor Arbiter, ‘ reinstatement
would bring the parties in close or frequent contact in work that may only serve to further aggra vate and inflame the existing animosity and antagonism
between them."
As shown by the above-quoted portion of the decision of the NLRC, its conclusion on the "strained relations" between petitioner and private respondents was merely gathered
from the latter's evidence on the former's less than ideal conduct and nothing more. There is no proof that such conduct actually caused animosity between her and private
respondents. Besides, there is no clear showing that the perceived "strained relations" between the parties is of so serious a nature or of such a degree as to justify petitioner's
dismissal.
"Strained relations" must be of such a nature or degree as to preclude reinstatement. But, where the differences between the parties are neither personal nor physical, nor
serious, then there is no reason why the illegally dismissed employee should not be reinstated rather than simply given separation pay and backwages. More so if the cause of
the perceived "strained relations" is the filing of a complaint for illegal dismissal.
Whatever resentments had been harbored by petitioner upon her unceremonious dismissal after having been employed by St. Joseph School for more than sixteen (16) years is
understandable. Such resentments, however, would not suffice to deny her reemployment because to do so would render for naught her constitutional right to security of
tenure and her corollary right to reinstatement under Article 279 of the Labor Code. Petitioner is, after all, a permanent teacher as she had rendered more than three years of
satisfactory service.
Closely related to the right to reinstatement is the employee's right to receive backwages which represent the compensation that an unjustly dismissed employee should have
received had said employee not been dismissed. Petitioner claims that she is entitled to full backwages (computed from the date of dismissal until actual reinstatement) under
Article 279 of the Labor Code. This contention, however, is not supported by prevailing jurisprudence which limits the award of backwages to three (3) years without
qualification and deduction.
While Republic Act No. 6715 amending Sec. 279, of the Labor Code grants full backwages to dismissed employees computed from the date of their illegal dismissal up to the
date of actual reinstatement, the same cannot be applied in the case at bar. This is because petitioner was illegally dismissed on April 4, 1988, or before the effectivity of RA
6715 on March 21, 1989.
In Lantion v. NLRC (181 SCRA 513 [1990]), We held that nothing in RA 6715 provides for its retroactive application. Necessarily, awards of backwages in cases of illegal dismissal
initiated before the effectivity of RA 6715 will have to be resolved by applying the three-year limit formulated in the case of Mercury Drug Co., Inc. v. CIR (56 SCRA 694 [1974].
EMMANUEL CALIXIHAN, RESPONDENTS.
Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on various dates by petitioner as regular piece-rate workers. They were uniformly
paid at a rate of P1.00 per tuna weighing thirty (30) to eighty (80) kilos per movement, that is - from the fishing boats down to petitioner's storage plant at a load/unload cycle of
 work until the tuna catch reached its final shipment/destination. They did the work of unloading tuna from fishing boats to truck haulers; unloading them again at petitioner's
cold storage plant for filing, storing, cleaning, and maintenance; and finally loading the processed tuna for shipment. They worked seven (7) days a week.

During the first week of June 1990, petitioner notified his workers of his proposal to reduce the rate-per-tuna movement due to the scarcity of tuna. Private respondents
resisted petitioner's proposed rate reduction. When they reported for work the next day, they were informed that they had been replaced by a new set of workers. When they
requested for a dialogue with the management, they were instructed to wait for further notice. They waited for the notice of dialogue for a full week but in vain.

Private respondents filed a case against petitioner before the NLRC Sub-Regional Arbitration Branch No. XI in General Santos City, for underpayment of wages (non- compliance
with Rep. Act Nos. 6640 and 6727) and non-payment of overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)-day service incentive leave pay; and for
constructive dismissal. With respect to their monetary claims, private respondents charged petitioner with violation of the minimum wage law, alleging that with petitioner's
rates and the scarcity of tuna catches, private respondents' average monthly earnings each did not exceed ONE THOUSAND PESOS (P1,000.00).

Accusing petitioner of constructive dismissal, private respondents claimed that petitioner refused to give them work assignments and replaced them with new workers when
they showed resistance to the petitioner's proposed reduction of the rate-per-tuna movement. Private respondents filed another case against petitioner containing an
additional claim for separation pay should their complaint for constructive dismissal be upheld.

ISSUE RULING

Whether or not there was We find petitioner's ratiocination on the impropriety of the award of separation pay to private respondents to be specious. Petitioner seeks to defeat the award of separation
no finding or even pay, in lieu of reinstatement, on the pretext that inasmuch as the existence of strained relationship -- as a permissible exception to an axiomatic order of reinstatement in cases
allegation of strained of illegal dismissal -- was not adequately established, Labor Arbiter Aponesto should not have entertained at all private respondents' claim for separation pay.
relationship between
petitioner and private A careful scrutiny of the records of the case at bench, however, readily discloses the existence of strained relationship between the petitioner and private respondents.
respondents, respondent
NLRC should have deleted, Firstly, petitioner consistently refused to readmit private respondents in his establishment. Petitioner even replaced private respondents with a new set of workers to perform
according to petitioner, the the tasks of private respondents. Moreover, although petitioner ostensibly argued in his supplemental motion for reconsideration that reinstatement should have been the
award of separation pay in proper remedy in the case at bench on his premise that the existence of strained relationship was not adequately established, yet petitioner never sincerely intended to effect
Labor Arbiter Aponesto's the actual reinstatement of private respondents. For if petitioner were to pursue further the entire logic of his argument, the prayer in his supplemental motion for
decision. reconsideration should have contained not just the mere deletion of the award of separation pay, but precisely, the reinstatement of private respondents. Quite obviously then,
notwithstanding petitioner's argument for reinstatement, he was only interested in the deletion of the award of separation pay to private respondents.

In the case of Felix Esmalin vs. National Labor Relations Commission (3rd Division) and CARE Philippines, we held that strained relationship is fairly established if the records of
the case showed consistent refusal of the employer to accept the dismissed employee, to wit:

"From the records of the case, it can be discerned that reinstatement is no longer viable in view of the strained relations between petitioner-employee (Felix
Esmalin) and private respondent-employer (CARE Philippines). This is very evident from the vehement and consistent stand of CARE Philippines in refusing to
accept back petitioner Esmalin. Instead, petitioner should be awarded separation pay as an alternative for reinstatement."

And secondly, private respondents themselves, from the very start, had already indicated their aversion to their continued employment in petitioner's establishment. The very
filing of their second case before Labor Arbiter Aponesto specifically for separation pay is conclusive of private respondents' intention to sever their working ties with
petitioner.

In the case of Arturo Lagniton, Sr. vs. National Labor Relations Commission, et al., we ruled that the refusal of the dismissed employee to be re-admitted is constitutive of
strained relations, thus:

"It appears that relations between the petitioner and the complainants have been so strained that the complainants are no longer willing to be reinstated. As
 such reinstatement would only exacerbate the animosities that have developed between the parties, the public respondents were correct in ordering instead
the grant of separation pay to the dismissed employees in the interest of industrial peace."

241. ACESITE CORPORATION VS. NATIONAL LABOR RELATIONS COMMISSION

ACESITE CORPORATION, HOLIDAY INN, JOHANN ANGERBAUER AND PHIL KENNEDY, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) AND LEO A. GONZALES, RESPONDENTS.

FACTS Leo A. Gonzales (Gonzales) was hired as Chief of Security of Manila Pavillion Hotel. Acesite Corporation took over the operations of Manila Pavillion and renamed it Holiday Inn
Manila. Acesite retained Gonzales as Chief of Security of the hotel.

Gonzales took a 4-day sick leave and took emergency leave. He again took a 12-day vacation leave, thereby using up all leaves that he was entitled for the year.

Before the expiration of his 12-day vacation leave, Gonzales filed an application for emergency leave for 10 days commencing on April 30 up to May 13, 1998. The application
was not, however, approved. By Acesite’s claim, he received a telegram informing him of the disapproval and asking him to report back for work on April 30, 1998.

Gonzales did not report for work on April 30, 1998. On even date, he received a telegram from Acesite advising him that he was on unauthorized leave and asking him to
provide a written explanation within the next 24 hours why he was not reporting for work. At the same time, he was required to report for work the following day or on May 1,
1998.

On May 2, 1998, Gonzales’ father Anacleto sent a telegram to Acesite stating that he was still recovering from severe stomach disorder and would report back for work on May
4, 1998. A medical certificate dated May 3, 1998 issued by a Dr. Laureano C. Gonzales, Jr. stating that Gonzales was under his care from April 30 – May 3, 1998 was presented to
prove that he indeed was treated from such sickness.

On May 4, 1998, around lunchtime, Gonzales reported for work and presented himself to Johann Angerbauer, then Resident Manager of the hotel. Angerbauer claims that
when Gonzales went to him, he asked him to explain why he had been absent despite orders for him to report back for work to which he (Gonzales) replied that it was necessary
for him to go home to his province in Abra.

Gonzales, on the other hand, claims that when he conferred with Angerbauer, he requested for leave without pay from May 5-9, 1998 which was provisionally approved on
condition that he (Gonzales) would be sending his explanation through e-mail behind his absences on April 30, 1998 and May 2, 1998 so that Angerbauer could send it to the
hotel General Manager Phil Kennedy who was then out of the country.

Gonzales not having reported for work on May 5, 1998, Angerbauer sent him on even date the following telegram at his provincial address in Abra:

THIS IS TO REITERATE OUR ADVICE FOR YOU TO REPORT BACK TO WORK IMMEDIATELY UPON RECEIPT OF THIS NOTICE DUE TO VERY URGENT MATTERS
INVOLVING SECURITY DEPARTMENT’S CONCERNS WHICH IMPERATIVELY REQUIRE YOUR PERSONAL ATTENTION. PLEASE CONSIDER THIS AS OUR FINAL ADVICE.

Gonzales, who claims to have received the May 5, 1998 telegram only in the afternoon of May 7, 1998, immediately repaired back to Manila on May 8, 1998 only to be
“humiliatingly and ignominiously barred by the guard (a subordinate of [Gonzales]) from entering the premises.” It appears that on May 7, 1998, Angerbauer issued the
following Notice of Termination through an inter-office memo.

Gonzales thus filed on May 27, 1998 a complaint against Acesite, Angerbauer and Kennedy for illegal dismissal with prayer for reinstatement and payment of full backwages,
service incentive leave, 13th month pay, moral and exemplary damages and attorney’s fees. Gonzales, however, failed to appear in 2 consecutive hearings despite notice,
meriting the dismissal by the Labor Arbiter of his complaint by Order of September 17, 1998.

After the filing of their respective position papers, pleadings and documentary evidence, the Labor Arbiter, by Decision, dismissed the complaint for lack of merit, it holding that
 Gonzales was dismissed for just cause and was not denied of due process.

Gonzales appealed to the National Labor Relations Commission (NLRC). By Decision of December 29, 2000, the NLRC reversed that of the Labor Arbiter, the dispositive portion of
which is quoted verbatim:

WHEREFORE, PREMISES CONSIDERED, the decision of Labor Arbiter Geobel A. Bartolabac dated February 7, 2000 is hereby, REVERSED. Respondents are hereby
ordered:
1) to immediately reinstate complainant to his former position without loss of seniority rights;

2) to pay complainant backwages beginning for the period May 16, 1998, until he is actually reinstated, inclusive of all his other fringe benefits
or their monetary equivalent.

ISSUE RULING

In illegal dismissal cases, reinstatement to an illegally dismissed employee’s former position may be excused on the ground of “strained relations.” This may be invoked against
employees whose positions demand trust and confidence, or whose differences with their employer are of such nature or degree as to preclude reinstatement. In the case at
bar, Gonzales was Chief of Security, whose duty was to “manage the operation of the security areas of the hotel to provide and ensure the safety and security of the hotel
guests, visitors, management, staff and their properties according to company policies and local laws.” It cannot be gainsaid that Gonzales’ position is one of trust and
confidence, he being in charge of the over-all security of said hotel. Thus, reinstatement is no longer possible. In lieu thereof, Acesite is liable to pay separation pay of 1 month
for every year of service.

Acesite Corporation is hereby ordered to pay Leo A. Gonzales:

a) his full backwages, inclusive of allowances, and his other benefits or their monetary equivalent, to be computed from the time he was illegally dismissed until
the finality of this Decision less 3 days in view of his suspension;
b) separation pay equivalent to his 1 month salary for every year of service computed from the time Gonzales was first employed by Acesite until the finality of
this Decision.

242. MANILA DIAMOND HOTEL EMPLOYEES’ UNION VS. COURT OF APPEALS

MANILA DIAMOND HOTEL EMPLOYEES’ UNION, PETITIONER, VS. THE HON. COURT OF APPEALS, THE SECRETARY OF LABOR AND EMPLOYMENT, AND THE MANILA DIAMOND HOTEL, RESPONDENTS.

FACTS The Union filed a petition for a certification election so that it may be declared the exclusive bargaining representative of the Hotel’s employees for the purpose of collective
bargaining. The petition was dismissed by the Department of Labor and Employment (DOLE) on January 15, 1997. After a few months, however, on August 25, 1997, the Union
sent a letter to the Hotel informing it of its desire to negotiate for a collective bargaining agreement. In a letter dated September 11, 1997, the Hotel’s Human Resources
Department Manager, Mary Anne Mangalindan, wrote to the Union stating that the Hotel cannot recognize it as the employees’ bargaining agent since its petition for
certification election had been earlier dismissed by the DOLE. On that same day, the Hotel received a letter from the Union stating that they were not giving the Hotel a notice to
bargain, but that they were merely asking for the Hotel to engage in collective bargaining negotiations with the Union for its members only and not for all the rank and file
employees of the Hotel.

On September 18, 1997, the Union announced that it was taking a strike vote. A Notice of Strike was thereafter filed on September 29, 1997, with the National Conciliation and
Mediation Board (NCMB) for the Hotel’s alleged “refusal x x x to bargain” and for alleged acts of unfair labor practice. The NCMB summoned both parties and held a series of
dialogues, the first of which was on October 6, 1997.

On November 29, 1997, however, the Union staged a strike against the Hotel. Numerous confrontations between the two parties followed, creating an obvious strain between
 them. The Hotel claims that the strike was illegal and it had to dismiss some employees for their participation in the allegedly illegal concerted activity. The Union, on the other
hand, accused the Hotel of illegally dismissing the workers. What is pertinent to this case, however, is the Order issued by the then Secretary of Labor and Employment
Cresenciano B. Trajano assuming jurisdiction over the labor dispute. A Petition for Assumption of Jurisdiction was filed by the Union on April 2, 1998. Thereafter, the Secretary of
Labor and Employment issued an Order dated April 15, 1998, the dispositive portion of which states:
WHEREFORE, premises considered[,] this Office CERTIFIES the labor dispute at the Manila Diamond Hotel to the National Labor Relations Commission, for
compulsory arbitration, pursuant to Article 263 (g) of the Labor Code, as amended.

Accordingly, the striking officers and members of the Manila Diamond Hotel Employees Union --- NUWHRAIN are hereby directed to return to work within
twenty-four (24) hours upon receipt of this Order and the Hotel to accept them back under the same terms and conditions prevailing prior to the strike. The
parties are enjoined from committing any act that may exacerbate the situation.

The Union received the aforesaid Order on April 16, 1998 and its members reported for work the next day, April 17, 1998. The Hotel, however, refused to accept the returning
workers and instead filed a Motion for Reconsideration of the Secretary’s Order.

On April 30, 1998, then Acting Secretary of Labor Jose M. Español, issued the disputed Order, which modified the earlier one issued by Secretary Trajano. Instead of an actual
return to work, Acting Secretary Español directed that the strikers be reinstated only in the payroll. The Union moved for the reconsideration of this Order, but its motion was
denied on June 25, 1998. Hence, it filed before this Court on August 26, 1998, a petition for certiorari under Rule 65 of the Rules of Court alleging grave abuse of discretion on
the part of the Secretary of Labor for modifying its earlier order and requiring instead the reinstatement of the employees in the payroll. However, in a resolution dated July 12,
1999, this Court referred the case to the Court of Appeals, pursuant to the principle embodied in National Federation of Labor v. Laguesma.

On October 19, 1999, the Court of Appeals rendered a Decision dismissing the Union’s petition and affirming the Secretary of Labor’s Order for payroll reinstatement. The Court
of Appeals held that the challenged order is merely an error of judgment and not a grave abuse of discretion and that payroll reinstatement is not prohibited by law, but may be
“called for” under certain circumstances.

ISSUE RULING

The Court of Appeals based its decision on this Court’s ruling in University of Santo Tomas (UST) v. NLRC. There, the Secretary assumed jurisdiction over the labor dispute
between striking teachers and the university. He ordered the striking teachers to return to work and the university to accept them under the same terms and conditions.
However, in a subsequent order, the NLRC provided payroll reinstatement for the striking teachers as an alternative remedy to actual reinstatement. True, this Court held
therein that the NLRC did not commit grave abuse of discretion in providing for the alternative remedy of payroll reinstatement. This Court found that it was merely an error of
judgment, which is not correctible by a special civil action for certiorari. The NLRC was only trying its best to work out a satisfactory ad hoc solution to a festering and serious
problem.

However, this Court notes that the UST ruling was made in the light of one very important fact: the teachers could not be given back their academic assignments since the order
of the Secretary for them to return to work was given in the middle of the first semester of the academic year. The NLRC was, therefore, faced with a situation where the striking
teachers were entitled to a return to work order, but the university could not immediately reinstate them since it would be impracticable and detrimental to the students to
change teachers at that point in time.

In the present case, there is no showing that the facts called for payroll reinstatement as an alternative remedy. A strained relationship between the striking employees and
management is no reason for payroll reinstatement in lieu of actual reinstatement. Petitioner correctly points out that labor disputes naturally involve strained relations
between labor and management, and that in most strikes, the relations between the strikers and the non-strikers will similarly be tense. Bitter labor disputes always leave an
aftermath of strong emotions and unpleasant situations. Nevertheless, the government must still perform its function and apply the law, especially if, as in this case, national
interest is involved.

After making the distinction between UST and the present case, this Court now addresses the issue of whether the Court of Appeals erred in ruling that the Secretary did not
commit any grave abuse of discretion in ordering payroll reinstatement in lieu of actual reinstatement. This question is answered by the nature of Article 263(g). As a general
 rule, the State encourages an environment wherein employers and employees themselves must deal with their problems in a manner that mutually suits them best. This is the
basic policy embodied in Article XIII, Section 3 of the Constitution, which was further echoed in Article 211 of the Labor Code. Hence, a voluntary, instead of compulsory, mode of
dispute settlement is the general rule.

However, Article 263, paragraph (g) of the Labor Code, which allows the Secretary of Labor to assume jurisdiction over a labor dispute involving an industry indispensable to the
national interest, provides an exception:

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the
Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration.
Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or
certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work
and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. x x
x

Under Article 263(g), all workers must immediately return to work and all employers must readmit all of them under the same terms and conditions prevailing before the strike
or lockout. This Court must point out that the law uses the precise phrase of “under the same terms and conditions,” revealing that it contemplates only actual reinstatement.
This is in keeping with the rationale that any work stoppage or slowdown in that particular industry can be inimical to the national economy. It is clear that Article 263(g) was not
written to protect labor from the excesses of management, nor was it written to ease management from expenses, which it normally incurs during a work stoppage or
slowdown. It was an error on the part of the Court of Appeals to view the assumption order of the Secretary as a measure to protect the striking workers from any
retaliatory action from the Hotel.

It is, therefore, evident from the foregoing that the Secretary’s subsequent order for mere payroll reinstatement constitutes grave abuse of discretion amounting to lack or
excess of jurisdiction. Indeed, this Court has always recognized the “great breadth of discretion” by the Secretary once he assumes jurisdiction over a labor dispute. However,
payroll reinstatement in lieu of actual reinstatement is a departure from the rule in these cases and there must be showing of special circumstances rendering actual
reinstatement impracticable, as in the UST case aforementioned, or otherwise not conducive to attaining the purpose of the law in providing for assumption of jurisdiction by
the Secretary of Labor and Employment in a labor dispute that affects the national interest. None appears to have been established in this case. Even in the exercise of his
discretion under Article 236(g), the Secretary must always keep in mind the purpose of the law.

243. ROQUERO VS. PHILIPPINE AIRLINES, INC.

ALEJANDRO ROQUERO, PETITIONER, VS. PHILIPPINE AIRLINES, INC., RESPONDENT.

FACTS Roquero, along with Rene Pabayo, were ground equipment mechanics of respondent Philippine Airlines, Inc. From the evidence on record, it appears that Roquero and Pabayo
were caught red-handed possessing and using Methamphetamine Hydrochloride or shabu in a raid conducted by PAL security officers and NARCOM personnel.

Roquero and Pabayo received a “notice of administrative charge” for violating the PAL Code of Discipline. They were required to answer the charges and were placed under
preventive suspension. In a Memorandum, Roquero and Pabayo were dismissed by PAL. Thus, they filed a case for illegal dismissal.
In the Labor Arbiter’s decision, the dismissal of Roquero and Pabayo was upheld. The Labor Arbiter found both parties at fault – PAL for applying means to entice the
complainants into committing the infraction and the complainants for giving in to the temptation and eventually indulging in the prohibited activity. Nonetheless, the Labor
Arbiter awarded separation pay and attorney’s fees to the complainants.

While the case was on appeal with the National Labor Relations Commission (NLRC), the complainants were acquitted by the Regional Trial Court (RTC) in the criminal case
which charged them with “conspiracy for possession and use of a regulated drug in violation of Section 16, Article III of Republic Act 6425,” on the ground of instigation.

The NLRC ruled in favor of complainants as it likewise found PAL guilty of instigation. It ordered reinstatement to their former positions but without backwages. Complainants
 did not appeal from the decision but filed a motion for a writ of execution of the order of reinstatement. The Labor Arbiter granted the motion but PAL refused to execute the
said order on the ground that they have filed a Petition for Review before this Court. In accordance with the case of St. Martin Funeral Home vs. NLRC and Bienvenido Aricayos,
PAL’s petition was referred to the Court of Appeals.

During the pendency of the case with the Court of Appeals, PAL and Pabayo filed a Motion to Withdraw/Dismiss the case with respect to Pabayo, after they voluntarily entered
into a compromise agreement. The motion was granted in a Resolution promulgated by the Former Thirteenth Division of the Court of Appeals on January 29, 2002.

The Court of Appeals later reversed the decision of the NLRC and reinstated the decision of the Labor Arbiter insofar as it upheld the dismissal of Roquero. However, it denied
the award of separation pay and attorney’s fees to Roquero on the ground that one who has been validly dismissed is not entitled to those benefits.

ISSUE RULING

There is no question that petitioner Roquero is guilty of serious misconduct for possessing and using shabu. He violated Chapter 2, Article VII, section 4 of the PAL Code of
Discipline.

Serious misconduct is defined as “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.” For serious misconduct to warrant the dismissal of an employee, it (1) must be serious; (2) must relate to the performance of
the employee’s duty; and (3) must show that the employee has become unfit to continue working for the employer.

It is of public knowledge that drugs can damage the mental faculties of the user. Roquero was tasked with the repair and maintenance of PAL’s airplanes. He cannot discharge
that duty if he is a drug user. His failure to do his job can mean great loss of lives and properties. Hence, even if he was instigated to take drugs he has no right to be reinstated
to his position. He took the drugs fully knowing that he was on duty and more so that it is prohibited by company rules. Instigation is only a defense against criminal liability. It
cannot be used as a shield against dismissal from employment especially when the position involves the safety of human lives.

Petitioner cannot complain he was denied procedural due process. PAL complied with the twin-notice requirement before dismissing the petitioner. The twin-notice rule
requires (1) the notice which apprises the employee of the particular acts or omissions for which his dismissal is being sought along with the opportunity for the employee to air
his side, and (2) the subsequent notice of the employer’s decision to dismiss him. Both were given by respondent PAL.

Article 223 (3rd paragraph) of the Labor Code, as amended by Section 12 of Republic Act No. 6715, and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715,
Amending the Labor Code, provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal.

The order of reinstatement is immediately executory. The unjustified refusal of the employer to reinstate a dismissed employee entitles him to payment of his salaries
effective from the time the employer failed to reinstate him despite the issuance of a writ of execution. Unless there is a restraining order issued, it is ministerial upon the
Labor Arbiter to implement the order of reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on PAL to actually reinstate Roquero or
reinstate him in the payroll. Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of the decision of the NLRC until
the finality of the decision of this Court.

We reiterate the rule that technicalities have no room in labor cases where the Rules of Court are applied only in a suppletory manner and only to effectuate the objectives of
the Labor Code and not to defeat them. Hence, even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated
during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such,
more so if he actually rendered services during the period.

244. GENUINO VS. NATIONAL LABOR RELATIONS COMMISSION

 MARILOU S. GENUINO, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, CITIBANK, N.A., WILLIAM FERGUSON, AND AZIZ RAJKOTWALA, RESPONDENTS.

FACTS Citibank sent Genuino a letter charging her with “knowledge and/or involvement” in transactions “which were irregular or even fraudulent.” In the same letter, Genuino was
informed she was under preventive suspension.
Genuino wrote Citibank on September 13, 1993 and asked the bank the following:
1. Confront our client with the factual and legal basis of your charges, and afford her an opportunity to explain;
2. Substantiate your charge of fraudulent transactions against our client; or if the same cannot be substantiated;
3. Correct/repair/compensate the damage you have caused our client.
Citibank, through Victorino P. Vargas, its Country Senior Human Resources Officer, sent a letter to Genuino directing her to explain in writing why her employment should not be
terminated in view of her involvement in these irregular transactions.
Genuino did not appear in the administrative investigation held on September 21, 1993. Her lawyers wrote a letter to Citibank’s counsel asking “what bank clients’ funds were
diverted from the bank and invested in other companies, the specific amounts involved, the manner by which and the date when such diversions were purportedly affected.” In
reply, Citibank’s counsel noted Genuino’s failure to appear in the investigation and gave Genuino up to September 23, 1993 to submit her written explanation. Genuino did not
submit her written explanation.

On September 27, 1993, Citibank informed Genuino of the result of their investigation. It found that Genuino with Santos used “facilities of Genuino’s family corporation,
namely, Global Pacific, personally and actively participated in the diversion of bank clients’ funds to products of other companies that yielded interests higher than what Citibank
products offered, and that Genuino and Santos realized substantial financial gains, all in violation of existing company policy and the Corporation Code, which for your
information, carries a penal sanction.”

Genuino’s employment was terminated by Citibank on grounds of (1) serious misconduct, (2) willful breach of the trust reposed upon her by the bank, and (3) commission of
a crime against the bank.

ISSUE RULING

Anent the directive of the NLRC in its September 3, 1994 Decision ordering Citibank “to pay the salaries due to the complainant from the date it reinstated complainant in the
payroll (computed at P60,000.00 a month, as found by the Labor Arbiter) up to and until the date of this decision,” the Court hereby cancels said award in view of its finding
that the dismissal of Genuino is for a legal and valid ground.

Ordinarily, the employer is required to reinstate the employee during the pendency of the appeal pursuant to Art. 223, paragraph 3 of the Labor Code, which states:

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution
for reinstatement provided herein.

If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be deducted from the accrued benefits that the
dismissed employee was entitled to receive from his/her employer under existing laws, collective bargaining agreement provisions, and company practices. However, if the
employee was reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered without need of
refund.

Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a just cause, then she is not entitled to be paid the
salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC Decision.

245. JUANITO A. GARCIA AND ALBERTO J. DUMAGO, PETITIONERS, VS. PHILIPPINE AIRLINES, INC., RESPONDENT.

FACTS
ISSUE
Whether or not petitioners
may collect their wages
during the period between
the Labor Arbiter's order of
reinstatement pending
appeal and the NLRC
decision overturning that
of the Labor Arbiter, now
that respondent has exited
from rehabilitation
proceedings.
JUANITO A. GARCIA AND ALBERTO J. DUMAGO, PETITIONERS, VS. PHILIPPINE AIRLINES, INC., RESPONDENT.
The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners after they were allegedly caught in the act of sniffing shabu when a team
of company security personnel and law enforcers raided the PAL Technical Center's Toolroom Section on July 24, 1995.
After due notice, PAL dismissed petitioners for transgressing the PAL Code of Discipline, prompting them to file a complaint for illegal dismissal and damages which was, by
Decision of January 11, 1999, resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia, immediately comply with the reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiter's decision, the Securities and Exchange Commission (SEC) placed PAL, which was suffering from severe financial losses, under an
Interim Rehabilitation Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver.
RULING
The Court sustains the appellate court's finding that the peculiar predicament of a corporate rehabilitation rendered it impossible for respondent to exercise its option under
the circumstances.
The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision containing an order of reinstatement. The
immediacy of its execution needs no further elaboration. Reinstatement pending appeal necessitates its immediate execution during the pendency of the appeal, if the law is to
serve its noble purpose. At the same time, any attempt on the part of the employer to evade or delay its execution should not be countenanced.
After the labor arbiter's decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing
the reinstatement pending appeal was without fault on the part of the employer.
The test is two-fold:
(1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and
(2) the delay must not be due to the employer's unjustified act or omission.
If the delay is due to the employer's unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiter's decision.
In the case at bar, petitioners exerted efforts to execute the Labor Arbiter's order of reinstatement until they were able to secure a writ of execution, albeit issued on October 5,
2000 after the reversal by the NLRC of the Labor Arbiter's decision. Technically, there was still actual delay which brings to the question of whether the delay was due to
respondent's unjustified act or omission.
It is apparent that there was inaction on the part of respondent to reinstate them, but whether such omission was justified depends on the onset of the exigency of corporate
rehabilitation.
It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be
suspended. As stated early on, during the pendency of petitioners' complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver.
After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver.
Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is ministerial and mandatory. This injunction or suspension of
claims by legislative fiat partakes of the nature of a restraining order that constitutes a legal justification for respondent's non-compliance with the reinstatement order.
Respondent's failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such being the case, respondent's obligation to
pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach.
 While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the dismissed employee and his family, it does not
contemplate the period when the employer-corporation itself is similarly in a judicially monitored state of being resuscitated in order to survive.

The parallelism between a judicial order of corporation rehabilitation as a justification for the non-exercise of its options, on the one hand, and a claim of actual and imminent
substantial losses as ground for retrenchment, on the other hand, stops at the red line on the financial statements. Beyond the analogous condition of financial gloom, as
discussed by Justice Leonardo Quisumbing in his Separate Opinion, are more salient distinctions. Unlike the ground of substantial losses contemplated in a retrenchment case,
the state of corporate rehabilitation was judicially pre-determined by a competent court and not formulated for the first time in this case by respondent.

More importantly, there are legal effects arising from a judicial order placing a corporation under rehabilitation. Respondent was, during the period material to the case,
effectively deprived of the alternative choices under Article 223 of the Labor Code, not only by virtue of the statutory injunction but also in view of the interim relinquishment of
management control to give way to the full exercise of the powers of the rehabilitation receiver. Had there been no need to rehabilitate, respondent may have opted for actual
physical reinstatement pending appeal to optimize the utilization of resources. Then again, though the management may think this wise, the rehabilitation receiver may decide
otherwise, not to mention the subsistence of the injunction on claims.

In sum, the obligation to pay the employee's salaries upon the employer's failure to exercise the alternative options under Article 223 of the Labor Code is not a hard and
fast rule, considering the inherent constraints of corporate rehabilitation.

b. Damages (Articles 1702, 2217 and 2232 of the Civil Code)

246. PRIMERO VS. INTERMEDIATE APPELLATE COURT

ALFREDO F. PRIMERO, PETITIONER, VS. INTERMEDIATE APPELLATE COURT AND DM TRANSIT, RESPONDENTS.

FACTS Petitioner Primero was discharged from his employment as bus driver of DM Transit Corporation (DM) after having been employed therein for over 6 years. The circumstances
attendant upon that dismissal are recounted by the Court of Appeals as follows:

"Undisputably, since August 1, 1974, appellee's bus dispatcher did not assign any bus to be driven by appellant Primero. No reason or cause was given by the
dispatcher to appellant for not assigning a bus to the latter for 23 days.

"Also, for 23 days, appellant was given a run-around from one management official to another, pleading that he be allowed to work as his family was in dire
need of money and at the same time inquiring (why) he was not allowed to work or drive a bus of the company. Poor appellant did not only get negative
results but was given cold treatment, oftentimes evaded and given confusing information, or ridiculed, humiliated, or sometimes made to wait in the offices
of some management personnel of the appellee.

"(The) General Manager and (the) Vice-President and Treasurer ** wilfully and maliciously made said appellant ** seesaw or ** go back and forth between
them for not less than ten (10) times within a period of 23 days ** but (he) got negative results from both corporate officials. Worse, on the 23rd day of his
ordeal, appellant was suddenly told by General Manager Briones to seek employment with other bus companies because he was already dismissed from his job
with appellee (without having been) told of the cause of his hasty and capricious dismissal **

"Impelled to face the harsh necessities of life as a jobless person and worried by his immediate need for money, appellant pleaded with Corporate President
Demetrio Munoz, Jr. for his reinstatement and also asked P300.00 as financial assistance, but the latter told the former that he (Munoz, Jr.) will not give him
even one centavo and that should appellant sue him in court, then that will be the time President Munoz, Jr. will pay him, if Munoz, Jr. loses the case **

"Appellant also advised (the) President of the oppressive, anti-social and inhumane acts of subordinate officers ** (but) Munoz, Jr. did nothing to resolve
appellant's predicament and ** just told the latter to go back ** to ** Briones, who insisted that appellant seek employment with other bus firms in Metro
 Manila ** (but) admitted that the appellant has not violated any company rule or regulation **

"** (I)n pursuance (of) defendant's determination to oppress plaintiff and cause further loss, irreparable injury, prejudice and damage, (D.M. Transit) in bad
faith and with malice persuaded other firms (California Transit, Pascual Liner, De Dios Transit, Negrita Corporation, and MD Transit) not to employ (appellant) in
any capacity after he was already unjustly dismissed by said defendant **

"These companies with whom appellant applied for a job called up the D.M. Transit Office (which) ** told them ** that they should not accept (appellant)
because (he) was dismissed from that Office."

Primero instituted proceedings against DM with the Labor Arbiters of the Department of Labor, for illegal dismissal, and for recovery of back wages and reinstatement. It is not
clear from the record whether these proceedings consisted of one or two actions separately filed. What is certain is that he withdrew his claims for back wages and
reinstatement, "with the end in view of filing a damage suit" "in a civil court which has exclusive jurisdiction over his complaint for damages on causes of action founded on
tortious acts, breach of employment contract ** and consequent effects (thereof).

In any case, after due investigation, the Labor Arbiter rendered judgment ordering DM to pay complainant Primero P2,000.00 as separation pay in accordance with the
Termination Pay Law. The judgment was affirmed by the National Labor Relations Commission and later by the Secretary of Labor, the case having been concluded at this level
on March 3, 1978.

ISSUE RULING

Going by the literal terms of the law, it would seem clear that at the time that Primero filed his complaints for illegal dismissal and recovery of backwages, etc. with the Labor
Arbiter, the latter possessed original and exclusive jurisdiction also over claims for moral and other forms of damages; this, in virtue of Article 2653 of PD 442, otherwise known
as the Labor Code, effective from May 1, 1974.

In other words, in the proceedings before the Labor Arbiter, Primero plainly had the right to plead and prosecute a claim not only for the reliefs specified by the Labor Code itself
for unlawful termination of employment, but also for moral or other damages under the Civil Code arising from or connected with that termination of employment. And this was
the state of the law when he moved for the dismissal of his claims before the Labor Arbiter, for reinstatement and recovery of back wages, so that he might later file a damage
suit "in a civil court which has exclusive jurisdiction over his complaint ** founded on tortious acts, breach of employment contract ** and consequent effects (thereof)."

The legislative intent appears clear to allow recovery in proceedings before Labor Arbiters of moral and other forms of damages in all cases or matters arising from employer-
employee relations. This would no doubt include, particularly, instances where an employee has been unlawfully dismissed. In such a case the Labor Arbiter has jurisdiction to
award to the dismissed employee not only the reliefs specifically provided by labor laws, but also moral and other forms of damages governed by the Civil Code.

Moral damages would be recoverable, for example, where the dismissal of the employee was not only effected without authorized cause and/or due process -- for which relief is
granted by the Labor Code -- but was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or
public policy -- for which which the obtainable relief is determined by the Civil Code (not the Labor Code). Stated otherwise, if the evidence adduced by the employee before
the Labor Arbiter should establish that the employer did indeed terminate the employee's services without just cause or without according him due process, the Labor Arbiter's
judgment shall be for the employer to reinstate the employee and pay him his back wages or, exceptionally, for the employee simply to receive separation pay. These are reliefs
explicitly prescribed by the Labor Code. But any award of moral damages by the Labor Arbiter obviously cannot be based on the Labor Code but should be grounded on the Civil
Code. Such an award cannot be justified solely upon the premise (otherwise sufficient for redress under the Labor Code) that the employer fired his employee without just
cause or due process. Additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, these being, to repeat, that the act of dismissal
was attended by bad faith or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy; and, of course, that social humiliation,
wounded feelings, grave anxiety, etc., resulted therefrom.

It is clear that the question of the legality of the act of dismissal is intimately related to the issue of the legality of the manner by which that act of dismissal was performed.
But while the Labor Code treats of the nature of, and the remedy available as regards the first -- the employee's separation from employment -- it does not at all deal with the
 second -- the manner of that separation -- which is governed exclusively by the Civil Code. In addressing the first issue, the Labor Arbiter applies the Labor Code; in addressing
the second, the Civil Code. And this appears to be the plain and patent intendment of the law. For apart from the reliefs expressly set out in the Labor Code flowing from illegal
dismissal from employment, no other damages may be awarded to an illegally dismissed employee other than those specified by the Civil Code. Hence, the fact that the issue --
of whether or not moral or other damages were suffered by an employee and in the affirmative, the amount that should properly be awarded to him in the circumstances -- is
determined under the provisions of the Civil Code and not the Labor Code, obviously was not meant to create a cause of action independent of that for illegal dismissal and thus
place the matter beyond the Labor Arbiter's jurisdiction.

Thus, an employee who has been illegally dismissed (i.e., discharged without just cause or being accorded due process), in such a manner as to cause him to suffer moral
damages (as determined by the Civil Code), has a cause of action for reinstatement and recovery of back wages and damages. When he institutes proceedings before the Labor
Arbiter, he should make a claim for all said reliefs. He cannot, to be sure, be permitted to prosecute his claims piecemeal. He cannot institute proceedings separately and
contemporaneously in a court of justice upon the same cause of action or a part thereof. He cannot and should not be allowed to sue in two forums: one, before the Labor
Arbiter for reinstatement and recovery of back wages, or for separation pay, upon the theory that his dismissal was illegal; and two, before a court of justice for recovery of
moral and other damages, upon the theory that the manner of his dismissal was unduly injurious, or tortious. This is what in procedural law is known as splitting causes of
action, engendering multiplicity of actions. It is against such mischiefs that the Labor Code amendments just discussed are evidently directed, and it is such duplicity which the
Rules of Court regard as ground for abatement or dismissal of actions, constituting either litis pendentia (auter action pendant) or res adjudicata, as the case may be.1 But this
was precisely what Primero's counsel did. He split Primero's cause of action; and he made one of the split parts the subject of a cause of action before a court of justice.
Consequently, the judgment of the Labor Arbiter granting Primero separation pay operated as a bar to his subsequent action for the recovery of damages before the Court of
First Instance under the doctrine of res judicata. The rule is that the prior "judgment or order is, with respect to the matter directly adjudged or as to any other matter that
could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special
proceeding, litigating for the same thing and under the same title and in the same capacity."
We are not unmindful of our previous rulings on the matter cited in the dissent to the decision of the Court of Appeals subject of the instant petition, notably, Quisaba v. Sta.
Ines-Melale Veneer & Plywood, Inc., where a distinction was drawn between the right of the employer to dismiss an employee, which was declared to be within the competence
of labor agencies to pass upon, and the "manner in which the right was exercised and the effects flowing therefrom," declared to be a matter cognizable only by the regular
courts because "intrinsically civil." We opine that it is this very distinction which the law has sought to eradicate as being so tenuous and so difficult to observe, and, of course, as
herein pointed out, as giving rise to split jurisdiction, or to multiplicity of actions, "a situation obnoxious to the orderly admlinistration of justice.

Actually, we merely reiterate in this decision the doctrine already laid down in other cases to the effect that the grant of jurisdiction to the Labor Arbiter by Article 217 of the
Labor code is sufficiently comprehensive to include claims for moral and exemplary damages sought to be recovered from an employer by an employee upon the theory of his
illegal dismissal. Rulings to the contrary are deemed abandoned or modified accordingly.

247. MAGLUTAC VS. NATIONAL LABOR RELATIONS COMMISSION.

JOSE M. MAGLUTAC, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, COMMART (PHIL.), INC. AND JESUS T. MAGLUTAC, RESPONDENTS.

FACTS Jose M. Maglutac, employed by Commart (Phils.), Inc., received a notice of termination signed by Joaquin S. Cenzon, Vice-President - General Manager and Corporate Secretary
of CMS International, a corporation controlled by Commart.

Thereafter, Jose Maglutac filed a complaint for illegal dismissal against Commart and Jesus T. Maglutac, President and Chairman of the Board of Directors of Commart. The
complainant alleged that his dismissal was part of a vendetta drive against his parents who dared to expose the massive and fraudulent diversion of company funds to the
company president's private accounts, stressing that complainant's efficiency and effectiveness were never put to question when very suddenly he received his notice of
termination.

Commart and Jesus T. Maglutac, on the other hand, justified the dismissal for lack of trust and confidence brought about by complainant and his family's establishment of a
company, MM International, in direct competition with Commart.
 After the parties submitted their respective position papers, the Labor Arbiter assigned to the case, Jose Collado, Jr., rendered a decision finding that complainant was illegally
dismissed.

Commart and Jesus T. Maglutac filed a motion for reconsideration of the decision of the Labor Arbiter which was treated as an appeal to the National Labor Relations
Commission (NLRC). On April 30, 1987, a decision was rendered by the NLRC modifying the decision of the Labor Arbiter. The NLRC affirmed the finding of the Labor Arbiter
that complainant was illegally dismissed by Commart but it deleted the award for moral and exemplary damages in favor of complainant and absolved Jesus T. Maglutac from
any personal liability to the complainant.

Both parties filed their respective motions for reconsideration of the decision of the NLRC. Commart and Jesus T. Maglutac questioned the NLRC's finding that the complainant
was dismissed without just cause. For his part, complainant questioned the decision insofar as it deleted the award of moral and exemplary damages and the non-holding of a
joint and several liability of Jesus T. Maglutac and Commart. Complainant's motion was denied. Commart and Jesus T. Maglutac's motion for reconsideration was also denied.

Commart filed a manifestation stating that it had become insolvent and that it had suspended operations.

Complainant argued that because of the Labor Arbiter and the NLRC's findings that is dismissal was not merely without just cause but was also an act of vendetta, malice
attended the act. Consequently, he is entitled to moral and exemplary damages under the Civil Code.

ISSUE RULING

In the case of Primero v. Intermediate Appellate Court, We held that in cases of illegal dismissal, in addition to the reliefs granted under the Labor Code, other forms of
damages under the Civil Code may be granted. Thus,

"The legislative intent appears clear to allow recovery in proceedings before Labor Arbiters of moral and other forms of damages, in all cases or matters arising
from employer-employee relations. This would no doubt include, particularly, instances where an employee has been unlawfully dismissed. In such a case, the
Labor Arbiter has jurisdiction to award to the dismissed employee not only the reliefs specifically provided by labor laws, but also moral and other forms of
damages governed by the Civil Code. Moral damages would be recoverable, for example, wherethe dismissal of the employee was not only effected without
authorized cause and/or due process - for which relief is granted by the Labor Code - but was attended by bad faith or fraud, or constituted an act oppressive to
labor, or was done in a manner contrary to morals, good customs orpublic policy - for which the obtainable relief determined by the Civil Code (not the Labor
Code). Stated otherwise, if the evidence adduced by the employee before the Labor Arbiter should establish that the employer did indeed terminate the
employee's services without just cause or without according him due process, the Labor arbiter's judgment shall be for the employer to reinstate the employee
and pay him his backwagesor, exceptionally, for the employee simply to receive separation pay. These are reliefs explicitly prescribed by the Labor Code. But
any award of moral damages by the Labor Arbiter obviously cannot be based on the Labor Code but should be grounded on the Civil Code”.

"Moral damages may be awarded to compensate one for diverse injuries such as mental anguish, besmirched reputation, wounded feelings and social
humiliation. It is however not enough that such injuries have arisen; it is essential that they have sprung from a wrongful act or omission of the defendant
which was the proximate cause thereof."

From the findings of the Labor Arbiter as affirmed by the NLRC, there is sufficient basis for an award of moral and exemplary damages in the instant case. The alleged loss of
trust and confidence on complainant because of his family's establishment of MM International, a company allegedly in direct competition with Commart, was belied by the
findings of the Labor Arbiter:

"The formation of another corporation by complainant's parents including the complainant himself cannot be used to justify the termination of complainant.
The formation came about before complainant's parents brought a minority stockholders' derivative suit and in fact, this was with the sanction of respondent
company's president. The following handwritten communications by respondent Jesus Maglutac show that he even encouraged the organization of MM
International Inc. which Articles of Incorporation show complainant among the incorporating directors."
 Moreover, the complainant was dismissed without due process. His dismissal was made effective immediately and he was not given an opportunity to present his side. As
found by the Labor Arbiter:

“After studying in depth the facts and the evidence it is difficult to divert from the fact that the dismissal of complainant was triggered by his parent’s filing a
derivative suit against respondents with the Securities and Exchange Commission where it is alleged that the company's president and his wife siphoned
company funds to their private bank accounts. Complainant's cause of termination cannot easily and simply be detached from the filing of the minority
stockholders' derivative suit as this dismissal came abruptly shortly after the derivative suit was filed. Complainant's brother who was likewise employed by
respondents was likewise dismissed and this came on the heels of the suit filed with the Securities and Exchange Commission.

"The sequence of events should not be overlooked. It provides the link for the dismissal of complainant and his brother. Worse, the requirement of due
process was blatantly violated. His notice of termination dated October 3, 1984 ipso facto states that his dismissal is effective immediately. It should have
dawned upon the senses of respondents that BP 130 strictly enjoins an employer to terminate an employee provided the latter is given the opportunity to
answer charges imputed against him as basis for disciplinary action. The case at bar prominently reveals respondent's oversight of the requirements of the law.
On this score alone, the illegality of complainant's dismissal is bared eloquently more than ever.

"It appears very clearly that the feud between complainant's parents and respondent's president, the brother of complainant's father, seethed to an intolerable
point not sparing innocent people among whom is the complainant. Like a wild fire spreading its path, complainant's close kins were sacked from their employ
with respondent corporation in what is termed by complainant as a ‘vendetta drive.’ But blood spawned as a result of the derivative suit filed by complainant's
parents, although the suit is, legally speaking, intended to 'protect and safeguard the company's interest from further depredation.”

Where the employee's dismissal was effected without procedural fairness, an award of exemplary damages in her favor can only be justified if her dismissal was affected in a
wanton, oppressive or malevolent manner. The Labor Arbiter justified the award of moral damages from its finding of the oppressive and malevolent manner the complainant
and his relatives were treated after Jesus T. Maglutac found out that a derivative suit was filed by complainant's family with the Securities and Exchange Commission accusing
him and his wife of diverting corporation assets to their personal accounts. The Labor Arbiter justified the award of damages, thus:

"Complainant undoubtedly was exposed to undue humiliation as a result of his dismissal. From the taunts and sleepless nights he suffered, the pain cannot be
more than imagined. The oppressive and malevolent treatment which respondents subjected him to, including the ill-concealed attempt to deprive him of his
rights to the car that he had acquired through the company's car plan, not to mention the vindictive manner in which his mother was removed as a director and
his brother dismissed from CMS International, furnishes adequate basis for the claim for moral and exemplary damages."

We agree however, with the contention of the Solicitor General that the award by the Labor Arbiter of P200,000.00 moral damages and P20,000.00 exemplary damages is
excessive. In the exercise of our discretion, We reduce the award of damages to P40,000.00 as moral damages and P10,000.00 as exemplary damages.

c. Attorney’s fees

248. TAGANAS VS. NATIONAL LABOR RELATIONS COMMISSION

ATTY. WILFREDO TAGANAS, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, MELCHOR ESCULTURA, ET. AL., RESPONDENTS.

FACTS Petitioner Atty. Wilfredo E. Taganas represented herein private respondents in a labor suit for illegal dismissal, underpayment and non-payment of wages, thirteenth-month
pay, attorney's fees and damages conditioned upon a contingent fee arrangement granting the equivalent of fifty percent of the judgment award plus three hundred pesos
appearance fee per hearing.
The Labor Arbiter ruled in favor of private respondents and ordered Ultra Clean Services (Ultra) and the Philippine Tuberculosis Society, Inc., (PTSI) respondents therein, jointly
and severally to reinstate herein private respondents with full backwages, to pay wage differentials, emergency cost of living allowance, thirteenth-month pay and attorney's
 fee, but disallowed the claim for damages for lack of basis. This decision was appealed by Ultra and PTSI to the National Labor Relations Commission (NLRC), and subsequently by
PTSI to the Court but to no avail. During the execution stage of the decision, petitioner moved to enforce his attorney's charging lien. [3] Private respondents, aggrieved for
receiving a reduced award due to the attorney's charging lien, contested the validity of the contingent fee arrangement they have with petitioner, albeit four of the fourteen
private respondents have expressed their conformity thereto.

Finding the arrangement excessive, the Labor Arbiter ordered the reduction of petitioner's contingent fee from fifty percent of the judgment award to ten percent, except for
the four private respondents who earlier expressed their conformity. Petitioner appealed to NLRC which affirmed with modification the Labor Arbiter's order by ruling that the
ten percent contingent fee should apply also to the four respondents even if they earlier agreed to pay a higher percentage. Petitioner's motion for reconsideration was denied,
hence this petition for certiorari.

ISSUE RULING

Whether or not the A contingent fee arrangement is an agreement laid down in an express contract between a lawyer and a client in which the lawyer's professional fee, usually a fixed percentage
reduction of petitioner's of what may be recovered in the action, is made to depend upon the success of the litigation. This arrangement is valid in this jurisdiction. It is, however, under the supervision
contingent fee is and scrutiny of the court to protect clients from unjust charges. Section 13 of the Canons of Professional Ethics states that "[a] contract for a contingent fee, where sanctioned
warranted. by law, should be reasonable under all the circumstances of the case including the risk and uncertainty of the compensation, but should always be subject to the supervision of
a court, as to its reasonableness". Likewise, Rule 138, Section 24 of the Rules of Court provides:

SEC. 24. Compensation of attorneys; agreement as to fees. — An attorney shall be entitled to have and recover from his client no more than a reasonable
compensation for his services, with a view to the importance of the subject-matter of the controversy, the extent of the services rendered, and the professional
standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation but may disregard such testimony
and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be
unconscionable or unreasonable.

When it comes, therefore, to the validity of contingent fees, in large measure it depends on the reasonableness of the stipulated fees under the circumstances of each case. The
reduction of unreasonable attorney's fees is within the regulatory powers of the courts.

We agree with the NLRC's assessment that fifty percent of the judgment award as attorney's fees is excessive and unreasonable. The financial capacity and economic status of
the client have to be taken into account in fixing the reasonableness of the fee. Noting that petitioner's clients were lowly janitors who receive miniscule salaries and that they
were precisely represented by petitioner in the labor dispute for reinstatement and claim for backwages, wage differentials, emergency cost of living allowance, thirteenth-
month pay and attorney's fees to acquire what they have not been receiving under the law and to alleviate their living condition, the reduction of petitioner's contingent fee is
proper. Labor cases, it should be stressed, call for compassionate justice.

Furthermore, petitioner's contingent fee falls within the purview of Article 111 of the Labor Code. This article fixes the limit on the amount of attorney's fees which a lawyer,
like petitioner, may recover in any judicial or administrative proceedings since the labor suit where he represented private respondents asked for the claim and recovery of
wages. In fact, We are not even precluded from fixing a lower amount than the ten percent ceiling prescribed by the article when circumstances warrant it. [12] Nonetheless,
considering the circumstances and the able handling of the case, petitioner's fee need not be further reduced.

The manifestation of petitioner's four clients indicating their conformity with the contingent fee contract did not make the agreement valid. The contingent fee contract being
unreasonable and unconscionable the same was correctly disallowed by public respondent NLRC even with respect to the four private respondents who agreed to pay higher
percentage. Petitioner is reminded that as a lawyer he is primarily an officer of the court charged with the duty of assisting the court in administering impartial justice between
the parties. When he takes his oath, he submits himself to the authority of the court and subjects his professional fees to judicial control.

d. Separation pay

249. LIM VS. THE NATIONAL LABOR RELATIONS COMMISSION

 SAMUEL CASAS LIM, PETITIONER, VS. THE NATIONAL LABOR RELATIONS COMMISSION AND VICTORIA R. CALSADO, RESPONDENTS.

FACTS Private respondent Victoria Calsado was hired by Sweet Lines, Inc. as Senior Branch Officer of its International Accounts Department for a fixed salary and a stipulated 5%
commission on sales production. After tendering her resignation to accept another offer of employment, she was persuaded to remain with an offer of her promotion to
Manager of the Department with corresponding increase in compensation, which she accepted. She was also allowed to buy a second-hand Colt Lancer pursuant to a liberal
car plan under which one-half of the cost was to be paid by the company and the other half was to be deducted from her salary.

Relations began to sour later, however, when she repeatedly asked for payment of her commissions, which had accumulated and were long overdue. She also complained of
the inordinate demands on her time even when she was sick and in the hospital. Finally, she was served with a letter from Samuel Casas Lim, the other petitioner, informing her
that her "employment with Sweet Lines" would terminate. Efforts were also taken by Sweet Lines to forcibly take the car from her, culminating in an action for replevin against
her in the regional trial court of Manila.

On August 14, 1985, Calsado filed a complaint against both petitioners for illegal dismissal, illegal deduction, and unpaid wages and commissions plus moral and exemplary
damages, among other claims. There followed an extended hearing where she testified on the details of her employment, emphasizing her unsatisfactory treatment by the
management of Sweet Lines and especially the termination of her services without the required notice and hearing and without valid cause.

The respondents' defenses were based mainly on the claim that Calsado was not an employee of Sweet Lines but an independent contractor and that therefore their dispute
with her came under the jurisdiction of the civil courts and not of the Labor Arbiter.

Decision was rendered against the two petitioners by the Labor Arbiter, who held them liable in solidum to the complainant for the following amounts:

(a) Separation pay equivalent to one month pay for every year of service based on her latest basic salary of P2,500.00 plus allowance of P500.00, or a total
monthly pay of P3,000.00;
(b) Backwages based on her last monthly pay rate of P3,000.00 to be computed from the time of her dismissal to the actual payment of her separation pay;
(c) Proportionate 13th month pay for the year 1985;
(d) Sales commission in the sum of P432,656.68;
(e) Moral damages of P100,000.00;
(f) Exemplary damages of P10,000.00; and
(g) Attorney's fees of P10,000.00 plus 25% of the total monetary awards in favor of the complainant.

The decision was appealed to the National Labor Relations Commission and affirmed in toto except as to the attorney's fees, which were reduced to 10% of the total award.

ISSUE RULING

Whether or not separation Separation pay is granted where reinstatement is no longer advisable because of strained relations between the employee and the employer. Back wages represent
pay and back wages are compensation that should have been earned but were not collected because of the unjust dismissal. The bases for computing the two are different, the first being usually the
inconsistent with each length of the employee's service and the second the actual period when he was unlawfully prevented from working.
other is not well-taken.
We have ordered the payment of both in proper case as otherwise the employee might be deprived of benefits justly due him. Thus, if an employee who has worked only one
year is sustained by the labor court after three years from his unjust dismissal, granting him separation pay only would entitle him to only one month salary. There is no reason
why he should not also be paid three years back wages corresponding to the period when he could not return to his work or could not find employment elsewhere.

250. OSIAS ACADEMY VS. DOLE

OSIAS ACADEMY, PETITIONER, VS. THE DEPARTMENT OF LABOR AND EMPLOYMENT, CONCHITA G. MERCADO AND CELERIO MERCADO, RESPONDENTS.
ISSUE RULING

The award by the respondent Minister of Labor of separation pay, on grounds of equity, to two employees of petitioner Osias Academy despite the avowedly correct grant of
clearance to it to terminate the services of said employees on the ground of loss of confidence based on a satisfactory showing of embezzlement of company funds, serious
misconduct, etc., is challenged in the special civil action of certiorari at bar.

A similar issue was involved in a case recently decided by this Court en banc. It was noted that these cases constituted an exception to the rule in the Labor Code that a person
dismissed for cause is not entitled to separation pay, the exception being based on considerations of equity. The Court observed, however, that the cited decisions had "not
been consistent as to the justification for the grant of separation pay in the amount and rate of such award," and pointed out the need for a re-examination of the policy therein
enunciated, in order to rationalize the exception, "to make it fair to both labor and management, especially to labor." The Court then proceeded to lay down the following
principles, which are hereby reaffirmed:

"There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay
to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. For example, a subordinate
who has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence, which is an allowable
ground. A working mother who has to be frequently absent because she has also to take care of her child may also be removed because of her poor
attendance, this being another authorized ground. It is not the employee's fault if he does not have the necessary aptitude for his work but on the other hand
the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these
and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is
for cause.

But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more discerning. There is no doubt it is
compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his
offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on the job is
doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but
sleeping with a prostitute during his tour of duty and in the company premises, the situation is changed completely. This is not only inefficiency but immorality
and the grant of separation pay would be entirely unjustified.

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for
causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication
or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect of rewarding rather than punishing the erring employee for his offense. And we do not
agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the
employee who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his
next employment because he thinks he can expect a little leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general
any good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution.

In light of the foregoing propositions, it is evident that the grant of separation pay to the private respondents is unjustified, they having been dismissed for causes reflecting
on their moral character.

251. GUSTILO VS. WYETH PHILIPPINES, INC.

ALAN D. GUSTILO, PETITIONER, VS. WYETH PHILIPPINES, INC., FILEMON VERZANO, JR., AURELIO MERCADO AND EDGAR EPILEPSIA, RESPONDENTS.
 FACTS Alan D. Gustilo, petitioner, was employed by Wyeth Philippines, Inc., respondent company, as a pharmaceutical territory manager. Eventually, he was placed in charge of its
various branches in Metro Bacolod City and Negros Occidental. To ensure a profitable sale of its pharmaceutical products, he performed various functions, such as visiting
hospitals, pharmacies, drugstores and physicians concerned; preparing and submitting his pre-dated itinerary; and submitting periodic reports of his daily call visits, monthly
itinerary, and weekly locator and incurred expenses.

Petitioner’s employment records show that respondent company, on various dates, reprimanded and suspended him for habitually neglecting to submit his periodic reports .
On November 28, 1994, respondent company sent petitioner a notice reprimanding him for submitting late his weekly expense report. Again, on July 5, 1995, he was late in
submitting the same report, prompting respondent company to suspend him for five (5) days. Still, petitioner repeatedly incurred delay in submitting his daily call reports dated
October 16-20, 1995, October 23-27, 1995, November 6-10, 1995, and November 13-17, 1995. He did not submit his daily call reports for the period from November 20 to 24,
1995. As a consequence, respondent company sent petitioner another notice suspending him for fifteen (15) days or from January 2 to 22, 1996.

Meantime, respondent company, after integrating its pharmaceutical products with Lederle, a sister company, conducted a nationwide on-the-job training of sales personnel.
With this development, petitioner was assigned in charge of promoting four (4) Lederle pharmaceutical products.

Subsequently, petitioner submitted to respondent company a plan of action dated February 6, 1996 where he committed to make an average of 18 daily calls to physicians;
submit promptly all periodic reports; and ensure 95% territory program performance for every cycle.

However, petitioner failed to achieve the above objectives, prompting respondent company to send him two (2) separate notices dated February 20, 1996 and April 10, 1996,
charging him with willful violation of company rules and regulations and directing him to submit a written explanation.

In his explanation, petitioner stated that he was overworked and an object of reprisal by his immediate supervisor.

On May 22, 1996, upon recommendation of a Review Panel, respondent company terminated the services of petitioner.

ISSUE RULING

Whether or not the
petitioner should be
reinstated and paid his full
back wages and other
benefits and privileges
The Court of Appeals still awarded him separation pay of P106,890.00 by reason of several mitigating factors mentioned in its assailed Decision. The issue for our determination
now is whether he is entitled to such an award.
The rule embodied in the Omnibus Rules Implementing the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. However, in
PLDT vs. NLRC and Abucay, we held:

“x x x henceforth, separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other
than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, x x x an offense involving moral turpitude x x x,
the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of
social justice.”

Similarly, in Telefunken Semiconductors Employees Union-FFW vs. Court of Appeals, we ruled:

“The same view holds with respect to the award of financial assistance or separation pay. The assumption for granting financial assistance or separation pay,
which is, that there is an illegally dismissed employee and that illegally dismissed employee would otherwise have been entitled to reinstatement, is not present
in the case at bench. Here, the striking workers have been validly dismissed ‘Where the employee’s dismissal was for a just cause, it would be neither fair nor
just to allow the employee to recover something he has not earned or could not have earned. This being so, there can be no award of backwages, for it must be
pointed out that while backwages are granted on the basis of equity for earnings which a worker or employee has lost due to his illegal dismissal, where private
 respondent’s dismissal is for just cause, as in the case herein, there is no factual or legal basis to order the payment of backwages; otherwise, private
respondent would be unjustly enriching herself at the expense of petitioners.’ We are of course aware that financial assistance may be allowed as a measure
of social justice in exceptional circumstances and as an equitable concession. We are likewise mindful that financial assistance is allowed only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character.

In the case at bar, we find no exceptional circumstances to warrant the grant of financial assistance or separation pay to petitioner. It bears stressing that petitioner did not only
violate company disciplinary rules and regulations. As found by the Court of Appeals, he falsified his employment application form by not stating therein that he is the
nephew of Mr. Danao, respondent Wyeth’s Nutritional Territory Manager. Also, on February 2, 1993, he was suspended for falsifying a gasoline receipt. On June 28, 1993, he
was warned for submitting a false report of his trade outlet calls. On September 8, 1993, he was found guilty of unauthorized availment of sick, vacation and emergency
leaves. These infractions manifest his slack of moral principle. In simple term, he is dishonest.

Neither can petitioner find reliance on the policy of social justice. As aptly held by this Court in the same case of Philippine Long Distance Telephone vs. NLRC and Abucay, [10]
“[T]hose who invoke social justice may do so only if their hands are clean and their motives blameless x x x.” Here, petitioner failed to measure up to such requirement.

In sum, we find that petitioner was legally dismissed from employment and is, therefore, not entitled to reinstatement or an award of separation pay or other benefits.
Unfortunately, respondent company did not interpose an appeal to this Court. Hence, no affirmative relief can be extended to it. A party in a case who did not appeal is not
entitled to any affirmative relief.[11] Thus, respondent company has to comply with the Appellate Court’s mandate to grant petitioner his separation pay.