SECOND DIVISION G.R. No.

166411 August 3, 2010 ELPIDIO CALIPAY, Petitioner, - versus NATIONAL LABOR RELATIONS COMMISSION, TRIANGLE ACE CORPORATION and JOSE LEE, Respondents. DECISION PERALTA, J.: Before the Court is a petition for review on certiorari seeking to annul and set aside the Decision1[1] and Resolution2[2] of the Court of Appeals (CA), dated August 24, 2004 and December 10, 2004, respectively, in CA-G.R. SP No. 79277. The CA Decision dismissed the special civil action for certiorari filed by petitioner, while the CA Resolution denied petitioners motion for reconsideration.The pertinent facts of the case are as follows:On July 16, 1999, a Complaint3[3] for illegal dismissal, unfair labor practice, underpayment of wages and 13 th month pay, non-payment of service incentive leave pay, overtime pay, premium pay for holiday, rest day, night shift allowances and separation pay was filed by herein petitioner Elpidio Calipay, together with Alfredo Mission and Ernesto Dimalanta against herein private respondents Triangle Ace Corporation (Triangle) and Jose Lee. Calipay and the other complainants alleged in their Position Paper that in the course of their employment, they were not given any specific work assignment; they performed various kinds of work imposed upon them by Lee; in discharging their functions, they were required by Lee to work for nine (9) hours a day, beginning from 7:00 a.m. and ending at 6:00 p.m. with a break of one hour at 12:00 noon; they were also required to report from Monday to Sunday; for work rendered from Mondays to Saturdays beyond the normal eight (8) working hours in a day, they were paid a uniform daily wage in the amount of P140.00 even during holidays; for work performed on Sundays, they were not paid any wage due to the policy of Lee that his workers must provide work without pay at least a day in the week under his so-called bayanihan system; in receiving their wages, they were not given any duly accomplished payslips; instead, they were forced to sign a blank form of their daily time records and salary vouchers. It was further alleged that in May 1998, Lee confronted Calipay and Mission regarding their alleged participation and assistance in Dimalantas claim for disability benefits with the Social Security System; despite their denials, Lee scolded Calipay and Mission; this incident later led to their dismissal in the same month.In their Position Paper, private respondents countered that the termination of Calipay and the other complainants was for a valid or just cuse and that due process was observed. They claimed, among others, that Calipay was on absence without leave (AWOL) status from November 2, 1998 up to November 17, 1998; a memorandum dated November 17, 1998, requiring him to explain why his services should not be terminated, was sent by mail but he refused to receive the same; for failure to explain his side, another memorandum dated December 11, 1998 was issued terminating Calipays employment on the ground of abandonment of work; there is no unfair labor practice because there is no union; there is full compliance with the law regarding payment of wages and other benefits due to their employees; non-payment of nightshift premium is true, because the company does not operate at night. On July 10, 2000, the Labor Arbiter handling the case rendered a Decision4[4] dismissing the Complaint for lack of merit. Calipay and the other complainants filed an appeal with the National Labor

Relations Commission (NLRC).5[5]On February 1, 2002, the NLRC rendered judgment via a Resolution6[6] based on the findings that: (a) in dismissing the complainants from their employment, respondents failed to faithfully observe the requirements of notice and hearing rendering the said dismissals invalid and illegal; (b) the dismissals were not based on any of the just causes provided in Article 282 of the Labor Code; (3) the complainants failure to report for work were justified by their sudden termination from employment which nullified respondents contention that complainants were guilty of abandonment of work. The dispositive portion of the NLRC Decision reads as follows: WHEREFORE, the Decision appealed from is hereby MODIFIED, ordering respondents Triangle Ace Corporation Inc./Jose Lee to reinstate the complainants to their former position without loss of seniority rights and benefits and to pay them full backwages reckoned from the date of dismissals up to actual reinstatement which as of even date amount to P149,017.57 for Alfredo Mission, P148,705.44 for Elpidio Calipay, and P165,961.77 for Ernesto Dimalanta, plus ten (10%) percent of the total award as and for attorneys fees totaling P46,368.47 computed as follows: xxxx Should reinstatement be not feasible, the payment of separation pay in lieu thereof is awarded. The Decision is AFFIRMED in all other respects. SO ORDERED.7[7] Aggrieved, private respondents filed a Motion for Reconsideration. On September 24, 2002, the NLRC issued a Resolution8[8] granting private respondents Motion for Reconsideration, the dispositive portion of which reads:

WHEREFORE, the instant motion being meritorious is GIVEN DUE COURSE. Accordingly, Our Resolution promulgated on February 1, 2002 is hereby RECONSIDERED and the decision of the Arbiter a quo dated 10 July 2002 is REINSTATED and AFFIRMED en (sic) toto. SO ORDERED.9[9] As a consequence, Calipay and the other complainants moved for the reconsideration of the above-quoted Resolution, but the same was denied by the NLRC in a Resolution dated June 30, 2003.Calipay and the other complainants then filed a special civil action for certiorari, with the CA assailing the September 24, 2002 and June 30, 2003 Resolutions of the NLRC.On August 24, 2004, the CA rendered its presently disputed Decision dismissing the abovementioned petition for certiorari.Calipay filed a Motion for Reconsideration, but the CA denied it in its Resolution dated December 10, 2004.Hence, the instant petition of Calipay raising the following issues: I. WHETHER OR NOT PUBLIC RESPONDENT COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT ISSUED ITS DECISION DATED 24 AUGUST 2004 AND RESOLUTION DATED 10 DECEMBER 2004 DISMISSING THE PETITION FOR CERTIORARI AND AFFIRMING THE RESOLUTIONS OF PUBLIC RESPONDENT NLRC DATED 30 JUNE 2003 AND 24 SEPTEMBER 2002, WHICH RESOLUTIONS DISMISSED PETITIONERS COMPLAINT FOR ILLEGAL DISMISSAL BY REVERSING RESPONDENT NLRCS PREVIOUS RESOLUTION DATED 01 FEBRUARY 2002.

II. WHETHER OR NOT PUBLIC RESPONDENT COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT AFFIRMED THE SUBJECT RESOLUTIONS OF PUBLIC RESPONDENT NLRC DISMISSING THE APPEAL FILED BY PETITIONER AND REINSTATED THE DECISION OF LABOR ARBITER PANGANIBAN ORDERING

THE DISMISSAL OF THE COMPLAINT FOR ILLEGAL TERMINATION NOTWITHSTANDING THE PREVIOUS RESOLUTION OF PUBLIC RESPONDENT NLRC DATED 01 FEBRUARY 2002 DECLARING THE ILLEGALITY OF PETITIONERS DISMISSAL FROM EMPLOYMENT.

III. WHETHER OR NOT SUBSTANTIAL JUSTICE WAS UNDULY COMPROMISED WHEN PUBLIC RESPONDENT COURT OF APPEALS AFFIRMED NLRCS DISMISSAL OF PETITIONERS APPEAL DATED 06 SEPTEMBER 2000 AND RULED AGAINST PETITIONERS COMPLAINT FOR ILLEGAL DISMISSAL BASED SOLELY ON TECHNICAL RULES OF PROCEDURE WHEN THE SAME SHOULD HAVE BEEN RELAXED TO GIVE WAY TO MERITORIOUS AND JUDICIOUS CASES SUCH AS THIS INVOLVING DISMISSAL FROM WORK OF AN EMPLOYEE.10[10] Petitioners basic contention is that the CA erred in dismissing the petition filed with it on the basis of strictly adhering to purely technical grounds. Petitioner argues that he cannot be solely faulted for his failure to timely file his appeal with the NLRC, considering that his former counsel suddenly and unexpectedly withdrew his services at the time that said counsel should have been preparing his appeal, leaving petitioner without anyone to help him prepare his appeal on time. Petitioner avers that in a number of cases, this Court allowed the late filing of an appeal where such appeal by a dismissed worker is, like in the present case, impressed with merit in order that the ends of substantial justice would be served. The petition lacks merit.It bears to reiterate the settled rule that the timely perfection of an appeal is a mandatory requirement, which cannot be trifled with as a mere technicality to suit the interest of a party.11[11] The rules on periods for filing appeals are to be observed religiously, and parties who seek to avail themselves of the privilege must comply with the rules.12[12]Procedural rules setting the period for perfecting an appeal or filing a petition for review are generally inviolable.13[13] It is doctrinally entrenched that appeal is not a

constitutional right, but a mere statutory privilege.14[14] Hence, parties who seek to avail themselves of it must comply with the statutes or rules allowing it.15[15] The requirements for perfecting an appeal within the reglementary period specified in law must, as a rule, be strictly followed.16[16] Such requirements are considered indispensable interdictions against needless delays and are necessary for the orderly discharge of the judicial business.17[17] Furthermore, the perfection of an appeal in the manner and within the period permitted by law is not only mandatory, but also jurisdictional.18[18] Failure to perfect the appeal renders the judgment of the court final and executory.19[19] Just as a losing party has the privilege to file an appeal within the prescribed period, so does the winner also have the correlative right to enjoy the finality of the decision.20[20]It is true that procedural rules may be waived or dispensed with in the interest of substantial justice.21[21] This

Court may deign to veer away from the general rule if, on its face, the appeal appears to be absolutely meritorious.22[22] Indeed, in a number of instances, procedural rules are relaxed in order to serve substantial justice. However, the Court sees no reason to do so in this case as there is no reason to reverse the findings of the CA, to wit: It must be considered that his [Calipays] former counsel had manifested in his Withdrawal of Appearance (p. 80, Rollo) that he was withdrawing as counsel by reason of his (Calipay) desire to engage the services of another counsel for purposes of perfecting his appeal from the Labor Arbiters Decision and said Withdrawal of Appearance was duly signed by his former counsel with the petitioners conformity thereto and which therefore showed that the latter had assented to such withdrawal by reason stated therein. Hence, petitioner Calipay could not blame their former counsel for the non-perfection of their appeal. And even if it were true, that there was untimely withdrawal of his counsel, the latter should not be totally blamed as the herein petitioner is duty bound to protect his interests and he should have been more vigilant and circumspect of his right in pursuing his case by observing the rule on perfection of appeal. Moreover, the Court notes private respondents contention that petitioner again did not comply with procedural requirements when he failed to attach to the instant petition a verification and certificate against forum shopping as required under Section, Rule 45 of the Rules of Court. On this basis alone, the petition should be dismissed.Even if the Court were to disregard petitioners violation of the above-cited procedural rules, a careful review of his contentions, as well as the records of the case, would show that on its merits, the present petition should still fail.A perusal of the assailed Decision of the CA would readily confirm that the appellate courts dismissal of the petition filed by herein petitioner was not based solely on procedural or technical grounds. Thus, the CA held: Be that as it may, even if We would set aside the technicalities in the interest of substantial justice as proffered by petitioner Calipay that the belated filing of his appeal should nevertheless be considered in order to completely resolve the case on its merits, We opine that the instant case would likewise fail. We agree with the Labor Arbiters finding that petitioner Calipay had abandoned his work. x x x In the instant case, petitioner Calipay had failed to report for work for unknown reasons x x x His continued absences without the private respondents approval constituted gross and habitual neglect which is a just cause for termination under Article 282 of the Labor Code of the Philippines.Petitioner harps on the fact that on February 1, 2002, the NLRC issued a Resolution which was in his favor. While petitioner relies heavily on the said Resolution, he, however, always fails to mention that in a subsequent Resolution dated September 24, 2002, the NLRC reversed itself and reinstated the Decision of the Labor Arbiter dismissing the complaint filed by petitioner and his former co-employees. Furthermore, petitioner insists that he is not guilty of abandoning his job and that his failure to report for work was justified by his unceremonious dismissal from employment. However, the Labor Arbiter made the following categorical findings: Complainant Ernesto Dimalanta claimed that he was dismissed on January 30, 1998. x x x Complainants Alfredo Mission and Elpidio Calipay, for their part, alleged that they were dismissed by the respondent[s] on May 25, 1998 and May 27, 1998, respectively x x x. The record, however, shows that complainants actually reported for work and were paid wages by the respondent company even after their alleged termination as evidenced by their Daily Time Records and Salary Vouchers submitted by respondents. Complainant Mission worked with the respondent until July 15, 1998, complainant Calipay up to November 2, 1998 while complainant Dimalanta until May 17, 1998. After those dates, they absented themselves from their work without any permission from the management or without filing any leave of absence. Thus, two (2) written notices were sent to each complainant and the Department of Labor and Employment by the respondent through its General Manager. Calipay and the other complainants failed to sufficiently refute these findings of the Labor Arbiter in their appeal filed with the NLRC. They simply insisted that they did not report for work, because they were already terminated. However, they did not present any evidence to prove their allegation. On the other hand, as held by the Labor Arbiter, private respondents were able to present the DTRs and Salary Vouchers of Calipay and the other complainants showing that they indeed reported for work even after their alleged termination from employment. Calipay and the other complainants also failed to present evidence to prove their allegation that they were forced to sign blank forms of their DTRs and Salary Vouchers. Indeed, if petitioner was dismissed, as he claims, on May 27, 1998, why did the DTRs and Salary Vouchers presented by private respondents show that he continued to receive wages until October 31, 1998? Moreover, why did petitioner file his complaint for illegal dismissal only on July 16, 1999, or more than one year after he claims to have been illegally dismissed? On the basis of the foregoing, the Court arrives at the conclusion that the filing of the complaint for illegal dismissal appears only as a convenient afterthought on the part of petitioner and the other complainants after they were dismissed in accordance with law.Jurisprudence has held time and again that abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so if the same is accompanied by a prayer for reinstatement.23[27] In the present case, however, petitioner filed his complaint more than one year

after his alleged termination from employment. Moreover, petitioner and the other complainants inconsistency in their stand is also shown by the fact that in the complaint form which they personally filled up and filed with the NLRC, they only asked for payment of separation pay and other monetary claims. They did not ask for reinstatement. It is only in their Position Paper later prepared by their counsel that they asked for reinstatement. This is an indication that petitioner and the other complainants never had the intention or desire to return to their jobs. In fact, there is no evidence to prove that petitioner and his former co-employees ever attempted to return to work after they were dismissed from employment.On the other hand, private respondents were able to present memoranda or show-cause letters served on petitioner and the other complainants at their last known address requiring them to explain their absence, with a warning that their failure would be construed as abandonment of work. Also, private respondents served on petitioner and the other complainants a notice of termination as required by law. Private respondents compliance with said requirements, taken together with the other circumstances abovediscussed, only proves petitioner and the other complainants abandonment of their work.Finally, it bears to point out that the Decision of the Labor Arbiter was affirmed by the NLRC and the CA. The settled rule is that the factual findings of the Labor Arbiter and the NLRC, especially when affirmed by the CA, are accorded not only great respect but also finality, and are deemed binding upon this Court so long as they are supported by substantial evidence.24[28] In the present case, the Court finds no cogent reason to depart from this rule. WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals, dated August 24, 2004 and December 10, 2004, respectively, in CA-G.R. SP No. 79277, are AFFIRMED. SO ORDERED. Dismissal; abandonment. Time and again, the Supreme Court has held that abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so if the same is accompanied by a prayer for reinstatement. In the present case, however, petitioner filed his complaint more than one year after his alleged termination from employment. Moreover, petitioner did not ask for reinstatement in the complaint form, which he personally filled up and filed with the NLRC. The prayer for reinstatement is made only in the Position Paper that was later prepared by his counsel. This is an indication that petitioner never had the intention or desire to return to his job. Elpidio Calipay vs. National Labor Relations Commission, et al., G.R. No. 166411, August 3, 2010.

SECOND DIVISION

ALEX GURANGO, G.R. No. 174593 Petitioner, - versus - BEST CHEMICALS AND PLASTICS Promulgated: INC. and MOON PYO HONG, Respondents. August 25, 2010 DECISION The Case This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 20 July 2006 Decision2 and 11 September 2006 Resolution3 of the Court of Appeals in CA-G.R. SP No. 94004. The Court of Appeals set aside the 17 October 2005 4 and 24 January 20065 Resolutions of the National Labor Relations Commission (NLRC) in CA No. 044428-05, affirming the 6 July 2004 Decision6 of the Labor Arbiter in NLRC NCR Case No. 05-06181-03. The Facts Respondent Best Chemicals and Plastics, Inc. (BCPI) is a corporation engaged in the manufacture of biaxially oriented polypropylene and related products. Respondent Moon Pyo Hong (Hong) is the president and chief executive officer of BCPI.

Petitioner Alex R. Gurango (Gurango) and Romeo S. Albao (Albao) worked as boiler operator and security guard, respectively, in BCPI. In a memorandum7 dated 2 May 2003, BCPI prohibited its empoyees from bringing personal items to their work area. Erring employees would be suspended for six days. BCPI stated that:

Please be reminded of the following existing rules and regulations that all employees are expected to strictly observe and adhere to: Bringing in to work station/area of personal belongings other than those required in the performance of ones duty which disrupt/obstruct Companys services and operations, except those authorized by higher authorities. This offense shall include the following items [sic]: radios, walkman, discman, make-up kits, ladies bags, workers knapsacks and the like which must be left behind and safe kept [sic] in the employees respective lockers. This being a Serious Offense, the penalty of which is six (6) days suspension from work without pay.8 Gurango and Albao presented two conflicting sets of facts as to what happened on 5 May 2003. According to Gurango, at 4 a.m., he performed his routine check-up inside the production area. He had in his pocket a camera without film. On his way out of the production area, he saw Albao standing near the bundy clock. Albao pulled him, grabbed his pocket, and tried to confiscate the camera. Gurango refused to give the camera because there was no reason to surrender it. Albao held Gurangos arm and punched him on the face. Gurango shouted for help. Another security guard, Rodenio I. Pablis (Pablis), arrived. Instead of pacifying Albao, Pablis joined in punching and kicking Gurango. Albao and Pablis banged Gurangos head against the floor and provoked him to fight back. Gurangos co-worker, Elvin Juanitas (Juanitas), saw what happened and asked Albao and Pablis to stop hitting Gurango. Albao and Pablis brought Gurango to the guardhouse. Officer-incharge Rommel M. Cordero (Cordero) locked the guardhouse, then ordered Albao and Pablis to continue hitting Gurango. Freddie Infuerto arrived at the guardhouse and asked the security guards to stop hitting Gurango. Gurango agreed to surrender the camera on the condition that the security guards would prepare a document acknowledging receipt of the camera. Albao, on the other hand, alleged that he was on duty at the main entrance of the production area from 7 p.m. of 4 May 2003 to 7 a.m. of 5 May 2003. At 4:20 a.m., Gurango tried to enter the production area bringing a camera. Albao told Gurango that he could not bring the camera inside the production area. Gurango got mad and tried to grab Albaos gun. Albao and Gurango engaged in a fistfight. Cordero, Pablis, and another security guard, Fredrick Laada, arrived and stopped the fight. On 5 May 2003, at 8:35 a.m., Gurango went to Dr. Homer L. Aguinaldo (Dr. Aguinaldo) for examination and treatment. Dr. Aguinaldo issued a medical report9 and advised Gurango to rest for three days. In a letter10 dated 5 May 2003, BCPI asked Gurango to explain in writing why no disciplinary action should be taken against him and then placed him under preventive suspension effective 6 May 2003. On 6 May 2003, Gurango wrote a letter11 to BCPI narrating what happened. On 8 May 2003, Gurango wrote another letter 12 to BCPI stating that: I already explained my side of the story regarding the alleged fistfight between Romeo Albao and me. I would like to reiterate that I was never involved in any fistfight nor commit any violation of our Companys Code of Discipline. Another issue is the preventive suspension Im undergoing with [sic]. I would like to question the propriety of such action. Be reminded that you are putting me under indefinite preventive suspension. Under the law, an employee may be placed under preventive suspension only if his continued employment poses a serious and imminent threat to the life and property of the employer or of his co-employees. Consequently, without this kind of threat, preventive suspension is improper.13 On 9 May 2003, Juanitas wrote a letter14 to BCPI narrating what he saw. Juanitas stated that: Noong May 5 bandang alas 4:20 ng madaling araw ako po ay lumabas ng electral [sic] shop upang pumunta sa production upang mag monitor. Ng sa bandang locker room pa lang ako may nakita ako tatlong tao na nakasuot ng kulay puti na nagpaikot-ikot (sa harapan banda ng bandi [sic] clock). Medyo madilim pa kaya hindi ko nakita si Alex Gurango kasi nakasoot sya ng kulay dark blue na T-shirt. Ng medyo malapit na ako nakarinig ako ng boses na (tama na nasasaktan na ako) at may sumagot na ibigay mo na masasaktan ka lang. Ng makalapit na ako sa kanila nakita ko na iniipit na ng kanang braso ni Albao (Guard) ang leeg ni Alex. Akala ko nagbibiroan lang sila. Tinanong ko kung ano yan pero bago ako tumanong sa kanila nakita ko na nasasaktan na si Alex dahil sa pagkaipit sa kanyang leeg. Sagot ni Alex sa akin pre (ako) kinukuha nila ang kamera sa akin to eh. Sabi pa ni Alex hindi ko to ibibigay sa inyo kahit akoy saktan nyo, hindi ako lalaban sa inyo. May pagbibigyan ako, ibibigay ko to sa management. Sabi ko ano ba yan nasasaktan na ang tao. Nagtataka naman ako sa kanila ni Pables at Laada bakit hindi nila inaawat, nakatingin lang sila at kasamahan pa nila. Ako naman natatakot akong paghiwalayin sila kasi may baril si Albao na naka sabit sa beywang nya baka pag inawat ko baka sasabihin ni Albao na kumampi ako kay Alex dahil parehas kaming maintenance. Sinabihan ko si Albao na bitiwan mo si Alex ayusin natin to. Hindi pa rin binitiwan ni Albao ang pagkaipit sa leeg ni Alex hanggang sa naitulak ko sila papunta sa guardhouse. Ng sa loob na ng guardhouse hindi pa rin binitiwan ni Albao si Alex kaya hinahanap ko ang kanilang O.I.C. Para ayusin na. Maya maya lumabas si Cordero (O.I.C.). Sabi ko awatin niya si Albao pero hindi manlang nya inawat pati na ang kanyang mga kasama dahil nandoon pa rin sa loob ng guardhouse sina Pables, Laada at Cordero. Lumabas ako at tinawag ko si Pong sa kanilang shop. Bumalik ako sa guardhouse kasama si Pong, ganon pa rin nakakapit pa rin ang braso ni Albao sa leeg ni Alex. Ngayon naglakas loob na lang ako na paghiwalayin sila. Nahirapan ako dahil malakas si Albao. Napaghiwalay ko sila pero muntik pa nga ako tamaan ng kamay ni Albao at ng maghiwalay na pinaupo ko si Alex sa upuan sa tabi at hinarang ko si Albao dahil gusto pa nyang lumapit kay Alex at nagsabi ako kay Pong na bantayan mo si Alex dahil tatawag ako ng Korean o supervisor para ayusin.15 On 10 May 2003, BCPI wrote a letter to Gurango finding him guilty of engaging in a fistfight and violating company policy by bringing a camera. On 14 May 2003, Gurango wrote a letter16 to BCPI stating that:

I again would like to reiterate that I was never involved nor commit [sic] any violation of Companys Code of Discipline. For me to further explain, could you please be more specific what company policies are you referring to when you said that bringing of camera inside the production area and refusal to surrender the same camera constitute infractions of company policy.17 On 15 May 2003, Gurango filed with the 5th Municipal Circuit Trial Court (MCTC), Carmona, Cavite, a criminal complaint18 against Albao, Cordero and Pablis for slight physical injury. In a letter19 dated 19 May 2003, BCPI dismissed Gurango effective 20 May 2003. BCPI stated that After a thorough evaluation and intensive deliberation on the facts attendant to your case, Management has found you to have committed the following Offenses under the Companys Code of Discipline: 1. Concealing and bringing in to work station/area of personal belongings (e.g., a camera), other than those required in the performance of ones duty which disrupt/obstruct Company services and operations, except those authorized by higher authorities. (Table II, Serious, No. 10 of Code of Discipline); 2. Utter disregard for or refusal to submit to reasonable inspection connected within [sic] the Company premises by authorized Company security personnel in the conduct of their business. (Table IV, Minor, No. 1 of Code of Discipline); 3. Starting or provoking a fight, i.e., involvement in a fist fight with a security guard last May 5, 2003. (Table I, Grave, No. 6 of Code of Discipline); 4. Attempting to inflict or inflicting bodily injury upon any Company official (e.g., security guard who is a peacekeeping officer of the company) or employee. (Table I, Grave, No. 05 of Code of Discipline); and 5. Intentionally causing personal injury to another person (i.e., the security guard) within the Company premises. (Table I, Grave, No. 12 of Code of Discipline). Based on the foregoing, and in view of the gravity of the offenses that you have committed which constitute gross misconduct, the Company is constrained to terminate your employment for cause effective May 20, 2003, at the close of business hours.20 On 26 May 2003, Gurango filed with the NLRC a complaint against BCPI and Hong for illegal dismissal. The Labor Arbiters Ruling In his 6 July 2004 Decision, the Labor Arbiter found BCPI liable for illegal dismissal. The Labor Arbiter ordered BCPI to pay Gurango backwages and separation pay. The Labor Arbiter held that: I find that the complainant was illegally dismissed from employment. He was dismissed from [sic] trying to bring an alleged prohibited item, a camera, inside the Production Area but company rules did not prohibit the bringing of camera. How can an unloaded camera be said to disrupt/obstruct company services and operations? It cannot. As to the alleged fistfight between the complainant and security guard Albao, I am more inclined to believe and find credible complainants version that he was mauled by Albao and, later, by some of the guards. His letter/statement was made on May 6, 2003, or only a day after the incident. The statement of guard Albao was made on May 28, 2003, several days after the incident.I find that complainants statement is freshly unblemished, and, therefore, very credible while Albaos contradictory statement is the fruit of afterthought. Moreover, I dont find the complainant was foolish enough to try to snatch the gun of Albao during the incident. I am convinced Albao lied in his statement. In the present case, no solid cause exists to dismiss complainant from employment as to warrant a dismissal. BCPI and Hong appealed to the NLRC. The NLRCs Ruling In its 17 October 2005 Resolution, the NLRC affirmed in toto the Labor Arbiters 6 July 2004 Decision. The NLRC held that: Although fighting within company premises constitute serious misconduct, this however, does not apply in this case. Complainant did not start nor provoke the fight. It was precipitated, instead, by guard Albao when he tried to get the complainants camera for no valid reason. The statement of Albao that complainant tried to snatch his service firearm is not only unbelievable but is also exaggerated. The Labor Arbiter is correct and we concur in his finding that the complainant was not foolish enough to try to snatch the gun of Albao. The camera is undisputably owned by complainant. Bringing it inside his workplace is not a crime. So why would he try to snatch a gun for a very trivial misunderstanding. What is clear is that the security guards over acted in the performance of their duty. The prohibition against the bringing of personal belongings in to the work station/area is qualified by a condition that such belongings will disrupt/obstruct companys services and operations. That is why in the enumerations the following are included, radios, walkman, discman, make-up kits, ladies bag workers knapsacks and the like. An unloaded camera is not listed and we cannot imagine how such camera could disrupt or obstruct company services and operations. Moreover, even if we assume that the complainant indeed violated this Inter-Office Memorandum, still, this will not justify complainants dismissal because the penalty provided therein is only six (6) days suspension from work without pay, not dismissal.22

BCPI and Hong filed a motion for reconsideration, which the NLRC denied. BCPI and Hong filed with the Court of Appeals a petition for certiorari under Rule 65 of the Rules of Court. The Court of Appeals Ruling In its 20 July 2006 Decision, the Court of Appeals set aside the 17 October 2005 and 24 January 2006 Resolutions of the NLRC. The Court of Appeals held that private respondent engaged himself in a fistfight with the security guard 23 and that engaging in a fistfight constituted serious misconduct. Gurango filed a motion24 for reconsideration, which the Court of Appeals denied in its 11 September 2006 Resolution. Hence, the present petition. The Issue Gurango raises as issue that the Court of Appeals erred in ruling that he was legally dismissed. BCPI failed to prove that he engaged in a fistfight and that there was just cause for his dismissal. The Courts Ruling The petition is meritorious. As a general rule, only questions of law may be raised in petitions for certiorari under Rule 45 of the Rules of Court. Section 1 of Rule 45 states that, The petition shall raise only questions of law. In Triumph International (Phils.), Inc. v. Apostol,25 the Court enumerated exceptions to the rule. Among the exceptions are when the findings of fact are conflicting and when the findings are conclusions without citation of specific evidence on which they are based. In the present case, the findings of fact of the Court of Appeals conflict with the findings of fact of the NLRC and the Labor Arbiter. Also, the finding of the Court of Appeals that Gurango engaged in a fistfight is a conclusion without citation of specific evidence on which it is based. In termination cases, the employer has the burden of proving, by substantial evidence, that the dismissal is for just cause. If the employer fails to discharge the burden of proof, the dismissal is deemed illegal. In AMA Computer College East Rizal v. Ignacio, the Court held that :In termination cases, the burden of proof rests on the employer to show that the dismissal is for just cause. When there is no showing of a clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid or authorized cause. And the quantum of proof which the employer must discharge is substantial evidence. An employees dismissal due to serious misconduct must be supported by substantial evidence. Substantial evidence is that amount of relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.28 In the present case, aside from Albaos statement, BCPI did not present any evidence to show that Gurango engaged in a fistfight. Moreover, there is no showing that Gurangos actions were performed with wrongful intent. In AMA Computer College East Rizal, the Court held that: The Labor Code provides that an employer may terminate the services of an employee for a just cause. Among the just causes in the Labor Code is serious misconduct. Misconduct is improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. The misconduct to be serious within the meaning of the Labor Code must be of such a grave and aggravated character and not merely trivial or unimportant. In National Labor Relations Commission v. Salgarino, the Court stressed that [i]n order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been performed with wrongful intent. After a thorough examination of the records of the case, however, the Court finds that petitioner AMACCI miserably failed to prove by substantial evidence its charges against respondent. There is no showing at all that respondents actions were motivated by a perverse and wrongful intent, as required by Article 282(a) of the Labor Code. 29 (Emphasis supplied) The surrounding circumstances show that Gurango did not engage in a fistfight: (1) in his 9 May 2003 letter to BCPI, Juanitas corroborated Gurangos version of the facts; (2) nobody corroborated Albaos version of the facts; (3) in his medical report, Dr. Aguinaldo found that Gurango suffered physical injuries; (4) Gurango filed with the MCTC a complaint against Albao, Cordero and Pablis for slight physical injury; (5) the Labor Arbiter found Gurangos statement credible and unblemished; (6) the Labor Arbiter found Albaos statement contradictory; (7) the Labor Arbiter stated, I am convinced Albao lied in his statement; (8) the NLRC found that Gurango did not start a fight; (9) the NLRC found Albaos statement unbelievable and exaggerated; and (10) the Court of Appeals reversal of the findings of fact of the Labor Arbiter and the NLRC is baseless. In Triumph International (Phils.), Inc., the Court held that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are accorded not only respect but finality when supported by susbstantial evidence.30 WHEREFORE, we GRANT the petition. We SET ASIDE the 20 July 2006 Decision and 11 September 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 94004 and REINSTATE the 17 October 2005 and 24 January 2006 Resolutions of the NLRC in CA No. 044428-05. SO ORDERED SECOND DIVISION CENTURY CANNING CORPORATION, RICARDO T. PO, JR. and AMANCIO C. RONQUILLO,- versus -VICENTE RANDY R. RAMIL. G.R. No. 171630August 8, 2010

DECISION PERALTA, J.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision25[1] and Resolution26[2] of the Court of Appeals (CA) in CA-G.R. SP. No. 86939, dated December 1, 2005 and February 17, 2006, respectively.The antecedents are as follows: Petitioner Century Canning Corporation, a company engaged in canned food manufacturing, employed respondent Vicente Randy Ramil in August 1993 as technical specialist. Prior to his dismissal on May 20, 1999, his job included, among others, the preparation of the purchase requisition (PR) forms and capital expenditure (CAPEX) forms, as well as the coordination with the purchasing department regarding technical inquiries on needed products and services of petitioner's different departments. On March 3, 1999, respondent prepared a CAPEX form for external fax modems and terminal server, per order of Technical Operations Manager Jaime Garcia, Jr. and endorsed it to Marivic Villanueva, Secretary of Executive Vice-President Ricardo T. Po, for the latter's signature. The CAPEX form, however, did not have the complete details27[3] and some required signatures.28[4] The following day, March 4, 1999, with the form apparently signed by Po, respondent transmitted it to Purchasing Officer Lorena Paz in Taguig Main Office. Paz processed the paper and found that some details in the CAPEX form were left blank. She also doubted the genuineness of the signature of Po, as appearing in the form. Paz then transmitted the CAPEX form to Purchasing Manager Virgie Garcia and informed her of the questionable signature of Po. Consequently, the request for the equipment was put on hold due to Po's forged signature. However, due to the urgency of purchasing badly needed equipment, respondent was ordered to make another CAPEX form, which was immediately transmitted to the Purchasing Department. Suspecting him to have committed forgery, respondent was asked to explain in writing the events surrounding the incident. He vehemently denied any participation in the alleged forgery. Respondent was, thereafter, suspended on April 21, 1999. Subsequently, he received a Notice of Termination from Armando C. Ronquillo, on May 20, 1999, for loss of trust and confidence. Due to the foregoing, respondent, on May 24, 1999, filed a Complaint for illegal dismissal, non-payment of overtime pay,

separation pay, moral and exemplary damages and attorney's fees against petitioner and its officers before the Labor Arbiter (LA), and was docketed as NLRC-NCR Case No. 00-05-05894-99.29 LA Potenciano S. Canizares rendered a Decision30[6] dated December 6, 1999 dismissing the complaint for lack of merit. Aggrieved by the LA's finding, respondent appealed to the National Labor Relations Commission (NLRC). Upon recommendation of LA Cristeta D. Tamayo, who reviewed the case, the NLRC First Division, in its Decision31[7] dated August 26, 2002, set aside the ruling of LA Canizares. The NLRC declared respondent's dismissal to be illegal and directed petitioner to reinstate respondent with full backwages and seniority rights and privileges. It found that petitioner failed to show clear and convincing evidence that respondent was responsible for the forgery of the signature of Po in the CAPEX form. Petitioner filed a motion for reconsideration. To respondent's surprise and dismay, the NLRC reversed itself and rendered a new Decision32[8] dated October 20, 2003, upholding LA Canizares' dismissal of his complaint. Respondent filed a

motion for reconsideration, which was denied by the NLRC. Frustrated by this turn of events, respondent filed a petition for certiorari with the CA. The CA, in its Decision dated December 1, 2005, rendered judgment in favor of respondent and reinstated the earlier decision of the NLRC, dated August 26, 2002. It ordered petitioner to reinstate respondent, without loss of seniority rights and privileges, and to pay respondent full backwages from the time his employment was terminated on May 20, 1999 up to the time of the finality of its decision. The CA, likewise, remanded the case to the LA for the computation of backwages of the respondent. Petitioner filed a motion for reconsideration, which the CA denied in a Resolution dated February 17, 2006. Hence, the instant petition assigning the following errors: I THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISREGARDING THE UNANIMOUS FINDINGS OF THE LABOR ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION SUSTAINING THE LEGALITY OF PRIVATE RESPONDENT'S TERMINATION FROM HIS EMPLOYMENT. II THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT PETITIONER CORPORATION FAILED TO SATISFY THE BURDEN OF PROVING THAT THE DISMISSAL OF PRIVATE RESPONDENT WAS FOR A VALID OR AUTHORIZED CAUSE. III THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT FOR LOSS OF TRUST AND CONFIDENCE TO BE A VALID GROUND FOR AN EMPLOYEE'S DISMISSAL, IT MUST BE SUBSTANTIAL AND NOT ARBITRARY, AND MUST BE FOUNDED ON CLEARLY ESTABLISHED FACTS, OVERLOOKING THE RULE THAT THE MERE EXISTENCE OF A BASIS FOR BELIEVING THAT SUCH EMPLOYEE HAS BREACHED THE TRUST AND CONFIDENCE OF HIS EMPLOYER SUFFICES FOR HIS DISMISSAL. IV THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT ASIDE FROM HIS INVOLVEMENT IN THE FORGERY OF THE CAPITAL EXPENDITURE (CAPEX) FORMS, PRIVATE RESPONDENT'S PAST VIOLATIONS OR ADMITTED INFRACTIONS OF COMPANY RULES AND REGULATIONS ARE MORE THAN SUFFICIENT GROUNDS TO JUSTIFY THE TERMINATION OF HIS EMPLOYMENT WITH PETITIONER CORPORATION. Petitioner's main allegation is that there are factual and legal grounds constituting substantial proof that respondent was clearly involved in the forgery of the CAPEX form, i.e., respondent is the forger of the signature of Po, as he is the custodian and the one who prepared the CAPEX form; the forged signature was already existing when he submitted the same for processing; he has the motive to forge the signature; respondent has the propensity to deviate from the Standard Operating Procedure as shown by the fact that the CAPEX form, with the forged signature of Po, is not complete in details and lacks the required signatures; also, in February 1999, respondent ordered 8 units of External Fax Modem without the required CAPEX form and a PR form. Petitioner insists that the mere existence of a basis for believing that respondent employee has breached the trust and confidence of his employer suffices for his dismissal. Finally, petitioner maintains that aside from respondent's involvement in the forgery of the CAPEX form, his past violations of company rules and regulations are more than sufficient grounds to justify his termination from employment. In his Comment, respondent alleged that petitioner failed to present clear and convincing evidence to prove his participation in the charge of forgery nor any damage to the petitioner. Anent the first issue raised, petitioner faults the CA in disregarding the unanimous findings of the LA and the NLRC sustaining the legality of respondent's termination from his employment. The rule is that high respect is accorded to the findings of fact of quasi-judicial agencies, more so in the case at bar where both the LA and the NLRC share the same findings. The rule is not, however, without exceptions one of which is when the findings of fact of the labor officials on which the conclusion was based are not supported by substantial evidence. The same holds true when it is perceived that far too much is concluded, inferred or deduced from bare facts adduced in evidence.33[9] In the case at bar, the NLRC's findings of fact upon which its conclusion was based are not supported by substantial evidence, that is, the amount of relevant evidence, which a reasonable mind might accept as adequate to justify a conclusion.34[1 As correctly found by the CA:

x x x The record of the case is bereft of evidence that would clearly establish Ramil's involvement in the forgery. They did not even submit any affidavit of witness35[11] or present any during the hearing to substantiate their claim against

Ramil.36[12] Respondent alleged in his position paper that after preparing the CAPEX form on March 3, 1999, he endorsed it to Marivic Villanueva for the signature of the Executive Vice-President Ricardo T. Po. The next day, March 4, 1999, respondent received the CAPEX form containing the signature of Po. Petitioner never controverted these allegations in the proceedings before the NLRC and the CA despite its opportunity to do so. Petitioner's belated allegations in its reply filed before this Court that Marivic Villanueva denied having seen the CAPEX form cannot be given credit. Points of law, theories, issues and arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body need not be considered by a reviewing court, as they cannot be raised for the first time at that late stage.37[13] When a party deliberately adopts a certain theory and the case is decided upon that theory in the court below, he will not be permitted to change the same on appeal, because to permit him to do so would be unfair to the adverse party.38[14] Thus, if respondent retrieved the form on March 4, 1999 with the signature of Po, it can be correctly inferred that he is not the forger. Had the CAPEX form been returned to respondent without Po's signature, Villanueva or any officer of the petitioner's company could have readily noticed the lack of signature, and could have easily attested that the form was unsigned when it was released to respondent. Further, as correctly found by the NLRC in its original decision dated August 26, 2002, if respondent was the one who forged the signature of Po in the CAPEX form, there was no need for him to endorse the same to Villanueva and transmit it the next day. He could have easily forged the signature of Po on the same day that he prepared the CAPEX form and submitted it on the very same day to petitioner's main office without passing through any officer of petitioner. Accordingly, for want of substantial basis, in fact or in law, factual findings of an administrative agency, such as the NLRC, cannot be given the stamp of finality and conclusiveness normally accorded to it, as even decisions of administrative agencies which are declared final by law are not exempt from judicial review when so warranted.39[15] Contrary to petitioners assertion, therefore, this Court sees no error on the part of the CA when it made a new determination of the case and, upon this, reversed the ruling of the NLRC. As to the second issue, the law mandates that the burden of proving the validity of the termination of employment rests with the employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal justification for dismissing employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of labor laws and the Constitution.40[16]The termination letter41[17] addressed to respondent, dated May 20, 1999, provides that:We also conducted inquiries from persons concerned to get more information in (sic) this forgery. Some of your statements do not jibe with theirs. x x xHowever, this information which petitioner allegedly obtained from the persons concerned was not backed-up by any affidavit or proof. Petitioner did not even bother to name these resource persons.Petitioner based respondent's dismissal on its unsubstantiated suspicions and conclusion that since respondent was the custodian and the one who prepared the CAPEX forms, he had the motive to commit the forgery. However, as correctly found by the NLRC in its original Decision, respondent would not be benefited by the purchase of the subject equipment. The equipment would be for the use of petitioner company. With respect to the third issue, while We have previously held that employers are allowed a wider latitude of discretion in terminating the services of employees who perform functions which by their nature require the employers' full trust and confidence and the mere existence of basis for believing that the employee has breached the trust of the employer is sufficient,42[18] this does not mean that the said basis may be arbitrary and unfounded The right of an employer to dismiss an employee on the ground that it has lost its trust and confidence in him must not be exercised arbitrarily and without just cause.43[19] Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust44[20] and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established, but proof beyond reasonable doubt is not

necessary.45[21] It must rest on substantial grounds and not on the employers arbitrariness, whim, caprice or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. The case of Philippine Airlines, Inc. v. Tongson,46[23] cited by the petitioner, is not applicable to the present case. In that case, PAL dismissed Tongson from service on the ground of corruption, extortion and bribery in the processing of PAL's passengers' travel documents. We upheld the validity of Tongson's dismissal because PAL's overwhelming documentary evidence reflects an unbroken chain which naturally leads to one fair and reasonable conclusion, that at the very least, respondent was involved in extorting money from PAL's passengers. We further said that even if there is no direct evidence to prove that the employees actually committed the offense, substantial proof based on documentary evidence is sufficient to warrant their dismissal from employment. In the case at bar, there is neither direct evidence nor substantial documentary evidence pointing to respondent as the one liable for the forgery of the signature of Po. The cited case of Deles Jr. v. National Labor Relations Commission47[24] is also inapplicable. Therein dismissed employee, Deles Jr., himself admitted during the company investigation that he tampered with the company's sensitive equipment (the JTF Gravitometer No. 5). Thus, there existed sufficient basis for the finding that therein employee breached the trust and confidence of his employer. As for the final issue raised, petitioner's reliance on respondent's previous tardiness in reporting for work as a ground for his dismissal is likewise not meritorious. The correct rule has always been that such previous offense may be used as valid justification for dismissal from work only if the infractions are related to the subsequent offense upon which the basis of termination is decreed.48[25] His previous offenses were entirely separate and distinct from his latest alleged infraction of forgery. Hence, the same could no longer be utilized as an added justification for his dismissal. Besides, respondent had already been sanctioned for his prior infractions. To consider these offenses as justification for his dismissal would be penalizing respondent twice for the same offense. Respondent's illegal dismissal carries the legal consequences defined under Article 279 of the Labor Code, that is, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, and to the payment of 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. However, the Court finds that it would be best to award separation pay instead of reinstatement, in view of the strained relations between petitioner and respondent. Respondent was dismissed due to loss of trust and confidence and it would be impractical to reinstate an employee whom the employer does not trust, and whose task is to handle and prepare delicate documents. Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. In view of the foregoing, respondent is entitled to the payment of full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the date of his dismissal on May 20, 1999 up to the finality of this decision, and separation pay in lieu of reinstatement equivalent to one month salary for every year of service, computed from the time of his engagement by petitioner on August 1993 up to the finality of the decision.]The awards of separation pay and backwages are not mutually exclusive and both may be given to the respondent. In Nissan North Edsa Balintawak, Quezon City v. Serrano, Jr.,49[30] the Court held that: The normal consequences of a finding that an employee has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position without loss of seniority rights and, secondly, the payment of backwages corresponding to the period from his illegal dismissal up to actual reinstatement. The statutory intent on this matter is clearly discernible. Reinstatement restores the employee who was unjustly dismissed to the position from which he was removed, that is, to his status quo ante dismissal, while the grant of backwages allows the same employee to recover from the employer that which he had lost by way of wages as a result of his dismissal. These twin remedies reinstatement and payment of backwages make the dismissed employee whole who can then look forward to continued employment. Thus, do these two remedies give meaning and substance to the constitutional right of labor to security of tenure. The two forms of relief are distinct and separate, one from the other. Though the grant of reinstatement commonly carries with it an award of backwages, the inappropriateness or non-availability of one does not carry with it the inappropriateness or nonavailability of the other. x x x As the term suggests, separation pay is the amount that an employee receives at the time of his severance from the service and x x x is designed to provide the employee with the wherewithal during the period that he is looking for another employment. In the instant case, the grant of separation pay was a substitute for immediate and continued re-employment with the private respondent Bank. The grant of separation pay did not redress the injury that is

intended to be relieved by the second remedy of backwages, that is, the loss of earnings that would have accrued to the dismissed employee during the period between dismissal and reinstatement. Put a little differently, payment of backwages is a form of relief that restores the income that was lost by reason of unlawful dismissal; separation pay, in contrast, is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job. x x x The grant of separation pay was a proper substitute only for reinstatement; it could not be an adequate substitute both for reinstatement and for backwages. (Emphasis supplied.)50[31] The case is, therefore, remanded to the Labor Arbiter for the purpose of computing the proper monetary award due to the respondent.WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 86939, dated December 1, 2005 and February 17, 2006, respectively, are AFFIRMED with MODIFICATION that the order of reinstatement is deleted, and in lieu thereof, Petitioner Century Canning Corporation is DIRECTED to pay respondent separation pay.

The case is REMANDED to the Labor Arbiter for the purpose of computing respondent's full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the date of his dismissal on May 20, 1999 up to the finality of the decision, and separation pay in lieu of reinstatement equivalent to one month salary for every year of service, computed from the time of his engagement by petitioner on August 1993 up to the finality of this decision SECOND DIVISION

PHARMACIA and UPJOHN, INC. (now PFIZER PHILIPPINES, INC.), ASHLEY MORRIS, ALEDA CHU, JANE MONTILLA & FELICITO GARCIA, Petitioners,

G.R. No. 172724

Present: CARPIO, J., Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ.

-versus-

Promulgated:

RICARDO P. ALBAYDA, JR., Respondent.

August 23, 2010

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

DECISION PERALTA, J.: Before this Court is a petition for review on certiorari,51[1] under Rule 45 of the Rules of Court, seeking to set aside the November 30, 2005 Decision52[2] and May 5, 2006 Resolution53[3] of the Court of Appeals (CA), in CA-G.R. SP No. 00386.

The facts of the case are as follows: Respondent Ricardo P. Albayda, Jr. (respondent) was an employee of Upjohn, Inc. (Upjohn) in 1978 and continued working there until 1996 when a merger between Pharmacia and Upjohn was created. After the merger, respondent was designated by petitioner Pharmacia and Upjohn (Pharmacia) as District Sales Manager assigned to District XI in the Western Visayas area. During the period of his assignment, respondent settled in Bacolod City. Sometime on August 9, 1999, a district meeting was held in Makati City wherein one of the topics discussed was the district territorial configuration for the new marketing and sales direction for the year 2000.

In December 1999, respondent received a Memorandum54[4] announcing the sales force structure for the year 2000. In the said memorandum, respondent was reassigned as District Sales Manager to District XII in the Northern Mindanao area. One of the key areas covered in District XII is Cagayan de Oro City.

In response to the memorandum, respondent wrote a letter55[5] dated December 27,1999 to Felicito M. Garcia (Garcia), Pharmacias Vice-President for Sales and Marketing, questioning his transfer from District XI to District XII. Respondent said that he has always been assigned to the Western Visayas area and that he felt that he could not improve the sales of products if he was assigned to an unfamiliar territory. Respondent concluded that his transfer might be a way for his managers to dismiss him from employment. Respondent added that he could not possibly accept his new assignment in Cagayan de Oro City because he will be dislocated from his family; his wife runs an established business in Bacolod City; his eleven- year-old daughter is studying in Bacolod City; and his two-year-old son is under his and his wifes direct care. On January 10, 2000, Garcia wrote a letter56[6] to respondent denying his request to be reassigned to the Western Visayas area. Garcia explained that the factors used in determining assignments of managers are to maximize business opportunities and growth and development of personnel. Garcia stressed that other people past and in the year 2000 re-alignment. both reprensentatives and district sales managers have been re-located in the

On February 16, 2000, respondent wrote a letter57[7] to Aleda Chu (Chu), Pharmacias National Sales and External Business Manager, reiterating his request to be reassigned to the Western Visayas area. Respondent alleged that during one conversation, Chu assured him that as long as he hits his sales target by 100%, he would not be transferred. Respondent again speculated that the real reason behind his transfer was that it was petitioners way of terminating his employment. Respondent harped that his transfer would compel him to lose his free housing and his wifes compensation of P50,000.00 from her business in Bacolod City.

In a letter58[8] dated March 3, 2000, Chu said that she did not give any assurance or commitment to respondent that he would not be transferred as long as he achieved his 100% target for 1999. Chu explained to respondent that they are moving him to Cagayan de Oro City,

because of their need of respondents expertise to build the business there.

Chu added that the district performed dismally in 1999 and,

therefore, they were confident that under respondents leadership, he can implement new ways and develop the sales force to become better and more productive. Moreover, since respondent has been already in Bacolod and Iloilo for 22 years, Chu said that exposure to a different market environment and new challenges will contribute to respondents development as a manager. Finally, Chu stressed that the decision to transfer respondent was purely a business decision. Respondent replied through a letter59[9] dated March 16, 2000. Respondent likened his transfer to Mindanao as a form of punishment as he alleged that even Police Chief General Panfilo Lacson transferred erring and non-performing police officers to Mindanao. Respondent argued that Chu failed to face and address the issues he raised regarding the loss of his family income, the additional cost of housing and other additional expenses he will incur in Mindanao.

In a memorandum60[10] dated May 11, 2000, Jane B. Montilla (Montilla), Pharmacias Human Resource Manager, notified respondent that since he has been on sick leave since January 5, 2000 up to the present, he had already consumed all his sick leave credits for the year 2000. Montilla stated that per company policy, respondent would then be considered on indefinite sick leave without pay. In another memorandum61[11] dated May 15, 2000, Montilla informed respondent of the clinic schedule of the company appointed doctor.

In a letter62[12] dated May 17, 2000, respondent acknowledged his receipt of the letters from Montilla. Respondent informed Montilla that his doctors had already declared him fit for work as of May 16, 2000. Respondent stated that he was already ready to take on his regular assignment as District Sales Manager in Negros Occidental or in any district in the Western Visayas area.

In a letter63[13] dated May 17, 2000, Chu expressed her disappointment on the way respondent viewed their reason for moving his place of assignment. Chu was likewise disappointed with respondents opinion that with the movement, he be given additional remuneration, when in fact, such was never done in the past and never the practice in the industry and in the Philippines. Chu concluded that it appeared to her that respondent would not accept any reason for the movement and that nothing is acceptable to him except a Western Visayas assignment. Consequently, Chu referred the case to the Human Resource Department for appropriate action.

Montilla met with respondent to discuss his situation. After the meeting, Montilla sent respondent a memorandum64[14] wherein his request to continue his work responsibilities in Negros Occidental or in any district in the Western Visayas area was denied as there was no vacant position in those areas. Montilla stressed that the company needed respondent in Cagayan de Oro City, because of his wealth of

experience, talent and skills. Respondent, however, was also given an option to be assigned in Metro Manila as a position in the said territory

had recently opened when Joven Rodriguez was transferred as Government Accounts and Special Projects Manager. Montilla gave respondent until June 2, 2000 to talk to his family and weigh the pros and cons of his decision on whether to accept a post in Cagayan de Oro City or in Manila.

In a letter65[15] dated May 31, 2000, respondent reiterated the concerns he raised in his previous letters.

Montilla sent respondent another memorandum66[16] dated June 6, 2000, stating that it is in the best interest of the company for respondent to report to the Makati office to assume his new area of assignment.

In a letter67[17] dated June 8, 2000, respondent told Montilla that he will be airing his grievance before the National Labor Relations Commission (NLRC).

In a memorandum68[18] dated June 15, 2000, Montilla stated that contrary to the opinion of respondent, respondent is entitled to Relocation Benefits and Allowance pursuant to the companys Benefits Manual. Montilla directed respondent to report for work in Manila within 5 working days from receipt of the memorandum.

In another memorandum69[19] dated June 26, 2000, Montilla stated that she had not heard from respondent since his June 8, 2000 letter and that he has not replied to their last memorandum dated June 15, 2000. Respondent was warned that the same would be a final notice for him to report for work in Manila within 5 working days from receipt of the memo; otherwise, his services will be terminated on the basis of being absent without official leave (AWOL).

On July 13, 2000, Montilla sent respondent a memorandum70[20] notifying him of their decision to terminate his services after he repeatedly refused to report for work despite due notice, the pertinent portions of which read: As I mentioned many times in our talks, you are in a Sales position for which you had signed up. Your employment contract actually states that you are willing to be assigned anywhere else in the Philippines, wherever the company needs you sees you fit. Metro Manila is the biggest and most advanced market we have in the Philippines. It is where the success or failure of our business lies. It is, therefore, the most competitive and significant area for sales. It is the most challenging and most rewarding of all areas. Only the best field managers are given the opportunity to manage a territory in Metro Manila. This is why I chose Manila over Cagayan de Oro for you in my letter dated June 6, 2000. And because you had assured us that you

were fit to work, after being on sick leave for about five and a half months, I asked you to assume your new assignment in Metro Manila before June 16, 2000. Before June 16, 2000, you wrote us a letter advising us that you can not accept the new assignment in Manila. In response, we advised you that the assignment in Manila is a business need and for said reason you were requested to report for work within five working days from receipt of notice. However, you failed to comply. So we issued another memo dated June 26, 2000, instructing you to report for work and advising you that should you continue to fail to report for work, the company shall be constrained to terminate your employment. In view of the foregoing, we have no alternative but to terminate your services on the basis of absence without official leave (AWOL) and insubordination pursuant to Article 282 of the Labor Code of the Philippines, which shall be effective on July 19, 2000.71[21]

On August 14, 2000, respondent filed a Complaint72[22] with the NLRC, Regional Arbitration Branch No. VI, Bacolod City against Pharmacia, Chu, Montilla and Garcia for constructive dismissal. Also included in the complaint was Ashley Morris, Pharmacias President. Since mandatory conciliation failed between the parties, both sides were directed to submit their position papers.

On July 12, 2002, the Labor Arbiter (LA) rendered a Decision73[23] dismissing the case, the dispositive portion of which reads:

WHEREFORE, premises considered, the complaint against respondents in the above-entitled case is DISMISSED for lack of merit. SO ORDERED.74[24]

Respondent appealed to the NLRC. In a Decision75[25] dated July 26, 2004, the NLRC dismissed the appeal, the dispositive portion of which reads:

WHEREFORE, premises considered, the appeal of complainant is hereby DISMISSED for lack of merit. The decision of the Labor Arbiter is AFFIRMED en toto. SO ORDERED.76[26]

Respondent filed a Motion for Reconsideration,77[27] which was denied by the NLRC in a Resolution78[28] dated November 10, 2004.

Aggrieved, respondent filed a Petition for Certiorari79[29] before the CA.

On November 30, 2005, the CA rendered a Decision ruling in favor of respondent, the dispositive portion of which reads:

WHEREFORE, premises considered, this petition is hereby given due course and the Resolution dated November 10, 2004 and the Decision dated July 26, 2004 of the NLRC Fourth Division in NLRC Case No. V-000521-2000 (RAB Case No. 06-08-10650-2000), are hereby REVERSED and SET ASIDE. Accordingly, the case is REMANDED to the National Labor Relations Commission, Regional Arbitration Branch No. VI, Bacolod City, for the proper determination of the petitioners claims. SO ORDERED.80[30]

Petitioners filed a Motion for Reconsideration, which was, however, denied by the CA in a Resolution dated May 5, 2006.

Hence, herein petition, with petitioner raising a lone assignment of error to wit:

WHETHER OR NOT THE COURT OF APPEALS (CEBU CITY) CAN REVERSE OR SET ASIDE THE FACTUAL AND LEGAL FINDINGS OF THE NLRC WHICH WAS BASED ON SUBSTANTIAL EVIDENCE WHEN THERE IS NO SHOWING OF PALPABLE ERROR OR THAT THE FINDINGS OF FACTS OF THE LABOR ARBITER IS CONTRARY TO THAT OF THE NLRC.81[31]

The petition is meritorious.

As a general rule, this Court does not entertain factual issues. The scope of our review in petitions filed under Rule 45 is limited to errors of law or jurisdiction.82[32] This Court leaves the evaluation of facts to the trial and appellate courts which are better equipped for this task.

However, there are instances in which factual issues may be resolved by this Court, to wit: (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) the CA goes beyond the issues of the case, and its

findings are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the CA are contrary to those of the trial court; (8) said findings of fact are conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the petition, as well as in the petitioners main and reply briefs, are not disputed by the respondent; and (10) the findings of fact of the CA are premised on the supposed absence of evidence and contradicted by the evidence on record.83[33]

In the present case, this Court is prompted to evaluate the findings of the LA, the NLRC, and the CA which are diametrically opposed.

Petitioners argue that the CA erred when it reversed the factual and legal findings of the NLRC which affirmed the decision of the LA. Petitioners contend that it is well established that factual findings of administrative agencies and quasi-judicial bodies are accorded great respect and finality and are not to be disturbed on appeal unless patently erroneous.

After a judicious examination of the records herein, this Court sustains the findings of the LA and the NLRC which are more in accord with the facts and law of the case. On petitioners exercise of management prerogative

Jurisprudence recognizes the exercise of management 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 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.84[34]

To determine the validity of the transfer of employees, the employer must 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.85[35]

Both the LA and the NLRC ruled that the reassignment of respondent was a valid exercise of petitioners management prerogative.

The LA shared petitioners posture that the transfer of respondent was a valid exercise of a legitimate management prerogative to maximize business opportunities, growth and development of personnel and that the expertise of respondent was needed to build the companys business in Cagayan de Oro City which dismally performed in 1999.86[36]

In addition, the LA explained that the reassignment of respondent was not a demotion as he will also be assigned as a District Sales Manager in Mindanao or in Metro Manila and that the notice of his transfer did not indicate that his emoluments will be reduced. Moreover, the LA mentioned that respondent was entitled to Relocation Benefits and Allowance in accordance with petitioners Benefits Manual.

On respondents allegation that his family stands to lose income from his wifes business, the LA ruled:

The allegation of complainant that his income will be affected because his wife who is doing business in Bacolod City and earns P50,000.00, if true, should not be taken in consideration of his transfer. What is contemplated here is the diminution of the salary of the complainant but not his wife. Besides, even if complainant may accept his new assignment in Cagayan de Oro or in Metro Manila, his wife may still continue to do her business in Bacolod City. Anyway, Bacolod City and Manila is just one (1) hour travel by plane.87[37]

Lastly, the LA pointed out that in respondents contract of employment, he agreed to be assigned to any work or workplace as may be determined by the company whenever the operations require such assignment.

The NLRC affirmed in toto the findings of the LA. The NLRC ruled that petitioners restructuring move was a valid exercise of its management prerogative and authorized under the employment contract of respondent, to wit:

We do not see in the records any evidence to prove that the restructuring move of respondent company was done with ill motives or with malice and bad faith purposely to constructively terminate complainants employment. Such misinterpretation or misguided supposition by complainant is belied by the fact that respondents officers had in several communications officially sent to complainant, expressly recognized complainants expertise and capabilities as a top sales man and manager for which reason the respondent company needs his services and skills to energize the low-performing areas in order to maximize business opportunities and to afford complainant an opportunity for further growth and development. Complainant persistently refused instead of taking this opportunity as a challenge after all, the nature of employment of a sales man or sales manager is that it is mobile or ambulant being always seeking for possible areas to market goods and services. He totally forgot the terms and conditions in his employment contract, stated in part, thus: xxxx You agree, during the period of employment, to be assigned to any work or workplace for such period as may be determined by the company and whenever the operations thereof require such assignment.88[38]

The rule in our jurisdiction is that findings of fact of the NLRC, affirming those of the LA, are entitled to great weight and will not be disturbed if they are supported by substantial evidence.89[39] Substantial evidence is an amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.90[40] As explained in Ignacio v. Coca-Cola Bottlers Phils., Inc:91[41]

x x x Factual findings of the NLRC affirming those of the Labor Arbiter, both bodies being deemed to have acquired expertise in matters within their jurisdictions, when sufficiently supported by evidence on record, are accorded respect if not finality, and are considered binding on this Court. As long as their decisions are devoid of any unfairness

or arbitrariness in the process of their deduction from the evidence proffered by the parties, all that is left is for the Court to stamp its affirmation and declare its finality.92[42]

Based on the foregoing, this Court rules that the CA had overstepped its legal mandate by reversing the findings of fact of the LA and the NLRC as it appears that both decisions were based on substantial evidence. There is no proof of arbitrariness or abuse of discretion in the process by which each body arrived at its own conclusions. Thus, the CA should have deferred to such specialized agencies which are considered experts in matters within their jurisdictions.

Moreover, what is objectionable with the CA decision is that in finding that the reassignment of respondent was arbitrary and unreasonable it had, in effect, imposed on petitioners its own opinion or judgment on what should have been a purely business decision, to wit:

Discussing the issues jointly, a perusal of the records shows that there was no overwhelming evidence to prove that petitioner was terminated for a just and valid cause. Public respondent had overlooked the fact that the reassignment of petitioner was arbitrary and unreasonable as the same was in contrast to the purposes espoused by private respondents. Undoubtedly, petitioner is a complete alien to the territory and as no established contacts therein, thus, he cannot be effective nor can he maximize profits. It cannot also contribute to his professional growth and development considering that he had already made a mark on his territory by virtue of his twenty-two (22) long years of valuable service. Considering the quality of his performance in his territory, the private respondents cannot therefore reason out that they are merely exercising their management prerogative for it would be unreasonable since petitioner has not been amiss in his responsibilities. Furthermore, it would undeniably cause undue inconvenience to herein petitioner who would have to relocate, disrupting his familys peaceful living, and with no additional monthly remuneration.93[43]

In the absence of arbitrariness, the CA should not have looked into the wisdom of a management prerogative. It is the employers prerogative, based on its assessment and perception of its employees qualifications, aptitudes, and competence, to move them around in the various areas of its business operations in order to ascertain where they will function with maximum benefit to the company.94[44]

As a matter of fact, while the CAs observations may be acceptable to some quarters, it is nevertheless not universal so as to foreclose another view on what may be a better business decision. While it would be profitable to keep respondent in an area where he has established contacts and therefore the probability of him reaching and even surpassing his sales quota is high, on the one hand, one can also make a case that since respondent is one of petitioners best district managers, he is the right person to turn around and improve the sales numbers in Cagayan de Oro City, an area which in the past had been dismally performing. After all, improving and developing a new market may even be more profitable than having respondent stay and serve his old market. In addition, one can even make a case and say that the transfer of respondent is also for his professional growth. Since respondent

has been already assigned in the Western Visayas area for 22 years, it may mean that his market knowledge is very limited. In another territory, there will be new and more challenges for respondent to face. In addition, one can even argue that for purposes of future promotions, it would be better to promote a district manager who has experience in different markets.

The foregoing illustrates why it is dangerous for this Court and even the CA to look into the wisdom of a management prerogative. Certainly, one can argue for or against the pros and cons of transferring respondent to another territory. Absent a definite finding that such exercise of prerogative was tainted with arbitrariness and unreasonableness, the CA should have left the same to petitioners better judgment. The rule is well settled that labor laws discourage interference with an employer's judgment in the conduct of his business. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. As long as the company's exercise of the same 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.95[45]

In addition, this Court cannot agree with the findings of the CA that the transfer of respondent was unreasonable, considering he had not been remiss in his responsibilities. What the CA failed to recognize is that the very nature of a sales man is that it is mobile and ambulant. On this point, it bears to stress that respondent signed two documents signifying his assent to be assigned anywhere in the Philippines. In respondents Employment Application,96[46] he checked the box which asks, Are you willing to be relocated anywhere in the Philippines?97[47] In addition, in respondents Contract of Employment,98[48] item (8) reads:

You agree, during the period of your employment, to be assigned to any work or workplace for such period as may be determined by the company and whenever the operations thereof require such assignment.99[49]

Even if respondent has been performing his duties well it does not mean that petitioners hands are tied up that they can no longer reassign respondent to another territory. And it is precisely because of respondents good performance that petitioners want him to be reassigned to Cagayan de Oro City so that he could improve their business there.

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,100[50] which involved a complaint filed by a medical representative against his employer drug company for illegal dismissal for allegedly terminating his employment when he refused to accept his reassignment to a new area, the Court upheld the right of the drug company to transfer or reassign its employee in accordance with its operational demands and requirements. The ruling of the Court therein, quoted hereunder, also finds application in the instant case:

Therefore, Bobadilla had no valid reason to disobey the order of transfer. He had tacitly given his consent thereto when he acceded to the petitioners policy of hiring sales staff who are willing to be assigned anywhere in the Philippines which is demanded by petitioners business. By the very nature of his employment, a drug salesman or medical representative is expected to travel. He should anticipate reassignment according to the demands of their business. It would be a poor drug corporation which cannot

even assign its representatives or detail men to new markets calling for opening or expansion or to areas where the need for pushing its products is great. More so if such reassignments are part of the employment contract.101[51] On the existence of grounds to dismiss respondent from the service

Because of respondents adamant refusal to be reassigned, the LA ruled that petitioners had valid grounds to terminate his employment, to wit:

As early as in December 27, 1999, complainant already signified his refusal to accept his new assignment in Cagayan de Oro. Complainant was on sick leave since January 5, 2000 up to May 11, 2000, for about four (4) months and he already consumed his leave credits up to March 2000. Hence, starting April 2000 he was already on indefinite leave without pay. xxxx In his letter dated May 17, 2000, addressed to respondent Jane B. Montilla, complainant informed her that his doctors have already declared him fit for work as of May 16, 2000, and he was ready to assume to his regular assignment as District Sales Manager of Negros Occidental. This is a strong indication that complainant really does not want to accept his new assignment either in Cagayan de Oro or in Metro Manila, which is clearly a defiance of the lawful order of his employer, and a ground to terminate his services pursuant to Article 282 of the Labor Code. Notwithstanding his adamant refusal to resume working to his new assignment in Metro Manila, complainant was still given by respondent Montilla another chance to think it over up to June 2, 2000. By way of reply, complainant, in his letter dated May 31, 2000 to Ms. Montilla, he clearly expressed his disagreement to his transfer and would rather seek justice elsewhere in another forum. But still the respondent company, notwithstanding the position taken by complainant in his letter dated May 31, 2000 that he is refusing his transfer gave complainant until June 16, 2000 to reconsider his position. In a letter dated June 5, 2000, respondent Montilla gave complainant a period of five (5) days from receipt thereof to report to Manila, but still complainant did not comply. Ms. Montilla sent complainant a final notice dated June 26, 2000 for him to report to Manila within five (5) working days from receipt of the same, with a warning that his failure to do so, the company would be constraint to terminate his services for being absent without official leave. Finally, is was only on July 19, 2000, when the services of complainant was terminated by respondent company through its Human Resource Manager on the ground of absence without leave and insubordination pursuant to Article 282 of the Labor Code. Clearly, the complainant had abandoned his work by reason of his being on AWOL as a consequence of vigorous objection to his transfer to either Cagayan de Oro or Metro Manila. The long period of absence of complainant without official leave from April to July 19, 2000 is more than sufficient ground to dismiss him. The refusal of complainant to accept his transfer of assignment is a clear willful disobedience of the lawful order of his employer and a ground to terminate his services under Article 282, par. (a) of the Labor Code, as amended. The series of chances given complainant to report for work, coupled by his adamant refusal to report to his new assignment, is a conclusive indication of willful disobedience of the lawful orders of his employer.102[52]

In addition, the NLRC also ruled that respondent was guilty of insubordination, thus:

Apparently, complainant, by his unjustified acts of refusing to be transferred either to Mindanao or Manila for personal reasons, absent any bad faith or malice on the part of respondents, has deliberately ignored and defied lawful orders of his employer. An employee who refuses to be transferred, when such transfer is valid, is guilty of insubordination. x x x103[53]

Based on the foregoing, this Court rules that the findings of the LA and the NLRC are supported by substantial evidence. The LA clearly outlined the steps taken by petitioners and the manner by which respondent was eventually dismissed. The NLRC, for its part,

explained why respondent was guilty of insubordination. No abuse of discretion can, therefore, be attributed to both agencies, and the CA was certainly outside its mandate in reversing such findings.

This Court has long stated that the objection to the transfer being grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer.104[54] Such being the case, respondent cannot adamantly refuse to abide by the order of transfer without exposing himself to the risk of being dismissed. Hence, his dismissal was for just cause in accordance with Article 282(a)105[55] of the Labor Code. The CA, however, ruled that respondent was not guilty of insubordination, to wit: As to the findings of insubordination, the records show that petitioner was not guilty of such offense. For insubordination to exist, the order must be reasonable and lawful, sufficiently known to the employee and in connection to his duties. Where an order or rule is not reasonable, in view of the terms of the contract of employment and the general right of the parties, a refusal to obey does not constitute a just cause for the employees discharge. It is undeniable that the order given by the company to petitioner to transfer to a place where he has no connections, leaving his family behind, and with no clear additional remuneration, can be considered unreasonable and petitioners actuation cannot be considered insubordination.106[56]

This Court cannot agree with the findings of the CA, in view of the fact that it was an error for it to substitute its own judgment and interfere with management prerogatives. No iota of evidence was presented that the reassignment of respondent was a demotion as he would still be a District Sales Manager in Cagayan de Oro City or in Metro Manila. Furthermore, he would be given relocation benefits in

accordance with the Benefits Manual. If respondent feels that what he was given is less than what is given to all other district managers who were likewise reassigned, the onus is on him to prove such fact. Furthermore, records reveal that respondent has been harping on the fact that no additional remuneration would be given to him with the transfer. However, again, respondent did not present any evidence that additional remuneration were being given to other district managers who were reassigned to different locations, or that such was the practice in the company. This Court, therefore, is inclined to believe the statement of Chu in her May 17, 2000 letter to respondent that additional remuneration is never given to people who are reassigned, to wit:

x x x Likewise, I am disappointed that with the movement, you expect to be paid additional remuneration when in fact, this has never been done in the past and never a practice within the industry and the Philippines.107[57]

Lastly, while it is understandable that respondent does not want to relocate his family, this Court agrees with the NLRC when it observed that such inconvenience is considered an employment or professional hazard which forms part of the concessions an employee is deemed to have offered or sacrificed in the view of his acceptance of a position in sales.

On the observance of due process

The CA ruled that respondent was denied due process in the manner he was dismissed by petitioners, to wit:

Furthermore, the finding that petitioner was afforded due process is bereft of any legal basis. An employee must be given notice and an ample opportunity, prior to dismissal to adequately prepare for his defense. This is an elementary rule in labor law that due process in dismissal cases contemplates the twin requisites of notice and hearing. These procedural requirements have been mandatorily imposed to the employer to accord its employees the right to be heard. Failure of the employer to comply with such requirements renders its judgment of dismissal void and inexistent. A written notice from the employer containing the causes for the dismissal must be given. The employee is then given ample opportunity to be heard and to defend himself, appraising him of his right to counsel if he desires. Lastly, a written notice informing the employee of the decision of the employer, citing there reasons therefore, is given. The above procedure was not followed in the instant case and the series of communications and meetings cannot take the place and is therefore not sufficient to take the place of notice and hearing.108[58]

In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employers decision to dismiss him. The requirement of a hearing is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.109[59] While no actual hearing was conducted before petitioners dismissed respondent, the same is not fatal as only an ample opportunity to be heard is what is required in order to satisfy the requirements of due process.110[60] Accordingly, this Court is guided by Solid Development Corporation Workers Association v. Solid Development Corporation111[61] (Solid), where the validity of the dismissal of two employees was upheld notwithstanding that no hearing was conducted, to wit:

[W]ell-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the dismissal of employees. It is a cardinal rule in our jurisdiction that the employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employers decision to dismiss him. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. In separate infraction reports, petitioners were both apprised of the particular acts or omissions constituting the charges against them. They were also required to submit their written explanation within 12 hours from receipt of the reports. Yet, neither of them complied. Had they found the 12-hour period too short, they should have requested for an extension of time. Further, notices of termination were also sent to them informing them of the basis of their dismissal. In fine, petitioners were given due process before they were dismissed. Even if no hearing was conducted, the requirement of due process had been met since they were accorded a chance to explain their side of the controversy112[62]

In the case at bar, this Court finds that petitioners had complied with the requirements of law in effecting the dismissal of respondent. Petitioners sent respondent a first notice in the form of a memorandum113[63] dated June 26, 2000, warning him that the same would serve as a final notice for him to report to work in Manila within 5 working days from receipt thereof, otherwise, his services would be terminated on the basis of AWOL. After receiving the memorandum, respondent could have requested for a conference with the assistance of

counsel, if he so desired. Like in Solid, had respondent found the time too short, he should have responded to the memorandum asking for more time. It, however, appears to this Court that respondent made no such requests. On July 13, 2000, petitioners sent another

memorandum114[64] notifying respondent that they are terminating his services effective July 19, 2000, after he repeatedly refused to report to work despite due notice. Even if no actual hearing was conducted, this Court is of the opinion that petitioners had complied with the requirements of due process as all that the law requires is an ample opportunity to be heard.

In conclusion, it bears to stress that the CA should not have disturbed the factual findings of the LA and the NLRC in the absence of arbitrariness or palpable error. The reassignment of respondent to another territory was a valid exercise of petitioners management prerogative and, consequently, his dismissal was for cause and in accordance with the due process requirement of law.

This Court, however, is not unmindful of previous rulings,115[65] wherein separation pay has been granted to a validly dismissed employee after giving considerable weight to long years of employment.116[66]

An employee who is dismissed for cause is generally not entitled to any financial assistance. Equity considerations, however, provide an exception. Equity has been defined as justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law. It is grounded on the precepts of conscience and not on any sanction of positive law, for equity finds no room for application where there is law.117[67]

In Philippine Long Distance Telephone Co. v. National Labor Relations Commission,118[68] the Court laid down the guidelines in the grant of separation pay to a lawfully dismissed employee, thus:

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.119[69]

In the instant case, this Court rules that an award to respondent of separation pay by way of financial assistance, equivalent to onehalf (1/2) months pay for every year of service, is equitable. Although respondent's actions constituted a valid ground to terminate his

services, the same is to this Court's mind not so reprehensible as to warrant complete disregard of his long years of service. It also appears that the same is respondent's first offense. While it may be expected that petitioners will argue that respondent has only been in their service for four years since the merger of Pharmacia and Upjohn took place in 1996, equity considerations dictate that respondent's tenure be computed from 1978, the year when respondent started working for Upjohn.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The November 30, 2005 Decision and May 5, 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 00386 are REVERSED and SET ASIDE.

In view of the above disquisitions, petitioners are ORDERED to pay respondent separation pay by way of financial assistance equivalent to one-half (1/2) month pay for every year of service.

SO ORDERED.

DIOSDADO M. PERALTA Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice Chairperson

ANTONIO EDUARDO B. NACHURA Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinio of the Courts Division.

ANTONIO T. CARPIO Associate Justice Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice Republic of the Philippines Supreme Court Manila

THIRD DIVISION

PHIMCO INDUSTRIES, INC., Petitioner,

G.R. No. 170830

Present: versus CARPIO MORALES, J., Chairperson PHIMCO INDUSTRIES LABOR BRION,

ASSOCIATION (PILA), and ERLINDA VAZQUEZ, RICARDO SACRISTAN, LEONIDA CATALAN, MAXIMO PEDRO, NATHANIELA DIMACULANGAN, RODOLFO MOJICO, ROMEO CARAMANZA, REYNALDO GANITANO, ALBERTO BASCONCILLO, and RAMON FALCIS, in their capacity as officers of PILA, and ANGELITA BALOSA, DANILO BANAAG, ABRAHAM CADAY, ALFONSO CLAUDIO, FRANCISCO DALISAY, ANGELITO DEJAN,
**** *** ** *

BERSAMIN, ABAD, and VILLARAMA, JR., JJ.

Promulgated:

August 11, 2010

*****

PHILIP

GARCES, NICANOR ILAGAN, FLORENCIO LIBONGCOGON,

******

NEMESIO MAMONONG, TEOFILO MANALILI, ALFREDO PEARSON, MARIO PEREA,

******** *******

RENATO

Designated additional Member of the Third Division, in view of the retirement of Chief Justice Reynato S. Puno, per Special Order No. 843 d

RAMOS, MARIANO ROSALES, PABLO SARMIENTO, RODOLFO TOLENTINO, FELIPE VILLAREAL, ARSENIO ZAMORA, DANILO BALTAZAR, ROGER CABER,
*********

REYNALDO CAMARIN, BERNARDO CUADRA,

**********

ANGELITO DE
***********

GUZMAN, GERARDO FELICIANO,

ALEX IBAEZ, BENJAMIN JUAN, SR., RAMON MACAALAY, GONZALO MANALILI, RAUL MICIANO, HILARIO PEA, TERESA PERMOCILLO,
************

ERNESTO RIO,

RODOLFO SANIDAD, RAFAEL STA. ANA, JULIAN TUGUIN and AMELIA ZAMORA, as members of PILA, Respondents. x-----------------------------------------------------------------------------------------x

DECISION

BRION, J.:

Before us is the petition for review on certiorari set aside the decision,
121[2]

120[1]

filed by petitioner Phimco Industries, Inc. (PHIMCO), seeking to reverse and

122[3]

dated February 10, 2004, and the resolution,

dated December 12, 2005, of the Court of Appeals (CA) in CA-

G.R. SP No. 70336. The assailed CA decision dismissed PHIMCOs petition for certiorari that challenged the resolution, dated December 29, 1998, and the decision, dated February 20, 2002, of the National Labor Relations Commission (NLRC); the assailed CA resolution denied PHIMCOs subsequent motion for reconsideration.

FACTUAL BACKGROUND

The facts of the case, gathered from the records, are briefly summarized below.

PHIMCO is a corporation engaged in the production of matches, with principal address at Phimco Compound, Felix Manalo St., Sta. Ana, Manila. Respondent Phimco Industries Labor Association (PILA) is the duly authorized bargaining representative of PHIMCOs dailypaid workers. The 47 individually named respondents are PILA officers and members.

When the last collective bargaining agreement was about to expire on December 31, 1994, PHIMCO and PILA negotiated for its renewal. The negotiation resulted in a deadlock on economic issues, mainly due to disagreements on salary increases and benefits.

On March 9, 1995, PILA filed with the National Conciliation and Mediation Board (NCMB) a Notice of Strike on the ground of the bargaining deadlock. Seven (7) days later, or on March 16, 1995, the union conducted a strike vote; a majority of the union members voted for a strike as its response to the bargaining impasse. On March 17, 1995, PILA filed the strike vote results with the NCMB. Thirty-five (35) days later, or on April 21, 1995, PILA staged a strike.

On May 3, 1995, PHIMCO filed with the NLRC a petition for preliminary injunction and temporary restraining order (TRO), to enjoin the strikers from preventing through force, intimidation and coercion the ingress and egress of non-striking employees into and from the company premises. On May 15, 1995, the NLRC issued an ex-parte TRO, effective for a period of twenty (20) days, or until June 5, 1995.

On June 23, 1995, PHIMCO sent a letter to thirty-six (36) union members, directing them to explain within twenty-four (24) hours why they should not be dismissed for the illegal acts they committed during the strike. Three days later, or on June 26, 1995, the thirty-six (36) union members were informed of their dismissal.

On July 6, 1995, PILA filed a complaint for unfair labor practice and illegal dismissal (illegal dismissal case) with the NLRC. The case was docketed as NLRC NCR Case No. 00-07-04705-95, and raffled to Labor Arbiter (LA) Pablo C. Espiritu, Jr.

On July 7, 1995, then Acting Labor Secretary Jose S. Brillantes assumed jurisdiction over the labor dispute, and ordered all the striking employees (except those who were handed termination papers on June 26, 1995) to return to work within twenty-four (24) hours from receipt of the order. The Secretary ordered PHIMCO to accept the striking employees, under the same terms and conditions prevailing prior to the strike.
123[4]

On the same day, PILA ended its strike.

On August 28, 1995, PHIMCO filed a Petition to Declare the Strike Illegal (illegal strike case) with the NLRC, with a prayer for the dismissal of PILA officers and members who knowingly participated in the illegal strike. PHIMCO claimed that the strikers prevented ingress to and egress from the PHIMCO compound, thereby paralyzing PHIMCOs operations. The case was docketed as NLRC NCR Case No. 00-0806031-95, and raffled to LA Jovencio Ll. Mayor.

On March 14, 1996, the respondents filed their Position Paper in the illegal strike case. They countered that they complied with all the legal requirements for the staging of the strike, they put up no barricade, and conducted their strike peacefully, in an orderly and lawful manner, without incident.

LA Mayor decided the case on February 4, 1998,124[5] and found the strike illegal; the respondents committed prohibited acts during the strike by blocking the ingress to and egress from PHIMCOs premises and preventing the non-striking employees from reporting for work. He observed that it was not enough that the picket of the strikers was a moving picket, since the strikers should allow the free passage to the entrance and exit points of the company premises. Thus, LA Mayor declared that the respondent employees, PILA officers and members, have lost their employment status.

On March 5, 1998, PILA and its officers and members appealed LA Mayors decision to the NLRC.

THE NLRC RULING

The NLRC decided the appeal on December 29, 1998, and set aside LA Mayors decision.

125[6]

The NLRC did not give weight to

PHIMCOs evidence, and relied instead on the respondents evidence showing that the union conducted a peaceful moving picket.

On January 28, 1999, PHIMCO filed a motion for reconsideration in the illegal strike case.

126[7]

In a parallel development, LA Espiritu decided the unions illegal dismissal case on March 2, 1999. He ruled the respondents dismissal as illegal, and ordered their reinstatement with payment of backwages. PHIMCO appealed LA Espiritus decision to the NLRC.

Pending the resolution of PHIMCOs motion for reconsideration in the illegal strike case and the appeal of the illegal dismissal case, PHIMCO moved for the consolidation of the two (2) cases. The NLRC acted favorably on the motion and consolidated the two (2) cases in its Order dated August 5, 1999.

On February 20, 2002, the NLRC rendered its Decision in the consolidated cases, ruling totally in the unions favor.

127[8]

It dismissed

the appeal of the illegal dismissal case, and denied PHIMCOs motion for reconsideration in the illegal strike case. The NLRC found that the picket conducted by the striking employees was not an illegal blockade and did not obstruct the points of entry to and exit from the

companys premises; the pictures submitted by the respondents revealed that the picket was moving, not stationary. With respect to the illegal dismissal charge, the NLRC observed that the striking employees were not given ample opportunity to explain their side after receipt of the June 23, 1995 letter. Thus, the NLRC affirmed the Decision of LA Espiritu with respect to the payment of backwages until the promulgation of the decision, plus separation pay at one (1) month salary per year of service in lieu of reinstatement, and 10% of the monetary award as attorneys fees. It ruled out reinstatement because of the damages sustained by the company brought about by the strike.

On March 14, 2002, PHIMCO filed a motion for reconsideration of the consolidated decision.

On April 26, 2002, without waiting for the result of its motion for reconsideration, PHIMCO elevated its case to the CA through a petition for certiorari under Rule 65 of the Rules of Court.
128[9]

THE CA RULING

In a Decision

129[10]

promulgated on February 10, 2004, the CA dismissed PHIMCOs petition for certiorari. The CA noted that the

NLRC findings, that the picket was peaceful and that PHIMCOs evidence failed to show that the picket constituted an illegal blockade or that it obstructed the points of entry to and exit from the company premises, were supported by substantial evidence.

PHIMCO came to us through the present petition after the CA denied

130[11]

PHIMCOs motion for reconsideration.

131[12]

THE PETITION

The petitioner argues that the strike was illegal because the respondents committed the prohibited acts under Article 264(e) of the Labor Code, such as blocking the ingress and egress of the company premises, threat, coercion, and intimidation, as established by the evidence on record.

THE CASE FOR THE RESPONDENTS

The respondents, on the other hand, submit that the issues raised in this case are factual in nature that we cannot generally touch in a petition for review, unless compelling reasons exist; the company has not shown any such compelling reason as the picket was peaceful and uneventful, and no human barricade blocked the company premises.

THE ISSUE

In Montoya v. Transmed Manila Corporation, decisions in labor cases, thus:

132[13]

we laid down the basic approach that should be followed in the review of CA

In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. This is the approach that should be basic in a Rule 45 review of a CA ruling in a labor case. In question form, the question to ask is: Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?

In this light, the core issue in the present case is whether the CA correctly ruled that the NLRC did not act with grave abuse of discretion in ruling that the unions strike was legal.

OUR RULING

We find the petition partly meritorious.

Requisites of a valid strike

A strike is the most powerful weapon of workers in their struggle with management in the course of setting their terms and conditions of employment. Because it is premised on the concept of economic war between labor and management, it is a weapon that can either breathe life to or destroy the union and its members, and one that must also necessarily affect management and its members.
133[14]

In light of these effects, the decision to declare a strike must be exercised responsibly and must always rest on rational basis, free from emotionalism, and unswayed by the tempers and tantrums of hot heads; it must focus on legitimate union interests. To be legitimate, a strike should not be antithetical to public welfare, and must be pursued within legal bounds. The right to strike as a means of attaining social justice is never meant to oppress or destroy anyone, least of all, the employer.
134[15]

Since strikes affect not only the relationship between labor and management but also the general peace and progress of the community, the law has provided limitations on the right to strike. Procedurally, for a strike to be valid, it must comply with Article 263
135[16]

of the Labor Code, which requires that: (a) a notice of strike be filed with the Department of Labor and Employment (DOLE) 30 days before the intended date thereof, or 15 days in case of unfair labor practice; (b) a strike vote be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in a meeting called for that purpose; and (c) a notice be given to the DOLE of the results of the voting at least seven days before the intended strike.

These requirements are mandatory, and the unions failure to comply renders the strike illegal.

136[17]

The 15 to 30-day cooling-off

period is designed to afford the parties the opportunity to amicably resolve the dispute with the assistance of the NCMB conciliator/mediator, while the seven-day strike ban is intended to give the DOLE an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members.
137[18]

In the present case, the respondents fully satisfied the legal procedural requirements; a strike notice was filed on March 9, 1995; a strike vote was reached on March 16, 1995; notification of the strike vote was filed with the DOLE on March 17, 1995; and the actual strike was launched only on April 25, 1995.

Strike may be illegal for commission of prohibited acts

Despite the validity of the purpose of a strike and compliance with the procedural requirements, a strike may still be held illegal where the means employed are illegal. Labor Code which provides:
138[19]

The means become illegal when they come within the prohibitions under Article 264(e) of the

No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares.

Based on our examination of the evidence which the LA viewed differently from the NLRC and the CA, we find the PILA strike illegal. We intervene and rule even on the evidentiary and factual issues of this case as both the NLRC and the CA grossly misread the evidence, leading them to inordinately incorrect conclusions, both factual and legal. While the strike undisputably had not been marred by actual violence and patent intimidation, the picketing that respondent PILA officers and members undertook as part of their strike activities effectively blocked the free ingress to and egress from PHIMCOs premises, thus preventing non-striking employees and company vehicles from entering the PHIMCO compound. In this manner, the picketers violated Article 264(e) of the Labor Code.

The Evidence

We gather from the case record the following pieces of relevant evidence adduced in the compulsory arbitration proceedings.139[20]

For the Company

1. company premises;140[21] 2.

Pictures taken during the strike, showing that the respondents prevented free ingress to and egress from the

Affidavit of PHIMCO Human Resources Manager Francis Ferdinand Cinco, stating that he was one of the employees

prevented by the strikers from entering the PHIMCO premises;141[22] 3. Affidavit of Cinco, identifying Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan, Maximo Pedro, Nathaniela R.

Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo Ganitano, Alberto Basconcillo, and Ramon Falcis as PILA officers;142[23] 4. 5. Affidavit of Cinco identifying other members of PILA;143[24] Folder 1, containing pictures taken during the strike identifying and showing Leonida Catalan, Renato Ramos, Arsenio

Zamora, Reynaldo Ganitano, Amelia Zamora, Angelito Dejan, Teresa Permocillo, and Francisco Dalisay as the persons preventing Cinco and his group from entering the company premises;144[25] 6. Folder 2, with pictures taken on May 30, 1995, showing Cinco, together with non-striking PHIMCO employees,

reporting for work but being refused entry by strikers Teofilo Manalili, Nathaniela Dimaculangan, Bernando Cuadra, Maximo Pedro, Nicanor Ilagan, Julian Tuguin, Nemesio Mamonong, Abraham Caday, Ernesto Rio, Benjamin Juan, Sr., Ramon Macaalay, Gerardo Feliciano, Alberto Basconcillo, Rodolfo Sanidad, Mariano Rosales, Roger Caber, Angelito de Guzman, Angelito Balosa and Philip Garces who blocked the company gate;145[26] 7. Folder 3, with pictures taken on May 30, 1995, showing the respondents denying free ingress to and egress from the

company premises;146[27]

8.

Folder 4, with pictures taken during the strike, showing that non-striking employees failed to enter the company

premises as a result of the respondents refusal to let them in;147[28] 9. 10. Affidavit of Joaquin Aguilar stating that the pictures presented by Cinco were taken during the strike;148[29] Pictures taken by Aguilar during the strike, showing non-striking employees being refused entry by the

respondents;149[30] 11. Joint affidavit of Orlando Marfil and Rodolfo Digo, identifying the pictures they took during the strike, showing

that the respondents blocked ingress to and egress from the company premises;150[31] and, 12. Leonida Catalan. Testimonies of PHIMCO employees Rodolfo Eva, Aguilar and Cinco, as well as those of PILA officers Maximo Pedro and

For the Respondents

1.

Affidavit of Leonida Catalan, stating that the PILA strike complied with all the legal requirements, and the strike/picket was

conducted peacefully with no incident of any illegality;151[32] 2. Affidavit of Maximo Pedro, stating that the strike/picket was conducted peacefully; the picket was always moving with

no acts of illegality having been committed during the strike;152[33] 3. Certification of Police Station Commander Bienvenido de los Reyes that during the strike there was no report of any

untoward incident;153[34] 4. Certification of Rev. Father Erick Adeviso of Dambanang Bayan Parish Church that the strike was peaceful and without

any untoward incident;154[35] 5. Certification of Priest-In-Charge Angelito Fausto of the Philippine Independent Church in Punta, Santa Ana, that the

strike complied with all the requirements for a lawful strike, and the strikers conducted themselves in a peaceful manner;155[36]

6.

Clearance issued by Punong Barangay Mario O. dela Rosa and Barangay Secretary Pascual Gesmundo, Jr. that the strike

from April 21 to July 7, 1995 was conducted in an orderly manner with no complaints filed;156[37] and, 7. Testimonies at the compulsory arbitration proceedings.

In its resolution of December 29, 1998,157[38] the NLRC declared that the string of proofs the company presented was overwhelmingly counterbalanced by the numerous pieces of evidence adduced by respondents x x x all depicting a common story that respondents put up a peaceful moving picket, and did not commit any illegal acts x x x specifically obstructing the ingress to and egress from the company premises*.+158[39]

We disagree with this finding as the purported peaceful moving picket upon which the NLRC resolution was anchored was not an innocuous picket, contrary to what the NLRC said it was; the picket, under the evidence presented, did effectively obstruct the entry and exit points of the company premises on various occasions.

To strike is to withhold or to stop work by the concerted action of employees as a result of an industrial or labor dispute.159[40] The work stoppage may be accompanied by picketing by the striking employees outside of the company compound. While a strike focuses on stoppage of work, picketing focuses on publicizing the labor dispute and its incidents to inform the public of what is happening in the company struck against. A picket simply means to march to and from the employers premises, usually accompanied by the display of placards and other signs making known the facts involved in a labor dispute.160[41] It is a strike activity separate and different from the actual stoppage of work.

While the right of employees to publicize their dispute falls within the protection of freedom of expression161[42] and the right to peaceably assemble to air grievances,162[43] these rights are by no means absolute. Protected picketing does not extend to blocking ingress to and egress from the company premises.163[44] That the picket was moving, was peaceful and was not attended by actual violence may not free it from taints of illegality if the picket effectively blocked entry to and exit from the company premises.

In this regard, PHIMCO employees Rodolfo Eva and Joaquin Aguilar, and the companys Human Resources Manager Francis Ferdinand Cinco testified during the compulsory arbitration hearings:

ATTY. REYES: this incident on May 22, 1995, when a coaster or bus attempted to enter PHIMCO compound, you mentioned that it was refused entry. Why was this (sic) it refused entry?

WITNESS: Because at that time, there was a moving picket at the gate that is why the bus was not able to enter.

164[45]

x x xx

Q: Despite this TRO, which was issued by the NLRC, were you allowed entry by the strikers?

A: We made several attempts to enter the compound, I remember on May 7, 1995, we tried to enter the PHIMCO compound but we were not allowed entry.

Q: Aside from May 27, 1995, were there any other instances wherein you were not allowed entry at PHIMCO compound?

A: On May 29, I recall I was riding with our Production Manager with the Pick-up. We tried to enter but we were not allowed by the strikers.
165[46]

x x x x

ARBITER MAYOR: How did the strikers block the ingress of the company?

A: They hold around, joining hands, moving picket.

166[47]

x x x x

ARBITER MAYOR: Reform the question, and because of that moving picket conducted by the strikers, no employees or vehicles can come in or go out of the premises?

A: None, sir.

167[48]

These accounts were confirmed by the admissions of respondent PILA officers Maximo Pedro and Leonida Catalan that the strikers prevented non-striking employees from entering the company premises. According to these union officers:

ATTY. CHUA: Mr. witness, do you recall an incident when a group of managers of PHIMCO, with several of the monthly paid employees who tried to enter the PHIMCO compound during the strike?

MR. PEDRO: Yes, sir.

ATTY. CHUA: Can you tell us if these (sic) group of managers headed by Francis Cinco entered the compound of PHIMCO on that day, when they tried to enter?

MR. PEDRO: No, sir. They were not able to enter.

168[49]

x x x x

ATTY. CHUA: Despite having been escorted by police Delos Reyes, you still did not give way, and instead proceeded with your moving picket?

MR. PEDRO: Yes, sir.

ATTY. CHUA: In short, these people were not able to enter the premises of PHIMCO, Yes or No.

MR. PEDRO: Yes, sir.

169[50]

x x x x

ATTY. CHUA: Madam witness, even if Major Delos Reyes instructed you to give way so as to allow the employees and managers to enter the premises, you and your co-employees did not give way?

MS. CATALAN: No sir.

ATTY. CHUA: the managers and the employees were not able to enter the premises?

MS. CATALAN: Yes, sir.

170[51]

The NLRC resolution itself noted the above testimonial evidence, all building up a scenario that the moving picket put up by [the] respondents obstructed the ingress to and egress from the company premises*,+171[52] yet it ignored the clear import of the testimonies as to the true nature of the picket. Contrary to the NLRC characterization that it was a peaceful moving picket, it stood, in fact, as an obstruction to the companys points of ingress and egress.

Significantly, the testimonies adduced were validated by the photographs taken of the strike area, capturing the strike in its various stages and showing how the strikers actually conducted the picket. While the picket was moving, it was maintained so close to the company gates that it virtually constituted an obstruction, especially when the strikers joined hands, as described by Aguilar, or were moving in circles, hand-to-shoulder, as shown by the photographs, that, for all intents and purposes, blocked the free ingress to and egress from the company premises. In fact, on closer examination, it could be seen that the respondents were conducting the picket right at the company gates.172[53]

The obstructive nature of the picket was aggravated by the placement of benches, with strikers standing on top, directly in front of the open wing of the company gates, clearly obstructing the entry and exit points of the company compound.173[54]

With a virtual human blockade and real physical obstructions (benches and makeshift structures both outside and inside the gates),174[55] it was pure conjecture on the part of the NLRC to say that *t+he non-strikers and their vehicles were x x x free to get in and out of the company compound undisturbed by the picket line.175[56] Notably, aside from non-strikers who wished to report for work, company vehicles likewise could not enter and get out of the factory because of the picket and the physical obstructions the respondents installed. The blockade went to the point of causing the build up of traffic in the immediate vicinity of the strike area, as shown by photographs.176[57] This, by itself, renders the picket a prohibited activity. Pickets may not aggressively interfere with the right of peaceful ingress to and egress from the employers shop or obstruct public thoroughfares; picketing is not peaceful where the sidewalk or entrance to a place of business is obstructed by picketers parading around in a circle or lying on the sidewalk.177[58]

What the records reveal belies the NLRC observation that the evidence x x x tends to show that what respondents actually did was walking or patrolling to and fro within the company vicinity and by word of mouth, banner or placard, informing the public concerning the dispute.178[59]

The peaceful moving picket that the NLRC noted, influenced apparently by the certifications (Mayor delos Reyes, Fr. Adeviso, Fr. Fausto and Barangay Secretary Gesmundo presented in evidence by the respondents, was peaceful only because of the absence of violence during the strike, but the obstruction of the entry and exit points of the company premises caused by the respondents picket was by no means a petty blocking act or an insignificant obstructive act.179[60]

As we have stated, while the picket was moving, the movement was in circles, very close to the gates, with the strikers in a handto-shoulder formation without a break in their ranks, thus preventing non-striking workers and vehicles from coming in and getting out. Supported by actual blocking benches and obstructions, what the union demonstrated was a very persuasive and quietly intimidating strategy whose chief aim was to paralyze the operations of the company, not solely by the work stoppage of the participating workers, but by excluding the company officials and non-striking employees from access to and exit from the company premises. No doubt, the strike caused the company operations considerable damage, as the NLRC itself recognized when it ruled out the reinstatement of the dismissed strikers.180[61]

Intimidation

Article 264(e) of the Labor Code tells us that picketing carried on with violence, coercion or intimidation is unlawful.181[62] According to American jurisprudence, what constitutes unlawful intimidation depends on the totality of the circumstances.182[63] Force threatened is the equivalent of force exercised. There may be unlawful intimidation without direct threats or overt acts of violence. Words or acts which are calculated and intended to cause an ordinary person to fear an injury to his person, business or property are equivalent to threats.183[64]

The manner in which the respondent union officers and members conducted the picket in the present case had created such an intimidating atmosphere that non-striking employees and even company vehicles did not dare cross the picket line, even with police intervention. Those who dared cross the picket line were stopped. The compulsory arbitration hearings bear this out.

Maximo Pedro, a PILA officer, testified, on July 30, 1997, that a group of PHIMCO managers led by Cinco, together with several monthly-paid employees, tried to enter the company premises on May 27, 1995 with police escort; even then, the picketers did not allow

them to enter.184[65]Leonida Catalan, another union officer, testified that she and the other picketers did not give way despite the instruction of Police Major de los Reyes to the picketers to allow the group to enter the company premises.185[66] (To be sure, police intervention and participation are, as a rule, prohibited acts in a strike, but we note this intervention solely as indicators of how far the union and its members have gone to block ingress to and egress from the company premises.)

Further, PHIMCO employee Rodolfo Eva testified that on May 22, 1995, a company coaster or bus attempted to enter the PHIMCO compound but it was refused entry by the moving picket.186[67] Cinco, the company personnel manager, also testified that on May 27, 1995, when the NLRC TRO was in force, he and other employees tried to enter the PHIMCO compound, but they were not allowed entry; on May 29, 1995, Cinco was with the PHIMCO production manager in a pick-up and they tried to enter the company compound but, again, they were not allowed by the strikers.187[68] Another employee, Joaquin Aguilar, when asked how the strikers blocked the ingress of the company, replied that the strikers hold around, joining hands, moving picket and, because of the moving picket, no employee or vehicle could come in and go out of the premises.188[69]

The evidence adduced in the present case cannot be ignored. On balance, it supports the companys submission that the respondent PILA officers and members committed acts during the strike prohibited under Article 264(e) of the Labor Code. The testimonies of non-striking employees, who were prevented from gaining entry into the company premises, and confirmed no less by two officers of the union, are on record.

The photographs of the strike scene, also on record, depict the true character of the picket; while moving, it, in fact, constituted a human blockade, obstructing free ingress to and egress from the company premises, reinforced by benches planted directly in front of the company gates. The photographs do not lie these photographs clearly show that the picketers were going in circles, without any break in their ranks or closely bunched together, right in front of the gates. Thus, company vehicles were unable to enter the company compound, and were backed up several meters into the street leading to the company gates.

Despite all these clear pieces of evidence of illegal obstruction, the NLRC looked the other way and chose not to see the unmistakable violations of the law on strikes by the union and its respondent officers and members. Needless to say, while the law protects the rights of the laborer, it authorizes neither the oppression nor the destruction of the employer.189[70] For grossly ignoring the evidence before it, the NLRC committed grave abuse of discretion; for supporting these gross NLRC errors, the CA committed its own reversible error.

Liabilities of union

officers and members

In the determination of the liabilities of the individual respondents, the applicable provision is Article 264(a) of the Labor Code:

Art. 264. Prohibited activities. (a) x x x

x x x x

Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike.

We explained in Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc.

190[71]

that the effects of illegal strikes,

outlined in Article 264 of the Labor Code, make a distinction between participating workers and union officers. The services of an ordinary striking worker cannot be terminated for mere participation in an illegal strike; proof must be adduced showing that he or she committed illegal acts during the strike. The services of a participating union officer, on the other hand, may be terminated, not only when he actually commits an illegal act during a strike, but also if he knowingly participates in an illegal strike.
191[72]

In all cases, the striker must be identified. But proof beyond reasonable doubt is not required; substantial evidence, available under the attendant circumstances, suffices to justify the imposition of the penalty of dismissal on participating workers and union officers as above described.
192[73]

In the present case, respondents Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan, Maximo Pedro, Nathaniela Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo Ganitano, Alberto Basconcillo, and Ramon Falcis stand to be dismissed as participating union officers, pursuant to Article 264(a), paragraph 3, of the Labor Code. This provision imposes the penalty of dismissal on any union officer who knowingly participates in an illegal strike. The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment.
193[74]

PHIMCO was able to individually identify the participating union members thru the affidavits of PHIMCO employees Martimer Panis
194[75]

and Rodrigo A. Ortiz,

195[76]

and Personnel Manager Francis Ferdinand Cinco,

196[77]

and the photographs

197[78]

of Joaquin Aguilar.

Identified were respondents Angelita Balosa, Danilo Banaag, Abraham Caday, Alfonso Claudio, Francisco Dalisay, Angelito Dejan, Philip Garces, Nicanor Ilagan, Florencio Libongcogon, Nemesio Mamonong, Teofilo Manalili, Alfredo Pearson, Mario Perea, Renato Ramos, Mariano Rosales, Pablo Sarmiento, Rodolfo Tolentino, Felipe Villareal, Arsenio Zamora, Danilo Baltazar, Roger Caber, Reynaldo Camarin, Bernardo Cuadra, Angelito de Guzman, Gerardo Feliciano, Alex Ibaez, Benjamin Juan, Sr., Ramon Macaalay, Gonzalo Manalili, Raul Miciano, Hilario Pea, Teresa Permocillo, Ernesto Rio, Rodolfo Sanidad, Rafael Sta. Ana, Julian Tuguin and Amelia Zamora as the union members who actively participated in the strike by blocking the ingress to and egress from the company premises and preventing the passage of non-striking employees. For participating in illegally blocking ingress to and egress from company premises, these union members stand to be dismissed for their illegal acts in the conduct of the unions strike.

PHIMCO failed to observe due process

We find, however, that PHIMCO violated the requirements of due process of the Labor Code when it dismissed the respondents.

Under Article 277(b)

198[79]

of the Labor Code, the employer must send the employee, who is about to be terminated, a written

notice stating the cause/s for termination and must give the employee the opportunity to be heard and to defend himself.

We explained in Suico v. National Labor Relations Commission,

199[80]

that Article 277(b), in relation to Article 264(a) and (e) of the

Labor Code recognizes the right to due process of all workers, without distinction as to the cause of their termination, even if the cause was their supposed involvement in strike-related violence prohibited under Article 264(a) and (e) of the Labor Code.

To meet the requirements of due process in the dismissal of an employee, an employer must furnish him or her with two (2) written notices: (1) a written notice specifying the grounds for termination and giving the employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer's decision to dismiss the employee.
200[81]

In the present case, PHIMCO sent a letter, on June 23, 1995, to thirty-six (36) union members, generally directing them to explain within twenty-four (24) hours why they should not be dismissed for the illegal acts they committed during the strike; three days later, or on June 26, 1995, the thirty-six (36) union members were informed of their dismissal from employment.

We do not find this company procedure to be sufficient compliance with the due process requirements that the law guards zealously. It does not appear from the evidence that the union officers were specifically informed of the charges against them and given the chance to explain and present their side. Without the specifications they had to respond to, they were arbitrarily separated from work in total disregard of their rights to due process and security of tenure.

As to the union members, only thirty-six (36) of the thirty-seven (37) union members included in this case were notified of the charges against them thru the letters dated June 23, 1995, but they were not given an ample opportunity to be heard and to defend themselves; the notice of termination came on June 26, 1995, only three (3) days from the first notice - a perfunctory and superficial attempt to comply with the notice requirement under the Labor Code. The short interval of time between the first and second notice speaks for itself under the circumstances of this case; mere token recognition of the due process requirements was made, indicating the companys intent to dismiss the union members involved, without any meaningful resort to the guarantees accorded them by law.

Under the circumstances, where evidence sufficient to justify the penalty of dismissal has been adduced but the workers concerned were not accorded their essential due process rights, our ruling in Agabon v. NLRC
201[82]

finds full application; the employer,

despite the just cause for dismissal, must pay the dismissed workers nominal damages as indemnity for the violation of the workers right to statutory due process. Prevailing jurisprudence sets the amount of nominal damages at P30,000.00, which same amount we find sufficient and appropriate in the present case.
202[83]

WHEREFORE, in light of all the foregoing, we hereby REVERSE and SET ASIDE the decision dated February 10, 2004 and the resolution dated December 12, 2005 of the Court of Appeals in CA-G.R. SP No. 70336, upholding the rulings of the National Labor Relations Commission.

The Decision, dated February 4, 1998, of Labor Arbiter Jovencio Ll. Mayor should prevail and is REINSTATED with the MODIFICATION that Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan, Maximo Pedro, Nathaniela Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo Ganitano, Alberto Basconcillo, Ramon Falcis, Angelita Balosa, Danilo Banaag, Abraham Caday, Alfonso Claudio, Francisco Dalisay, Angelito Dejan, Philip Garces, Nicanor Ilagan, Florencio Libongcogon, Nemesio Mamonong, Teofilo Manalili, Alfredo Pearson, Mario Perea, Renato Ramos, Mariano Rosales, Pablo Sarmiento, Rodolfo Tolentino, Felipe Villareal, Arsenio Zamora, Danilo Baltazar, Roger Caber, Reynaldo Camarin, Bernardo Cuadra, Angelito de Guzman, Gerardo Feliciano, Alex Ibaez, Benjamin Juan, Sr., Ramon Macaalay, Gonzalo Manalili, Raul Miciano, Hilario Pea, Teresa Permocillo, Ernesto Rio, Rodolfo Sanidad, Rafael Sta. Ana, Julian Tuguin, and Amelia Zamora are each awarded nominal damages in the amount of P30,000.00. No pronouncement as to costs.

SO ORDERED.

ARTURO D. BRION Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES Associate Justice

LUCAS P. BERSAMIN Associate Justice

ROBERTO A. ABAD Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

SECOND DIVISION

WENSHA SPA CENTER, INC. and/or XU ZHI JIE, Petitioners,

G.R. No. 185122

Present:

CARPIO, J., Chairperson, NACHURA, PERALTA,

- versus -

ABAD, and MENDOZA, JJ.

Promulgated: LORETA T. YUNG, Respondent. August 16, 2010

X -------------------------------------------------------------------------------------- X

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by an employer who was charged before the National Labor Relations Commission (NLRC) for dismissing an employee upon the advice of a Feng Shui master. In this action, the petitioners assail the May 28, 2008 Decision203[1] and October 23, 2008 Resolution204[2] of the Court of Appeals (CA) in CA-G.R. SP No. 98855 entitled Loreta T. Yung v. National Labor Relations Commission, Wensha Spa Center, Inc. and/or Xu Zhi Jie.

THE FACTS:

Wensha Spa Center, Inc. (Wensha) in Quezon City is in the business of sauna bath and massage services. Xu Zhi Jie a.k.a. Pobby Co (Xu) is its president,205[3] respondent Loreta T. Yung (Loreta) was its administrative manager at the time of her termination from employment.

In her position paper,206[4] Loreta stated that she used to be employed by Manmen Services Co., Ltd. (Manmen) where Xu was a client. Xu was apparently impressed by Loretas performance. After he established Wensha, he convinced Loreta to transfer and work at Wensha. Loreta was initially reluctant to accept Xus offer because her job at Manmen was stable and she had been with Manmen for seven years. But Xu was persistent and offered her a higher pay. Enticed, Loreta resigned from Manmen and transferred to Wensha. She started working on April 21, 2004 as Xus personal assistant and interpreter at a monthly salary of P12,000.00.

Loreta introduced positive changes to Wensha which resulted in increased business. This pleased Xu so that on May 18, 2004, she was promoted to the position of Administrative Manager.207[5]

Loreta recounted that on August 10, 2004, she was asked to leave her office because Xu and a Feng Shui master were exploring the premises. Later that day, Xu asked Loreta to go on leave with pay for one month. She did so and returned on September 10, 2004. Upon her return, Xu and his wife asked her to resign from Wensha because, according to the Feng Shui master, her aura did not match that of Xu. Loreta refused but was informed that she could no longer continue working at Wensha. That same afternoon, Loreta went to the NLRC and filed a case for illegal dismissal against Xu and Wensha.

Wensha and Xu denied illegally terminating Loretas employment. They claimed that two months after Loreta was hired, they received various complaints against her from the employees so that on August 10, 2004, they advised her to take a leave of absence for one month while they conducted an investigation on the matter. Based on the results of the investigation, they terminated Loretas employment on August 31, 2004 for loss of trust and confidence.208[6]

The Labor Arbiter (LA) Francisco Robles dismissed Loretas complaint for lack of merit. He found it more probable that Loreta was dismissed from her employment due to Wenshas loss of trust and confidence in her. The LAs decision209[7] partly reads:

However, this office has found it dubious and hard to believe the contentions made by the complainant that she was dismissed by the respondents on the sole ground that she is a mismatch in respondents' business as advised by an alleged Feng Shui Master. The complainant herself alleged in her position paper that she has done several improvements in respondents business such as uplifting the morale and efficiency of its employees and increasing respondents clientele, and that respondent Co was very much pleased with the improvements made by the complainant that she was offered twice a promotion but she nevertheless declined. It would be against human experience and contrary to business acumen to let go of someone, who was an asset and has done so much for the company merely on the ground that she is a mismatch to the business. Absent any proof submitted by the complainant, this office finds it more probable that the complainant was dismissed due to loss of trust and confidence.210[8]

This ruling was affirmed by the NLRC in its December 29, 2006 Resolution,211[9] citing its observation that Wensha was still considering the proper action to take on the day Loreta left Wensha and filed her complaint. The NLRC added that this finding was bolstered by Wenshas September 10, 2004 letter to Loreta asking her to come back to personally clarify some matters, but she declined because she had already filed a case.

Loreta moved for a reconsideration of the NLRCs ruling but her motion was denied. Loreta then went to the CA on a petition for certiorari. The CA reversed the ruling of the NLRC on the ground that it gravely abused its discretion in appreciating the factual bases that led to Loretas dismissal. The CA noted that there were irregularities and inconsistencies in Wenshas position. The CA stated the following:

We, thus, peruse the affidavits and documentary evidence of the Private Respondents and find the following: First, on the affidavits of their witnesses, it must be noted that the same were mere photocopies. It was held that [T]he purpose of the rule in requiring the production of the best evidence is the prevention of fraud, because if a party is in possession of such evidence and withholds it, and seeks to substitute inferior evidence in its place, the presumption naturally arise[s] that the better evidence is withheld for fraudulent purposes which its production would expose and defeat. Moreover, the affidavits were not executed under oath. The rule is that an affiant must sign the document in the presence of and take his oath before a notary public as evidence that the affidavit was properly made. Guided by these principles, the affidavits cannot be assigned any weighty probative value and are mere scraps of paper the contents of which are hearsay. Second, on the sales report and order slips, which allegedly prove that Yung had been charging her food and drinks to Wensha, the said pieces of evidence do not, however, bear Yungs name thereon or even her signature. In fact, it does not state anyones name, except that of Wensha. Hence, it would simply be capricious to pinpoint, or impute, on Yung as the author in charging such expenses to Wensha on the basis of hearsay evidence. Third, while the affidavit of Wenshas Operations Manager, Princess delos Reyes (delos Reyes), may have been duly executed under oath, she did not, however, specify the alleged infractions that Yung committed. If at all, delos Reyes only made general statements on the alleged complaints against Yung that were not even substantiated by any other piece of evidence. Finally, the daily time records (DTRs) of Yung, which supposedly prove her habitual tardiness, were mere photocopies that are not even signed by Wenshas authorized representative, thus suspect, if not violative of the best evidence rule and, therefore, incompetent evidence. x x x [Emphases appear in the original] x x x x. Finally, after the Private Respondents filed their position paper, they alleged mistake on the part of their former counsel in stating that Yung was dismissed on August 31, 2004. Thus, they subsequently moved for the admission of their rejoinder. Notably, however, the said rejoinder was dated October 4, 2004, earlier than the date when their position paper was filed, which was on November 3, 2004. It is also puzzling that their position paper was dated November 25, 2004, much later than its date of filing. The irregularities are simply too glaring to be ignored. Nevertheless, the Private Respondents admission of Yungs termination on August 31, 2004 cannot be retracted. They cannot use the mistake of their counsel as an excuse considering that the position paper was verified by their Operations Manager, delos Reyes, who attested to the truth of the contents therein.212[10] [Emphasis supplied]

Hence, the fallo of the CA decision reads:

WHEREFORE, the instant petition is GRANTED. Wensha Spa Center, Inc. and Xu Zhi Jie are ORDERED to, jointly and severally, pay Loreta T. Yung her full backwages, other privileges, and benefits, or their monetary equivalent, corresponding to the period of her dismissal from September 1, 2004 up to the finality of this decision, and damages in the amounts of fifty thousand pesos (Php50,000.00) as moral damages, twenty five thousand pesos (Php25,000.00) as exemplary damages, and twenty thousand pesos (Php20,000.00) as attorneys fees. No costs. SO ORDERED.213[11]

Wensha and Xu now assail this ruling of the CA in this petition presenting the following:

V.

GROUNDS FOR THE ALLOWANCE OF THE PETITION

5.1 The following are the reasons and arguments, which are purely questions of law and some questions of facts, which justify the appeal by certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure, as amended, to this Honorable SUPREME COURT of the assailed Decision and Resolution, to wit: 5.1.1 The Honorable COURT OF APPEALS gravely erred in reversing that factual findings of the Honorable Labor Arbiter and the Honorable NLRC (Third Division) notwithstanding recognized and established rule in our jurisdiction that findings of facts of quasi-judicial agencies who have gained expertise on their respective subject matters are given respect and finality;

5.1.2

The Honorable COURT OF APPEALS committed grave abuse of discretion and serious errors when it ruled that findings of facts of the Honorable Labor Arbiter and the Honorable NLRC are not supported by substantial evidence despite the fact that the records clearly show that petitioner therein was not dismissed but is under investigation, and that she is guilty of serious infractions that warranted her termination; The Honorable COURT OF APPEALS grave[ly] erred when it ordered herein petitioner to pay herein respondent her separation pay, in lieu of reinstatement, and full backwages, as well as damages and attorneys fees; The Honorable COURT OF APPEALS committed grave abuse of discretion and serious errors when it held that petitioner XU ZHI JIE to be solidarily liable with WENSHA, assuming that respondent was illegally dismissed;

5.1.3

5.1.4

5.2 The same need to be corrected as they would work injustice to the herein petitioner, grave and irreparable damage will be done to him, and would pose dangerous precedent.214[12]

THE COURTS RULING:

Loretas security of tenure is guaranteed by the Constitution and the Labor Code. The 1987 Philippine Constitution provides in Section 18, Article II that the State shall protect the rights of workers and promote their welfare. Section 3, Article XIII also provides that all workers shall be entitled to security of tenure. Along that line, Article 3 of the Labor Code mandates that the State shall assure the rights of workers to security of tenure.

Under the security of tenure guarantee, a worker can only be terminated from his employment for cause and after due process. For a valid termination by the employer: (1) the dismissal must be for a valid cause as provided in Article 282, or for any of the authorized causes under Articles 283 and 284 of the Labor Code; and (2) the employee must be afforded an opportunity to be heard and to defend himself. A just and valid cause for an employees dismissal must be supported by substantial evidence, and before the employee can be dismissed, he must be given notice and an adequate opportunity to be heard.215[13] In the process, the employer bears the burden of proving that the dismissal of an employee was for a valid cause. Its failure to discharge this burden renders the dismissal unjustified and, therefore, illegal.216[14]

As a rule, the factual findings of the court below are conclusive on Us in a petition for review on certiorari where We review only errors of law. This case, however, is an exception because the CAs factual findings are not congruent with those of the NLRC and the LA.

According to Wensha in its position paper,217[15] it dismissed Loreta on August 31, 2004 after investigating the complaints against her. Wensha asserted that her dismissal was a valid exercise of an employers right to terminate a managerial employee for loss of trust and confidence. It claimed that she caused the resignation of an employee because of gossips initiated by her. It was the reason she was asked to take a leave of absence with pay for one month starting August 10, 2004.218[16]

Wensha also alleged that Loreta was sowing intrigues in the company which was inimical to Wensha. She was also accused of dishonesty, serious breach of trust reposed in her, tardiness, and abuse of authority.219[17]

In its Rejoinder, Wensha changed its position claiming that it did not terminate Loretas employment on August 31, 2004. It even sent her a notice requesting her to report back to work. She, however, declined because she had already filed her complaint.220[18]

As correctly found by the CA, the cause of Loretas dismissal is questionable. Loss of trust and confidence to be a valid ground for dismissal must have basis and must be founded on clearly established facts.221[19]

The Court finds the LA ruling that states, [a]bsent any proof submitted by the complainant, this office finds it more probable that the complainant was dismissed due to loss of trust and confidence,222[20] to be utterly erroneous as it is contrary to the applicable rules and pertinent jurisprudence. The onus of proving a valid dismissal rests on the employer, not on the employee.223[21] It is the employer who bears the burden of proving that its dismissal of the employee is for a valid or authorized cause supported by substantial evidence. 224[22]

According to the NLRC, [p]erusal of the entire records show that complainant left the respondents premises when she was confronted with the infractions imputed against her.225[23] This information was taken from the affidavit226[24] of Princess Delos Reyes (Delos Reyes) which was dated March 21, 2005, not in Wenshas earlier position paper or pleadings submitted to the LA. The affidavits227[25] of employees attached to Delos Reyes affidavit were all dated November 19, 2004 indicating that they were not yet executed when the complaints against Loreta were supposedly being investigated in August 2004.

It is also noteworthy that Wenshas position paper related that because of the gossips perpetrated by Loreta, a certain Oliva Gonzalo (Gonzalo) resigned from Wensha. Because of the incident, Gonzalo, whose father was a policeman, reportedly got angry with complainant and of the management telling her friends at respondent company that she would retaliate thus creating fear among those concerned.228[26] As a result, Loreta was advised to take a paid leave of absence for one month while Wensha conducted an investigation. According to Loreta, however, the reason for her termination was her aura did not match that of Xu and the work environment at Wensha. Loreta narrated: On August 10, 2004 however, complainant was called by respondent Xu and told her to wait at the lounge area while the latter and a Feng Shui Master were doing some analysis of the office. After several hours of waiting, respondent Xu then told complainant that according to the Feng Shui master her Chinese Zodiac sign is a mismatch with that of the respondents; that complainant should not enter the administrative office for a month while an altar was to be placed on the left side where complainant has her table to allegedly correct the mismatch and that it is necessary that offerings and prayers have to be made and said for about a month to correct the alleged jinx. Respondent Xu instructed complainant not to report to the office for a month with assurance of continued and regular salary. She was ordered not to seek employment elsewhere and was told to come back on the 10th of September 2004.229[27]

Although she was a little confused, Loreta did as she was instructed and did not report for work for a month. She returned to work on September 10, 2004. This is how Loreta recounted the events of that day:

On September 10, 2004, in the morning, complainant reported to the office of respondents. As usual, she punched-in her time card and signed in the logbook of the security guard. When she entered the administrative office, some of its employees immediately contacted respondent Xu. Respondent Xu then contacted complainant thru her mobile phone and told her to leave the administrative office immediately and instead to wait for him in the dining area.

xxx Complainant waited for respondent Xu in the dining area. After waiting for about two (2) hours, respondent Xu was nowhere. Instead, it was Jiang Xue Qin a.k.a Annie Co, the Chinese wife of respondent Xu, who arrived and after a short conversation between them, the former frankly told complainant that she has to resign allegedly she is a mismatch to respondent Xu according to the Feng Shui master and therefore she does not fit to work (sic) with the respondents. Surprised and shocked, complainant demanded of Jiang Xue Qin to issue a letter of termination if it were the reason therefor.

Instead of a termination letter issued, Jiang Xue Qin insisted for the complainant's resignation. But when complainant stood her ground, Jian Xue Qin shouted invectives at her and told to leave the office immediately. Respondent Xu did not show up but talked to the complainant over the mobile phone and convinced her likewise to resign from the company since there is no way to retain her because her aura unbalanced the area of employment according to the Feng Shui, the Chinese spiritual art of placement. Hearing this from no lees than respondent Xu, complainant left the office and went straight to this Office and filed the present case on September 10, 2004. xxx230[28]

Loreta also alleged that in the afternoon of that day, September 10, 2004, a notice was posted on the Wensha bulletin board that reads:

TO ALL EMPLOYEES OF WENSHA SPA CENTER WE WOULD LIKE TO INFORM YOU THAT MS. LORIE TSE YUNG, FORMER ADMINISTRATIVE OFFICER OF WENSHA SPA CENTER IS NO LONGER CONNECTED TO THIS COMPANY STARTING TODAY SEPTEMBER 10, 2004. ANY TRANSACTION MADE BY HER IS NO LONGER A LIABILITY OF THE COMPANY. (SGD.) THE MANAGEMENT [Italics were in red letters.]231[29]

The Court finds Loretas complaint credible. There is consistency in her pleadings and evidence. In contrast, Wenshas pleadings and evidence, taken as a whole, suffer from inconsistency. Moreover, the affidavits of the employees only pertain to petty matters that, to the Courts mind, are not sufficient to support Wenshas alleged loss of trust and confidence. To be a valid cause for termination of employment, the act or acts constituting breach of trust must have been done intentionally, knowingly, and purposely; and they must be founded on clearly established facts.

The CA decision is supported by evidence and logically flows from a review of the records. Loretas narration of the events surrounding her termination from employment was simple and straightforward. Her claims are more credible than the affidavits which were clearly prepared as an afterthought.

More importantly, the records are bereft of evidence that Loreta was duly informed of the charges against her and that she was given the opportunity to respond to those charges prior to her dismissal. If there were indeed charges against Loreta that Wensha had to investigate, then it should have informed her of those charges and required her to explain her side. Wensha should also have kept records of the investigation conducted while Loreta was on leave. The law requires that two notices be given to an employee prior to a valid termination: the first notice is to inform the employee of the charges against her with a warning that she may be terminated from her employment and giving her reasonable opportunity within which to explain her side, and the second notice is the notice to the employee that upon due consideration of all the circumstances, she is being terminated from her employment.232[30] This is a requirement of due process and clearly, Loreta did not receive any of those required notices.

We are in accord with the pronouncement of the CA that the reinstatement of Loreta to her former position is no longer feasible in the light of the strained relations between the parties. Reinstatement, under the circumstances, would no longer be practical as it would not be in the interest of both parties. Under the law and jurisprudence, an illegally dismissed employee is entitled to two reliefs - backwages and reinstatement, which are separate and distinct. If reinstatement would only exacerbate the tension and further ruin the relations of the employer and the employee, or if their relationship has been unduly strained due to irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be prudent to order payment of separation pay instead of reinstatement.233[31] In the case of Golden Ace Builders v. Talde,234[32] We wrote: Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.

In the case at bench, the CA, upon its own assessment, pronounced that the relations between petitioners and the respondent have become strained because of her dismissal anchored on dubious charges. The respondent has not contested the finding. As she is not insisting on being reinstated, she should be paid separation pay equivalent to one (1) month salary for every year of service.235[33] The CA, however, failed to decree such award in the dispositive portion. This should be rectified.

Nevertheless, the Court finds merit in the argument of petitioner Xu that the CA erred in ruling that he is solidarily liable with Wensha.

Elementary is the rule that a corporation is invested by law with a personality separate and distinct from those of the persons composing it and from that of any other legal entity to which it may be related. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality.236[34]

In labor cases, corporate directors and officers may be held solidarily liable with the corporation for the termination of employment only if done with malice or in bad faith.237[35] Bad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud.238[36]

In the subject decision, the CA concluded that petitioner Xu and Wensha are jointly and severally liable to Loreta.239[37] We have read the decision in its entirety but simply failed to come across any finding of bad faith or malice on the part of Xu. There is, therefore, no justification for such a ruling. To sustain such a finding, there should be an evidence on record that an officer or director acted maliciously or in bad faith in terminating the services of an employee.240[38] Moreover, the finding or indication that the dismissal was effected with malice or bad faith should be stated in the decision itself.241[39]

WHEREFORE, the petition is PARTIALLY GRANTED. The Appeals, in CA-G.R. SP No. 98855, is hereby MODIFIED to read as follows:

decretal portion of the May 28, 2008 Decision of the Court of

WHEREFORE, the petition is GRANTED. Wensha Spa Center, Inc. is hereby ordered to pay Loreta T. Yung her full backwages, other privileges, and benefits, or their monetary equivalent, and separation pay reckoned from the date of her dismissal, September 1, 2004, up to the finality of this decision, plus damages in the amounts of Fifty Thousand (P50,000.00) Pesos, as moral damages; Twenty Five Thousand (P25,000.00) Pesos as exemplary damages; and Twenty Thousand (P20,000.00) Pesos, as attorneys fees. No costs.

SO ORDERED.

JOSE CATRAL MENDOZA Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice Chairperson FIRST DIVISION

JESUS E. DYCOCO, JR., Petitioner,

G.R. No. 188271

Present:

CORONA, C.J., Chairperson, VELASCO, JR., - versus LEONARDO-DE CASTRO, DEL CASTILLO and PEREZ, JJ.

EQUITABLE PCI BANK (NOW BANCO DE ORO), RENE BUENAVENTURA AND SILES SAMALEA, Respondents. Promulgated:

August 16, 2010

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

RESOLUTION

CORONA, C.J.:

Petitioner Jesus E. Dycoco, Jr. seeks reconsideration of the August 26, 2009 resolution denying his petition242[1] wherein he assailed the February 16, 2009 decision and May 12, 2009 resolution of the Court of Appeals (CA) in CA-G.R. SP No. 105126.

The CA affirmed the decision and resolution of the National Labor Relations Commission (NLRC) in Jesus Dycoco, Jr. v. Equitable PCI Bank / Rene Buenaventura, et al., docketed as LAC No. 01-000390-08. The NLRC, on the other hand, reversed and set aside the July 24, 2007 decision of the labor arbiter of the Regional Arbitration Branch No. V, Legazpi City, in RAB-V Case No. 09-00407-06 which held that petitioner was illegally dismissed by respondents Equitable PCI Bank (now Banco de Oro), Rene Buenaventura and Siles Samalea.

In reversing the labor arbiter, the NLRC ruled that petitioners dismissal was for just cause. He was guilty of serious misconduct, willful disobedience and gross negligence for not performing his duty to complete the documentary requirements in the opening of accounts pursuant to the banks internal procedures. This directly resulted in the unauthorized abstraction of bank funds.

The pertinent facts are as follows.

In February 1997, petitioner was hired by respondent bank as Assistant Manager and/or OIC Branch Head of its Legazpi City Branch, Region V (Legazpi branch). In 2000, petitioner became Branch Head and in September 2003, respondent bank underwent an internal reorganization. Pursuant thereto, petitioner became the Personal Banking Manager (PBM) of the Legazpi branch.

In June 2005, several clients of the Legazpi branch filed complaints for alleged unauthorized abstractions of various trust funds, treasury placements and deposits. Respondent bank promptly commenced an investigation. Consequently, show cause letters were issued to the officers of the Legazpi branch, including Branch Center Head Glena Orogo, former Service Officer respondent Siles Samalea, Service Officer Irene Tabuzo, Operations Officers Imelda Espiritu and Maria Fe Gianan, Investment Clerk Carlo Quirong and the petitioner as the PBM.

The November 14, 2005 show cause letter243[2] addressed to petitioner stated the results of the investigation, as follows:

A.

On the Abstraction of Trust Placement of Client, Ma. Carolina V. Villegas a. On 01.30.04, when you approved the opening of PLI account for P7.5M of Ms. Villegas: i. You did not require Ms. Villegas to accomplish/submit the account opening requirements such as Revocable Trust Agreement, Investment Guidelines and Trust Compensation Agreement. ii. You did not require Ms. Villegas to sign on the LOIContribution for P7.5M (as initial contribution) to acknowledge the validity and correctness of contribution made, despite your notation signature to follow on the cited LOI. b. You did not enroll in your Sales Portal the PLI account of Ms. Ma. Carolina V. Villegas opened with an initial placement of P7.5M on 01.30.04 upon your approval. c. You did not secure the required account opening documents (i.e. Revocable Trust Agreements, Investment Guidelines, Trust Compensation Agreement) on the PLI account opened on 01.30.04 by Ms. Villegas, despite

B.

C.

D.

E. F.

e-mail follow ups by Ms. Ma. Nelisa M. Trajano/AOPersonal Trust and Agencies Division on 5.13.04 and 02.23.05. d. Based on statements of branch personnel, you prevented the BCH and her branch personnel from going to the residence of Carlo B. Quirong to make inquiry/investigation about the Villegas case. On the Abstraction of Trust Placement of Clients, Fr. Roberto Crisol or Benita Crisol (PLI No. 117-78825-2) a. On 10.29.03, you did not require Fr. Roberto Crisol or Benita Crisol to sign on the LOI-Contribution for P285K to acknowledge the validity and correctness of contribution made, despite your notation signature to follow on the cited LOI. On the Abstraction of Trust Placement of Clients, Fr. Roberto Crisol or Anna Lea Borromeo (PLI No. 117-78828-7) a. On 10.29.06, you did not require Fr. Roberto Crisol or Anna Lea Borromeo to sign on the LOI-Contribution for P235K to acknowledge the validity and correctness of contribution made, despite your notation signature to follow on the cited LOI. On the Abstraction of Trust Placement of Clients, Fr. Roberto Crisol or Ma. Celio Sabareza (PLI No. 117-78829-5) a. On 7.31.03, you co-approved the payment of spurious withdrawal for P100K from the PLI account of Fr. Roberto Crisol or Maria Celio Sabareza: i. Despite the signatures of Fr. Roberto Crisol on the LOIWithdrawal for P100K were forged. ii. Although you did not verify the signatures of Fr. Roberto Crisol on the spurious LOI-Withdrawal for P100K against the specimen signatures on file. Instead, you allowed Carlo B. Quirong do the signature verification. iii. Without requiring the PLI processor (Ailene C. Perfecto) to prepare Managers Check under the name of Fr. Roberto Crisol or Ma. Celio Sabareza (Trustor/client) or credit memo (CM) for clients account as mode of payment of said PLI withdrawal as required by policy. Instead, you approved the validation of cited withdrawal as miscellaneous payout. iv. Allowing Carlo B. Quirong/CSA to pay via miscellaneous payout the LOI-Withdrawal for P100K instead of the teller. You did not enroll in your Sales Portal the five PLI accounts of Fr. Roberto Crisol et al. outstanding with the branch as of 01.31.04. On the Abstraction of Trust Placements of Sps. Cesario Israel/Josephine Bandong a. You did not immediately notify or report the fraudulent act of Carlo B. Quirong, Sales Assistant to his superior officer, BCH upon your knowledge of the incident on 06.15.05. The BCH could have immediately placed under preventive suspension Carlo B. Quirong effective 06.15.05, thereby preventing the complaint of Mayor Dick Galicia, client on the alleged withdrawal for P810K by Carlo B. Quirong on 06.16.05. b. You did not report the Cesario Israel/Josephine Bandong (Abstraction of CTF placement for P2,371,620.43 on 12.09.03 by Carlo Quirong) incident to Internal Audit Division (IAD) within two working days from the date of your knowledge of the incident on 06.15.05. xxx As a result, the fraudulent withdrawal was not detected/prevented exposing the Bank to financial loss of P100K.

In August 2006, respondent bank issued a second show cause letter244[3] to petitioner charging him with involvement in alleged dollar-trading activities. Petitioner was preventively suspended from September 20, 2006 to October 20, 2006.

On September 22, 2006, while petitioner was under preventive suspension, he filed a complaint in the NLRC Regional Arbitration Branch No. V alleging constructive dismissal and illegal suspension, and demanding reinstatement/separation pay and payment of incentives, 13th month pay, bonuses, moral and exemplary damages and attorneys fees.

However, on October 10, 2006, respondent bank rendered a decision245[4] with respect to the first show cause letter finding petitioner guilty of violating Articles IV (F) (Class C) (1), IV (D) (Class D) (1) and IV (E) (Class C) (13) of the banks Code of Conduct, and

Article 282 (b) of the Labor Code. The penalty of dismissal was imposed on him. Petitioner was, however, exonerated from the charge of dollar-tradingas specified in the second show cause letter.

On July 24, 2007, the labor arbiter held that petitioner was illegally dismissed. He ordered respondent bank to pay separation pay, backwages, incentives, bonuses, 13th month pay and attorneys fees in the total amount of P1,147,216.00.246[5]

On appeal, the NLRC reversed the labor arbiters decision. The CA subsequently affirmed the NLRC.

Petitioner insists that he was illegally dismissed. We already rejected his position but petitioner seeks reconsideration.

The motion for reconsideration is denied.

Jurisprudence247[6] has repeatedly outlined how diligence in the banking industry should be observed:

By its very nature, the business of the petitioner bank is so impressed with public trust; banks are mandated to exercise a higher degree of diligence in the handling of its affairs than that expected of an ordinary business enterprise. Banks handle transactions involving millions of pesos and properties worth considerable sums of money. The banking business will thrive only as long as it maintains the trust and confidence of its customers/clients. Indeed, by the very nature of their work, the degree of responsibility, care and trustworthiness expected of officials and employees of the bank is far greater than those of ordinar y officers and employees in the other business firms. Hence, no effort must be spared by banks and their officers and employees to ensure and preserve the trust and confidence of the general public and its customers/clients as well as the integrity of its records and the safety and well-being of its customers/clients while in its premises.

As the banking industry is impressed with public interest, all bank personnel are burdened with a high level of responsibility insofar as care and diligence in the custody and management of funds are concerned. Petitioner miserably failed to discharge this burden.

Petitioner violated his duties and responsibilities as PBM when he signed and approved the subject transactions without the necessary signatures of the concerned clients. As PBM, it was his obligation to ensure that all documentary requirements (were) complied with by clients being handled and that the banks interest (was) at all times protected. It was incumbent on him to enforce strict compliance with bank policies and internal control procedures while maintaining the highest level of service quality.248[7]

It is significant that petitioner did not even deny that it was he who signed, approved and facilitated the subject transactions relating to the various abstractions committed by a bank employee. It was an implied admission that he was the one who opened the door for the commission of the unlawful abstractions by failing to ensure that all requirements for the opening of accounts were complied with. This constituted gross negligence.

As a PBM, petitioner should have exercised much care in performing his functions. Petitioners failure on three separate occasions to require clients to sign the requisite documents (a vital and standard procedure in all banking transactions) was a clear manifestation of serial negligence. Because of this gross negligence, Carlo Quirong, respondent banks Customer Sales Assistant, was able to filch millions of pesos from respondent bank by manipulating clients accounts.

Petitioners assertion that neither Quirong nor any of the bank operations personnel was under his supervision and that the day-today operations of his branch were the responsibility of the Banking Center Head does not exonerate him from liability. He was duty-bound to make certain that such documentary requirements were complied with in accordance with respondent banks rules.

Gross negligence connotes want of care in the performance of ones duties.249[8] Petitioners failure to observe basic procedure constituted gross negligence. His repeated failure to carefully observe his duties as PBM clearly showed utter want of care.

After committing gross negligence, petitioner surprisingly still expects respondent bank to retain him. Nothing can compel an employer to continue availing of the services of an employee guilty of acts inimical to its interests as this is a ground for loss of confidence.250[9] Petitioners breach of respondent banks policies intended to safeguard the bank and its clients funds was clearly inimical to the interests of his employer. Loss of confidence and dismissal from employment were therefore justified.

Loss of confidence applies to situations where the employee is routinely charged with the care and custody of employers money or property.251[10] If the employees are cashiers, managers, supervisors, salesmen or other personnel occupying positions of responsibility, the employers loss of trust and confidence in said employees may justify termination of their employment.252[11]

The CA was thus correct in upholding the dismissal of petitioner.

WHEREFORE, the motion for reconsideration is DENIED with FINALITY.

Costs against petitioner.

No further pleadings or motions shall be entertained. Let entry of judgment be made in due course.

SO ORDERED.

RENATO C. CORONA Chief Justice Chairperson

WE

CONCUR:

PRESBITERO J. VELASCO, JR. Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

MARIANO C. DEL CASTILLO Associate Justice

JOSE PORTUGAL PEREZ Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

Republic of the Philippines Supreme Court Manila

SPECIAL SECOND DIVISION

CARLOS DE CASTRO, Petitioner,

G.R. No. 165153

Present: versus CARPIO MORALES, J., Acting Chairperson, LIBERTY BROADCASTING NETWORK, INC. and EDGARDO QUIOGUE, Respondents. VELASCO, JR., BRION, *ABAD, and PEREZ, JJ.

Promulgated:

August 25, 2010 x----------------------------------------------------------------------------------------x

RESOLUTION

BRION, J.:

The respondent, Liberty Broadcasting Network, Inc. (LBNI), filed the present Motion for Reconsideration with Motion to Suspend Proceedings, asking us, first, to set aside our Decision253[1] and, second, to suspend the court proceedings in view of the Stay Order issued on August 19, 2005 by the Regional Trial Court (RTC) of Makati, Branch 138, in relation to the corporate rehabilitation proceedings that LBNI initiated.

The dispositive part of our Decision reads:

WHEREFORE, premises considered, we hereby GRANT the petition. Accordingly, we REVERSE and SET ASIDE the Decision and Resolution of the CA promulgated on May 25, 2004 and August 30, 2004, respectively, and REINSTATE in all respects the Resolution of the National Labor Relations Commission dated September 20, 2002. Costs against the respondents.

SO ORDERED.254[2]

The facts, as recited in our Decision, are summarized below:

The petitioner, Carlos C. de Castro, worked as a chief building administrator at LBNI. On May 31, 1996, LBNI dismissed de Castro on the grounds of serious misconduct, fraud, and willful breach of the trust reposed in him as a managerial employee. Allegedly, de Castro committed the following acts:

1.

Soliciting and/or receiving money for his own benefit from suppliers/dealers/traders [Cristino Samarita and Jose Aying+, representing commissions for job contracts involving the repair, reconditioning and replacement of parts of the airconditioning units at the companys Antipolo Station, as well as the installation of fire exits at the *LBNIs+ Technology Centre; Diversion of company funds by soliciting and receiving on different occasions a total of P14,000.00 in commissions from Aying for a job contract in the companys Antipolo Station; Theft of company property involving the unauthorized removal of one gallon of Delo oil from the company storage room; Disrespect/discourtesy towards a companys supply manager+; co-employee, for using offensive language against [Vicente Niguidula, the

2.

3.

4.

5.

Disorderly behavior, for challenging Niguidula to a fight during working hours within the company premises, thereby creating a disturbance that interrupted the normal flow of activities in the company;

6.

Threat and coercion, for threatening to inflict bodily harm on the person of Niguidula and for coercing [Gil Balais], a subordinate, into soliciting money in *de Castros+ behalf from suppliers/contractors; Abuse of authority, for instructing Balais to collect commissions from Aying and Samarita, and for requiring Raul Pacaldo (Pacaldo) to exact 2% - 5% of the price of the contracts awarded to suppliers; and Slander, for uttering libelous statements against Niguidula.255[3]

7.

8.

Aggrieved, de Castro filed a complaint for illegal dismissal against LBNI with the National Labor Relations Commission (NLRC) Arbitration Branch, National Capital Region, praying for reinstatement, payment of backwages, damages, and attorneys fees.256[4] He maintained that he could not have solicited commissions from suppliers considering that he was new in the company.257[5] Moreover, the accusations were belatedly filed as the imputed acts happened in 1995. He explained that the one gallon of Delo oil he allegedly took was actually found in Gil Balais room.258[6] He denied threatening Vicente Niguidula, whom he claimed verbally assaulted him and challenged him to a fight, an incident which he reported to respondent Edgardo Quiogue, LBNIs executive vice president, and to the Makati police.259[7] De Castro alleged that prior to executing affidavits against him, Niguidula and Balais had serious clashes with him.260[8]

On April 30, 1999, the Labor Arbiter rendered a decision261[9] in de Castros favor, holding LBNI liable for illegal dismissal.262[10] The Labor Arbiter found the affidavits of LBNIs witnesses to be devoid of merit, noting that (1) witnesses Niguidula and Balais had altercations with de Castro prior to the execution of their respective affidavits; (2) the affidavit of Cristino Samarita, one of the suppliers from whom de Castro allegedly asked for commissions, stated that it was not de Castro, but Balais, who personally asked for money; and (3) Jose Aying, another supplier, recanted his earlier affidavit.263[11]

LBNI appealed the Labor Arbiters ruling to the NLRC. Initially, the NLRC reversed the Labor Arbiters decision but on de Castros motion for reconsideration, the NLRC reinstated the Labor Arbiters decision.264[12] It ruled that the charges against de Castro were

never really substantiated other than by bare allegations in the witnesses affidavits who were the companys employees and who had altercations with De Castro prior to the execution of their affidavits.265[13]

LBNI again appealed the NLRCs adverse decision to the Court of Appeals (CA). On May 25, 2004, the CA reversed the NLRCs decision and held that de Castros dismissal was based on valid grounds. It ruled too that the NLRC gravely abused its discretion when it disregarded the affidavits of all of LBNIs witnesses.266[14]

In our September 23, 2008 Decision, we found that de Castros dismissal was based on unsubstantiated charges. Aying, a contractor, earlier executed an affidavit stating that de Castro asked him for commission, but in his second affidavit, he recanted his statement and exonerated de Castro.267[15] The other witnesses, Niguidula and Balais, were LBNI employees who resented de Castro.268[16] We noted that de Castro had not stayed long in the company and had not even passed his probationary period when the acts charged allegedly took place. We found this situation contrary to common experience, since new employees have a natural motivation to make a positive first impression on the employer, if only to ensure that they are regularized.269[17]

Thus, we ruled that the grounds that LBNI invoked for de Castros dismissal were, at best, doubtful, based on the evidence presented. These doubts should be interpreted in de Castros favor, pursuant to Article 4 of the Labor Code.270[18] Between a laborer and his employer, doubts reasonably arising from the evidence or interpretation of agreements and writing should be resolved in the formers favor.271[19]

The Motion for Reconsideration

LBNI now moves for a reconsideration of our September 23, 2008 Decision based on the following arguments: (1) LBNI had valid legal grounds to terminate de Castros employment for loss of trust and confidence;272[20] (2) the affidavits of LBNIs witnesses should not have been totally disregarded;273[21] and (3) LBNI is currently under rehabilitation, hence, the proceedings in this case must be suspended.274[22] LBNI points out that it filed, with the RTC of Makati, a petition for Corporate Rehabilitation with Prayer for Suspension of Payments (docketed as S.P. Proc. Case No. M-6126), and on August 19, 2005, the RTC issued a Stay Order directing, among others, that the

enforcement of all claims against Liberty Telecoms, Liberty Broadcasting and Skyphone, whether for money or otherwise and whether such enforcement is by Court action or otherwise x x x be forthwith stayed.275[23]

Comment on the Motion for Reconsideration

In his comment, de Castro contends that LBNIs motion for reconsideration contains a rehash of LBNIs earlier arguments. He avers that despite the RTCs Stay Order, it is premature for this Court to suspend the proceedings. If a suspension of the proceedings is necessary, the proper venue to file the motion is with the Office of the Labor Arbiter. 276[24] De Castro further posits that LBNI should have informed this Court of the status of its Petition for Corporate Rehabilitation.277[25] THE COURTS RULING

Except for the prayer to suspend the execution of our September 23, 2008 Decision, we do not find LBNIs Motion for Reconsideration meritorious. Although we reject, for lack of merit, LBNIs arguments regarding the legality of de Castros dismissal, we suspend the execution of our Decision in deference to the Stay Order issued by the rehabilitation court.

The issue of illegal dismissal has already been resolved in the Courts September 23, 2008 Decision

LBNIs motion for reconsideration merely reiterates its earlier arguments, which we have already addressed in our September 23, 2008 Decision. LBNI has failed to offer any substantive argument that would convince us to reverse our earlier ruling.

LBNI argues that there is no logic for it to illegally dismiss de Castro because being on probationary employment a fact which this Court had stated in its decision all that the company had to do was not to re-hire him.278[26] By this claim, LBNI has misread the import of our ruling. The September 23, 2008 Decision declared that de Castro had not stayed long in the company and had not even passed his probationary period when the acts charged allegedly took place.279[27] Properly read, we found that the acts charged against de Castro took place when he was still under probationary employment a finding completely different from LBNIs claim that de Castro was dismissed during his probationary employment. On the contrary, de Castro was dismissed on the ninth month of his employment with LBNI, and by then, he was already a regular employee by operation of law. Article 281 of the Labor Code provides that *p+robationary employment shall not exceed six (6) months from the date the employee started working, x x x [a]n employee who is allowed to work after a probationary period shall be considered a regular employee. As a regular employee, de Castro was entitled to security of tenure and his illegal dismissal from LBNI justified the awards of separation pay, backwages, and damages.

The pendency of the rehabilitation proceedings does not affect the Courts jurisdiction to resolve the case, but merely suspends the execution of the September 23, 2008 Decision

On October 18, 2005, while de Castros petition was still pending before the Court, LBNI filed a motion to suspend the proceedings, citing the Stay Order, dated August 19, 2005, issued by the RTC of Makati, Branch 138 in S.P. Case No. M-6126.280[28] The Stay Order read:

FOR THE REASONS GIVEN and applying Section 6 of the Interim Rules of Procedure on Corporate Rehabilitation, x x x it is ordered that enforcement of all claims against [LBNI] whether for money or otherwise and whether such enforcement is by Court action or otherwise, its guarantors and sureties not solidarily liable with the petitioner, be forthwith stayed. x x x x SO ORDERED.281[29]

LBNIs motion was denied in our Resolution of December 12, 2005 for being premature, as de Castro then had yet to file his reply to LBNIs comment on the petition.282[30] Thereafter, nothing was heard from LBNI regarding the Stay Order or the rehabilitation proceedings it instituted before the RTC of Makati, Branch 138. Even the memorandum, dated May 4, 2006, that LBNI filed with the Court contained no reference to the rehabilitation proceedings.283[31]

The filing of a memorandum before the Court is not an empty requirement, devoid of legal significance. In A.M. No. 99-2-04-SC, the Court declared that issues raised in previous pleadings but not included in the memorandum shall be deemed waived or abandoned. Being a summation of the parties previous pleadings, the memoranda alone may be considered by the Court in deciding or resolving the petition. Thus, on account of LBNIs omission, only the issues raised in the parties memoranda principally, the validity of de Castros dismissal from LBNI were considered by the Court in resolving the case.

The Court does not take judicial notice of proceedings in the various courts of justice in the Philippines.284[32] At the time we decided the present case, we were thus not bound to take note of and consider the pendency of the rehabilitation proceedings, as the matter had not been properly brought to our attention. In Social Justice Society v. Atienza,285[33] we said that: In resolving controversies, courts can only consider facts and issues pleaded by the parties. Courts, as well as magistrates presiding over them are not omniscient. They can only act on the facts and issues presented before them in appropriate pleadings. They may not even substitute their own personal knowledge for evidence. Nor may they take notice of matters except those expressly provided as subjects of mandatory judicial notice. x x x x The party asking the court to take judicial notice is obligated to supply the court with the full text of the rules the party desires it to have notice of.

Notably, LBNIs memorandum was filed on May 4, 2006, more than 180 days from the date of the initial hearing on October 5, 2005 (as set in the Stay Order of August 19, 2005). Under Section 11, Rule 4 of the Interim Rules of Procedure on Corporate Rehabilitation (Interim Rules), a petition for rehabilitation shall be dismissed if no rehabilitation plan is approved by the court upon the lapse of 180 days from the date of initial hearing. While the Interim Rules grant extension beyond the 180-day period, no such extension was alleged in this case; in fact, as we earlier pointed out, no mention at all was made in LBNIs memorandum of the rehabilitation proceedings. With the failure of LBNI to raise rehabilitation proceedings in its memorandum, the Court had sufficient grounds to suppose that the rehabilitation petition had been dismissed by the time the case was submitted for decision.

Given these circumstances, the existence of the Stay Order which would generally authorize the suspension of judicial proceedings, even those pending before the Court could not have affected the Courts action on the present case. At any rate, a stay order simply suspends all actions for claims against a corporation undergoing rehabilitation; it does not work to oust a court of its jurisdiction over a case properly filed before it.286[34] Our ruling on the principal issue of the case that de Castro had been illegally dismissed from his employment with LBNI thus stands.

Nevertheless, with LBNIs manifestation that it is still undergoing rehabilitation, the Court resolves to suspend the execution of our September 23, 2008 Decision. The suspension shall last up to the termination of the rehabilitation proceedings, as provided in Section 11, in relation to Section 27, Rule 4 of the Interim Rules

Sec. 11. Period of the Stay Order. - The stay order shall be effective from the date of its issuance until the dismissal of the petition or the termination of the rehabilitation proceedings.

The petition shall be dismissed if no rehabilitation plan is approved by the court upon the lapse of one hundred eighty (180) days from the date of the initial hearing. The court may grant an extension beyond this period only if it appears by convincing and compelling evidence that the debtor may successfully be rehabilitated. In no instance, however, shall the period for approving or disapproving a rehabilitation plan exceed eighteen (18) months from the date of filing of the petition.

x x x x

Sec. 27. Termination of Proceedings. In case of the failure of the debtor to submit the rehabilitation plan, or the disapproval thereof by the court, or the failure of the rehabilitation of the debtor because of failure to achieve the desired targets or goals as set forth therein, or the failure of the said debtor to perform its obligations under the said plan, or a determination that the rehabilitation plan may no longer be implemented in accordance with its terms, conditions, restrictions, or assumptions, the court shall upon motion, motu proprio, or upon the recommendation of the Rehabilitation Receiver, terminate the proceedings. The proceedings shall also terminate upon the successful implementation of the rehabilitation plan.

WHEREFORE, we DENY the Motion for Reconsideration; accordingly, our Decision dated September 23, 2008 is hereby AFFIRMED. The National Labor Relations Commission is, however, directed to SUSPEND the execution of our September 23, 2008 Decision until the Stay Order is lifted or the corporate rehabilitation proceedings are terminated. Respondent Liberty Broadcasting Network, Inc. is hereby directed to submit quarterly reports to the National Labor Relations Commission on the status of its rehabilitation, subject to the penalty of contempt in case of noncompliance.

SO ORDERED.

ARTURO D. BRION Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES Associate Justice

PRESBITERO J. VELASCO, JR. Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE PORTUGAL PEREZ Associate Justice

ATTESTATION

I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice Acting Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Acting Chairpersons Attestation, it is hereby certified that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice Republic of the Philippines Supreme Court Manila

SECOND DIVISION

D.M. CONSUNJI, INC., Petitioner,

G.R. No. 169170

Present: versus -

CARPIO, J., Chairperson, NACHURA, PERALTA,

ANTONIO GOBRES, MAGELLAN DALISAY, GODOFREDO PARAGSA, EMILIO ALETA and GENEROSO MELO, Respondents.

ABAD, and MENDOZA, JJ.

Promulgated: August 8, 2010 x---------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

This is a petition for review on certiorari287[1] of the Decision of the Court of Appeals in CA-G.R. SP No. 70708, dated March 9, 2005, and its Resolution, dated August 2, 2005, denying petitioners motion for reconsideration.

The facts are as follows:

Respondents Antonio Gobres, Magellan Dalisay, Godofredo Paragsa, Emilio Aleta and Generoso Melo worked as carpenters in the construction projects of petitioner D.M. Consunji, Inc., a construction company, on several occasions and/or at various times. Their termination from employment for each project was reported to the Department of Labor and Employment (DOLE), in accordance with Policy Instruction No. 20, which was later superseded by Department Order No. 19, series of 1993. Respondents last assignment was at Quad 4Project in Glorietta, Ayala, Makati, where they started working on September 1, 1998. On October 14, 1998, respondents saw their names included in the Notice of Termination posted on the bulletin board at the project premises.

Respondents filed a Complaint with the Arbitration Branch of the National Labor Relations Commission (NLRC) against petitioner D.M. Consunji, Inc. and David M. Consunji for illegal dismissal, and non-payment of 13 month pay, five (5) days service incentive leave pay, damages and attorneys fees.
th

Petitioner D.M. Consunji, Inc. and David M. Consunji countered that respondents, being project employees, are covered by Policy Instruction No. 20, as superseded by Department Order No. 19, series of 1993 with respect to their separation or dismissal. Respondents were employed per project undertaken by petitioner company and within varying estimated periods indicated in their respective project employment contracts. Citing the employment record of each respondent, petitioner and David M. Consuji averred that respondents services were terminated when their phases of work for which their services were engaged were completed or when the projects themselves were completed. Respondents notices of termination were filed with the DOLE, in compliance with Policy Instruction No. 20,288[2] superseded by Department Order No.19, series of 1993.289[3] With respect to respondent Generoso G. Melo, petitioner and David M. Consuji maintained the same positions they had against the case of Melos co-complainants.290[4] Petitioner contended that since respondents were terminated by reason of the completion of their respective phases of work in the construction project, their termination was warranted and legal.291[5]

Moreover, petitioner claimed that respondents have been duly paid their service incentive leave pay and 13 th month pay through their respective bank accounts, as evidenced by bank remittances.292[6]

Respondents replied that the Quad 4-Project at Glorietta, Ayala, Makati City was estimated to take two years to finish, but they were dismissed within the two-year period. They had no prior notice of their termination. Hence, granting that they were project employees, they were still illegally dismissed for non-observance of procedural due process.293[7]

On October 4, 1999, the Labor Arbiter rendered a Decision294[8] dismissing respondents complaint. The Labor Arbiter found that respondents were project employees, that they were dismissed from the last project they were assigned to when their respective phases of work were completed, and that petitioner D.M. Consunji, Inc. and David M. Consunji reported their termination of services to the DOLE in accordance with the requirements of law.

Respondents appealed the Labor Arbiters Decision to the NLRC

In a Resolution295[9] dated July 31, 2001, the NLRC affirmed the decision of the Labor Arbiter, and dismissed the appeal for lack of merit.

Respondents motion for reconsideration was denied by the NLRC for lack of merit in its Order296[10] dated February 21, 2002.

Respondents filed a petition for certiorari with the Court of Appeals, seeking the annulment of the NLRC Resolution dated July 31, 2001 and Order dated February 21, 2002. Respondents prayed that their dismissal be declared as illegal, and that they be ordered reinstated to their former position with full backwages until actual reinstatement, and awarded moral, exemplary and nominal damages.

On March 9, 2005, the Court of Appeals rendered a Decision, the dispositive portion of which reads:

WHEREFORE, the Decision and Resolution of the NLRC in finding petitioners dismissal as valid are AFFIRMED with MODIFICATION that private respondents are ordered to pay each of the petitioners the sum of P20,000.00 as nominal damages for non-compliance with the statutory due process. Costs against petitioners.297[11]

The Court of Appeals sustained the findings of the NLRC that respondents are project employees. It held:

The Labor Arbiter and [the] NLRC correctly applied Article 280 of the Labor Code when it ruled that petitioners employment, which is fixed for [a] specific project and the completion of which has been determined at the time that their services were engaged, makes them project employees. As could be gleaned from the last portion of Article 280 of the Labor Code, the nature of employment of petitioners, which is fixed for a specific project and the completion of which has been determined when they were hired, is excepted therefrom.

This is the reason why under Policy Instruction No. 20 and Department Order No. 19, series of 1993, employers of project employees are required to report their termination to DOLE upon completion of the project for which they were engaged.298[12]

The CA stated that although respondents were project employees, they were entitled to know the reason for their dismissal and to be heard on whatever claims they might have. It held that respondents right to statutory due process was violated for lack of advance notice of their termination, even if they were validly terminated for having completed the phases of work for which they were hired. The appellate court stated that had respondents been given prior notice, they would not have reported for work on October 14, 1998. It cited Agabon v. NLRC,299[13] which held that where the dismissal is for a just cause, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual, but the employer should indemnify the employee for the violation of his statutory rights by paying nominal damages. Hence, the Court of Appeals ordered petitioner and David M. Consunji to pay respondents P20,000.00 each as nominal damages for lack of advance notice of their termination.

Petitioner and David M. Consunji filed a partial motion for reconsideration and prayed that the Decision of the Court of Appeals be partially reconsidered by deleting the award of nominal damages to each respondent. It pointed out that under Department Order No. 19, series of 1993, which is the construction industrys governing law, there is no provision requiring administrative hearing/investigation before a project employee may be terminated on account of completion of phase of work or the project itself. Petitioner also argued that prior notice of termination is not required in this case, and that Agabon is not applicable here, because the termination in Agabon was for cause, while herein respondents were terminated due to the completion of the phases of work for which their services were engaged.

In a Resolution300[14] dated August 2, 2005, the Court of Appeals denied the partial motion for reconsideration. It held that the case of Agabon v. NLRC is the one controlling and in point. The appellate court stated that in Agabon, the Court ruled that even if the dismissal is legal, the employer should still indemnify the employee for the violation of his statutory rights. It added that no distinction was made in Agabon whether the employee is engaged in a construction project or not.

Petitioner D.M. Consunji, Inc. filed this petition raising this question of law:

WHETHER OR NOT THERE IS BASIS FOR THE COURT OF APPEALS IN ORDERING HEREIN PETITIONER TO PAY RESPONDENTS EACH THE SUM OF P20,000.00 AS NOMINAL DAMAGES FOR ALLEGED NON-COMPLIANCE WITH THE STATUTORY DUE PROCESS.301[15]

Petitioner contends that the award of nominal damages in the amount of P20,000.00 to each respondent is unwarranted under Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which states, If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required.302[16]

Petitioner also contends that Agabon v. NLRC is not applicable to this case. The termination therein was for just cause due to abandonment of work, while in this case, respondents were terminated due to the completion of the phases of work.

In support of its argument, petitioner cited Cioco, Jr. v. C.E. Construction Corporation,303[17] which held:

x x x More importantly, Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides that no prior notice of termination is required if the termination is brought about by completion of the contract or phase thereof for which the worker has been engaged. This is because completion of the work or project automatically terminates the employment, in which case, the employer is, under the law, only obliged to render a report to the DOLE on the termination of the employment.304[18]

The petition is meritorious.

Respondents were found to be project employees by the Labor Arbiter, the NLRC and the Court of Appeals. Their unanimous finding that respondents are project employees is binding on the Court. It must also be pointed out that respondents have not appealed from such finding by the Court of Appeals. It is only the petitioner that appealed from the decision of the Court of Appeals.

The main issue is whether or not respondents, as project employees, are entitled to nominal damages for lack of advance notice of their dismissal.

A project employee is defined under Article 280 of the Labor Code as one whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.305[19]

In this case, the Labor Arbiter, the NLRC and the Court of Appeals all found that respondents, as project employees, were validly terminated due to the completion of the phases of work for which their services were engaged. However, the Court of Appeals held that respondents were entitled to nominal damages, because petitioner failed to give them advance notice of their termination. The appellate court cited the case of Agabon v. NLRC as basis for the award of nominal damages.

The Court holds that Agabon v. NLRC is not applicable to this case, because it involved the dismissal of regular employees for abandonment of work, which is a just cause for dismissal under Article 282 of the Labor Code.306[20] Although the dismissal was for a cause, the employer therein was required to observe the standard of due process for termination of employment based on just causes under Article 282 of the Labor Code, which procedural due process requirements are enumerated in Section 2, Rule 1, Book VI307[21] of the Omnibus Rules Implementing the Labor Code.308[22] Since the employer therein failed to comply with the twin requirements of notice and hearing, the Court ordered the employer to pay the employees involved nominal damages in the amount of P30,000.00 for failure to observe procedural due process.

Unlike in Agabon, respondents, in this case, were not terminated for just cause under Article 282 of the Labor Code. Dismissal based on just causes contemplate acts or omissions attributable to the employee.309[23] Instead, respondents were terminated due to the completion of the phases of work for which their services were engaged.

As project employees, respondents termination is governed by Section 1 (c) and Section 2 (III), Rule XXIII (Termination of Employment), Book V of the Omnibus Rules Implementing the Labor Code.

Section 1 (c), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code states:

Section 1. Security of tenure. (a) In cases of regular employment, the employer shall not terminate the services of an employee except for just or authorized causes as provided by law, and subject to the requirements of due process.

xxxx (c) In cases of project employment or employment covered by legitimate contracting or sub-contracting arrangements, no employee shall be dismissed prior to the completion of the project or phase thereof for which the employee was engaged, or prior to the expiration of the contract between the principal and contractor, unless the dismissal is for just or authorized cause subject to the requirements of due process or prior notice, or is brought about by the completion of the phase of the project or contract for which the employee was engaged.310[24]

Records show that respondents were dismissed after the expiration of their respective project employment contracts, and due to the completion of the phases of work respondents were engaged for. Hence, the cited provisions requirements of due process or prior notice when an employee is dismissed for just or authorized cause (under Articles 282 and 283 of the Labor Code) prior to the completion of the project or phase thereof for which the employee was engaged do not apply to this case.

Further, Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides:

Section 2. Standard of due process: requirements of notice. In all cases of termination of employment, the following standards of due process shall be substantially observed. 1. 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 circumstance, grounds have been established to justify his termination. In case of termination, the foregoing notices shall be served on the employees last known address. II. For termination of employment as based on authorized causes defined in Article 283 of the Code, the requirements of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department at least thirty (30) days before the effectivity of the termination, specifying the ground or grounds for termination. III. If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required. If the termination is brought about by the failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.311[25]

In this case, the Labor Arbiter, the NLRC and the Court of Appeals all found that respondents were validly terminated due to the completion of the phases of work for which respondents services were engaged. The above rule clearly states, If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required. Cioco, Jr. v. C.E. Construction Corporation312[26] explained that this is because completion of the work or project automatically terminates the employment, in which case, the employer is, under the law, only obliged to render a report to the DOLE on the termination of the employment.

Hence, prior or advance notice of termination is not part of procedural due process if the termination is brought about by the completion of the contract or phase thereof for which the employee was engaged. Petitioner, therefore, did not violate any requirement of procedural due process by failing to give respondents advance notice of their termination; thus, there is no basis for the payment of nominal damages.

In sum, absent the requirement of prior notice of termination when the termination is brought about by the completion of the contract or phase thereof for which the worker was hired, respondents are not entitled to nominal damages for lack of advance notice of their termination. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 70708, dated March 9, 2005, insofar as it upholds the validity of the dismissal of respondents is AFFIRMED, but the award of nominal damages to respondents is DELETED. The Resolution of the Court of Appeals, dated August 2, 2005, is SET ASIDE.

No costs.

SO ORDERED.

DIOSDADO M. PERALTA Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice Chairperson

ANTONIO EDUARDO B. NACHURA Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE CATRAL MENDOZA Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of th opinion of the Courts Division.

ANTONIO T. CARPIO Associate Justice Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

Republic of the Philippines Supreme Court Manila

FIRST DIVISION

NAGKAKAISANG LAKAS NG MANGGAGAWA SA KEIHIN (NLMK-OLALIA-KMU) and HELEN VALENZUELA, Petitioners,

G.R. No. 171115

Present: CORONA, C. J., Chairperson, LEONARDO-DE CASTRO,

- versus -

BERSAMIN, DEL CASTILLO, and PEREZ, JJ. Promulgated: August 9, 2010

KEIHIN PHILIPPINES CORPORATION, Respondent.

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DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari313[1] assails the November 2, 2005 Resolution314[2] of the Court of Appeals (CA) in CA-G.R. SP No. 91718 dismissing outright the petition for certiorari filed by the petitioners, as well as its January 6, 2006 Resolution315[3] denying petitioners Motion for Reconsideration.

Factual Antecedents

Petitioner Helen Valenzuela (Helen) was a production associate in respondent Keihin Philippines Corporation (Keihin), a company engaged in the production of intake manifold and throttle body used in motor vehicles manufactured by Honda.

It is a standard operating procedure of Keihin to subject all its employees to reasonable search before they leave the company premises.316[4] On September 5, 2003, while Helen was about to leave the company premises, she saw a packing tape near her work area and placed it inside her bag because it would be useful in her transfer of residence. When the lady guard on duty inspected Helens bag, she found the packing tape inside her bag. The guard confiscated it and submitted an incident report317[5] dated September 5, 2003 to the Guard-in-Charge, who, in turn, submitted a memorandum318[6] regarding the incident to the Human Resources and Administration Department on the same date.

The following day, or on September 6, 2003, respondent company issued a show cause notice319[7] to Helen accusing her of violating F.2 of the companys Code of Conduct, which says, Any act constituting theft or robbery, or any attempt to commit theft or robbery, of any company property or other associates property. Penalty: D (dismissal).320[8] Paul Cupon, Helens supervisor, called her to his office and directed her to explain in writing why no disciplinary action should be taken against her.

Helen, in her explanation,321[9] admitted the offense and even manifested that she would accept whatever penalty would be imposed upon her. She, however, did not reckon that respondent company would terminate her services for her admitted offense.322[10]

On September 26, 2003, Helen received a notice323[11] of disciplinary action informing her that Keihin has decided to terminate her services.

On October 15, 2003, petitioners filed a complaint324[12] against respondent for illegal dismissal, non-payment of 13th month pay, with a prayer for reinstatement and payment of full backwages, as well as moral and exemplary damages. Petitioners alleged that Helens act of taking the packing tape did not constitute serious misconduct, because the same was done with no malicious intent.325[13] They believed that the tape was not of great value and of no further use to respondent company since it was already half used. Although Helen admitted that she took the packing tape, petitioners claimed that her punishment was disproportionate to her infraction.

Keihin, on the other hand, maintained that Helen was guilty of serious misconduct because there was a deliberate act of stealing from the company. Respondent company also claimed that motive and value of the thing stolen are irrelevant in this case.

Ruling of the Labor Arbiter

On July 30, 2004, the Labor Arbiter326[14] rendered his Decision327[15] dismissing the complaint of illegal dismissal. He brushed aside petitioners argument that the penalty imposed on Helen was disproportionate to the offense committed,328[16] and held that she indeed committed a serious violation of the companys policies amounting to serious misconduct,329[17] a just cause for terminating an employee under Article 282 of the Labor Code. The Labor Arbiter likewise upheld the right of the company to terminate Helen on the ground of loss of confidence or breach of trust.330[18]

The Labor Arbiter further held that Keihin observed the requirements of procedural due process in implementing the dismissal of Helen.331[19] He ruled that the following circumstances showed that the company observed the requirements of procedural due process: a) there was a show cause letter informing Helen of the charge of theft and requiring her to submit an explanation; b) there was an administrative hearing giving her an opportunity to be heard; and c) the respondent company furnished her with notice of termination stating the facts of her dismissal, the offense for which she was found guilty, and the grounds for her dismissal.332[20]

Ruling of the National Labor Relations Commission (NLRC)

On appeal, the NLRC dismissed the appeal of the petitioners and affirmed in toto the Decision of the Labor Arbiter. It held that petitioners admitted in their Position Paper that Helen took the packing tape strewn on the floor near her production line within the company premises.333[21] By the strength of petitioners admission, the NLRC held that theft is a valid reason for Helens dismissal.334[22]

As to the issue of due process, the pertinent portion of the Decision335[23] of the NLRC reads:

Complainants dismissal too, was with due process. Procedural due process only requires employers to furnish their errant employees written notices stating the particular acts or omissions constituting the grounds for their dismissal and to hear their side of the story (Mendoza vs. NLRC, 310 SCRA 846 [1999]). Complainants claim that the show-cause letter did not pass the stringent requirement of the law is belied by her admission in her position paper that Mr. Cupon furnished her a form, simultaneously asking her why she did such an act and x x x that Mr. Cupon directed her to submit a written explanation on the matter, which she complied with. By Complainants own admission then, it is clear that she was furnished a written notice informing her of the particular act constituting the ground for her dismissal and that x x x her side of the story [was heard]. Evidently then, Complainant was afforded due process prior to her dismissal.

The dispositive portion of the Decision of the NLRC reads:

WHEREFORE, premises considered, Complainants appeal is DISMISSED for lack of merit. The Labor Arbiters assailed Decision in the above-entitled case is hereby AFFIRMED in toto. SO ORDERED.336[24]

Ruling of the Court of Appeals

After having their Motion for Reconsideration337[25] denied338[26] by the NLRC, the petitioner union, the Nagkakaisang Lakas ng Manggagawa sa Keihin, filed a Petition for Certiorari with the CA praying that the Decision of the NLRC be set aside. However, in a Resolution339[27] dated November 2, 2005, the CA dismissed the petition outright for not having been filed by an indispensable party in interest under Section 2, Rule 3 of the Rules of Court.

SEC 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest.

Petitioners filed a Motion for Reconsideration340[28] but it was denied by the CA in its Resolution341[29] of January 6, 2006.

Hence, petitioners filed the present petition for review on certiorari under Rule 45, asking the Court to reverse the Resolutions of the CA and enter a new one declaring Helens dismissal unjustified. They anchor their petition on the following grounds:

I. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE PETITION FOR CERTIORARI FILED BY THE UNION AND MS. HELEN VALENZUELA WAS NOT FILED BY AN INDISPENSABLE PARTY. II. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN FAILING TO DECIDE THE CASE ON THE MERITS DESPITE SHOWING THAT THE PETITION FOR CERTIORARI WAS VERIFIED BY THE UNION PRESIDENT AND MS. HELEN VALENZUELA. III. THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THAT SERIOUS MISCONDUCT UNDER EXISTING LAW AND JURISPRUDENCE CANNOT BE ATTRIBUTED TO HEREIN PETITIONER HELEN VALENZUELA BECAUSE THE DECISION OF THE NLRC IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.342[30]

Our Ruling

We affirm the ruling of the CA.

It is clear that petitioners failed to include the name of the dismissed employee Helen Valenzuela in the caption of their petition for certiorari filed with the CA as well as in the body of the said petition. Instead, they only indicated the name of the labor union Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA) as the party acting on behalf of Helen. As a result, the CA rightly dismissed the petition based on a formal defect.

Under Section 7, Rule 3 of the Rules of Court, parties in interest without whom no final determination can be had of an action shall be joined as plaintiffs or defendants. If there is a failure to implead an indispensable party, any judgment rendered would have no effectiveness.343[31] It is precisely when an indispensable party is not before the court (that) an action should be dismissed. The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even to those present.344[32] The purpose of the rules on joinder of indispensable parties is a complete determination of all issues not only between the parties themselves, but also as regards other persons who may be affected by the judgment. A decision valid on its face cannot attain real finality where there is want of indispensable parties.

At any rate, we are aware that it is the policy of courts to encourage full adjudication of the merits of an appeal. Dismissal of appeals purely on technical grounds, especially an appeal by a worker who was terminated and whose livelihood depends on the speedy disposition of her case, is frowned upon. Thus, while we affirm the CAs dismissal of the petition for certiorari, we shall still discuss the substantive aspect of the case and go into the merits.

The petitioners argue that serious misconduct under existing law and jurisprudence could not be attributed to Helen because she was not motivated by malicious intent. According to petitioners, during the routine inspection and even before the guard opened Helens bag, she readily admitted that the bag contained a packing tape. Petitioners claim that the mental attitude of Helen negates depravity, willful or wrongful intent and, thus, she cannot be held guilty of serious misconduct. Rather, it was a mere error of judgment on the part of Helen. Furthermore, it was Helens honest belief that the tape she took was of no use or value and that she did not hide the same.

Thus, the issue boils down to whether, in taking the packing tape for her own personal use, Helen committed serious misconduct, which is a just cause for her dismissal from service.

Article 282 of the Labor Code enumerates the just causes for termination. It provides:

ARTICLE 282. Termination by employer. An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing.

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.345[33] For serious misconduct to justify dismissal under the law, (a) it must be serious, (b) must relate to the performance of the employees duties; and (c) must show that the employee has become unfit to continue working for the employer.346[34]

In the case at bar, Helen took the packing tape with the thought that she could use it for her own personal purposes. When Helen was asked to explain in writing why she took the tape, she stated, Kumuha po ako ng isang packing tape na gagamitin ko sa paglilipat ng gamit ko sa bago kong lilipatang bahay.347[35] In other words, by her own admission, there was intent on her part to benefit herself when she attempted to bring home the packing tape in question.

It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving both respondent companys property and personal belongings of other employees. In order to address this issue of losses, respondent company issued two memoranda implementing an intensive

inspection procedure and reminding all employees that those who will be caught stealing and performing acts of vandalism will be dealt with in accordance with the companys Code of Conduct. Despite these reminders, Helen took the packing tape and was caught during the routine inspection. All these circumstances point to the conclusion that it was not just an error of judgment on the part of Helen, but a deliberate act of theft of company property.

In the case of Firestone Tire and Rubber Company of the Philippines v. Lariosa348[36] involving an employee who was caught by the security guards of the company during a routine inspection with possession of company property, we held that: There is no gainsaying that theft committed by an employee constitutes a valid reason for his dismissal by the employer. Although as a rule this Court leans over backwards to help workers and employees continue with their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property are a different matter.349[37]

We hold that Helen is guilty of serious misconduct in her act of taking the packing tape.

The petitioners also argue that the penalty of dismissal is too harsh and disproportionate to the offense committed since the value of the thing taken is very minimal. Petitioners cite the case of Caltex Refinery Employees Association v. National Labor Relations Commission350[38] where Arnelio M. Clarete (Clarete) was found to have willfully breached the trust and confidence reposed in him by taking a bottle of lighter fluid. In said case, we refrained from imposing the supreme penalty of dismissal since the employee had no violations in his eight years of service and the value of the lighter fluid x x x is very minimal compared to his salary x x x.351[39]

After a closer study of both cases, we are convinced that the case of Caltex is different from the case at hand. Although both Clarete and Helen had no prior violations, the former had a clean record of eight years with his employer. On the other hand, Helen was not even on her second year of service with Keihin when the incident of theft occurred. And what further distinguishes the instant case from Caltex is that respondent company was dealing with several cases of theft, vandalism, and loss of company and employees property when the incident involving Helen transpired.

Regarding the requirement of procedural due process in dismissal of employees, petitioners argue that the first notice failed to explain the charge being leveled against Helen. According to the petitioners, the notice was vague and lacked sufficient definitiveness.

The show-cause notice states:

Please explain in writing within 48 hours upon receipt hereof, why you have committed an offense against company property specifically F.2 of the companys Code of Conduct: Any act constituting theft or robbery, or any attempt to commit theft or robbery, of any company property or other associates property.352[40]

We reject petitioners claim that respondent company failed to observe the requirements of procedural due process. In the dismissal of employees, it has been consistently held that the twin requirements of notice and hearing are essential elements of due process. The employer must furnish the employee with two written notices before termination of employment can be legally effected: (a) a notice apprising the employee of the particular acts or omissions for which his dismissal is sought, and (b) a subsequent notice informing the employee of the employers decision to dismiss him.353[41] In this case, respondent company furnished Helen a show-cause notice dated September 6, 2003 accusing her of violating F.2 of the companys Code of Conduct which says, Any act constituting theft or robbery, or any attempt to commit theft or robbery, of any company property or other associates property.354[42] We find that such notice sufficiently informed Helen of the charge of theft of company property against her. We are convinced that such notice satisfies the due process requirement to apprise the employee of the particular acts or omissions for which dismissal is sought.

With regard to the requirement of a hearing, the essence of due process lies in an opportunity to be heard. Such opportunity was afforded the petitioner when she was asked to explain her side of the story. In Metropolitan Bank and Trust Company v. Barrientos,355[43] we held that, the essence of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and indispensably be held. Similarly in Philippine Pasay Chung Hua Academy v. Edpan,356[44] we held that, [e]ven if no hearing or conference was conducted, the requirement of due process had been met since he was accorded a chance to explain his side of the controversy.

WHEREFORE, the Petition is DENIED. The Resolutions dated November 2, 2005 and January 6, 2006 of the Court of Appeals in CA-G.R. SP No. 91718 are AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO Associate Justice

WE CONCUR:

RENATO C. CORONA Chief Justice Chairperson

ERESITA J. LEONARDO-DE CASTRO

LUCAS P. BERSAMIN Associate Justice

ssociate Justice

JOSE PORTUGAL PEREZ Associate Justice

epublic of the Philippines Supreme Court Manila

SECOND DIVISION

PICOP RESOURCES, INCORPORATED (PRI), Petitioner,

G.R. No. 160828

Present: versus

ANACLETO L. TAECA, GEREMIAS S. TATO, JAIME N. CAMPOS, MARTINIANO A. MAGAYON, JOSEPH B. BALGOA, MANUEL G. ABUCAY, MOISES M. ALBARAN, MARGARITO G. ALICANTE, JERRY ROMEO T. AVILA, LORENZO D. CANON, RAUL P. DUERO, DANILO Y. ILAN, MANUEL M. MATURAN, JR., LUISITO R. POPERA, CLEMENTINO C. QUIMAN, ROBERTO Q. SILOT, CHARLITO D. SINDAY, REMBERT B. SUZON ALLAN J. TRIMIDAL, and NAMAPRI-SPFL, Respondents.

CARPIO, J., Chairperson, NACHURA, PERALTA ABAD, and MENDOZA, JJ.

Promulgated:

August 9, 2010

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DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision357[1] dated July 25, 2003 and Resolution358[2] dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, setting aside the Resolutions dated October 8, 2001359[3] and April 29, 2002360[4] of the National Labor Relations Commission in NLRC CA No. M-006309-2001 and reinstating the Decision361[5] dated March 16, 2001 of the Labor Arbiter.

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

On February 13, 2001, respondents Anacleto Taeca, Loreto Uriarte, Joseph Balgoa, Jaime Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay and fourteen (14) others filed a Complaint for unfair labor practice, illegal dismissal and money claims against petitioner PICOP Resources, Incorporated (PRI), Wilfredo Fuentes (in his capacity as PRI's Vice President/Resident Manager), Atty. Romero Boniel (in his capacity as PRI's Manager of Legal/Labor), Southern Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his capacity as Secretary General of SPFL), Pascasio Trugillo (in his capacity as Local President of Nagkahiusang Mamumuo sa PICOP Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty. Proculo Fuentes, Jr.362[6] (in his capacity as National President of SPFL).

Respondents were regular rank-and-file employees of PRI and bona fide members of Nagkahiusang Mamumuo sa PRI Southern Philippines Federation of Labor (NAMAPRI-SPFL), which is the collective bargaining agent for the rank-and-file employees of petitioner PRI.

PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of five (5) years from May 22, 1995 until May 22, 2000.

The CBA contained the following union security provisions:

Article II- Union Security and Check-Off

Section 6. Maintenance of membership.

6.1 All employees within the appropriate bargaining unit who are members of the UNION at the time of the signing of this AGREEMENT shall, as a condition of continued employment by the COMPANY, maintain their membership in the UNION in good standing during the effectivity of this AGREEMENT.

6.2 Any employee who may hereinafter be employed to occupy a position covered by the bargaining unit shall be advised by the COMPANY that they are required to file an application for membership with the UNION within thirty (30) days from the date his appointment shall have been made regular.

6.3 The COMPANY, upon the written request of the UNION and after compliance with the requirements of the New Labor Code, shall give notice of termination of services of any employee who shall fail to fulfill the condition provided in Section 6.1 and 6.2 of this Article, but it assumes no obligation to discharge any employee if it has reasonable grounds to believe either that membership in the UNION was not available to the employee on the same terms and conditions generally applicable to other members, or that membership was denied or terminated for reasons other than voluntary resignation or non-payment of regular union dues. Separation under the Section is understood to be for cause,

consequently, the dismissed employee is not entitled to separation benefits provided under the New Labor Code and in this AGREEMENT.363[7]

On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the management of PRI demanding the termination of employees who allegedly campaigned for, supported and signed the Petition for Certification Election of the Federation of Free Workers Union (FFW) during the effectivity of the CBA. NAMAPRI-SPFL considered said act of campaigning for and signing the petition for certification election of FFW as an act of disloyalty and a valid basis for termination for a cause in accordance with its Constitution and ByLaws, and the terms and conditions of the CBA, specifically Article II, Sections 6.1 and 6.2 on Union Security Clause.

In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the management of PRI to investigate those union members who signed the Petition for Certification Election of FFW during the existence of their CBA. NAMAPRI-SPFL, likewise, furnished PRI with machine copy of the authorization letters dated March 19, 20 and 21, 2000, which contained the names and signatures of employees.

Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero A. Boniel issued a memorandum addressed to the concerned employees to explain in writing within 72 hours why their employment should not be terminated due to acts of disloyalty

as alleged by their Union.

Within the period from May 26 to June 2, 2000, a number of employees who were served explanation memorandum submitted their explanation, while some did not.

In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the employees to Atty. Fuentes for evaluation and final disposition in accordance with the CBA.

After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management of PRI that the Union found the member's explanations to be unsatisfactory. He reiterated the demand for termination, but only of 46 member-employees, including respondents.

On October 16, 2000, PRI served notices of termination for causes to the 31 out of the 46 employees whom NAMAPRIL-SPFL sought to be terminated on the ground of acts of disloyalty committed against it when respondents allegedly supported and signed the Petition for Certification Election of FFW before the freedom period during the effectivity of the CBA. A Notice dated October 21, 2000 was also served on the Department of Labor and Employment Office (DOLE), Caraga Region.

Respondents then accused PRI of Unfair Labor Practice punishable under Article 248 (a), (b), (c), (d) and (e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and Pascasio Trujillo were accused of violating Article 248 (a) and (b) of the Labor Code.

Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL or submitted to PRI any union dues and check-off disauthorizations against NAMAPRI-SPFL. They claimed that they continue to remain on record as bona fide members of NAMAPRI-SPFL. They pointed out that a patent manifestation of ones disloyalty would have been the explicit resignation or withdrawal of membership from the Union accompanied by an advice to management to discontinue union dues and check-off deductions. They insisted that mere affixation of signature on such authorization to file a petition for certification election was not per se an act of disloyalty. They claimed that while it may be true that they signed the said authorization before the start of the freedom period, the petition of FFW was only filed with the DOLE on May 18, 2000, or 58 days after the start of the freedom period.

Respondents maintained that their acts of signing the authorization signifying support to the filing of a Petition for Certification Election of FFW was merely prompted by their desire to have a certification election among the rank-and-file employees of PRI with hopes of a CBA negotiation in due time; and not to cause the downfall of NAMAPRI-SPFL.

Furthermore, respondents contended that there was lack of procedural due process. Both the letter dated May 16, 2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of Trujillo addressed to PRI did not mention their names. Respondents stressed that NAMAPRI-SPFL merely requested PRI to investigate union members who supported the Petition for Certification Election of FFW. Respondents claimed that they should have been summoned individually, confronted with the accusation and investigated accordingly and from where the Union may base its findings of disloyalty and, thereafter, recommend to management the termination for causes.

Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their termination, it was no longer the bargaining representative of the rank-and-file workers of PRI, because the CBA had already expired on May 22, 2000. Hence, there could be no justification in PRIs act of dismissing respondents due to acts of disloyalty.

Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving in to the wishes of the Union in discharging them on the ground of disloyalty to the Union amounted to interference with, restraint or coercion of respondents exercise of their right to self-organization. The act indirectly required petitioners to support and maintain their membership with NAMAPRI-SPFL as a condition for their continued employment. The acts of NAMAPRI-SPFL, Atty. Fuentes and Trujillo amounted to actual restraint and coercion of the petitioners in the exercise of their rights to self-organization and constituted acts of unfair labor practice.

In a Decision364[8] dated March 16, 2001, the Labor Arbiter declared the respondents dismissal to be illegal and ordered PRI to reinstate respondents to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages. The dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby entered:

1.

Declaring complainants dismissal illegal; and

2. Ordering respondents Picop Resources Inc. (PRI) and NAMAPRI-SPFL to reinstate complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P420,339.30 as shown in the said Annex A plus damages in the amount of P10,000.00 each, or a total of P210,000.00 and attorneys fees equivalent to 10% of the total monetary award.

SO ORDERED.365[9]

PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission (NLRC), which reversed the decision of the Labor Arbiter; thus, declaring the dismissal of respondents from employment as legal.

Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for lack of merit.

Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court of Appeals and sought the nullification of the Resolution of the NLRC dated October 8, 2001 which reversed the Decision dated March 16. 2001 of Labor Arbiter and the Resolution dated April 29, 2002, which denied respondents motion for reconsideration.

On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions of the NLRC and reinstated the Decision dated March 16, 2001 of the Labor Arbiter.

Thus, before this Court, PRI, as petitioner, raised the following issues:

I WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITION INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO.

II WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF LAW FALL WITHIN THE AMBIT OF THE EXTRAORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT.366[10]

We will first delve on the technical issue raised.

PRI perceived a patent error in the mode of appeal elected by respondents for the purpose of assailing the decision of the NLRC. It claimed that assuming that the NLRC erred in its judgment on the legal issues, its error, if any, is not tantamount to abuse of discretion falling within the ambit of Rule 65.

Petitioner is mistaken.

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission.367[11] This Court held that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts.368[12] Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to the exercise of its original jurisdiction over Petitions for Certiorari is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues. 369[13]

We now come to the main issue of whether there was just cause to terminate the employment of respondents.

PRI argued that the dismissal of the respondents was valid and legal. It claimed to have acted in good faith at the instance of the incumbent union pursuant to the Union Security Clause of the CBA.

Citing Article 253 of the Labor Code,370[14] PRI contends that as parties to the CBA, they are enjoined to keep the status quo and continue in full force and effect the terms and conditions of the existing CBA during the 60-day period and/or until a new agreement is reached by the parties.

Petitioner's argument is untenable.

Union security" is a generic term, which is applied to and comprehends "closed shop," union shop," "maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit, or the agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.371[15]

However, in terminating the employment of an employee by enforcing the union security clause, the employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA.372[16]

As to the first requisite, there is no question that the CBA between PRI and respondents included a union security clause, specifically, a maintenance of membership as stipulated in Sections 6 of Article II, Union Security and Check-Off. Following the same provision, PRI, upon written request from the Union, can indeed terminate the employment of the employee who failed to maintain its good standing as a union member.

Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions demanded from PRI, in their letters dated May 16 and 23, 2000, to terminate the employment of respondents due to their acts of disloyalty to the Union.

However, as to the third requisite, we find that there is no sufficient evidence to support the decision of PRI to terminate the employment of the respondents.

PRI alleged that respondents were terminated from employment based on the alleged acts of disloyalty they committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a violation of the Union Security Clause, as provided in their Collective Bargaining Agreement.

We are unconvinced.

We are in consonance with the Court of Appeals when it held that the mere signing of the authorization in support of the Petition for Certification Election of FFW on March 19, 20 and 21, or before the freedom period, is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period. Nothing in the records would show that respondents failed to maintain their membership in good standing in the Union. Respondents did not resign or withdraw their membership from the Union to which they belong. Respondents continued to pay their union dues and never joined the FFW.

Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. However, we are constrained to believe that an authorization letter to file a petition for certification election is different from an actual Petition for Certification Election. Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was filed only on May 18, 2000.373[17] Thus, it was within the ambit of the freedom period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period.374[18] This is not the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondents right to self-organization.

Moreover, PRI anchored their decision to terminate respondents employment on Article 253 of the Labor Code which states that it shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. It claimed that they are still bound by the Union Security Clause of the CBA even after the expiration of the CBA; hence, the need to terminate the employment of respondents.

Petitioner's reliance on Article 253 is misplaced.

The provision of Article 256 of the Labor Code is particularly enlightening. It reads:

Article 256. Representation issue in organized establishments. - In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period before the expiration of a collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the labor unions receiving the two highest number of votes: Provided, That the total number of votes for all contending unions is at least fifty per cent (50%) of the number of votes cast.

At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed.375[19]

Applying the same provision, it can be said that while it is incumbent for the employer to continue to recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period, they could only do so when no petition for certification election was filed. The reason is, with a pending petition for certification, any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative.376[20] The provision for status quo is conditioned on the fact that no certification election was filed during the freedom

period. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them.377[21]

In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000.378[22] Therefore, following Article 256, at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for certification election were filed, as in this case.

Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a representational issue, the status quo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented,379[23] or compromised.

Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers. Their freedom to choose who should be their bargaining representative is of paramount importance. The fact that there already exists a bargaining representative in the unit concerned is of no moment as long as the petition for certification election was filed within the freedom period. What is imperative is that by such a petition for certification election the employees are given the opportunity to make known of who shall have the right to represent them thereafter. Not only some, but all of them should have the right to do so. What is equally important is that everyone be given a democratic space in the bargaining unit concerned.380[24]

We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This, however, is not without limitations. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee, because it affects not only his position but also his means of livelihood. Employers should, therefore, respect and protect the rights of their employees, which include the right to labor.381[25]

An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one month salary for every year of service. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer

possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Moreover, respondents, having been compelled to litigate in order to seek redress for their illegal dismissal, are entitled to the award of attorneys fees equivalent to 10% of the total monetary award.382[26]

WHEREFORE, the petition is DENIED. The Decision dated

July 25, 2003 and the Resolution dated October 23, 2003 of the

Court of Appeals in CA-G.R. SP No. 71760, which set aside the Resolutions dated October 8, 2001 and April 29, 2002 of the National Labor Relations Commission in NLRC CA No. M-006309-2001, are AFFIRMED accordingly. Respondents are hereby awarded full backwages and other allowances, without qualifications and diminutions, computed from the time they were illegally dismissed up to the time they are actually reinstated. Let this case be remanded to th e Labor Arbiter for proper computation of the full backwages due respondents, in accordance with Article 279 of the Labor Code, as expeditiously as possible.

SO ORDERED.

DIOSDADO M. PERALTA Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice Chairperson

ANTONIO EDUARDO B. NACHURA Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE CATRAL MENDOZA Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO Associate Justice Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

SECOND DIVISION

JEFFREY NACAGUE, Petitioner,

G.R. No. 172589

Present:

CARPIO, J., Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA,JJ. - versus -

Promulgated: August 8, 2010

SULPICIO LINES, INC., Respondent. x--------------------------------------------------x

DECISION

CARPIO, J.: The Case

This is a petition for review of the 23 January 2006 Decision and 19 April 2006 Resolution of the Court of Appeals in CA-G.R. CEB SP No. 01065. In its 23 January 2006 Decision, the Court of Appeals dismissed

the petition for certiorari filed by petitioner Jeffrey Nacague (Nacague) and affirmed the 21 March 2005 Decision and 31 May 2005 Resolution of the National Labor Relations Commission (NLRC) in NLRC Case No. V-00048104. In its 19 April 2006 Resolution, the Court of Appeals denied Nacagues motion for reconsideration.

The Facts

On 15 June 1995, respondent Sulpicio Lines, Inc. (Sulpicio Lines) hired Nacague as hepe de viaje or the representative of Sulpicio Lines on board its vessel M/V Princess of the World (the ship).

On 25 January 2003, Sulpicio Lines received an anonymous letter reporting the use of illegal drugs on board the ship. On 14 February 2003, Ceasar T. Chico, a housekeeper on the ship, submitted a report regarding the drug paraphernalia found inside the Mopalla Suite Room and the threat on his life made by Nacague and Chief Mate Reynaldo Doroon after he found the drug paraphernalia.

On 15 February 2003, Sulpicio Lines sent a notice of investigation to Nacague informing him of the charges against him for use of illegal drugs and threatening a co-employee.

When the ship docked in the port of Manila on 18 February 2003, some crew members of the ship, together with Nacague, were subjected to a random drug test. They were taken to S.M. Lazo Medical Clinic (S.M. Lazo Clinic) and were required to submit urine samples. The result of the random drug test revealed that Nacague was positive for methamphetamine hydrochloride or shabu.

On 20 February 2003, Sulpicio Lines subjected Nacague to a formal investigation. Nacague denied using illegal drugs.

On 23 February 2003, Nacague went to Chong Hua Hospital in Cebu City to undergo a voluntary drug test. The drug test with Chong Hua Hospital yielded a negative result. Nacague submitted this test result to Sulpicio Lines.

However, on 7 March 2003, Sulpicio Lines sent a memorandum to Nacague terminating him from the service. The memorandum reads: After a careful consideration of your case with the evidence available, including your explanation, and with the positive drug test result, management finds you culpable of grave misconduct and loss of trust and confidence. In view thereof, the company is constrained to terminate your employment effective today, March 7, 2003.

Feeling aggrieved, Nacague filed a complaint for illegal suspension, illegal dismissal and for reinstatement with backwages.

On 12 November 2003, Labor Arbiter Ernesto F. Carreon rendered a decision in favor of Nacague and declared that Sulpicio Lines illegally dismissed Nacague. The dispositive portion of the Labor Arbiters 12

November 2003 Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Sulpicio Lines, Inc. to pay complainant Jeffrey Nacague the following: Separation pay Backwages Total P75,600.00 P77,415.00 P153,015.00

The other claims are dismissed for lack of merit. SO ORDERED.

According to the Labor Arbiter, the termination of employment of employees found positive for using illegal drugs should not be exercised indiscriminately and thoughtlessly. The Labor Arbiter agreed with Nacague that the drug test result from S.M. Lazo Clinic was questionable because the clinic is not accredited by the Dangerous Drug Board and not under its supervision. The Labor Arbiter gave more weight to the drug test performed by Chong Hua Hospital because it was accredited by the Dangerous Drug Board. The Labor Arbiter said that doubts must be resolved in favor of the employee. The Labor Arbiter also ruled that reinstatement is no longer viable due to the strained relations between Nacague and Sulpicio Lines and, thus, awarded separation pay to Nacague.

Dissatisfied with the Labor Arbiters Decision, Sulpicio Lines appealed to the NLRC. In its 21 March 2005 Decision, the NLRC reversed the Labor Arbiters decision and dismissed Nacagues complaint for lack of merit.

According to the NLRC, since Nacague, who was performing a task involving trust and confidence, was found positive for using illegal drugs, he was guilty of serious misconduct and loss of trust and confidence. The NLRC added that Sulpicio Lines Code of Conduct specified that the penalty for the use and illegal possession of prohibited drugs is dismissal. The NLRC also said that there is a presumption that S.M. Lazo Clinic is an accredited drug testing center and that it was incumbent upon Nacague to show otherwise.

Nacague filed a motion for reconsideration. In its 31 May 2005 Resolution, the NLRC denied Nacagues motion.

Nacague filed a petition for certiorari with the Court of Appeals. Nacague alleged that the NLRC gravely abused its discretion when it declared that Sulpicio Lines validly terminated his employment.

The Ruling of the Court of Appeals

According to the Court of Appeals, Sulpicio Lines complied with both the procedural and substantive requirements of the law when it terminated the employment of Nacague. The Court of Appeals said that the positive result of the S.M. Lazo Clinic drug test was the main basis of Sulpicio Lines in terminating Nacagues employment. The Court of Appeals declared that the evidence presented by Sulpicio Lines was sufficient to justify the conclusion that Nacague committed serious misconduct and a breach of trust and confidence warranting his dismissal from employment. The Court of Appeals agreed with the NLRC that Nacague failed to prove his allegation that S.M. Lazo Clinic lacks accreditation. On the procedural requirements, the Court of Appeals found that Sulpicio Lines complied with the twin-notice requirements and conducted a formal hearing.

Nacague filed a motion for reconsideration. In its 19 April 2006 Resolution, the Court of Appeals denied the motion.

Hence, this petition.

The Issue

Nacague raises the sole issue of whether the Court of Appeals erred in ruling that his termination from employment was valid.

The Ruling of the Court

The petition is meritorious.

Nacague maintains that the S.M. Lazo Clinic drug test was not credible because Sulpicio Lines failed to show that S.M. Lazo Clinic is an authorized drug testing center. Nacague also alleges that the urine samples were gathered carelessly without proper labels to identify their owners and that S.M. Lazo Clinic did not ask Nacague if he was taking any medication that might alter the results of the drug test. Nacague adds that Republic Act No. 9165 (R.A. No. 9165) and the Department of Labor and Employment Order No. 53-03 (Department Order No. 53-03) require two drug tests a screening test and a confirmatory test. Nacague maintains that, since only a screening test was conducted, he was illegally dismissed based on an incomplete drug test. Nacague argues that Sulpicio Lines failed to discharge its burden of proving that the termination of his employment was legal.

On the other hand, Sulpicio Lines questions the belated attempt of Nacague to question the credibility of S.M. Lazo Clinic. Sulpicio Lines also argues that since Nacague knew that the residue of the drug would no longer be detectable in his body after five days, Nacague underwent another drug test with the Chong Hua Hospital. Sulpicio Lines insists that the most accurate drug test is the random drug test conducted by S.M. Lazo Clinic and that the test with Chong Hua Hospital was a planned test.

Under Article 279 of the Labor Code, an employer may terminate the services of an employee for just causes or for authorized causes. Furthermore, under Article 277(b) of the Labor Code, the employer must send the employee who is about to be terminated, a written notice stating the causes for termination and must give the employee the opportunity to be heard and to defend himself. Thus, to constitute valid dismissal from employment, two requisites must concur: (1) the dismissal must be for a just or authorized cause; and (2) the employee must be afforded an opportunity to be heard and to defend himself.

Contrary to Sulpicio Lines allegation, Nacague was already questioning the credibility of S.M. Lazo Clinic as early as the proceedings before the Labor Arbiter. In fact, the Labor Arbiter declared that the S.M. Lazo Clinic drug test result was doubtful since it is not under the supervision of the Dangerous Drug Board.

The NLRC and the Court of Appeals ruled that Sulpicio Lines validly terminated Nacagues employment because he was found guilty of using illegal drugs which constitutes serious misconduct and loss of trust and confidence. However, we find that Sulpicio Lines failed to clearly show that Nacague was guilty of using illegal drugs. We agree with the Labor Arbiter that the lack of accreditation of S.M. Lazo Clinic made its drug test results doubtful.

Section 36 of R.A. No. 9165 provides that drug tests shall be performed only by authorized drug testing centers. Moreover, Section 36 also prescribes that drug testing shall consist of both the screening test and the confirmatory test. Section 36 of R.A. No. 9165 reads:

SEC. 36. Authorized Drug Testing. Authorized drug testing shall be done by any government forensic laboratories or by any of the drug testing laboratories accredited and monitored by the DOH to safeguard the quality of test results. The DOH shall take steps in setting the price of the drug test with DOH accredited drug testing centers to further reduce the cost of such drug test. The drug testing shall employ, among others, two (2) testing methods, the screening test which will determine the positive result as well as the type of drug used and the confirmatory test which will confirm a positive screening test. x x x (Emphasis supplied)

Department Order No. 53-03 further provides:

Drug Testing Program for Officers and Employees Drug testing shall conform with the procedures as prescribed by the Department of Health (DOH) (www.doh.gov.ph). Only drug testing centers

accredited by the DOH shall be utilized. A list of accredited centers may be accessed through the OSHC website (www.oshc.dole.gov.ph). Drug testing shall consist of both the screening test and the confirmatory test; the latter to be carried out should the screening test turn positive. The employee concerned must be informed of the test results whether positive or negative. (Emphasis supplied)

In Social Justice Society v. Dangerous Drugs Board, we explained:

As to the mechanics of the test, the law specifies that the procedure shall employ two testing methods, i.e., the screening test and the confirmatory test, doubtless to ensure as much as possible the trustworthiness of the results. But the more important consideration lies in the fact that the tests shall be conducted by trained professionals in access-controlled laboratories monitored by the Department of Health (DOH) to safeguard against results tampering and to ensure an accurate chain of custody.

The law is clear that drug tests shall be performed only by authorized drug testing centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center. Sulpicio Lines did not even deny Nacagues allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test was

conducted to determine if Nacague was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory test. Sulpicio Lines failed to indubitably prove that Nacague was guilty of using illegal drugs amounting to serious misconduct and loss of trust and confidence. Sulpicio Lines failed to clearly show that it had a valid and legal cause for terminating Nacagues employment. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal. We agree with the Labor Arbiter that Nacagues reinstatement is no longer feasible due to strained relations between Nacague and Sulpicio Lines and that Nacague should instead be granted separation pay.

WHEREFORE, we GRANT the petition. We SET ASIDE the April 2006 Resolution of the Court

23 January 2006 Decision and the 19 12

of Appeals in CA-G.R. CEB SP No. 01065. We REINSTATE the

November 2003 Decision of the Labor Arbiter.

SO ORDERED.

ANTONIO T. CARPIO Associate Justice

WE CONCUR:

ANTONIO EDUARDO B. NACHURA Associate Justice

DIOSDADO M. PERALTA Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE C. MENDOZA Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO

Associate Justice Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

SECOND DIVISION

AGRICULTURAL AND INDUSTRIAL G.R. No. 177970 SUPPLIES CORPORATION, DAILY HARVEST MERCANTILE, INC., JOSEPH C. SIA HETIONG and REYNALDO M. RODRIGUEZ, Petitioners, Present:

CARPIO, J., Chairperson, - versus NACHURA, PERALTA, ABAD, and MENDOZA, JJ. JUEBER P. SIAZAR and THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, Respondents. August 25, 2010 Promulgated:

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

DECISION

ABAD, J.:

This case dwells on circumstances that spell dismissal from work although the company insists that such circumstances indicate abandonment of work.

The Facts and the Case

On July 3, 1997 respondent Jueber P. Siazar (Siazar) filed a complaint for illegal dismissal and unfair labor practice against petitioner Agricultural and Industrial Supplies Corporation (AISC) and others before the National Labor Relations Commission (NLRC) in NLRC-NCR Case 00-07-04689-97.

Siazar claimed that he first worked for the Daily Harvest Mercantile, Inc. (DHMI) on April 12, 1993 but was transferred after three years in June 1996 to AISC383[1] as product designer, mold maker, and CNC programmer with a monthly salary of P25,000.00.384[2]

In early 1997, Siazar discovered that his company was not remitting much of his SSS premiums although the computations appeared on his pay slips. When he told his co-employees about it, they made their own inquiries, too.385[3] On Siazars arrival at work on June 17, 1997, the company guard refused him entry and handed him two notes from the management: one said that he was not to report for work;386[4] the other said that he was to report after two days on June 19, 1997 to Atty. Rodriguez at his office in Binondo.387[5]

Too anxious over the matter, Siazar did not wait for June 19 and went straightaway to see Atty. Rodriguez. The latter told Siazar that the company had decided to abolish his department because of redundancy and he could no longer work. Atty. Rodriguez asked Siazar to make a computation of what amount he expected from the company and return to the lawyer with such computation on the following day and the company would immediately pay him.388[6]

When Siazar told his co-employees about this development, they thought that the company removed him from work because of fear that he would agitate them into forming a union, given the non-remittance of the correct amounts of their SSS contributions.389[7]

When Siazar and his wife saw Atty. Rodriguez again at his office on June 19, 1997, the latter insisted on getting Siazar to do the computation he asked. Because of the lawyers insistence, Siazar finally gave him a computation of his claims against the company on June 23, 1997. As Siazar was unsure of his situation, however, he consulted a lawyer on that same day. This lawyer went with him back to Atty. Rodriguez who confirmed that Siazar had indeed been dismissed because his department was no longer earning money. This surprised Siazar because his department did not generate income on its own, being a mere support unit of the company.390[8] Since all attempts at negotiation proved futile, Siazar filed his complaint.

AISC had a different version. It claimed the company thought of closing down Siazars department where he worked solo since it was no longer making money. Thus, they wrote him the two notes on June 17, 1997.391[9] Atty. Rodriguez did not say, however that the company was already dismissing Siazar.392[10] The latter simply decided on his own to drop out of work after learning of the companys plan regarding his department.393[11]

What Atty. Rodriguez and Siazar discussed was how the latter might be compensated if the companys plan went through. In response, Siazar even submitted a proposal that the company found excessive.394[12]

On December 14, 1998 the Labor Arbiter found that the company did not yet dismiss Siazar from work395[13] since they were still negotiating for a financial package for him. He rather stopped reporting for work of his own accord after learning of the plan to retrench him. Indeed, the company gave Siazar no letter of dismissal or retrenchment.396[14] Consequently, the Labor Arbiter dismissed the complaint but ordered the company to give Siazar separation pay, his unpaid salary, and a proportionate 13 month pay for 1997.397[15]
th

Siazar appealed to the NLRC, which ruled398[16] on June 3, 1999 to uphold the Labor Arbiters finding that the company did not dismiss him from work and that, misunderstanding its action, he ceased to report for work. It was all a misunderstanding, said the NLRC, and each party must bear his own loss to place them on equal footing.399[17] The NLRC sustained the award of separation pay, to be reckoned from June 1996 to June 1997, the time Siazar worked for AISC. The NLRC also affirmed the grant to him of his unpaid salary and proportionate 13 month pay.400[18] Siazar asked for reconsideration but the NLRC denied it.401[19]
th

Not dissuaded, Siazar went up to the Court of Appeals (CA)402[20] but on December 21, 2005403[21] the latter court affirmed the NLRC decision. On motion for reconsideration, however, the CA rendered an Amended

Decision404[22] on December 13, 2006, finding sufficient evidence that the company indeed illegally dismissed Siazar from work. The CA based its finding on the following: (a) Rodriguez told Siazar that he had been terminated; (b) the company did not allow Siazar to enter its premises; (c) it wanted to close his department and retrench him from work; (d) Rodriguez asked Siazar to compute what he expected was to be his separation pay; (e) the company neither gave Siazar notice nor informed him of the reason for his dismissal; and (f) it showed no valid or just cause for the dismissal.

The CA thus ordered the company to reinstate Siazar and pay him full backwages, inclusive of allowances and other benefits or their monetary equivalent computed from the time of his dismissal up to the time of his actual reinstatement.405[23] The company filed a motion for reconsideration, but the CA denied the same on May 22, 2007,406[24] hence the present petition for review on certiorari.

Issues Presented

Two issues are presented:

1.

Whether or not the company dismissed Siazar from work; and

2.

In the affirmative, whether or not his dismissal was valid.

Courts Ruling

The company insists that the Court should reinstate the original CA decision, given the findings of the Labor Arbiter and the NLRC that it had not dismissed Siazar.407[25] Ordinarily, the Court will not, on petition for review on certiorari, reexamine the facts of the case. Here, however, since the CA overturned its earlier ruling and

its factual findings now differ from those of the Labor Arbiter and the NLRC, the Court is making an exception.408[26]

From an examination of the record, the Court has ascertained that the evidence supports the CAs finding that the company dismissed Siazar from work. This is evident from the following:

One. On companys orders, the guard prevented Siazar from entering its premises to work. The company even gave him notice not to report for work and instead told him to see the companys external counsel after two days. If the company had not yet decided to close down Siazars department and wanted merely to explore that possibility with him,409[27] it had no reason to require him to stay away from work in the meantime. Barring him from work simply meant that the company had taken away his right to continue working for it.

Two. It is simply preposterous for Siazar or any employee like him to just give up a job that paid P25,000.00 a month when, according to the company, it had not yet decided to carry out its plan and fire him.

Three. That Siazar lost no time in filing a complaint for illegal dismissal negates the notion that he voluntarily left or abandoned his job.410[28] An employee who files a suit to claim his job back raises serious doubts that he even entertained the idea of leaving it in the first place.

Four. Despite Siazars failure to show up for work, the company did not summon him back or ask him to explain his long absence. Normally, an employer would not stand by when an employee just stops coming to work as this would affect its business. That the company just sat by when Siazar did not come to work strengthens his contention that it had dismissed him. Further, the company failed to substantiate its claim that it reported Siazars irregular behavior to the Department of Labor and Employment.411[29] The Court cannot consider allegations that have not been proved.412[30]

All these show that the company indeed terminated the services of Siazar. The question now is this: was his termination valid?

Here, the company did not adduce any evidence to prove that Siazars dismissal had been for a just or authorized cause as in fact it had been its consistent stand that it did not terminate him and that he quit on his own. But given that the company dismissed Siazar and that such dismissal had remained unexplained, there can be no other conclusion but that his dismissal was illegal.413[31]

The Court has held that, under Article 279 of the Labor Code, separation pay may be awarded to an illegally dismissed employee in lieu of reinstatement when continued employment is no longer possible where, as in this case, the continued relationship between the employer and the employee is no longer viable due to strained relations between them414[32] and reinstatement appears no longer practical due to the length of time that had since passed.415[33]

In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one month salary for every year of service416[34] reckoned from the first day of employment until the finality of the decision.417[35] Payment of separation pay is in addition to payment of backwages.418[36] And if separation pay is awarded instead of reinstatement, backwages shall be computed from the time of illegal termination up to the finality of the decision.419[37]

The separation pay in this case shall be reckoned from the time Siazar worked for AISC, from June 1996 until the finality of this decision. The Court could not hold AISC liable for his work with DHMI for lack of evidence that the latter was simply an alter ego of AISC and had been established to evade an existing obligation, justify a wrong, or protect a fraud.420[38]

WHEREFORE, the Court AFFIRMS the Court of Appeals Amended Decision dated December 13, 2006 and Resolution dated May 22, 2007 in CA-G.R. SP 56228 subject to the MODIFICATION that the liability for respondent Jueber P. Siazars illegal dismissal shall be the sole liability of petitioner Agricultural and Industrial Supplies Corporation and that, in lieu of reinstatement with backwages, the latter shall pay Siazar (a) separation pay in the amount equivalent to one month pay for every year of service computed from June 1996 up to the finality of this decision; and (b) full backwages computed from the date of his illegal dismissal on June 17, 1997 up to the finality of the decision.

Let the records of this case be REMANDED to the Labor Arbiter for the proper computation of the awards.

SO ORDERED.

ROBERTO A. ABAD Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice

ANTONIO EDUARDO B. NACHURA DIOSDADO M. PERALTA Associate Justice Associate Justice

JOSE CATRAL MENDOZA Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO Associate Justice Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice Republic of the Philippines Supreme Court Manila

EN BANC

WINSTON F. GARCIA, in his capacity as President and General Manager of GSIS, Petitioner,

G.R. No. 157383

- versus -

MARIO I. MOLINA and ALBERT M. VELASCO, Respondents.

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

WINSTON F. GARCIA, in his capacity as President and General Manager of the Government Service Insurance System, Petitioner, G.R. No. 174137

Present:

CORONA, C.J., CARPIO, CARPIO MORALES, VELASCO, JR., - versus NACHURA, LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR.,

MARIO I. MOLINA and ALBERT M. VELASCO, Respondents.

PEREZ, and MENDOZA, JJ.

Promulgated:

August 10, 2010

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

DECISION

NACHURA, J.:

Before the Court are two consolidated petitions filed by Winston F. Garcia (petitioner) in his capacity as President and General Manager of the Government Service Insurance System, or GSIS, against respondents Mario I. Molina (Molina) and Albert M. Velasco (Velasco). In G.R. No. 157383, petitioner assails the Court of Appeals (CA)

Decision421[1] dated January 2, 2003 and Resolution422[2] dated March 5, 2003 in CA-G.R. SP No. 73170. In G.R. No. 174137, petitioner assails the CA Decision423[3] dated December 7, 2005 and Resolution424[4] dated August 10, 2006 in CA-G.R. SP No. 75973.

The factual and procedural antecedents of the case are as follows:

Respondents Molina and Velasco, both Attorney V of the GSIS, received two separate Memoranda425[5] dated May 23, 2002 from petitioner charging them with grave misconduct. Specifically, Molina was charged for allegedly committing the following acts: 1) directly and continuously helping some alleged disgruntled employees to conduct concerted protest actions and/or illegal assemblies against the management and the GSIS President and General Manager; 2) leading the concerted protest activities held in the morning of May 22, 2002 during office hours within the GSIS compound; and 3) continuously performing said activities despite warning from his immediate superiors. 426[6] In addition to the charge for grave misconduct for performing the same acts as Molina, Velasco was accused of performing acts in violation of the Rules on Office Decorum for leaving his office without informing his supervisor of his whereabouts; and gross insubordination for persistently disregarding petitioners instructions that Velasco should report to the petitioners office.427[7] These acts, according to petitioner, were committed in open betrayal of the confidential nature of their positions and in outright defiance of the Rules and Regulations on Public Sector Unionism. In the same Memoranda, petitioner required respondents to submit their verified answer within seventy two (72) hours. Considering the gravity of the charges against them, petitioner ordered the preventive suspension of respondents for ninety (90) days without pay, effective immediately.428[8] The following day, a committee was constituted to investigate the charges against respondents.

In their Answer429[9] dated May 27, 2002, respondents denied the charges against them. Instead, they averred that petitioner was motivated by vindictiveness and bad faith in charging them falsely. They likewise opposed their preventive suspension for lack of factual and legal basis. They strongly expressed their opposition to petitioner acting as complainant, prosecutor and judge.

On May 28, 2002, respondents filed with the Civil Service Commission (CSC) an Urgent Petition to Lift Preventive Suspension Order.430[10] They contended that the acts they allegedly committed were arbitrarily characterized as grave misconduct. Consistent with their stand that petitioner could not act as the complainant, prosecutor and judge at the same time, respondents filed with the CSC a Petition to Transfer Investigation to This Commission.431[11]

Meanwhile, the GSIS hearing officer directed petitioners to submit to the jurisdiction of the investigating committee and required them to appear at the scheduled hearing.432[12]

Despite their urgent motions, the CSC failed to resolve respondents motions to lift preventive suspension order and to transfer the case from the GSIS to the CSC.

On October 10, 2002, respondents filed with the CA a special civil action for certiotari and prohibition with prayer for Temporary Restraining Order (TRO).433[13] The case was docketed as CA-G.R. SP No. 73170. Respondents sought the annulment and setting aside of petitioners order directing the former to submit to the jurisdiction of the committee created to hear and investigate the administrative case filed against them. They likewise prayed that petitioner (and the committee) be prohibited from conducting the scheduled hearing and from taking any action on the aforesaid administrative case against respondents.

On January 2, 2003, the CA rendered a decision434[14] in favor of respondents, the dispositive portion of which reads:

ACCORDINGLY, the petition is hereby GRANTED. Public respondents are hereby PERPETUALLY RESTRAINED from hearing and investigating the administrative case against petitioners, without prejudice to pursuing the same with the Civil Service Commission or any other agency of government as may be allowed for (sic) by law.

SO ORDERED.435[15]

The CA treated the petition as one raising an issue of gnawing fear, and thus agreed with respondents that the investigation be made not by the GSIS but by the CSC to ensure that the hearing is conducted before an impartial and disinterested tribunal.

Aggrieved, petitioner comes before the Court in this petition for review on certiorari under Rule 45 of the Rules of Court, raising the following issues:

I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE PETITIONERS ABUSED THEIR AUTHORITY AND HAVE BEEN PARTIAL IN REGARD TO THE ADMINISTRATIVE CASES AGAINST THE RESPONDENTS; AND IN PERPETUALLY RESTRAINING THE PETITIONERS FROM HEARING AND INVESTIGATING THE ADMINISTRATIVE CASES FILED AGAINST THE RESPONDENTS SOLELY ON THE BASIS OF THE TOTALLY UNFOUNDED ALLEGATIONS OF THE RESPONDENTS THAT THE PETITIONERS ARE PARTIAL AGAINST THEM.

II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO APPRECIATE AND APPLY THE PRINCIPLE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES AND THE RULE ON NON FORUM SHOPPING IN PERPETUALLY RESTRAINING THE PETITIONERS FROM HEARING AND INVESTIGATING THE ADMINISTRATIVE CASES AGAINST THE RESPONDENTS.

III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN RENDERING A DECISION WHICH IS CONTRARY TO AND COMPLETELY DISREGARDS APPLICABLE JURISPRUDENCE

AND WHICH, IN VIOLATION OF THE RULES OF COURT, DOES NOT CLEARLY STATE THE FACTS AND THE LAW ON WHICH IT IS BASED.436[16]

In the meantime, on February 27, 2003, the CSC resolved respondents Petition to Lift Order of Preventive Suspension and Petition to Transfer Investigation to the Commission through Resolution No. 03-0278,437[17] the dispositive portion of which reads:

WHEREFORE, the Commission hereby rules that:

1.

The Urgent Petition to Lift the Order of Preventive Suspension is hereby DENIED for having become moot and academic. The Petition to Transfer Investigation to the Commission is likewise DENIED for lack of merit. Accordingly, GSIS President and General Manager Winston F. Garcia is directed to continue the conduct of the formal investigation of the charges against respondents-petitioners Albert Velasco and Mario I. Molina.438[18]

2.

As to the lifting of the order of preventive suspension, the CSC considered the issue moot and academic considering that the period had lapsed and respondents had been allowed to resume their specific functions. This notwithstanding, the CSC opted to discuss the matter by way of obiter dictum. Without making a definitive conclusion as to the effect thereof in the case against respondents, the CSC declared that a preliminary investigation is a pre-requisite condition to the issuance of a formal charge.439[19]

On the requested transfer of the investigation from the GSIS to the CSC, the latter denied the same for lack of merit. The Commission concluded that the fact that the GSIS acted as the complainant and prosecutor and eventually the judge does not mean that impartiality in the resolution of the case will no longer be served.440[20]

Aggrieved, respondents appealed to the CA through a Petition for Review under Rule 43 of the Rules of Court.441[21] The case was docketed as CA-G.R. SP NO. 75973.

On December 7, 2005, the CA rendered a Decision442[22] in favor of respondents, the dispositive portion of which reads:

PREMISES CONSIDERED, the petition is hereby GRANTED. The formal charges filed by the President and General Manager of the GSIS against petitioners, and necessarily, the order of preventive suspension emanating therefrom, are declared NULL AND VOID. The GSIS is hereby directed to pay petitioners back salaries pertaining to the period during which they were unlawfully suspended. No pronouncement as to costs.

SO ORDERED.443[23]

The CA declared null and void respondents formal charges for lack of the requisite preliminary investigation. In view thereof, the CA disagreed with the CSC that the question on the propriety of the preventive suspension order had become moot and academic. Rather, it concluded that the same is likewise void having emanated from the void formal charges. Consequently, the CA found that respondents were entitled to back salaries during the time of their illegal preventive suspension.

Hence, the present petition raising the following issues:

I. WHETHER THE RESPONDENTS WERE FULLY ACCORDED THE REQUISITE OPPORTUNITY TO BE HEARD, WERE IN FACT HEARD AND BEING HEARD, AND WHETHER THE CONDUCT OF PRELIMINARY INVESTIGATION IN ADMINISTRATIVE PROCEEDINGS IS AN ESSENTIAL REQUISITE TO THE CONDUCT OF ADJUDICATION.

II. WHETHER THE RESPONDENTS WAIVED THEIR RIGHT TO PRELIMINARY INVESTIGATION.

III. WHETHER PRELIMINARY INVESTIGATION IS REQUIRED IN INDICTMENTS IN FLAGRANTI, AS HERE.

IV. WHETHER THE HONORABLE COURT OF APPEALS LACKED JURISDICTION, AS THE ALLEGED LACK OF PRELIMNARY INVESTIGATION SHOULD HAVE BEEN RAISED BEFORE THE GSIS AND, THEREAFTER, BEFORE THE CIVIL SERVICE COMMISSION, UNDER THE PRINCIPLE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES; THE GSIS HAVING ACQUIRED JURISDICTION OVER THE PERSONS OF THE RESPONDENTS, TO THE EXCLUSION OF ALL OTHERS.

V. WHETHER THE ALLEGED LACK OF PRELIMINARY INVESTIGATION IS A NON-ISSUE.

VI. WHETHER THE PREVENTIVE SUSPENSION ORDERS ISSUED AGAINST RESPONDENTS MOLINA AND VELASCO ARE VALID, WELL-FOUNDED AND DULY RECOGNIZED BY LAW.

VII. WHETHER PREVENTIVE SUSPENSION IS A PENALTY AND, THUS, MAY NOT BE IMPOSED WITHOUT BEING PRECEDED BY A HEARING.

VIII. WHETHER THE RESPONDENTS ARE ENTITLED TO PAYMENT OF BACK SALARIES PERTAINING TO THE PERIOD OF THEIR PREVENTIVE SUSPENSION.

IX. WHETHER THE INSTITUTION OF THE RESPONDENTS PETITION BEFORE THE CIVIL SERVICE COMMISSION WAS ENTIRELY PREMATURE.

X. WHETHER THE MISAPPREHENSIONS OF THE RESPONDENTS AS REGARDS THE PARTIALITY OF THE GSIS COMMITTEE INVESTIGATING THE CHARGES AGAINST THEM IS BLATANTLY WITHOUT FACTUAL BASIS.

XI.

WHETHER RESPONDENTS OBVIOUS ACT OF FORUM SHOPPING SHOULD BE COUNTENANCED BY THIS HONORABLE COURT.444[24]

The petitions are without merit.

The civil service encompasses all branches and agencies of the Government, including government-owned or controlled corporations (GOCCs) with original charters, like the GSIS, or those created by special law. As such, the employees are part of the civil service system and are subject to the law and to the circulars, rules and regulations issued by the CSC on discipline, attendance and general terms and conditions of employment.445[25] The CSC has jurisdiction to hear and decide disciplinary cases against erring employees. In addition, Section 37 (b) of Presidential Decree No. 807 or the Civil Service Decree of the Philippines also gives the heads of departments, agencies and instrumentalities, provinces, cities and municipalities the authority to investigate and decide matters involving disciplinary action against officers and employees under their jurisdiction. As for the GSIS, Section 45, Republic Act (R.A.) 8291 otherwise known as the GSIS Act of 1997, specifies its disciplining authority, viz:

SECTION 45. Powers and Duties of the President and General Manager. The President and General Manager of the GSIS shall among others, execute and administer the policies and resolutions approved by the Board and direct and supervise the administration and operations of the GSIS. The President and General Manager, subject to the approval of the Board, shall appoint the personnel of the GSIS, remove, suspend or otherwise discipline them for cause, in accordance with existing Civil Service rules and regulations, and prescribe their duties and qualifications to the end that only competent persons may be employed.

By this legal provision, petitioner, as President and General Manager of GSIS, is vested the authority and responsibility to remove, suspend or otherwise discipline GSIS personnel for cause.446[26]

However, despite the authority conferred on him by law, such power is not without limitations for it must be exercised in accordance with Civil Service rules. The Uniform Rules on Administrative Cases in the Civil Service lays down the procedure to be observed in issuing a formal charge against an erring employee, to wit:

First, the complaint. A complaint against a civil service official or employee shall not be given due course unless it is in writing and subscribed and sworn to by the complainant. However, in cases initiated by the proper disciplining authority, the complaint need not be under oath.447[27] Except when otherwise provided for by law, an administrative complaint may be filed at anytime with the Commission, proper heads of departments, agencies, provinces, cities, municipalities and other instrumentalities.448[28]

Second, the Counter-Affidavit/Comment. Upon receipt of a complaint which is sufficient in form and substance, the disciplining authority shall require the person complained of to submit Counter-Affidavit/Comment under oath within three days from receipt.449[29]

Third, Preliminary Investigation. A Preliminary investigation involves the ex parte examination of records and documents submitted by the complainant and the person complained of, as well as documents readily available from other government offices. During said investigation, the parties are given the opportunity to submit affidavits and counteraffidavits. Failure of the person complained of to submit his counter-affidavit shall be considered as a waiver thereof.450[30]

Fourth, Investigation Report. Within five (5) days from the termination of the preliminary investigation, the investigating officer shall submit the investigation report and the complete records of the case to the disciplining authority.451[31]

Fifth, Formal Charge. If a prima facie case is established during the investigation, a formal charge shall be issued by the disciplining authority. A formal investigation shall follow. In the absence of a prima facie case, the complaint shall be dismissed.452[32]

It is undisputed that the Memoranda separately issued to respondents were the formal charges against them. These formal charges contained brief statements of material or relevant facts, a directive to answer the charges within seventy two (72) hours from receipt thereof, an advice that they had the right to a formal investigation and a notice that they are entitled to be assisted by a counsel of their choice.453[33]

It is likewise undisputed that the formal charges were issued without preliminary or fact-finding investigation. Petitioner explained that no such investigation was conducted because the CSC rules did not specifically provide that it is a pre-requisite to the issuance of a formal charge. He likewise claimed that preliminary investigation was not required in indictments in flagranti as in this case.

We disagree.

Indeed, the CSC Rules does not specifically provide that a formal charge without the requisite preliminary investigation is null and void. However, as clearly outlined above, upon receipt of a complaint which is sufficient in form and substance, the disciplining authority shall require the person complained of to submit a CounterAffidavit/Comment under oath within three days from receipt. The use of the word shall quite obviously indicates that it is mandatory for the disciplining authority to conduct a preliminary investigation or at least respondent should be given the opportunity to comment and explain his side. As can be gleaned from the procedure set forth above, this is done prior to the issuance of the formal charge and the comment required therein is different from the answer that may later be filed by respondents. Contrary to petitioners claim, no exception is provided for in the CSC Rules. Not even an indictment in flagranti as claimed by petitioner.

This is true even if the complainant is the disciplining authority himself, as in the present case. To comply with such requirement, he could have issued a memorandum requiring respondents to explain why no disciplinary action should be taken against them instead of immediately issuing formal charges. With respondents comments, petitioner would have properly evaluated both sides of the controversy before making a conclusion that there was a prima facie case against respondents, leading to the issuance of the questioned formal charges. It is noteworthy that the very acts subject of the administrative cases stemmed from an event that took place the day before the formal charges were issued. It appears, therefore, that the formal charges were issued after the sole determination by the petitioner as the disciplining authority that there was a prima facie case against respondents.

To condone this would give the disciplining authority an unrestricted power to judge by himself the nature of the act complained of as well as the gravity of the charges. We, therefore, conclude that respondents were denied due process of law. Not even the fact that the charges against them are serious and evidence of their guilt is in the opinion of their superior strong can compensate for the procedural shortcut undertaken by petitioner which is evident in the record of this case.454[34] The filing by petitioner of formal charges against the respondents without complying with the mandated preliminary investigation or at least give the respondents the

opportunity to comment violated the latter's right to due process. Hence, the formal charges are void ab initio and may be assailed directly or indirectly at anytime.455[35]

The cardinal precept is that where there is a violation of basic constitutional rights, courts are ousted from their jurisdiction. The violation of a party's right to due process raises a serious jurisdictional issue which cannot be glossed over or disregarded at will. Where the denial of the fundamental right to due process is apparent, a decision rendered in disregard of that right is void for lack of jurisdiction. This rule is equally true in quasi-judicial and administrative proceedings, for the constitutional guarantee that no man shall be deprived of life, liberty, or property without due process is unqualified by the type of proceedings (whether judicial or administrative) where he stands to lose the same.456[36]

Although administrative procedural rules are less stringent and often applied more liberally, administrative proceedings are not exempt from basic and fundamental procedural principles, such as the right to due process in investigations and hearings.457[37] In particular, due process in administrative proceedings has been recognized to include the following: (1) the right to actual or constructive notice to the institution of proceedings which may affect a respondent's legal rights; (2) a real opportunity to be heard personally or with the assistance of counsel, to present witnesses and evidence in one's favor, and to defend one's rights; (3) a tribunal vested with competent jurisdiction and so constituted as to afford a person charged administratively a reasonable guarantee of honesty as well as impartiality; and (4) a finding by said tribunal which is supported by substantial evidence submitted for consideration during the hearing or contained in the records or made known to the parties affected.458[38]

Petitioner contends that respondents waived their right to preliminary investigation as they failed to raise it before the GSIS.

Again, we do not agree.

It is well-settled that a decision rendered without due process is void ab initio and may be attacked at anytime directly or collaterally by means of a separate action, or by resisting such decision in any action or proceeding where it is invoked.459[39] Moreover, while respondents failed to raise before the GSIS the lack of preliminary investigation, records show that in their Urgent Motion to Resolve (their Motion to Lift Preventive Suspension Order) filed with the CSC, respondents questioned the validity of their preventive suspension and the formal charges against them for lack of preliminary investigation.460[40] There is, thus, no waiver to speak of.

In the procedure adopted by petitioner, respondents were preventively suspended in the same formal charges issued by the former without the latter knowing that there were pending administrative cases against them. It is true that prior notice and hearing are not required in the issuance of a preventive suspension order.461[41] However, considering that respondents were preventively suspended in the same formal charges that we now declare null and void, then their preventive suspension is likewise null and void.

Lastly, the CA committed no reversible error in ordering the payment of back salaries during the period of respondents preventive suspension. As the administrative proceedings involved in this case are void, no delinquency or misconduct may be imputed to respondents and the preventive suspension meted them is baseless. Consequently, respondents should be awarded their salaries during the period of their unjustified suspension.462[42] In granting their back salaries, we are simply repairing the damage that was unduly caused respondents, and unless we can turn back the hands of time, we can do so only by restoring to them that which is physically feasible to do under the circumstances.463[43] The principle of no work, no pay does not apply where the employee himself was unlawfully forced out of job.464[44]

In view of the foregoing disquisition, we find no necessity to discuss the other issues raised by petitioner.

WHEREFORE, premises considered, the petition in G.R. No. 157383 is DENIED while the petition in G.R. No. 174137 is DISMISSED, for lack of merit.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA Associate Justice

WE CONCUR:

RENATO C. CORONA Chief Justice

ANTONIO T. CARPIO Associate Justice

FIRST DIVISION

SCA HYGIENE PRODUCTS CORPORATION EMPLOYEES ASSOCIATION-FFW, Petitioner,

G.R. No. 182877

Present:

CORONA, C. J., Chairperson, - versus LEONARDO-DE CASTRO, BERSAMIN,*

PEREZ, and MENDOZA, JJ.**

SCA HYGIENE PRODUCTS CORPORATION, Respondent. Promulgated: August 9, 2010 x --------------------------------------------------x

DECISION

PEREZ, J.:

For review on certiorari are the Decision465[1] dated 19 February 2008 and the Resolution466[2] dated 5 May 2008 of the Court of Appeals in CA-G.R. SP No. 100308, which reversed the Resolution467[3] dated 2 August 2007 of Voluntary Arbitrator Renato Q. Bello in V.A. Case No. 013-06. The undisputed facts are as follows:

Respondent SCA Hygiene Products Corporation is a domestic corporation engaged in the manufacture, sale and distribution of industrial paper, tissue and allied products. It has existing Collective Bargaining

Agreements (CBAs) with SCA Hygiene Products Corporation Monthly Employees Union-FSM (Monthly Employees Union) and petitioner SCA Hygiene Products Corporation Employees Association-FFW (Daily Employees Union), which represent the monthly and daily paid rank-and-file employees, respectively.

Both CBAs of the Monthly Employees Union and the Daily Employees Union contain provisions on Job Evaluation which state that:

ARTICLE VIII JOB EVALUATION SECTION 1. The Management (COMPANY) will conduct Job Evaluation when deemed necessary. A third party consultant may be tasked to conduct the program. The COMPANY agrees to maintain the practice of involving the incumbent employee member of the UNION in writing the Job Description which serves as input in the Job Evaluation Program. The third party consultant will conduct an orientation to both Union and Management of the Job Evaluation Process. xxxx ARTICLE VIII JOB EVALUATION SECTION 1. The COMPANY and the UNION agrees to abide by the result of the Job Evaluation (JE) conducted by the COMPANYs third party consultants. The UNION may participate in this activity in the form of consultations and suggestions. SECTION 2. The COMPANY agrees to advise the individual members of the UNION of the result of the JE concerning their respective positions and shall furnish the employee a copy of his/her job description.468[4] Sometime in 2003, respondent conducted a company-wide job evaluation through an independent consultant, Mercer Human Resource Consulting, Inc. As provided for in the CBAs, respondent conducted an orientation on the job evaluation process. All covered employees executed written job descriptions which were used in the job evaluation of their respective positions.

In February 2004, Mercer Human Resource Consulting, Inc. informed respondent of the result of the job evaluation which led respondent to adopt eight new job grade levels:469[5]

Job Grade Level

Employee*s+ Category

Executive

Executive

Department Manager

Unit Manager

Unit Manager

Management Team Member

Rank-and-File

Rank-and-File

In a Letter dated 24 February 2004,470[6] respondent informed 22 daily paid rank-and-file employees that their positions had been classified as Job Grade Level 2.

As a result, the Monthly Employees Union demanded that the 22 daily paid rank-and-file employees be given conversion increase, promotion increase as well as retroactive salary increase from the time the job evaluation was completed on the ground that their positions had been converted into a higher job grade level which amounted to a promotion. Likewise, the Daily Employees Union asked for the adjustment of said

employees compensation since the conversion warranted their entitlement to the benefits, status and privileges of a monthly paid rank-and-file employee.

As respondent failed to respond, both unions submitted their grievances for mediation. When the parties failed to reach an amicable settlement, they submitted the case for voluntary arbitration.

The unions claimed that the 22 daily paid rank-and-file employees were entitled to conversion increase since Job Grade Level 2 positions are meant for monthly paid rank-and-file employees and along with the conversion, said employees were given additional job descriptions. They were also entitled to promotion increase since such is the company practice everytime an employees rank is converted to a higher job grade level. The unions added that the company violated their CBAs by refusing to implement the result of the job evaluation considering that those converted from Job Grade Level 2 positions to Job Grade Level 3 positions were granted the benefits concomitant to their new positions.

The company countered that the job evaluation was merely a process of determining the relative contribution and value of the positions in its operations and does not provide for any adjustment in the salaries of

the covered employees. The subject employees cannot be converted to monthly paid rank-and-file employees and given a conversion increase since they continue to occupy the same positions that they were occupying prior to the job evaluation. They are not entitled to any promotion increase since they were never promoted to a higher position as a Job Grade Level 2 position does not involve any increase in their duties and responsibilities. The company added that those employees converted to Job Grade Level 3 positions are entitled to salary and benefits increase since they are classified as managerial employees. On the other hand, those holding Job Grade Level 2 positions remained rank-and-file employees.

On 2 August 2007, Voluntary Arbitrator Renato Q. Bello ruled in favor of the unions and awarded conversion increase and attorneys fees to the 22 daily paid rank-and-file employees. In so ruling, he noted that said employees were performing the duties and responsibilities of a monthly paid rank-and-file employee. The only difference was that there was no clear classification of their positions.

The dispositive portion of the resolution provides:

WHEREFORE, in view of the foregoing, this Voluntary Arbitrator promulgates the following:

1. Declaring that the following employees are now deemed monthly paid rankand-file employees and thus are entitled to conversion increase equivalent to ten per cent (10%) of their current basic salary as daily paid rank-and-file employees, retroactive from 24 February 2006 up to the time that full payment thereof is made by the Company:

Names 1. 2. 3. 4. 5. 6. 7. 8. 9. Julius M. Concepcion Rolando C. Miel Leonilo T. Sabinada Danilo T. Maningas Rulen A. Acosta Luisito P. Diaz Reynaldo M. Legario Arnel T. Limbaring Arlon Sison

Positions Shift Mechanical Technician Shift Mechanical Technician Electro Mechanical Technician Electrical Technician Back Tender Back Tender Back Tender Back Tender Back Tender Preventive Mechanical Technician Preventive Mechanical Technician Mechanical Technician Warehouse Custodian Mechanical Technician

10. Roberto dela Cruz 11. Elaido V. Agbayani 12. Charlie M. Manaois 13. Nelio E. Bejosano 14. Inventor V. Florada, Jr.

15. Paulo B. Romero 16. Dennis A. Ligue 17. Samuel F. Villosimo 18. Marian F. Perolino 19. Renante Anding 20. Gemar de Leola 21. Julius Cellona 22. Wenceslao B. Codizal

Electrical Production Operator Boiler Tender Boiler Tender Boiler Tender Electro Mechanical Technician Electro Mechanical Technician Instrumentation Technician

2. Denying the Unions claim for retroactive payment of promotional increase for lack of merit; and

3. Dismissing the Unions claim for damages also for lack of merit and awarding ten per cent (10%) attorneys fees to the Unions based on the total computed conversion increase due the twenty two (22) employees. For this purpose, the management of the Company and the duly authorized officers of the Unions are enjoined to sit down and discuss the mechanics of the actual implementation of this judgment award.471[7]

On appeal, the Court of Appeals ruled in favor of respondent. First, it held that the job evaluation was conducted as a reorganization process to standardize the companys organizational set-up. It was not designed to provide any conversion or adjustment to the salaries of the employees. The CBAs merely provided the procedure for the implementation of the job evaluation. It did not specifically state that the covered employees are entitled to any salary adjustment after the job evaluation. Hence, in the absence of any law or agreement between the parties, any conversion much less promotion is left entirely to respondents sound discretion. Second, the

appellate court did not give credence to the unions claim that the grant of conversion/promotion increase was respondents long-standing practice. To be considered a regular practice, the grant of such increase should have been done over a long period of time and must be shown to be consistent and deliberate. In this case, there was no evidence that respondent agreed to continue giving the benefits knowing fully well that its employees are not covered by the law requiring payment thereof. Third, the appellate court noted that those employees converted to Job Grade Level 3 positions were given salary and benefits increase since they became managerial employees after the job evaluation. The same could not be said with regard to those holding Job Grade Level 2 positions since they remained rank-and-file employees.

The decretal portion of the decision provides:

WHEREFORE, the petition for review is GRANTED and the Resolution dated August 2, 2007 of the voluntary arbitrator is NULLIFIED and SET ASIDE.472[8]

Hence, the instant petition raising the following issues:

I. THE HONORABLE COURT OF APPEALS GROSSLY ERRED WHEN IT DECIDED THE CASE IN UTTER DISREGARD OF THE SUBSTANTIATED FACTS THAT A PROMOTION TOOK PLACE WHEN THE TWENTY-TWO (22) DAILY PAID EMPLOYEES, WHO WERE PREVIOUSLY OCCUPYING JOB LEVEL I POSITIONS, WERE SUBSEQUENTLY CONVERTED INTO OR PROMOTED TO JOB LEVEL 2 POSITIONS AFTER THE RESULT OF THE JOB EVALUATION ON FEBRUARY 24, 2004. II. THE HONORABLE COURT OF APPEALS GROSSLY ERRED WHEN IT DECIDED THE CASE IN UTTER DISREGARD OF THE SUBSTANTIATED FACTS AND THE EVIDENCE ADDUCED TO THE EFFECT THAT THERE WAS A LONG-STANDING [COMPANY PRACTICE] THAT EVERYTIME THERE IS A CHANGE IN THE JOB LEVEL POSITION OF AN EMPLOYEE, THE COMPANY GRANTS A CORRESPONDING CONVERSION INCREASE OF TEN *PERCENT+ (10%), BASED ON THE EMPLOYEES CURRENT BASIC SALARY.473[9]

Briefly, the key issues in this petition are: (1) Were the 22 daily paid rank-and-file employees promoted after their positions have been converted from Job Grade Level 1 to Job Grade Level 2?; and (2) if so, are they entitled to conversion increase equivalent to 10% of their current basic salary?

Petitioner contends that the 22 daily paid rank-and-file employees were promoted after the job evaluation. In fact, they have been performing the duties and responsibilities of a monthly paid rank-and-file employee occupying a Job Grade Level 2 position even before the job evaluation. Petitioner adds that said employees are entitled to conversion increase since such has been the company practice everytime an employees rank is converted to a higher job grade level.

Respondent counters that the job evaluation was merely a process of determining the relative contribution and value of the positions in its operations and does not provide for any adjustment in the salaries of the covered employees. It adds that the 22 daily paid rank-and-file employees were not promoted since they continue to occupy the same positions that they were occupying prior to the job evaluation. They also perform the same functions and have the same responsibilities.

The petition has no merit.

It is a well-settled rule that labor laws do not authorize interference with the employer's judgment in the conduct of its business. The Labor Code and its implementing rules do not vest managerial authority in the labor arbiters or in the different divisions of the National Labor Relations Commission or in the courts. The hiring, firing, transfer, demotion, and promotion of employees have been traditionally identified as a management prerogative subject to limitations found in the law, a collective bargaining agreement, or in general principles of fair play and justice. This is a function associated with the employer's inherent right to control and manage effectively its enterprise. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. Accordingly, this Court has recognized and affirmed the

prerogative of management to implement a job evaluation program or a re-organization for as long as it is not contrary to law, morals or public policy.474[10]

In the case at bar, petitioner has miserably failed to convince this Court that respondent acted in bad faith in implementing the job evaluation program. There is no showing that it was intended to circumvent the law and deprive the 22 daily paid rank-and-file employees of the benefits they are supposed to receive.

The job evaluation program was undertaken to streamline respondents operations and to place its employees in their proper positions or groupings. A perusal of the CBAs of the parties showed that, as correctly ruled by the Court of Appeals, it merely provided the procedure for the implementation of the job evaluation and did not guarantee any adjustment in the salaries of the employees.

We are not prepared to grant any conversion or promotion increase to the 22 daily paid rank-and-file employees since what transpired was only a promotion in nomenclature. Of primordial consideration is not the nomenclature or title given to the employee, but the nature of his functions.475[11] Based on the eight new job grade levels which respondent adopted after the job evaluation, Job Grade Levels 1 and 2 positions are both categorized as rank-and-file employees. Said employees continued to occupy the same positions they were occupying prior to the job evaluation. Moreover, their job titles remained the same and they were not given additional duties and responsibilities.

There is also no evidence to show that Job Grade Levels 1 and 2 positions are confined only to daily and monthly paid rank-and-file employees, respectively, such that when a conversion from Job Grade Level 1 to Job Grade Level 2 takes place, a promotion automatically ensues. The pronouncement of Voluntary Arbitrator Renato Q. Bello that Job Grade Level 2 positions are mostly occupied by monthly paid rank-and-file employees implies that some daily paid rank-and-file employees also occupy that position.476[12] Thus, a mere conversion from Job Grade Level 1 position to Job Grade Level 2 position does not, of course, make a daily paid rank-and- filer a monthly paid one with a concomitant conversion and promotion increase.

Petitioner also failed to substantiate its allegation that it has been a long-standing company practice to grant a conversion or promotion increase everytime an employees rank is converted to a higher job grade level. The instances which petitioner cited showed clear intent on respondents part to promote the employees concerned. The job titles and positions held by such employees have changed following the fact that they have assumed additional duties and responsibilities.

Finally, we see why petitioners cannot make common cause with those whose positions were converted from Job Grade Level 2 to Job Grade Level 3 and were, thereby, given the benefits concomitant to the higher level. Those who were elevated to Job Grade Level 3 positions were rightfully given the additional benefits since they have become managerial employees, specifically Management Team Members, and not merely rank-and-file employees. The same cannot be said of the twenty-two (22) daily paid rank-and-file employees involved in the case at bar.

WHEREFORE, the petition is DENIED. The Decision dated 19 February 2008 and the Resolution dated 5 May 2008 of the Court of Appeals in CA-G.R. SP No. 100308 are AFFIRMED.

SO ORDERED.

JOSE PORTUGAL PEREZ Associate Justice

WE CONCUR:

RENATO C. CORONA Chief Justice Chairperson

TERESITA J. LEONARDO-DE CASTRO LUCAS P. BERSAMIN Associate Justice Associate Justice

JOSE CATRAL MENDOZA Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice Republic of the Philippines Supreme Court Manila

SPECIAL SECOND DIVISION

CARLOS DE CASTRO, Petitioner,

G.R. No. 165153

Present: versus CARPIO MORALES, J., Acting Chairperson, LIBERTY BROADCASTING NETWORK, INC. and EDGARDO QUIOGUE, Respondents. VELASCO, JR., BRION, *ABAD, and PEREZ, JJ.

Promulgated:

August 25, 2010 x----------------------------------------------------------------------------------------x

RESOLUTION

BRION, J.:

The respondent, Liberty Broadcasting Network, Inc. (LBNI), filed the present Motion for Reconsideration with Motion to Suspend Proceedings, asking us, first, to set aside our Decision477[1] and, second, to suspend the court proceedings in view of the Stay Order issued on August 19, 2005 by the Regional Trial Court (RTC) of Makati, Branch 138, in relation to the corporate rehabilitation proceedings that LBNI initiated.

The dispositive part of our Decision reads:

WHEREFORE, premises considered, we hereby GRANT the petition. Accordingly, we REVERSE and SET ASIDE the Decision and Resolution of the CA promulgated on May 25, 2004 and August 30, 2004, respectively, and REINSTATE in all respects the Resolution of the National Labor Relations Commission dated September 20, 2002. Costs against the respondents.

SO ORDERED.478[2]

The facts, as recited in our Decision, are summarized below:

The petitioner, Carlos C. de Castro, worked as a chief building administrator at LBNI. On May 31, 1996, LBNI dismissed de Castro on the grounds of serious misconduct, fraud, and willful breach of the trust reposed in him as a managerial employee. Allegedly, de Castro committed the following acts:

1.

Soliciting and/or receiving money for his own benefit from suppliers/dealers/traders *Cristino Samarita and Jose Aying+, representing commissions for job contracts involving the repair, reconditioning and replacement of parts of the airconditioning units at the companys Antipolo Station, as well as the installation of fire exits at the *LBNIs+ Technology Centre; Diversion of company funds by soliciting and receiving on different occasions a total of P14,000.00 in commissions from Aying for a job contract in the companys Antipolo Station; Theft of company property involving the unauthorized removal of one gallon of Delo oil from the company storage room;

2.

3.

4.

Disrespect/discourtesy towards a co-employee, for using offensive language against *Vicente Niguidula, the companys supply manager+; Disorderly behavior, for challenging Niguidula to a fight during working hours within the company premises, thereby creating a disturbance that interrupted the normal flow of activities in the company; Threat and coercion, for threatening to inflict bodily harm on the person of Niguidula and for coercing *Gil Balais+, a subordinate, into soliciting money in *de Castros+ behalf from suppliers/contractors; Abuse of authority, for instructing Balais to collect commissions from Aying and Samarita, and for requiring Raul Pacaldo (Pacaldo) to exact 2% - 5% of the price of the contracts awarded to suppliers; and Slander, for uttering libelous statements against Niguidula.479[3]

5.

6.

7.

8.

Aggrieved, de Castro filed a complaint for illegal dismissal against LBNI with the National Labor Relations Commission (NLRC) Arbitration Branch, National Capital Region, praying for reinstatement, payment of backwages, damages, and attorneys fees.480[4] He maintained that he could not have solicited commissions from suppliers considering that he was new in the company.481[5] Moreover, the accusations were belatedly filed as the imputed acts happened in 1995. He explained that the one gallon of Delo oil he allegedly took was actually found in Gil Balais room.482[6] He denied threatening Vicente Niguidula, whom he claimed verbally assaulted him and challenged him to a fight, an incident which he reported to respondent Edgardo Quiogue, LBNIs executive vice president, and to the Makati police.483[7] De Castro alleged that prior to executing affidavits against him, Niguidula and Balais had serious clashes with him.484[8]

On April 30, 1999, the Labor Arbiter rendered a decision485[9] in de Castros favor, holding LBNI liable for illegal dismissal.486[10] The Labor Arbiter found the affidavits of LBNIs witnesses to be devoid of merit, noting

that (1) witnesses Niguidula and Balais had altercations with de Castro prior to the execution of their respective affidavits; (2) the affidavit of Cristino Samarita, one of the suppliers from whom de Castro allegedly asked for commissions, stated that it was not de Castro, but Balais, who personally asked for money; and (3) Jose Aying, another supplier, recanted his earlier affidavit.487[11]

LBNI appealed the Labor Arbiters ruling to the NLRC. Initially, the NLRC reversed the Labor Arbiters decision but on de Castros motion for reconsideration, the NLRC reinstated the Labor Arbiters decision.488[12] It ruled that the charges against de Castro were never really substantiated other than by bare allegations in the witnesses affidavits who were the companys employees and who had altercations with De Castro prior to the execution of their affidavits.489[13]

LBNI again appealed the NLRCs adverse decision to the Court of Appeals (CA). On May 25, 2004, the CA reversed the NLRCs decision and held that de Castros dismissal was based on valid grounds. It ruled too that the NLRC gravely abused its discretion when it disregarded the affidavits of all of LBNIs witnesses.490[14]

In our September 23, 2008 Decision, we found that de Castros dismissal was based on unsubstantiated charges. Aying, a contractor, earlier executed an affidavit stating that de Castro asked him for commission, but in his second affidavit, he recanted his statement and exonerated de Castro.491[15] The other witnesses, Niguidula and Balais, were LBNI employees who resented de Castro.492[16] We noted that de Castro had not stayed long in the company and had not even passed his probationary period when the acts charged allegedly took place. We found this situation contrary to common experience, since new employees have a natural motivation to make a positive first impression on the employer, if only to ensure that they are regularized.493[17]

Thus, we ruled that the grounds that LBNI invoked for de Castros dismissal were, at best, doubtful, based on the evidence presented. These doubts should be interpreted in de Castros favor, pursuant to Article 4 of the Labor Code.494[18] Between a laborer and his employer, doubts reasonably arising from the evidence or interpretation of agreements and writing should be resolved in the formers favor.495[19]

The Motion for Reconsideration

LBNI now moves for a reconsideration of our September 23, 2008 Decision based on the following arguments: (1) LBNI had valid legal grounds to terminate de Castros employment for loss of trust and confidence;496[20] (2) the affidavits of LBNIs witnesses should not have been totally disregarded;497[21] and (3) LBNI is currently under rehabilitation, hence, the proceedings in this case must be suspended.498[22] LBNI points out that it filed, with the RTC of Makati, a petition for Corporate Rehabilitation with Prayer for Suspension of Payments (docketed as S.P. Proc. Case No. M-6126), and on August 19, 2005, the RTC issued a Stay Order directing, among others, that the

enforcement of all claims against Liberty Telecoms, Liberty Broadcasting and Skyphone, whether for money or otherwise and whether such enforcement is by Court action or otherwise x x x be forthwith stayed.499[23]

Comment on the Motion for Reconsideration

In his comment, de Castro contends that LBNIs motion for reconsideration contains a rehash of LBNIs earlier arguments. He avers that despite the RTCs Stay Order, it is premature for this Court to suspend the

proceedings. If a suspension of the proceedings is necessary, the proper venue to file the motion is with the Office of the Labor Arbiter. 500[24] De Castro further posits that LBNI should have informed this Court of the status of its Petition for Corporate Rehabilitation.501[25] THE COURTS RULING

Except for the prayer to suspend the execution of our September 23, 2008 Decision, we do not find LBNIs Motion for Reconsideration meritorious. Although we reject, for lack of merit, LBNIs arguments regarding the legality of de Castros dismissal, we suspend the execution of our Decision in deference to the Stay Order issued by the rehabilitation court.

The issue of illegal dismissal has already been resolved in the Courts September 23, 2008 Decision

LBNIs motion for reconsideration merely reiterates its earlier arguments, which we have already addressed in our September 23, 2008 Decision. LBNI has failed to offer any substantive argument that would convince us to reverse our earlier ruling.

LBNI argues that there is no logic for it to illegally dismiss de Castro because being on probationary employment a fact which this Court had stated in its decision all that the company had to do was not to re-hire him.502[26] By this claim, LBNI has misread the import of our ruling. The September 23, 2008 Decision declared that de Castro had not stayed long in the company and had not even passed his probationary period when the acts charged allegedly took place.503[27] Properly read, we found that the acts charged against de Castro took place when he was still under probationary employment a finding completely different from LBNIs claim that de Castro was dismissed during his probationary employment. On the contrary, de Castro was dismissed on the ninth month of his employment with LBNI, and by then, he was already a regular employee by operation of law. Article 281 of the Labor Code provides that *p+robationary employment shall not exceed six (6) months from the date the employee started working, x x x [a]n employee who is allowed to work after a probationary period shall be considered a regular employee. As a regular employee, de Castro was entitled to security of tenure and his illegal dismissal from LBNI justified the awards of separation pay, backwages, and damages.

The pendency of the rehabilitation proceedings does not affect the Courts jurisdiction to resolve the case, but merely suspends the execution of the September 23, 2008 Decision

On October 18, 2005, while de Castros petition was still pending before the Court, LBNI filed a motion to suspend the proceedings, citing the Stay Order, dated August 19, 2005, issued by the RTC of Makati, Branch 138 in S.P. Case No. M-6126.504[28] The Stay Order read:

FOR THE REASONS GIVEN and applying Section 6 of the Interim Rules of Procedure on Corporate Rehabilitation, x x x it is ordered that enforcement of all claims against [LBNI] whether for money or otherwise and whether such enforcement is by Court action or otherwise, its guarantors and sureties not solidarily liable with the petitioner, be forthwith stayed. x x x x SO ORDERED.505[29]

LBNIs motion was denied in our Resolution of December 12, 2005 for being premature, as de Castro then had yet to file his reply to LBNIs comment on the petition.506[30] Thereafter, nothing was heard from LBNI regarding the Stay Order or the rehabilitation proceedings it instituted before the RTC of Makati, Branch 138. Even the memorandum, dated May 4, 2006, that LBNI filed with the Court contained no reference to the rehabilitation proceedings.507[31]

The filing of a memorandum before the Court is not an empty requirement, devoid of legal significance. In A.M. No. 99-2-04-SC, the Court declared that issues raised in previous pleadings but not included in the memorandum shall be deemed waived or abandoned. Being a summation of the parties previous pleadings, the memoranda alone may be considered by the Court in deciding or resolving the petition. Thus, on account of LBNIs omission, only the issues raised in the parties memoranda principally, the validity of de Castros dismissal from LBNI were considered by the Court in resolving the case.

The Court does not take judicial notice of proceedings in the various courts of justice in the Philippines.508[32] At the time we decided the present case, we were thus not bound to take note of and consider the pendency of the rehabilitation proceedings, as the matter had not been properly brought to our attention. In Social Justice Society v. Atienza,509[33] we said that: In resolving controversies, courts can only consider facts and issues pleaded by the parties. Courts, as well as magistrates presiding over them are not omniscient. They can only act on the facts and issues presented before them in appropriate pleadings. They may not even substitute their own personal knowledge for evidence. Nor may they take notice of matters except those expressly provided as subjects of mandatory judicial notice. x x x x The party asking the court to take judicial notice is obligated to supply the court with the full text of the rules the party desires it to have notice of.

Notably, LBNIs memorandum was filed on May 4, 2006, more than 180 days from the date of the initial hearing on October 5, 2005 (as set in the Stay Order of August 19, 2005). Under Section 11, Rule 4 of the Interim Rules of Procedure on Corporate Rehabilitation (Interim Rules), a petition for rehabilitation shall be dismissed if no rehabilitation plan is approved by the court upon the lapse of 180 days from the date of initial hearing. While the Interim Rules grant extension beyond the 180-day period, no such extension was alleged in this case; in fact, as we earlier pointed out, no mention at all was made in LBNIs memorandum of the rehabilitation proceedings. With the failure of LBNI to raise rehabilitation proceedings in its memorandum, the Court had sufficient grounds to suppose that the rehabilitation petition had been dismissed by the time the case was submitted for decision.

Given these circumstances, the existence of the Stay Order which would generally authorize the suspension of judicial proceedings, even those pending before the Court could not have affected the Courts action on the present case. At any rate, a stay order simply suspends all actions for claims against a corporation undergoing rehabilitation; it does not work to oust a court of its jurisdiction over a case properly filed before it.510[34] Our ruling on the principal issue of the case that de Castro had been illegally dismissed from his employment with LBNI thus stands.

Nevertheless, with LBNIs manifestation that it is still undergoing rehabilitation, the Court resolves to suspend the execution of our September 23, 2008 Decision. The suspension shall last up to the termination of the rehabilitation proceedings, as provided in Section 11, in relation to Section 27, Rule 4 of the Interim Rules

Sec. 11. Period of the Stay Order. - The stay order shall be effective from the date of its issuance until the dismissal of the petition or the termination of the rehabilitation proceedings.

The petition shall be dismissed if no rehabilitation plan is approved by the court upon the lapse of one hundred eighty (180) days from the date of the initial hearing. The court may grant an extension beyond this period only if it appears by convincing and compelling evidence that the debtor may successfully be rehabilitated. In no instance, however, shall the period for approving or disapproving a rehabilitation plan exceed eighteen (18) months from the date of filing of the petition.

x x x x

Sec. 27. Termination of Proceedings. In case of the failure of the debtor to submit the rehabilitation plan, or the disapproval thereof by the court, or the failure of the rehabilitation of the debtor because of failure to achieve the desired targets or goals as set forth therein, or the failure of the said debtor to perform its obligations under the said plan, or a determination that the rehabilitation plan may no longer be implemented in accordance with its terms, conditions, restrictions, or assumptions, the court shall upon motion, motu proprio, or upon the recommendation of the Rehabilitation Receiver, terminate the proceedings. The proceedings shall also terminate upon the successful implementation of the rehabilitation plan.

WHEREFORE, we DENY the Motion for Reconsideration; accordingly, our Decision dated September 23, 2008 is hereby AFFIRMED. The National Labor Relations Commission is, however, directed to SUSPEND the execution of our September 23, 2008 Decision until the Stay Order is lifted or the corporate rehabilitation proceedings are terminated. Respondent Liberty Broadcasting Network, Inc. is hereby directed to submit quarterly reports to the National Labor Relations Commission on the status of its rehabilitation, subject to the penalty of contempt in case of noncompliance.

SO ORDERED.

ARTURO D. BRION Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES Associate Justice

PRESBITERO J. VELASCO, JR. Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE PORTUGAL PEREZ Associate Justice

ATTESTATION

I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice

Acting Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Acting Chairpersons Attestation, it is hereby certified that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

Republic of the Philippines Supreme Court Manila

THIRD DIVISION

SPIC N SPAN SERVICES CORPORATION, Petitioner,

G.R. No. 174084

Present:

versus -

CARPIO MORALES, J., Chairperson, BRION, GLORIA PAJE, LOLITA GOMEZ, MIRIAM CATACUTAN, ESTRELLA ZAPATA, GLORIA SUMANG, JULIET DINGAL, MYRA AMANTE, and FE S. BERNANDO, Respondents. BERSAMIN, VILLARAMA, JR., and SERENO, JJ.

Promulgated:

August 25, 2010 x----------------------------------------------------------------------------------------x DECISION

BRION, J.:

Before the Court is the petition for review on certiorari511[1] filed by Spic N Span Services Corporation (SNS) to seek the reversal of the October 25, 2004 Decision512[2] and the August 2, 2006 Resolution513[3] of the Court of Appeals (CA) in CA-G.R. SP No. 83215, entitled "Gloria Paje, Lolita Gomez, Miriam Catacutan, Estrella Zapata, Gloria Sumang, Juliet Dingal, Myra Amante and Fe S. Bernardo v. National Labor Relations Commission, Spic N Span Service Corporation and Swift Foods, Inc. BACKGROUND FACTS

Swift Foods, Inc. (Swift) is a subsidiary of RFM Corporation that manufactures and processes meat products and other food products. SNSs business is to supply manpower services to its clients for a fee. Swift and SNS have a contract to promote Swift products.

Inocencio Fernandez, Edelisa F. David, Thelma Guardian, Juliet C. Dingal, Fe S. Bernardo, Lolita Gomez, Myra Amante, Miriam S. Catacutan, Gloria O. Sumang, Gloria O. Paje, and Estrella Zapata (complainants) worked as Deli/Promo Girls of Swift products in various supermarkets in Tarlac and Pampanga. They were all dismissed from their employment on February 28, 1998. They filed two complaints for illegal dismissal against SNS and Swift before the National Labor Relations Commission (NLRC) Regional Arbitration Branch III, San Fernando, Pampanga, docketed as Case Nos. 03-9131-98 and 07-9295-98. These cases were subsequently consolidated.

After two unsuccessful conciliation hearings, the Labor Arbiter ordered the parties to submit their position papers. Swift filed its position paper; SNS did not.514[4] The complainants position papers were signed by Florencio P. Peralta who was not a lawyer and who claimed to be the complainants representative, although he never showed any proof of his authority to represent them.

In their position papers, the complainants alleged that they were employees of Swift and SNS, and their services were terminated without cause and without due process. The termination came on the day they received their notices; thus, they were denied the procedural due process requirements of notice and hearing prior to their termination of employment.515[5] Swift, in its position paper, moved to dismiss the complaints on the ground that it entered into an independent labor contract with SNS for the promotion of its products; it alleged that the complainants were the employees of SNS, not of Swift.516[6]

The Labor Arbiter517[7] found SNS to be the agent of Swift, and ordered SNS and Swift to jointly and severally pay Edelisa David P115,637.50 and Inocencio Fernandez P192,197.50, representing their retirement pay and service incentive leave pay. He dismissed, without prejudice, the claims of the other complainants because they failed to verify their position paper. He also denied all other claims for lack of factual basis.518[8]

Both Swift and the complainants appealed to the NLRC. Swift filed a memorandum of appeal, while the complainants filed a partial memorandum of appeal.519[9]

The NLRC denied the complainants appeal for lack of merit.520[10] It dismissed the complaint against Swift, and ordered SNS to pay Edelisa David a total of P256,620.13, and Inocencio Fernandez a total of P280,912.63, representing backwages, separation pay, and service incentive leave pay. It dismissed all other claims for lack of merit. Thereafter, Edelisa David and Inocencio Fernandez agreed to a settlement, and their cases were thus closed.521[11]

The complainants whose claims were dismissed, namely, Gloria Paje, Lolita Gomez, Miriam Catacutan, Estrella Zapata, Gloria Sumang, Juliet Dingal, Myra Amante, and Fe S. Bernardo (respondents), moved for the reconsideration of the NLRCs ruling. This time, they were represented by the Public Attorneys Office. The NLRC denied their motion.522[12]

The respondents then sought relief with the CA through a petition for certiorari, based on the alleged grave abuse of discretion committed by the NLRC. The CA found the petition meritorious, in its assailed decision of October 25, 2004, and ruled that the respondents failure to sign the verification in their position paper was a formal defect that was not fatal to their case. It concluded that SNS was merely an agent of Swift; thus, the latter should not be exempt from liability. It ordered the remand of the case to the Labor Arbiter for the computation of the respondents backwages, separation pay, and service incentive leave pay. SNS and Swift filed their motions for reconsideration which the CA denied.

SNS is now before us on a petition for review on certiorari, and submits the following

I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE CLAIMS OF HEREIN RESPONDENTS ON THE GROUND OF NON-SIGNING OF THE POSITION PAPER.

II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT ALTHOUGH THE RESPONDENTS WERE NOT REPRESENTED BY A LAWYER BUT BY ONE WHO IS NOT A MEMBER OF THE BAR, SAID FACT IS SUFFICIENT JUSTIFICATION FOR THE PETITIONERS FAILURE TO COMPLY WITH THE REQUIREMENTS OF LAW.

III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN REMANDING THE CASE TO THE LABOR ARBITER FOR THE COMPUTATION OF THE MONEY CLAIMS OF THE RESPONDENTS, TO WIT: 1) BACKWAGES, 2) SEPARATION PAY, AND 3) SERVICE INCENTIVE LEAVE, DESPITE THE FACT THAT NOWHERE IN THE DECISIONS OF THE LABOR ARBITER, THE NATIONAL LABOR RELATIONS COMMISSION, AND COURT OF APPEALS IS IT STATED THAT HEREIN RESPONDENTS WERE ILLEGALLY DISMISSED.523[13]

THE COURTS RULING

We find the petition unmeritorious.

SNS submits that since respondents did not sign the verification in their position paper, the CA erred when it ruled that the NLRC committed grave abuse of discretion in dismissing the respondents complaints. SNS stressed the importance of a signature in a pleading, and harped on the respondents failure to sign their position paper. 524[14] This, to SNS, is fatal to the respondents case.

We do not agree with SNS.

As we previously explained in Torres v. Specialized Packaging Development Corporation,525[15] where only two of the 25 real parties-in-interest signed the verification, the verification by the two could be sufficient assurance that the allegations in the petition were made in good faith, are true and correct, and are not speculative. The lack of a verification in a pleading is only a formal defect, not a jurisdictional defect, and is not necessarily fatal to a case.526[16] The primary reason for requiring a verification is simply to ensure that the allegations in the pleading are done in good faith, are true and correct, and are not mere speculations.527[17]

The CA, in its assailed decision, cited Philippine Telegraph and Telephone Corporation v. NLRC528[18] to emphasize that in labor cases, the deciding authority should use every reasonable means to speedily and objectively ascertain the facts, without regard to technicalities of law and procedure. Technical rules of evidence are not strictly binding in labor cases.529[19]

In the hierarchy observed in the dispensation of justice, rules of procedure can be disregarded in order to serve the ends of justice. This was explained by Justice Bernando P. Pardo, in Aguam v. Court of Appeals,530[20] when he said

Litigations must be decided on their merits and not on technicality. Every party litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the unacceptable plea of technicalities. Thus, dismissal of appeals purely on technical grounds is frowned upon where the policy of the court is to encourage hearings of appeals on their merits and the rules of procedure ought not to be applied in a very rigid, technical sense; rules of procedure are used only to help secure, not override substantial justice. It is a far better and more prudent course of action for the court to excuse a technical lapse and afford the parties a review of the case on appeal to attain the ends of justice rather than dispose of the case on technicality and cause a grave injustice to the parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a miscarriage of justice.531[21]

We should remember, too, that certain labor rights assume preferred positions in our legal hierarchy. Under the Constitution and the Labor Code, the State is bound to protect labor and assure the rights of workers to security of tenure.532[22] Article 4 of the Labor Code provides that all doubts in the implementation and

interpretation of its provisions (including its implementing rules and regulations) shall be resolved in favor of labor. The Constitution, on the other hand, characterizes labor as a primary social economic force. The State is bound to protect the rights of workers and promote their welfare,533[23] and the workers are entitled to security of tenure, humane conditions of work, and a living wage.534[24] Under these fundamental guidelines,

respondents right to security of tenure is a preferred constitutional right that technical infirmities in labor pleadings cannot defeat.

1.

SNS submits that the CA committed a serious error in ruling that the respondents

representatives non-membership in the bar is sufficient justification for their failure to comply with the requirements of the law. SNS argues that this ruling excuses the employment of a non-lawyer and places the acts of the latter on the same level as those of a member of the Bar.535[25] Our Labor Code allows a non-lawyer to represent a party before the Labor Arbiter and the Commission,536[26] but provides limitations: Non-lawyers may appear before the Commission or any Labor Arbiter only: (1) If they represent themselves; or (2) If they represent their organization or members thereof.537[27] Thus, SNS concludes that the respondents representative had no personality to appear before the Labor Arbiter or the NLRC, and his representation for the respondents should produce no legal effect.

Our approach to these arguments is simple as the problem boils down to a balance between a technical rule and protected constitutional interests. The cited technical infirmity cannot defeat the respondents preferred right to security of tenure which has primacy over technical requirements. Thus, we affirm the CAs ruling on this point, without prejudice to whatever action may be taken against the representative, if he had indeed been engaged in the unauthorized practice of law.

2.

SNS also claims serious error on the part of the CA in remanding the case to the Labor Arbiter, for

computation of the respondents backwages, separation pay and service incentive leave pay despite the fact that nowhere in the decisions of the Labor Arbiter, the NLRC, and CA was there any finding that respondents had been illegally dismissed.

We find this to be the first argument of its kind from SNS, and, in fact, is the first ever submission from SNS before it filed a motion for reconsideration with the CA. To recall, SNS did not file its position paper before the

labor arbiter, nor did it file its appeal before the NLRC; only Swift and the complainants did.538[28] It was only Swift, too, that filed its comment to the herein respondents petition for certiorari.539[29]

The records do not show if SNS filed its memorandum before the CA, although SNS filed a motion for reconsideration of the CA decision. It then claimed that the CA erred in ruling that the NLRC committed grave abuse of discretion when it dismissed respondents claim; that a petition for certiorari under Rule 65 of the Rules of Court is not the proper remedy to correct the NLRCs alleged grave abuse of discretion; and that the respondents were bound by the mistakes of their non-lawyer representative.540[30] Significantly, SNS did not raise the question of the CAs failure to state that the respondents had been illegally dismissed. At this point, it is too late for SNS to raise the issue.

Nothing on record indicates the reason for the respondents termination from employment, although the fact of termination was never disputed. Swift denied liability on the basis of its contract with SNS. The contract

was not presented before the Labor Arbiter, although Swift averred that under the contract, SNS would supply promo girls, merchandisers and other promotional personnel to handle all promotional aspects and merchandising strategy of Swift.541[31] We can assume, for lack of proof to the contrary, that the respondents termination from employment was illegal since neither SNS nor Swift, as employers, presented any proof that their termination from employment was legal. Upon proof of termination of employment, the employer has the burden of proof that the dismissal was valid; absent this proof, the termination from employment is deemed illegal, as alleged by the dismissed employees.

3.

In order that a labor relationship can be categorized as legitimate/permissible job contracting or

as prohibited labor-only contracting, the totality of the facts and the surrounding circumstances of the relationship ought to be considered.542[32] Every case is unique and has to be assessed on the basis of its facts and of the features of the relationship in question. In permissible job contracting, the principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. The test is whether the independent contractor has contracted to do the work according to his own methods and without being subject to the principals control except only as to

the results, he has substantial capital, and he has assured the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.543[33]

The CA found SNS to be Swifts agent, and explained its ruling as follows544[34]

To be legitimate, contracting or subcontracting must satisfy the following requirements: 1) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manners and methods, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; 2) the contractor or subcontractor has substantial capital or investment; and 3) the agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of right to self-organization, security of tenure, and social and welfare benefit (Vinoya v. NLRC, 324 SCRA 469).

The parties failed to attach a copy of the agreement entered into between SNS and Swift. Neither did they attach a copy of the financial statement of SNS. Thus, we are constrained to rule on the issue involved on the basis of the findings of both the Labor Arbiter and the NLRC.

The Labor Arbiter, in finding that SNS was merely a labor-only contractor, cited the following reasons: First, the agreement between SNS and Swift shows that the latter exercised control over the promo girls and/or merchandisers through the services of coordinators. Second, it cannot be said that SNS has substantial capital. Third, the duties of the petitioners were directly related, necessary and vital to the day-to-day operations of Swift. Lastly, the uniform and identification cards used by the petitioners were subject to the approval of Swift.

The NLRC, on the other hand, in finding that SNS is an independent contractor gave the following reasons: First, there is no evidence that Swift exercised the power of control over the petitioners. Rather, it is SNS who exercised direct control and supervision over the nature and performance of the works of herein petitioners. Second, by law, Swift and SNS have distinct and separate juridical personality from each other.

The decision of the NLRC is bereft of explanation as to the existence of circumstances that would make SNS an independent contractor as would exempt the principal from liabilities to the employees.

Nowhere in the decision of both the Labor Arbiter and the NLRC shows that SNS had full control of the means and methods of the performance of their work. Moreover, as found by the Labor Arbiter, there was no evidence that SNS has substantial capital or investment. Lastly, there

was no finding by the Labor Arbiter nor the NLRC that the agreement between the principal (Swift) and contractor (SNS) assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of right to self-organization, security of tenure, and social and welfare benefit.

In view of the foregoing, we conclude that the requisites above-mentioned are not obtaining in the present case. Hence, SNS is considered merely an agent of Swift which does not exempt the latter from liability.

We note that the present decision does not affect the settlement entered into between Edeliza David and Inocencio Fernandez, on the one hand and SNS, on the other. As held by the NLRC, their complaints are considered closed and terminated.

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Resolutions of the NLRC dated January 11, 2002 and December 23, 2003 are SET ASIDE in so far as the dismissal of the petitioners case is concerned and in so far as Swift is found not liable for the payment of the petitioners money claims.

The present case is hereby REMANDED to the Labor Arbiter for the computation of the money claims of the petitioners, to wit: 1) Backwages; 2) Separation Pay; and 3) Service Incentive Leave Pay.

The settlement of the claims of David and Fernandez is not affected by this decision.

We fully agree with this ruling. What we have before us, therefore, is a case of illegal dismissal perpetrated by a principal and its illegal contractor-agent. Thus, we affirm the ruling of the CA with the modification that the respondents are also entitled to nominal damages, for violation of their due process rights to notice and hearing, pursuant to our ruling in Agabon v. NLRC.545[35] We peg this amount at P30,000.00 for each of the respondents.

WHEREFORE, premises considered, we hereby AFFIRM the Court of Appeals October 25, 2004 Decision and August 2, 2006 Resolution in CA-G.R. SP No. 83215, with the modification that nominal damages in the amount of P30,000.00 should additionally be paid to each of the respondents, for violation of their procedural due process rights. Costs against the petitioner.

SO ORDERED.

ARTURO D. BRION Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES Associate Justice

LUCAS P. BERSAMIN Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

MARIA LOURDES P.A. SERENO Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

Republic of the Philippines Supreme Court Manila

SECOND DIVISION

PHARMACIA and UPJOHN, INC. (now PFIZER PHILIPPINES, INC.), ASHLEY MORRIS, ALEDA CHU, JANE MONTILLA & FELICITO GARCIA, Petitioners,

G.R. No. 172724

Present: CARPIO, J., Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ.

-versus-

Promulgated:

RICARDO P. ALBAYDA, JR., Respondent.

August 23, 2010

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

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari,546[1] under Rule 45 of the Rules of Court, seeking to set aside the November 30, 2005 Decision547[2] and May 5, 2006 Resolution548[3] of the Court of Appeals (CA), in CA-G.R. SP No. 00386.

The facts of the case are as follows:

Respondent Ricardo P. Albayda, Jr. (respondent) was an employee of Upjohn, Inc. (Upjohn) in 1978 and continued working there until 1996 when a merger between Pharmacia and Upjohn was created. After the merger,

respondent was designated by petitioner Pharmacia and Upjohn (Pharmacia) as District Sales Manager assigned to District XI in the Western Visayas area. During the period of his assignment, respondent settled in Bacolod City.

Sometime on August 9, 1999, a district meeting was held in Makati City wherein one of the topics discussed was the district territorial configuration for the new marketing and sales direction for the year 2000.

In December 1999, respondent received a Memorandum549[4] announcing the sales force structure for the year 2000. In the said memorandum, respondent was reassigned as District Sales Manager to District XII in the Northern Mindanao area. One of the key areas covered in District XII is Cagayan de Oro City.

In response to the memorandum, respondent wrote a letter550[5] dated December 27,1999 to Felicito M. Garcia (Garcia), Pharmacias Vice-President for Sales and Marketing, questioning his transfer from District XI to District XII. Respondent said that he has always been assigned to the Western Visayas area and that he felt that he could not improve the sales of products if he was assigned to an unfamiliar territory. Respondent concluded that his transfer might be a way for his managers to dismiss him from employment. Respondent added that he could not possibly accept his new assignment in Cagayan de Oro City because he will be dislocated from his family; his wife runs an established business in Bacolod City; his eleven- year-old daughter is studying in Bacolod City; and his twoyear-old son is under his and his wifes direct care. On January 10, 2000, Garcia wrote a letter551[6] to respondent denying his request to be reassigned to the Western Visayas area. Garcia explained that the factors used in determining assignments of managers are to maximize business opportunities and growth and development of personnel. Garcia stressed that other people both reprensentatives and district sales managers alignment. have been re-located in the past and in the year 2000 re-

On February 16, 2000, respondent wrote a letter552[7] to Aleda Chu (Chu), Pharmacias National Sales and External Business Manager, reiterating his request to be reassigned to the Western Visayas area. Respondent alleged that during one conversation, Chu assured him that as long as he hits his sales target by 100%, he would not be transferred. Respondent again speculated that the real reason behind his transfer was that it was petitioners way of terminating his employment. Respondent harped that his transfer would compel him to lose his free housing and his wifes compensation of P50,000.00 from her business in Bacolod City.

In a letter553[8] dated March 3, 2000, Chu said that she did not give any assurance or commitment to respondent that he would not be transferred as long as he achieved his 100% target for 1999. Chu explained to respondent that they are moving him to Cagayan de Oro City, because of their need of respondents expertise to build the business there. Chu added that the district performed dismally in 1999 and, therefore, they were confident that under respondents leadership, he can implement new ways and develop the sales force to become better and more productive. Moreover, since respondent has been already in Bacolod and Iloilo for 22 years, Chu said that exposure to a different market environment and new challenges will contribute to respondents development as a manager. Finally, Chu stressed that the decision to transfer respondent was purely a business decision. Respondent replied through a letter554[9] dated March 16, 2000. Respondent likened his transfer to Mindanao as a form of punishment as he alleged that even Police Chief General Panfilo Lacson transferred erring and non-performing police officers to Mindanao. Respondent argued that Chu failed to face and address the issues he raised regarding the loss of his family income, the additional cost of housing and other additional expenses he will incur in Mindanao.

In a memorandum555[10] dated May 11, 2000, Jane B. Montilla (Montilla), Pharmacias Human Resource Manager, notified respondent that since he has been on sick leave since January 5, 2000 up to the present, he had already consumed all his sick leave credits for the year 2000. Montilla stated that per company policy, respondent would then be considered on indefinite sick leave without pay. In another memorandum556[11] dated May 15, 2000, Montilla informed respondent of the clinic schedule of the company appointed doctor.

In a letter557[12] dated May 17, 2000, respondent acknowledged his receipt of the letters from Montilla. Respondent informed Montilla that his doctors had already declared him fit for work as of May 16, 2000. Respondent stated that he was already ready to take on his regular assignment as District Sales Manager in Negros Occidental or in any district in the Western Visayas area.

In a letter558[13] dated May 17, 2000, Chu expressed her disappointment on the way respondent viewed their reason for moving his place of assignment. Chu was likewise disappointed with respondents opinion that with

the movement, he be given additional remuneration, when in fact, such was never done in the past and never the practice in the industry and in the Philippines. Chu concluded that it appeared to her that respondent would not accept any reason for the movement and that nothing is acceptable to him except a Western Visayas assignment. Consequently, Chu referred the case to the Human Resource Department for appropriate action.

Montilla met with respondent to discuss his situation. After the meeting, Montilla sent respondent a memorandum559[14] wherein his request to continue his work responsibilities in Negros Occidental or in any district in the Western Visayas area was denied as there was no vacant position in those areas. Montilla stressed

that the company needed respondent in Cagayan de Oro City, because of his wealth of experience, talent and skills. Respondent, however, was also given an option to be assigned in Metro Manila as a position in the said territory had recently opened when Joven Rodriguez was transferred as Government Accounts and Special Projects Manager. Montilla gave respondent until June 2, 2000 to talk to his family and weigh the pros and cons of his decision on whether to accept a post in Cagayan de Oro City or in Manila.

In a letter560[15] dated May 31, 2000, respondent reiterated the concerns he raised in his previous letters.

Montilla sent respondent another memorandum561[16] dated June 6, 2000, stating that it is in the best interest of the company for respondent to report to the Makati office to assume his new area of assignment.

In a letter562[17] dated June 8, 2000, respondent told Montilla that he will be airing his grievance before the National Labor Relations Commission (NLRC).

In a memorandum563[18] dated June 15, 2000, Montilla stated that contrary to the opinion of respondent, respondent is entitled to Relocation Benefits and Allowance pursuant to the companys Benefits Manual. Montilla directed respondent to report for work in Manila within 5 working days from receipt of the memorandum.

In another memorandum564[19] dated June 26, 2000, Montilla stated that she had not heard from respondent since his June 8, 2000 letter and that he has not replied to their last memorandum dated June 15, 2000. Respondent was warned that the same would be a final notice for him to report for work in Manila within 5 working days from receipt of the memo; otherwise, his services will be terminated on the basis of being absent without official leave (AWOL).

On July 13, 2000, Montilla sent respondent a memorandum565[20] notifying him of their decision to terminate his services after he repeatedly refused to report for work despite due notice, the pertinent portions of which read: As I mentioned many times in our talks, you are in a Sales position for which you had signed up. Your employment contract actually states that you are willing to be assigned anywhere else in the Philippines, wherever the company needs you sees you fit. Metro Manila is the biggest and most advanced market we have in the Philippines. It is where the success or failure of our business lies. It is, therefore, the most competitive and significant area for sales. It is the most challenging and most rewarding of all areas. Only the best field managers are given the opportunity to manage a territory in Metro Manila. This is why I chose Manila over Cagayan de Oro for you in my letter dated June 6, 2000. And because you had assured us that you were fit to work, after being on sick leave for about five and a half months, I asked you to assume your new assignment in Metro Manila before June 16, 2000. Before June 16, 2000, you wrote us a letter advising us that you can not accept the new assignment in Manila. In response, we advised you that the assignment in Manila is a business need and for said reason you were requested to report for work within five working days from receipt of notice. However, you failed to comply. So we issued another memo dated June 26, 2000, instructing you to report for work and advising you that should you continue to fail to report for work, the company shall be constrained to terminate your employment. In view of the foregoing, we have no alternative but to terminate your services on the basis of absence without official leave (AWOL) and insubordination pursuant to Article 282 of the Labor Code of the Philippines, which shall be effective on July 19, 2000.566[21]

On August 14, 2000, respondent filed a Complaint567[22] with the NLRC, Regional Arbitration Branch No. VI, Bacolod City against Pharmacia, Chu, Montilla and Garcia for constructive dismissal. Also included in the complaint was Ashley Morris, Pharmacias President. Since mandatory conciliation failed between the parties, both sides were directed to submit their position papers.

On July 12, 2002, the Labor Arbiter (LA) rendered a Decision568[23] dismissing the case, the dispositive portion of which reads:

WHEREFORE, premises considered, the complaint against respondents in the aboveentitled case is DISMISSED for lack of merit. SO ORDERED.569[24]

Respondent appealed to the NLRC. In a Decision570[25] dated July 26, 2004, the NLRC dismissed the appeal, the dispositive portion of which reads:

WHEREFORE, premises considered, the appeal of complainant is hereby DISMISSED for lack of merit. The decision of the Labor Arbiter is AFFIRMED en toto. SO ORDERED.571[26]

Respondent filed a Motion for Reconsideration,572[27] which was denied by the NLRC in a Resolution573[28] dated November 10, 2004.

Aggrieved, respondent filed a Petition for Certiorari574[29] before the CA.

On November 30, 2005, the CA rendered a Decision ruling in favor of respondent, the dispositive portion of which reads:

WHEREFORE, premises considered, this petition is hereby given due course and the Resolution dated November 10, 2004 and the Decision dated July 26, 2004 of the NLRC Fourth Division in NLRC Case No. V-000521-2000 (RAB Case No. 06-08-10650-2000), are hereby REVERSED and SET ASIDE. Accordingly, the case is REMANDED to the National Labor

Relations Commission, Regional Arbitration Branch No. VI, Bacolod City, for the proper determination of the petitioners claims. SO ORDERED.575[30]

Petitioners filed a Motion for Reconsideration, which was, however, denied by the CA in a Resolution dated May 5, 2006.

Hence, herein petition, with petitioner raising a lone assignment of error to wit:

WHETHER OR NOT THE COURT OF APPEALS (CEBU CITY) CAN REVERSE OR SET ASIDE THE FACTUAL AND LEGAL FINDINGS OF THE NLRC WHICH WAS BASED ON SUBSTANTIAL EVIDENCE WHEN THERE IS NO SHOWING OF PALPABLE ERROR OR THAT THE FINDINGS OF FACTS OF THE LABOR ARBITER IS CONTRARY TO THAT OF THE NLRC.576[31]

The petition is meritorious.

As a general rule, this Court does not entertain factual issues. The scope of our review in petitions filed under Rule 45 is limited to errors of law or jurisdiction.577[32] This Court leaves the evaluation of facts to the trial and appellate courts which are better equipped for this task.

However, there are instances in which factual issues may be resolved by this Court, to wit: (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) the CA goes beyond the issues of the case, and its findings are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the CA are contrary to those of the trial court; (8) said findings of fact are conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the petition, as well as in the petitioners main and reply briefs, are not disputed by the respondent; and (10) the findings of fact of the CA are premised on the supposed absence of evidence and contradicted by the evidence on record.578[33]

In the present case, this Court is prompted to evaluate the findings of the LA, the NLRC, and the CA which are diametrically opposed.

Petitioners argue that the CA erred when it reversed the factual and legal findings of the NLRC which affirmed the decision of the LA. Petitioners contend that it is well established that factual findings of administrative agencies and quasi-judicial bodies are accorded great respect and finality and are not to be disturbed on appeal unless patently erroneous.

After a judicious examination of the records herein, this Court sustains the findings of the LA and the NLRC which are more in accord with the facts and law of the case. On petitioners exercise of management prerogative

Jurisprudence recognizes the exercise of management 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 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.579[34]

To determine the validity of the transfer of employees, the employer must 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.580[35]

Both the LA and the NLRC ruled that the reassignment of respondent was a valid exercise of petitioners management prerogative.

The LA shared petitioners posture that the transfer of respondent was a valid exercise of a legitimate management prerogative to maximize business opportunities, growth and development of personnel and that the expertise of respondent was needed to build the companys business in Cagayan de Oro City which dismally performed in 1999.581[36]

In addition, the LA explained that the reassignment of respondent was not a demotion as he will also be assigned as a District Sales Manager in Mindanao or in Metro Manila and that the notice of his transfer did not indicate that his emoluments will be reduced. Moreover, the LA mentioned that respondent was entitled to Relocation Benefits and Allowance in accordance with petitioners Benefits Manual.

On respondents allegation that his family stands to lose income from his wifes business, the LA ruled:

The allegation of complainant that his income will be affected because his wife who is doing business in Bacolod City and earns P50,000.00, if true, should not be taken in consideration of his transfer. What is contemplated here is the diminution of the salary of the complainant but not his wife. Besides, even if complainant may accept his new assignment in Cagayan de Oro or in Metro Manila, his wife may still continue to do her business in Bacolod City. Anyway, Bacolod City and Manila is just one (1) hour travel by plane.582[37]

Lastly, the LA pointed out that in respondents contract of employment, he agreed to be assigned to any work or workplace as may be determined by the company whenever the operations require such assignment.

The NLRC affirmed in toto the findings of the LA. The NLRC ruled that petitioners restructuring move was a valid exercise of its management prerogative and authorized under the employment contract of respondent, to wit:

We do not see in the records any evidence to prove that the restructuring move of respondent company was done with ill motives or with malice and bad faith purposely to constructively terminate complainants employment. Such misinterpretation or misguided supposition by complainant is belied by the fact that respondents officers had in several communications officially sent to complainant, expressly recognized complainants expertise and capabilities as a top sales man and manager for which reason the respondent company needs his services and skills to energize the low-performing areas in order to maximize business opportunities and to afford complainant an opportunity for further growth and development. Complainant persistently refused instead of taking this opportunity as a challenge after all, the nature of employment of a sales man or sales manager is that it is mobile or ambulant being always seeking for possible areas to market goods and services. He totally forgot the terms and conditions in his employment contract, stated in part, thus: xxxx You agree, during the period of employment, to be assigned to any work or workplace for such period as may be determined by the company and whenever the operations thereof require such assignment.583[38]

The rule in our jurisdiction is that findings of fact of the NLRC, affirming those of the LA, are entitled to great weight and will not be disturbed if they are supported by substantial evidence.584[39] Substantial evidence is an amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.585[40] As explained in Ignacio v. Coca-Cola Bottlers Phils., Inc:586[41]

x x x Factual findings of the NLRC affirming those of the Labor Arbiter, both bodies being deemed to have acquired expertise in matters within their jurisdictions, when sufficiently supported by evidence on record, are accorded respect if not finality, and are considered binding on this Court. As long as their decisions are devoid of any unfairness or arbitrariness in the process of their deduction from the evidence proffered by the parties, all that is left is for the Court to stamp its affirmation and declare its finality.587[42]

Based on the foregoing, this Court rules that the CA had overstepped its legal mandate by reversing the findings of fact of the LA and the NLRC as it appears that both decisions were based on substantial evidence. There is no proof of arbitrariness or abuse of discretion in the process by which each body arrived at its own conclusions. Thus, the CA should have deferred to such specialized agencies which are considered experts in matters within their jurisdictions.

Moreover, what is objectionable with the CA decision is that in finding that the reassignment of respondent was arbitrary and unreasonable it had, in effect, imposed on petitioners its own opinion or judgment on what should have been a purely business decision, to wit:

Discussing the issues jointly, a perusal of the records shows that there was no overwhelming evidence to prove that petitioner was terminated for a just and valid cause. Public respondent had overlooked the fact that the reassignment of petitioner was arbitrary and unreasonable as the same was in contrast to the purposes espoused by private respondents. Undoubtedly, petitioner is a complete alien to the territory and as no established contacts therein, thus, he cannot be effective nor can he maximize profits. It cannot also contribute to his professional growth and development considering that he had already made a mark on his territory by virtue of his twenty-two (22) long years of valuable service. Considering the quality of his performance in his territory, the private respondents cannot therefore reason out that they are merely exercising their management prerogative for it would be unreasonable since petitioner has not been amiss in his responsibilities. Furthermore, it would undeniably cause undue inconvenience to herein petitioner who would have to relocate, disrupting his familys peaceful living, and with no additional monthly remuneration.588[43]

In the absence of arbitrariness, the CA should not have looked into the wisdom of a management prerogative. It is the employers prerogative, based on its assessment and perception of its employees qualifications, aptitudes, and competence, to move them around in the various areas of its business operations in order to ascertain where they will function with maximum benefit to the company.589[44]

As a matter of fact, while the CAs observations may be acceptable to some quarters, it is nevertheless not universal so as to foreclose another view on what may be a better business decision. While it would be profitable to

keep respondent in an area where he has established contacts and therefore the probability of him reaching and even surpassing his sales quota is high, on the one hand, one can also make a case that since respondent is one of petitioners best district managers, he is the right person to turn around and improve the sales numbers in Cagayan de Oro City, an area which in the past had been dismally performing. After all, improving and developing a new market may even be more profitable than having respondent stay and serve his old market. In addition, one can even make a case and say that the transfer of respondent is also for his professional growth. Since respondent

has been already assigned in the Western Visayas area for 22 years, it may mean that his market knowledge is very limited. In another territory, there will be new and more challenges for respondent to face. In addition, one can even argue that for purposes of future promotions, it would be better to promote a district manager who has experience in different markets.

The foregoing illustrates why it is dangerous for this Court and even the CA to look into the wisdom of a management prerogative. Certainly, one can argue for or against the pros and cons of transferring respondent to another territory. Absent a definite finding that such exercise of prerogative was tainted with arbitrariness and unreasonableness, the CA should have left the same to petitioners better judgment. The rule is well settled that labor laws discourage interference with an employer's judgment in the conduct of his business. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. As long as the company's exercise of the same 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.590[45]

In addition, this Court cannot agree with the findings of the CA that the transfer of respondent was unreasonable, considering he had not been remiss in his responsibilities. What the CA failed to recognize is that the very nature of a sales man is that it is mobile and ambulant. On this point, it bears to stress that respondent signed two documents signifying his assent to be assigned anywhere in the Philippines. In respondents Employment Application,591[46] he checked the box which asks, Are you willing to be relocated anywhere in the Philippines?592[47] In addition, in respondents Contract of Employment,593[48] item (8) reads:

You agree, during the period of your employment, to be assigned to any work or workplace for such period as may be determined by the company and whenever the operations thereof require such assignment.594[49]

Even if respondent has been performing his duties well it does not mean that petitioners hands are tied up that they can no longer reassign respondent to another territory. And it is precisely because of respondents good performance that petitioners want him to be reassigned to Cagayan de Oro City so that he could improve their business there.

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,595[50] which involved a complaint filed by a medical representative against his employer drug company for illegal dismissal for allegedly terminating his employment when he refused to accept his reassignment to a new area, the Court upheld the right of the drug company to transfer or reassign its employee in accordance with its operational demands and requirements. The ruling of the Court therein, quoted hereunder, also finds application in the instant case:

Therefore, Bobadilla had no valid reason to disobey the order of transfer. He had tacitly given his consent thereto when he acceded to the petitioners policy of hiring sales staff who are willing to be assigned anywhere in the Philippines which is demanded by petitioners business. By the very nature of his employment, a drug salesman or medical representative is expected to travel. He should anticipate reassignment according to the demands of their business. It would be a poor drug corporation which cannot even assign its representatives or detail men to new markets calling for opening or expansion or to areas where the need for pushing its products is great. More so if such reassignments are part of the employment contract.596[51] On the existence of grounds to dismiss respondent from the service

Because of respondents adamant refusal to be reassigned, the LA ruled that petitioners had valid grounds to terminate his employment, to wit:

As early as in December 27, 1999, complainant already signified his refusal to accept his new assignment in Cagayan de Oro. Complainant was on sick leave since January 5, 2000 up to May 11, 2000, for about four (4) months and he already consumed his leave credits up to March 2000. Hence, starting April 2000 he was already on indefinite leave without pay. xxxx In his letter dated May 17, 2000, addressed to respondent Jane B. Montilla, complainant informed her that his doctors have already declared him fit for work as of May 16, 2000, and he was ready to assume to his regular assignment as District Sales Manager of Negros Occidental. This is a strong indication that complainant really does not want to accept his new assignment either in Cagayan de Oro or in Metro Manila, which is clearly a defiance of the lawful order of his employer, and a ground to terminate his services pursuant to Article 282 of the Labor Code. Notwithstanding his adamant refusal to resume working to his new assignment in Metro Manila, complainant was still given by respondent Montilla another chance to think it over up to June 2, 2000. By way of reply, complainant, in his letter dated May 31, 2000 to Ms. Montilla, he

clearly expressed his disagreement to his transfer and would rather seek justice elsewhere in another forum. But still the respondent company, notwithstanding the position taken by complainant in his letter dated May 31, 2000 that he is refusing his transfer gave complainant until June 16, 2000 to reconsider his position. In a letter dated June 5, 2000, respondent Montilla gave complainant a period of five (5) days from receipt thereof to report to Manila, but still complainant did not comply. Ms. Montilla sent complainant a final notice dated June 26, 2000 for him to report to Manila within five (5) working days from receipt of the same, with a warning that his failure to do so, the company would be constraint to terminate his services for being absent without official leave. Finally, is was only on July 19, 2000, when the services of complainant was terminated by respondent company through its Human Resource Manager on the ground of absence without leave and insubordination pursuant to Article 282 of the Labor Code. Clearly, the complainant had abandoned his work by reason of his being on AWOL as a consequence of vigorous objection to his transfer to either Cagayan de Oro or Metro Manila. The long period of absence of complainant without official leave from April to July 19, 2000 is more than sufficient ground to dismiss him. The refusal of complainant to accept his transfer of assignment is a clear willful disobedience of the lawful order of his employer and a ground to terminate his services under Article 282, par. (a) of the Labor Code, as amended. The series of chances given complainant to report for work, coupled by his adamant refusal to report to his new assignment, is a conclusive indication of willful disobedience of the lawful orders of his employer.597[52]

In addition, the NLRC also ruled that respondent was guilty of insubordination, thus:

Apparently, complainant, by his unjustified acts of refusing to be transferred either to Mindanao or Manila for personal reasons, absent any bad faith or malice on the part of respondents, has deliberately ignored and defied lawful orders of his employer. An employee who refuses to be transferred, when such transfer is valid, is guilty of insubordination. x x x598[53]

Based on the foregoing, this Court rules that the findings of the LA and the NLRC are supported by substantial evidence. The LA clearly outlined the steps taken by petitioners and the manner by which respondent was eventually dismissed. The NLRC, for its part, explained why respondent was guilty of insubordination. No abuse of discretion can, therefore, be attributed to both agencies, and the CA was certainly outside its mandate in reversing such findings.

This Court has long stated that the objection to the transfer being grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer.599[54] Such being the case, respondent cannot adamantly refuse to abide by the order of transfer without exposing himself to the risk of being dismissed. Hence, his dismissal was for just cause in accordance with Article 282(a)600[55] of the Labor Code.

The CA, however, ruled that respondent was not guilty of insubordination, to wit: As to the findings of insubordination, the records show that petitioner was not guilty of such offense. For insubordination to exist, the order must be reasonable and lawful, sufficiently known to the employee and in connection to his duties. Where an order or rule is not reasonable, in view of the terms of the contract of employment and the general right of the parties, a refusal to obey does not constitute a just cause for the employees discharge. It is undeniable that the order given by the company to petitioner to transfer to a place where he has no connections, leaving his family behind, and with no clear additional remuneration, can be considered unreasonable and petitioners actuation cannot be considered insubordination.601[56]

This Court cannot agree with the findings of the CA, in view of the fact that it was an error for it to substitute its own judgment and interfere with management prerogatives. No iota of evidence was presented that

the reassignment of respondent was a demotion as he would still be a District Sales Manager in Cagayan de Oro City or in Metro Manila. Furthermore, he would be given relocation benefits in accordance with the Benefits

Manual. If respondent feels that what he was given is less than what is given to all other district managers who were likewise reassigned, the onus is on him to prove such fact. Furthermore, records reveal that respondent has been harping on the fact that no additional remuneration would be given to him with the transfer. However, again, respondent did not present any evidence that additional remuneration were being given to other district managers who were reassigned to different locations, or that such was the practice in the company. This Court, therefore, is inclined to believe the statement of Chu in her May 17, 2000 letter to respondent that additional remuneration is never given to people who are reassigned, to wit:

x x x Likewise, I am disappointed that with the movement, you expect to be paid additional remuneration when in fact, this has never been done in the past and never a practice within the industry and the Philippines.602[57]

Lastly, while it is understandable that respondent does not want to relocate his family, this Court agrees with the NLRC when it observed that such inconvenience is considered an employment or professional hazard which forms part of the concessions an employee is deemed to have offered or sacrificed in the view of his acceptance of a position in sales.

On the observance of due process

The CA ruled that respondent was denied due process in the manner he was dismissed by petitioners, to wit:

Furthermore, the finding that petitioner was afforded due process is bereft of any legal basis. An employee must be given notice and an ample opportunity, prior to dismissal to adequately prepare for his defense. This is an elementary rule in labor law that due process in dismissal cases contemplates the twin requisites of notice and hearing. These procedural requirements have been mandatorily imposed to the employer to accord its employees the right to be heard. Failure of the employer to comply with such requirements renders its judgment of dismissal void and inexistent. A written notice from the employer containing the causes for the dismissal must be given. The employee is then given ample opportunity to be heard and to defend

himself, appraising him of his right to counsel if he desires. Lastly, a written notice informing the employee of the decision of the employer, citing there reasons therefore, is given. The above procedure was not followed in the instant case and the series of communications and meetings cannot take the place and is therefore not sufficient to take the place of notice and hearing.603[58]

In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employers decision to dismiss him. The requirement of a hearing is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.604[59] While no actual hearing was conducted before petitioners dismissed respondent, the same is not fatal as only an ample opportunity to be heard is what is required in order to satisfy the requirements of due process.605[60] Accordingly, this Court is guided by Solid Development Corporation Workers Association v. Solid Development Corporation606[61] (Solid), where the validity of the dismissal of two employees was upheld notwithstanding that no hearing was conducted, to wit:

[W]ell-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the dismissal of employees. It is a cardinal rule in our jurisdiction that the employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employers decision to dismiss him. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. In separate infraction reports, petitioners were both apprised of the particular acts or omissions constituting the charges against them. They were also required to submit their written explanation within 12 hours from receipt of the reports. Yet, neither of them complied. Had they found the 12-hour period too short, they should have requested for an extension of time. Further, notices of termination were also sent to them informing them of the basis of their dismissal. In fine, petitioners were given due process before they were dismissed. Even if no hearing was conducted, the requirement of due process had been met since they were accorded a chance to explain their side of the controversy607[62]

In the case at bar, this Court finds that petitioners had complied with the requirements of law in effecting the dismissal of respondent. Petitioners sent respondent a first notice in the form of a memorandum608[63] dated June 26, 2000, warning him that the same would serve as a final notice for him to report to work in Manila within 5 working days from receipt thereof, otherwise, his services would be terminated on the basis of AWOL. After receiving the memorandum, respondent could have requested for a conference with the assistance of counsel, if he so desired. Like in Solid, had respondent found the time too short, he should have responded to the memorandum asking for more time. It, however, appears to this Court that respondent made no such requests. On July 13, 2000, petitioners sent another memorandum609[64] notifying respondent that they are terminating his services effective July 19, 2000, after he repeatedly refused to report to work despite due notice. Even if no actual hearing was conducted, this Court is of the opinion that petitioners had complied with the requirements of due process as all that the law requires is an ample opportunity to be heard.

In conclusion, it bears to stress that the CA should not have disturbed the factual findings of the LA and the NLRC in the absence of arbitrariness or palpable error. The reassignment of respondent to another territory was a valid exercise of petitioners management prerogative and, consequently, his dismissal was for cause and in accordance with the due process requirement of law.

This Court, however, is not unmindful of previous rulings,610[65] wherein separation pay has been granted to a validly dismissed employee after giving considerable weight to long years of employment.611[66]

An employee who is dismissed for cause is generally not entitled to any financial assistance. Equity considerations, however, provide an exception. Equity has been defined as justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law. It is grounded on the precepts of conscience and not on any sanction of positive law, for equity finds no room for application where there is law.612[67]

In Philippine Long Distance Telephone Co. v. National Labor Relations Commission,613[68] the Court laid down the guidelines in the grant of separation pay to a lawfully dismissed employee, thus:

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.614[69]

In the instant case, this Court rules that an award to respondent of separation pay by way of financial assistance, equivalent to one-half (1/2) months pay for every year of service, is equitable. Although respondent's actions constituted a valid ground to terminate his services, the same is to this Court's mind not so reprehensible as to warrant complete disregard of his long years of service. It also appears that the same is respondent's first offense. While it may be expected that petitioners will argue that respondent has only been in their service for four years since the merger of Pharmacia and Upjohn took place in 1996, equity considerations dictate that respondent's tenure be computed from 1978, the year when respondent started working for Upjohn.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The November 30, 2005 Decision and May 5, 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 00386 are REVERSED and SET ASIDE.

In view of the above disquisitions, petitioners are ORDERED to pay respondent separation pay by way of financial assistance equivalent to one-half (1/2) month pay for every year of service.

SO ORDERED.

DIOSDADO M. PERALTA Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice Chairperson

ANTONIO EDUARDO B. NACHURA Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE CATRAL MENDOZA Associate Justice

ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO Associate Justice Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice THIRD DIVISION

RODOLFO J. SERRANO, Petitioner,

G.R. No. 187698

Present:

CARPIO MORALES, J., Chairperson, - versus BRION, BERSAMIN, ABAD,* and VILLARAMA, JR., JJ.

SEVERINO SANTOS TRANSIT and/or SEVERINO SANTOS, Respondents.

Promulgated:

August 9, 2010

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

DECISION

CARPIO MORALES, J.:

Petitioner Rodolfo J. Serrano was hired on September 28, 1992 as bus conductor by respondent Severino Santos Transit, a bus company owned and operated by its co-respondent Severino Santos.

After 14 years of service or on July 14, 2006, petitioner applied for optional retirement from the company whose representative advised him that he must first sign the already prepared Quitclaim before his retirement pay could be released. As petitioners request to first go over the computation of his retirement pay was denied, he signed the Quitclaim on which he wrote U.P. (under protest) after his signature, indicating his protest to the amount of P75,277.45 which he received, computed by the company at 15 days per year of service.

Petitioner soon after filed a complaint615[1] before the Labor Arbiter, alleging that the company erred in its computation since under Republic Act No. 7641, otherwise known as the Retirement Pay Law, his retirement pay should have been computed at 22.5 days per year of service to include the cash equivalent of the 5-day service incentive leave (SIL) and 1/12 of the 13th month pay which the company did not.

The company maintained, however, that the Quitclaim signed by petitioner barred his claim and, in any event, its computation was correct since petitioner was not entitled to the 5-day SIL and pro-rated 13th month pay for, as a bus conductor, he was paid on commission basis. Respondents, noting that the retirement differential pay amounted to only P1,431.15, explained that in the computation of petitioners retirement pay, five months were inadvertently not included because some index cards containing his records had been lost.

By Decision616[2] of February 15, 2007, Labor Arbiter Cresencio Ramos, Jr. ruled in favor of petitioner, awarding him P116,135.45 as retirement pay differential, and 10% of the total monetary award as attorneys fees. In arriving at such computation, the Labor Arbiter ratiocinated:

In the same Labor Advisory on Retirement Pay Law, it was likewise decisively made clear that the law expanded the concept of one-half month salary from the usual one-month salary divided by two, to wit: B. COMPUTATION OF RETIREMENT PAY A covered employee who retires pursuant to RA 7641 shall be entitled to retirement pay equivalent to at least one-half (1/12) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. The law is explicit that one-half month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days service incentive leaves unless the parties provide for broader inclusions. Evidently, the law expanded the concept of one-half month salary from the usual one-month salary divided by two. The retirement pay is equal to half-months pay per year of service. But half-months pay is expanded because it means not just the salary for 15 days but also one-twelfth of the 13th-month pay and the cash value of five-day service incentive leave. THIS IS THE MINIMUM. The retirement pay package can be improved upon by voluntary company policy, or particular agreement with the employee, or through a collective bargaining agreement. (The Labor Code with Comments and Cases, C.A. Azcunea, Vol. II, page 765, Fifth Edition 2004).

Thus, having established that 22.5 days pay per year of service is the correct formula in arriving at the complete retirement pay of complainant and inasmuch as complainants daily earning is based on commission earned in a day, which varies each day, the next critical issue that needs discernment is the determination of what is a fair and rational amount of daily earning of complainant to be used in the computation of his retirement pay. While complainant endeavored to substantiate his claim that he earned average daily commission of P700.00, however, the documents he presented are not complete, simply representative copies, therefore unreliable. On the other haNd, while respondents question complainants use of P700.00 (daily income) as basis in determining the latters correct retirement pay, however it does not help their defense that they did not present a single Conductors Trip Report to contradict the claim of complainant. Instead, respondents adduced a handwritten summary of complainants monthly income from 1993 until June 2006. It must be noted also that complainant did not contest the amounts stated on the summary of his monthly income as reported by respondents. Given the above considerations, and most importantly that complainant did not dispute the figures stated in that document, we find it logical, just and equitable for both parties to rely on the summary of monthly income provided by respondent, thus, we added complainants monthly income from June 2005 until June 2006 or the last twelve months and we arrived at P189,591.30) and we divided it by twelve (12) to arrive at complainants average monthly earning of P15,799.28. Thereafter, the average monthly of P15,799.28 is divided by twenty-six (26) days, the factor commonly used in determining the regular working days in a month, to arrive at his average daily income of P607.66. Finally, P607.66 (average daily income) x 22.5 days = P13,672.35 x 14 (length of service) = P191,412.90 (COMPLETE RETIREMENT PAY). However, inasmuch as complainant already received P75,277.45, the retirement differential pay due him is P116,135.45 (P191,412.90 P75,277.45). (underscoring partly in the original and partly supplied)

The National Labor Relations Commission (NLRC) to which respondents appealed reversed the Labor Arbiters ruling and dismissed petitioners complaint by Decision617[3] dated April 23, 2008. It, however, ordered respondents to pay retirement differential in the amount of P2,365.35.

Citing R & E Transport, Inc. v. Latag,618[4] the NLRC held that since petitioner was paid on purely commission basis, he was excluded from the coverage of the laws on 13 th month pay and SIL pay, hence, the 1/12 of the 13th month pay and the 5-day SIL should not be factored in the computation of his retirement pay.

Petitioners motion for reconsideration having been denied by Resolution619[5] of June 27, 2008, he appealed to the Court of Appeals.

By the assailed Decision620[6] of February 11, 2009, the appellate court affirmed the NLRCs ruling, it merely holding that it was based on substantial evidence, hence, should be respected.

Petitioners motion for reconsideration was denied, hence, the present petition for review on certiorari.

The petition is meritorious.

Republic Act No. 7641 which was enacted on December 9, 1992 amended Article 287 of the Labor Code by providing for retirement pay to qualified private sector employees in the absence of any retirement plan in the establishment. The pertinent provision of said law reads:

Section 1. Article 287 of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines, is hereby amended to read as follows: xxxx

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. Retail, service and agricultural establishments or operations employing not more than (10) employees or workers are exempted from the coverage of this provision. x x x x (emphasis and underscoring supplied)

Further, the Implementing Rules of said law provide:

RULE II Retirement Benefits SECTION 1. General Statement on Coverage. This Rule shall apply to all employees in the private sector, regardless of their position, designation or status and irrespective of the method by which their wages are paid, except to those specifically exempted under Section 2 hereof. As used herein, the term Act shall refer to Republic Act No. 7641 which took effect on January 7, 1993. SECTION 2 Exemptions. This Rule shall not apply to the following employees: 2.1 Employees of the National Government and its political subdivisions, including Government-owned and/or controlled corporations, if they are covered by the Civil Service Law and its regulations. 2.2 Domestic helpers and persons in the personal service of another.

2.3 Employees of retail, service and agricultural establishment or operations regularly employing not more than ten (10) employees. As used in this sub-section; xxxx

SECTION 5 Retirement Benefits. 5.1 In the absence of an applicable agreement or retirement plan, an employee who retires pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half () month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. 5.2 Components of One-half () Month Salary. For the purpose of determining the minimum retirement pay due an employee under this Rule, the term one-half month salary shall include all of the following: (a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term salary includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours, whether such payments are fixed or ascertained on a time, task, piece of commission basis, or other method of calculating the same, and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of food, lodging or other facilities customarily furnished by the employer to his employees. The term does not include cost of living allowances, profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. (b) The cash equivalent of not more than five (5) days of service incentive leave; (c) One-twelfth of the 13th month pay due the employee. (d) All other benefits that the employer and employee may agree upon that should be included in the computation of the employees retirement pay. x x x x (emphasis supplied)

Admittedly, petitioner worked for 14 years for the bus company which did not adopt any retirement scheme. Even if petitioner as bus conductor was paid on commission basis then, he falls within the coverage of R.A. 7641 and its implementing rules. As thus correctly ruled by the Labor Arbiter, petitioners retirement pay should include the cash equivalent of the 5-day SIL and 1/12 of the 13th month pay.

The affirmance by the appellate court of the reliance by the NLRC on R & E Transport, Inc. is erroneous. In said case, the Court held that a taxi driver paid according to the boundary system is not entitled to the 13th month and the SIL pay, hence, his retirement pay should be computed on the sole basis of his salary.

For purposes, however, of applying the law on SIL, as well as on retirement, the Court notes that there is a difference between drivers paid under the boundary system and conductors who are paid on commission basis.

In practice, taxi drivers do not receive fixed wages. They retain only those sums in excess of the boundary or fee they pay to the owners or operators of the vehicles.621[7] Conductors, on the other hand, are paid a certain percentage of the bus earnings for the day.

It bears emphasis that under P.D. 851 or the SIL Law, the exclusion from its coverage of workers who are paid on a purely commission basis is only with respect to field personnel. The more recent case of Auto Bus

Transport Systems, Inc., v. Bautista622[8] clarifies that an employee who is paid on purely commission basis is entitled to SIL:

A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as field personnel. The phrase other employees whose performance is unsupervised by the employer must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those whose actual hours of work in the field cannot be determined with reasonable certainty.

The same is true with respect to the phrase those who are engaged on task or contract basis, purely commission basis. Said phrase should be related with field personnel, applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow. Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel. xxxx According to Article 82 of the Labor Code, field personnel shall refer to nonagricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association which states that: As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. x x x x (emphasis, italics and underscoring supplied)

WHEREFORE, the petition is GRANTED. The Court of Appeals Decision of February 11, 2009 and Resolution of April 28, 2009 are REVERSED and SET ASIDE and the Labor Arbiters Decision dated February 15, 2007 is REINSTATED.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

ARTURO D. BRION Associate Justice

LUCAS P. BERSAMIN Associate Justice

ROBERTO A. ABAD Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice Republic of the Philippines Supreme Court Manila

THIRD DIVISION

PHIMCO INDUSTRIES, INC., Petitioner,

G.R. No. 170830

Present: versus CARPIO MORALES, J., Chairperson

PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), and ERLINDA VAZQUEZ, RICARDO SACRISTAN, LEONIDA CATALAN, MAXIMO PEDRO, NATHANIELA DIMACULANGAN, RODOLFO MOJICO, ROMEO CARAMANZA, REYNALDO GANITANO, ALBERTO BASCONCILLO, and RAMON FALCIS, in their capacity as officers of PILA, and ANGELITA BALOSA, DANILO BANAAG, ABRAHAM CADAY, ALFONSO CLAUDIO, FRANCISCO DALISAY, ANGELITO DEJAN,
**** *** ** *

BRION, BERSAMIN, ABAD, and VILLARAMA, JR., JJ.

Promulgated:

August 11, 2010

*****

PHILIP

GARCES, NICANOR ILAGAN, FLORENCIO LIBONGCOGON,

******

NEMESIO MAMONONG, TEOFILO MANALILI, ALFREDO PEARSON, MARIO PEREA,

******** *******

RENATO

Designated additional Member of the Third Division, in view of the retirement of Chief Justice Reynato S. Puno, per Special Order No. 843 dated May 17, 2010.
*

Spelled as Nathaniel Dimaculangan in other parts of the record. Spelled as Alberto Basconillo and Alberto Basconilo in other parts of the record. Spelled as Angelito Balosa in other parts of the record. Known as Francisco Dalisay, Jr. in other parts of the record. Spelled as Angelito Dizon in other p

**

***

****

*****

RAMOS, MARIANO ROSALES, PABLO SARMIENTO, RODOLFO TOLENTINO, FELIPE VILLAREAL, ARSENIO ZAMORA, DANILO BALTAZAR, ROGER CABER,
*********

REYNALDO CAMARIN, BERNARDO CUADRA,

**********

ANGELITO DE
***********

GUZMAN, GERARDO FELICIANO,

ALEX IBAEZ, BENJAMIN JUAN, SR., RAMON MACAALAY, GONZALO MANALILI, RAUL MICIANO, HILARIO PEA, TERESA PERMOCILLO,
************

ERNESTO RIO,

RODOLFO SANIDAD, RAFAEL STA. ANA, JULIAN TUGUIN and AMELIA ZAMORA, as members of PILA, Respondents. x-----------------------------------------------------------------------------------------x

DECISION

BRION, J.:

Before us is the petition for review on certiorari seeking to reverse and set aside the decision,
624[2]

623[1]

filed by petitioner Phimco Industries, Inc. (PHIMCO),

625[3]

dated February 10, 2004, and the resolution,

dated

December 12, 2005, of the Court of Appeals (CA) in CA-G.R. SP No. 70336. The assailed CA decision dismissed PHIMCOs petition for certiorari that challenged the resolution, dated December 29, 1998, and the decision, dated February 20, 2002, of the National Labor Relations Commission (NLRC); the assailed CA resolution denied PHIMCOs subsequent motion for reconsideration.

FACTUAL BACKGROUND

The facts of the case, gathered from the records, are briefly summarized below.

PHIMCO is a corporation engaged in the production of matches, with principal address at Phimco Compound, Felix Manalo St., Sta. Ana, Manila. Respondent Phimco Industries Labor Association (PILA) is the duly authorized bargaining representative of PHIMCOs daily-paid workers. The 47 individually named respondents are PILA officers and members.

When the last collective bargaining agreement was about to expire on December 31, 1994, PHIMCO and PILA negotiated for its renewal. The negotiation resulted in a deadlock on economic issues, mainly due to disagreements on salary increases and benefits.

On March 9, 1995, PILA filed with the National Conciliation and Mediation Board (NCMB) a Notice of Strike on the ground of the bargaining deadlock. Seven (7) days later, or on March 16, 1995, the union conducted a strike vote; a majority of the union members voted for a strike as its response to the bargaining impasse. On March 17, 1995, PILA filed the strike vote results with the NCMB. Thirty-five (35) days later, or on April 21, 1995, PILA staged a strike.

On May 3, 1995, PHIMCO filed with the NLRC a petition for preliminary injunction and temporary restraining order (TRO), to enjoin the strikers from preventing through force, intimidation and coercion the ingress and egress of non-striking employees into and from the company premises. On May 15, 1995, the NLRC issued an ex-parte TRO, effective for a period of twenty (20) days, or until June 5, 1995.

On June 23, 1995, PHIMCO sent a letter to thirty-six (36) union members, directing them to explain within twenty-four (24) hours why they should not be dismissed for the illegal acts they committed during the strike. Three days later, or on June 26, 1995, the thirty-six (36) union members were informed of their dismissal.

On July 6, 1995, PILA filed a complaint for unfair labor practice and illegal dismissal (illegal dismissal case) with the NLRC. The case was docketed as NLRC NCR Case No. 00-07-04705-95, and raffled to Labor Arbiter (LA) Pablo C. Espiritu, Jr.

On July 7, 1995, then Acting Labor Secretary Jose S. Brillantes assumed jurisdiction over the labor dispute, and ordered all the striking employees (except those who were handed termination papers on June 26, 1995) to return to work within twenty-four (24) hours from receipt of the order. The Secretary ordered PHIMCO to accept the striking employees, under the same terms and conditions prevailing prior to the strike. PILA ended its strike.
626[4]

On the same day,

On August 28, 1995, PHIMCO filed a Petition to Declare the Strike Illegal (illegal strike case) with the NLRC, with a prayer for the dismissal of PILA officers and members who knowingly participated in the illegal strike. PHIMCO claimed that the strikers prevented ingress to and egress from the PHIMCO compound, thereby paralyzing PHIMCOs operations. The case was docketed as NLRC NCR Case No. 00-08-06031-95, and raffled to LA Jovencio Ll. Mayor.

On March 14, 1996, the respondents filed their Position Paper in the illegal strike case. They countered that they complied with all the legal requirements for the staging of the strike, they put up no barricade, and conducted their strike peacefully, in an orderly and lawful manner, without incident.

LA Mayor decided the case on February 4, 1998,627[5] and found the strike illegal; the respondents committed prohibited acts during the strike by blocking the ingress to and egress from PHIMCOs premises and preventing the non-striking employees from reporting for work. He observed that it was not enough that the picket of the strikers was a moving picket, since the strikers should allow the free passage to the entrance and exit points of the company premises. Thus, LA Mayor declared that the respondent employees, PILA officers and members, have lost their employment status.

On March 5, 1998, PILA and its officers and members appealed LA Mayors decision to the NLRC.

THE NLRC RULING

The NLRC decided the appeal on December 29, 1998, and set aside LA Mayors decision.

628[6]

The NLRC did

not give weight to PHIMCOs evidence, and relied instead on the respondents evidence showing that the union conducted a peaceful moving picket.

On January 28, 1999, PHIMCO filed a motion for reconsideration in the illegal strike case.

629[7]

In a parallel development, LA Espiritu decided the unions illegal dismissal case on March 2, 1999. He ruled the respondents dismissal as illegal, and ordered their reinstatement with payment of backwages. PHIMCO appealed LA Espiritus decision to the NLRC.

Pending the resolution of PHIMCOs motion for reconsideration in the illegal strike case and the appeal of the illegal dismissal case, PHIMCO moved for the consolidation of the two (2) cases. The NLRC acted favorably on the motion and consolidated the two (2) cases in its Order dated August 5, 1999.

On February 20, 2002, the NLRC rendered its Decision in the consolidated cases, ruling totally in the unions favor.
630[8]

It dismissed the appeal of the illegal dismissal case, and denied PHIMCOs motion for

reconsideration in the illegal strike case. The NLRC found that the picket conducted by the striking employees was not an illegal blockade and did not obstruct the points of entry to and exit from the companys premises; the pictures submitted by the respondents revealed that the picket was moving, not stationary. With respect to the illegal dismissal charge, the NLRC observed that the striking employees were not given ample opportunity to explain their side after receipt of the June 23, 1995 letter. Thus, the NLRC affirmed the Decision of LA Espiritu with respect to the payment of backwages until the promulgation of the decision, plus separation pay at one (1) month salary per year of service in lieu of reinstatement, and 10% of the monetary award as attorneys fees. It ruled out reinstatement because of the damages sustained by the company brought about by the strike.

On March 14, 2002, PHIMCO filed a motion for reconsideration of the consolidated decision.

On April 26, 2002, without waiting for the result of its motion for reconsideration, PHIMCO elevated its case to the CA through a petition for certiorari under Rule 65 of the Rules of Court.
631[9]

THE CA RULING

In a Decision

632[10]

promulgated on February 10, 2004, the CA dismissed PHIMCOs petition for certiorari.

The CA noted that the NLRC findings, that the picket was peaceful and that PHIMCOs evidence failed to show that

the picket constituted an illegal blockade or that it obstructed the points of entry to and exit from the company premises, were supported by substantial evidence.

PHIMCO came to us through the present petition after the CA denied reconsideration.
634[12]

633[11]

PHIMCOs motion for

THE PETITION

The petitioner argues that the strike was illegal because the respondents committed the prohibited acts under Article 264(e) of the Labor Code, such as blocking the ingress and egress of the company premises, threat, coercion, and intimidation, as established by the evidence on record.

THE CASE FOR THE RESPONDENTS

The respondents, on the other hand, submit that the issues raised in this case are factual in nature that we cannot generally touch in a petition for review, unless compelling reasons exist; the company has not shown any such compelling reason as the picket was peaceful and uneventful, and no human barricade blocked the company premises.

THE ISSUE

In Montoya v. Transmed Manila Corporation,

635[13]

we laid down the basic approach that should be

followed in the review of CA decisions in labor cases, thus:

In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision

before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. This is the approach that should be basic in a Rule 45 review of a CA ruling in a labor case. In question form, the question to ask is: Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?

In this light, the core issue in the present case is whether the CA correctly ruled that the NLRC did not act with grave abuse of discretion in ruling that the unions strike was legal.

OUR RULING

We find the petition partly meritorious.

Requisites of a valid strike

A strike is the most powerful weapon of workers in their struggle with management in the course of setting their terms and conditions of employment. Because it is premised on the concept of economic war between labor and management, it is a weapon that can either breathe life to or destroy the union and its members, and one that must also necessarily affect management and its members.
636[14]

In light of these effects, the decision to declare a strike must be exercised responsibly and must always rest on rational basis, free from emotionalism, and unswayed by the tempers and tantrums of hot heads; it must focus on legitimate union interests. To be legitimate, a strike should not be antithetical to public welfare, and must be pursued within legal bounds. The right to strike as a means of attaining social justice is never meant to oppress or destroy anyone, least of all, the employer.
637[15]

Since strikes affect not only the relationship between labor and management but also the general peace and progress of the community, the law has provided limitations on the right to strike. Procedurally, for a strike to be valid, it must comply with Article 263
638[16]

of the Labor Code, which requires that: (a) a notice of strike be filed

with the Department of Labor and Employment (DOLE) 30 days before the intended date thereof, or 15 days in case of unfair labor practice; (b) a strike vote be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in a meeting called for that purpose; and (c) a notice be given to the DOLE of the results of the voting at least seven days before the intended strike.

These requirements are mandatory, and the unions failure to comply renders the strike illegal.

639[17]

The

15 to 30-day cooling-off period is designed to afford the parties the opportunity to amicably resolve the dispute with the assistance of the NCMB conciliator/mediator, while the seven-day strike ban is intended to give the DOLE an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members.
640[18]

In the present case, the respondents fully satisfied the legal procedural requirements; a strike notice was filed on March 9, 1995; a strike vote was reached on March 16, 1995; notification of the strike vote was filed with the DOLE on March 17, 1995; and the actual strike was launched only on April 25, 1995.

Strike may be illegal for commission of prohibited acts

Despite the validity of the purpose of a strike and compliance with the procedural requirements, a strike may still be held illegal where the means employed are illegal.
641[19]

The means become illegal when they come

within the prohibitions under Article 264(e) of the Labor Code which provides:

No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares.

Based on our examination of the evidence which the LA viewed differently from the NLRC and the CA, we find the PILA strike illegal. We intervene and rule even on the evidentiary and factual issues of this case as both the NLRC and the CA grossly misread the evidence, leading them to inordinately incorrect conclusions, both factual and legal. While the strike undisputably had not been marred by actual violence and patent intimidation, the picketing that respondent PILA officers and members undertook as part of their strike activities effectively blocked the free ingress to and egress from PHIMCOs premises, thus preventing non-striking employees and company vehicles from entering the PHIMCO compound. In this manner, the picketers violated Article 264(e) of the Labor Code.

The Evidence

We gather from the case record the following pieces of relevant evidence adduced in the compulsory arbitration proceedings.642[20]

For the Company

1.

Pictures taken during the strike, showing that the respondents prevented free ingress

to and egress from the company premises;643[21] 2. Affidavit of PHIMCO Human Resources Manager Francis Ferdinand Cinco, stating that he was one

of the employees prevented by the strikers from entering the PHIMCO premises;644[22] 3. Affidavit of Cinco, identifying Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan,

Maximo Pedro, Nathaniela R. Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo Ganitano, Alberto Basconcillo, and Ramon Falcis as PILA officers;645[23] 4. 5. Affidavit of Cinco identifying other members of PILA;646[24] Folder 1, containing pictures taken during the strike identifying and showing Leonida Catalan,

Renato Ramos, Arsenio Zamora, Reynaldo Ganitano, Amelia Zamora, Angelito Dejan, Teresa Permocillo, and Francisco Dalisay as the persons preventing Cinco and his group from entering the company premises;647[25] 6. Folder 2, with pictures taken on May 30, 1995, showing Cinco, together with non-striking

PHIMCO employees, reporting for work but being refused entry by strikers Teofilo Manalili, Nathaniela Dimaculangan, Bernando Cuadra, Maximo Pedro, Nicanor Ilagan, Julian Tuguin, Nemesio Mamonong, Abraham Caday, Ernesto Rio, Benjamin Juan, Sr., Ramon Macaalay, Gerardo Feliciano, Alberto Basconcillo, Rodolfo Sanidad,

Mariano Rosales, Roger Caber, Angelito de Guzman, Angelito Balosa and Philip Garces who blocked the company gate;648[26] 7. Folder 3, with pictures taken on May 30, 1995, showing the respondents denying free ingress

to and egress from the company premises;649[27] 8. Folder 4, with pictures taken during the strike, showing that non-striking employees failed to

enter the company premises as a result of the respondents refusal to let them in;650[28] 9. strike;651[29] 10. Pictures taken by Aguilar during the strike, showing non-striking employees being refused entry Affidavit of Joaquin Aguilar stating that the pictures presented by Cinco were taken during the

by the respondents;652[30] 11. Joint affidavit of Orlando Marfil and Rodolfo Digo, identifying the pictures they took

during the strike, showing that the respondents blocked ingress to and egress from the company premises;653[31] and, 12. Testimonies of PHIMCO employees Rodolfo Eva, Aguilar and Cinco, as well as those of PILA

officers Maximo Pedro and Leonida Catalan.

For the Respondents

1.

Affidavit of Leonida Catalan, stating that the PILA strike complied with all the legal requirements, and

the strike/picket was conducted peacefully with no incident of any illegality;654[32] 2. Affidavit of Maximo Pedro, stating that the strike/picket was conducted peacefully; the picket

was always moving with no acts of illegality having been committed during the strike;655[33]

3.

Certification of Police Station Commander Bienvenido de los Reyes that during the strike there

was no report of any untoward incident;656[34] 4. Certification of Rev. Father Erick Adeviso of Dambanang Bayan Parish Church that the strike

was peaceful and without any untoward incident;657[35] 5. Certification of Priest-In-Charge Angelito Fausto of the Philippine Independent Church in

Punta, Santa Ana, that the strike complied with all the requirements for a lawful strike, and the strikers conducted themselves in a peaceful manner;658[36] 6. Clearance issued by Punong Barangay Mario O. dela Rosa and Barangay Secretary Pascual

Gesmundo, Jr. that the strike from April 21 to July 7, 1995 was conducted in an orderly manner with no complaints filed;659[37] and, 7. Testimonies at the compulsory arbitration proceedings.

In its resolution of December 29, 1998,660[38] the NLRC declared that the string of proofs the company presented was overwhelmingly counterbalanced by the numerous pieces of evidence adduced by respondents x x x all depicting a common story that respondents put up a peaceful moving picket, and did not commit any illegal acts x x x specifically obstructing the ingress to and egress from the company premises*.+661[39]

We disagree with this finding as the purported peaceful moving picket upon which the NLRC resolution was anchored was not an innocuous picket, contrary to what the NLRC said it was; the picket, under the evidence presented, did effectively obstruct the entry and exit points of the company premises on various occasions.

To strike is to withhold or to stop work by the concerted action of employees as a result of an industrial or labor dispute.662[40] The work stoppage may be accompanied by picketing by the striking employees outside of the company compound. While a strike focuses on stoppage of work, picketing focuses on publicizing the labor dispute and its incidents to inform the public of what is happening in the company struck against. A picket simply

means to march to and from the employers premises, usually accompanied by the display of placards and other signs making known the facts involved in a labor dispute.663[41] It is a strike activity separate and different from the actual stoppage of work.

While the right of employees to publicize their dispute falls within the protection of freedom of expression664[42] and the right to peaceably assemble to air grievances,665[43] these rights are by no means absolute. Protected picketing does not extend to blocking ingress to and egress from the company premises.666[44] That the picket was moving, was peaceful and was not attended by actual violence may not free it from taints of illegality if the picket effectively blocked entry to and exit from the company premises.

In this regard, PHIMCO employees Rodolfo Eva and Joaquin Aguilar, and the companys Human Resources Manager Francis Ferdinand Cinco testified during the compulsory arbitration hearings:

ATTY. REYES: this incident on May 22, 1995, when a coaster or bus attempted to enter PHIMCO compound, you mentioned that it was refused entry. Why was this (sic) it refused entry?

WITNESS: Because at that time, there was a moving picket at the gate that is why the bus was not able to enter.
667[45]

x x xx

Q: Despite this TRO, which was issued by the NLRC, were you allowed entry by the strikers?

A: We made several attempts to enter the compound, I remember on May 7, 1995, we tried to enter the PHIMCO compound but we were not allowed entry.

Q: Aside from May 27, 1995, were there any other instances wherein you were not allowed entry at PHIMCO compound?

A: On May 29, I recall I was riding with our Production Manager with the Pick-up. We tried to enter but we were not allowed by the strikers.
668[46]

x x x x

ARBITER MAYOR: How did the strikers block the ingress of the company?

A: They hold around, joining hands, moving picket.

669[47]

x x x x

ARBITER MAYOR: Reform the question, and because of that moving picket conducted by the strikers, no employees or vehicles can come in or go out of the premises?

A: None, sir.

670[48]

These accounts were confirmed by the admissions of respondent PILA officers Maximo Pedro and Leonida Catalan that the strikers prevented non-striking employees from entering the company premises. According to these union officers:

ATTY. CHUA: Mr. witness, do you recall an incident when a group of managers of PHIMCO, with several of the monthly paid employees who tried to enter the PHIMCO compound during the strike?

MR. PEDRO: Yes, sir.

ATTY. CHUA: Can you tell us if these (sic) group of managers headed by Francis Cinco entered the compound of PHIMCO on that day, when they tried to enter?

MR. PEDRO: No, sir. They were not able to enter.

671[49]

x x x x

ATTY. CHUA: Despite having been escorted by police Delos Reyes, you still did not give way, and instead proceeded with your moving picket?

MR. PEDRO: Yes, sir.

ATTY. CHUA: In short, these people were not able to enter the premises of PHIMCO, Yes or No.

MR. PEDRO: Yes, sir.

672[50]

x x x x

ATTY. CHUA: Madam witness, even if Major Delos Reyes instructed you to give way so as to allow the employees and managers to enter the premises, you and your co-employees did not give way?

MS. CATALAN: No sir.

ATTY. CHUA: the managers and the employees were not able to enter the premises?

MS. CATALAN: Yes, sir.

673[51]

The NLRC resolution itself noted the above testimonial evidence, all building up a scenario that the moving picket put up by [the] respondents obstructed the ingress to and egress from the company premises*,+674[52] yet it ignored the clear import of the testimonies as to the true nature of the picket. Contrary to the NLRC characterization that it was a peaceful moving picket, it stood, in fact, as an obstruction to the companys points of ingress and egress.

Significantly, the testimonies adduced were validated by the photographs taken of the strike area, capturing the strike in its various stages and showing how the strikers actually conducted the picket. While the picket was moving, it was maintained so close to the company gates that it virtually constituted an obstruction, especially when the strikers joined hands, as described by Aguilar, or were moving in circles, hand-to-shoulder, as shown by the photographs, that, for all intents and purposes, blocked the free ingress to and egress from the company premises. In fact, on closer examination, it could be seen that the respondents were conducting the picket right at the company gates.675[53]

The obstructive nature of the picket was aggravated by the placement of benches, with strikers standing on top, directly in front of the open wing of the company gates, clearly obstructing the entry and exit points of the company compound.676[54]

With a virtual human blockade and real physical obstructions (benches and makeshift structures both outside and inside the gates),677[55] it was pure conjecture on the part of the NLRC to say that *t+he non-strikers and their vehicles were x x x free to get in and out of the company compound undisturbed by the picket line.678[56] Notably, aside from non-strikers who wished to report for work, company vehicles likewise could not enter and get out of the factory because of the picket and the physical obstructions the respondents installed. The blockade went to the point of causing the build up of traffic in the immediate vicinity of the strike area, as shown by photographs.679[57] This, by itself, renders the picket a prohibited activity. Pickets may not aggressively interfere with the right of peaceful ingress to and egress from the employers shop or obstruct public thoroughfares; picketing is not peaceful where the sidewalk or entrance to a place of business is obstructed by picketers parading around in a circle or lying on the sidewalk.680[58]

What the records reveal belies the NLRC observation that the evidence x x x tends to show that what respondents actually did was walking or patrolling to and fro within the company vicinity and by word of mouth, banner or placard, informing the public concerning the dispute.681[59]

The peaceful moving picket that the NLRC noted, influenced apparently by the certifications (Mayor delos Reyes, Fr. Adeviso, Fr. Fausto and Barangay Secretary Gesmundo presented in evidence by the respondents, was peaceful only because of the absence of violence during the strike, but the obstruction of the entry and exit points of the company premises caused by the respondents picket was by no means a petty blocking act or an insignificant obstructive act.682[60]

As we have stated, while the picket was moving, the movement was in circles, very close to the gates, with the strikers in a hand-to-shoulder formation without a break in their ranks, thus preventing non-striking workers and vehicles from coming in and getting out. Supported by actual blocking benches and obstructions, what the union demonstrated was a very persuasive and quietly intimidating strategy whose chief aim was to paralyze the operations of the company, not solely by the work stoppage of the participating workers, but by excluding the company officials and non-striking employees from access to and exit from the company premises. No doubt, the strike caused the company operations considerable damage, as the NLRC itself recognized when it ruled out the reinstatement of the dismissed strikers.683[61]

Intimidation

Article 264(e) of the Labor Code tells us that picketing carried on with violence, coercion or intimidation is unlawful.684[62] According to American jurisprudence, what constitutes unlawful intimidation depends on the totality of the circumstances.685[63] Force threatened is the equivalent of force exercised. There may be unlawful intimidation without direct threats or overt acts of violence. Words or acts which are calculated and intended to cause an ordinary person to fear an injury to his person, business or property are equivalent to threats.686[64]

The manner in which the respondent union officers and members conducted the picket in the present case had created such an intimidating atmosphere that non-striking employees and even company vehicles did not dare cross the picket line, even with police intervention. Those who dared cross the picket line were stopped. The compulsory arbitration hearings bear this out.

Maximo Pedro, a PILA officer, testified, on July 30, 1997, that a group of PHIMCO managers led by Cinco, together with several monthly-paid employees, tried to enter the company premises on May 27, 1995 with police escort; even then, the picketers did not allow them to enter.687[65]Leonida Catalan, another union officer, testified that she and the other picketers did not give way despite the instruction of Police Major de los Reyes to the picketers to allow the group to enter the company premises.688[66] (To be sure, police intervention and participation are, as a rule, prohibited acts in a strike, but we note this intervention solely as indicators of how far the union and its members have gone to block ingress to and egress from the company premises.)

Further, PHIMCO employee Rodolfo Eva testified that on May 22, 1995, a company coaster or bus attempted to enter the PHIMCO compound but it was refused entry by the moving picket.689[67] Cinco, the company personnel manager, also testified that on May 27, 1995, when the NLRC TRO was in force, he and other employees tried to enter the PHIMCO compound, but they were not allowed entry; on May 29, 1995, Cinco was with the PHIMCO production manager in a pick-up and they tried to enter the company compound but, again, they were not allowed by the strikers.690[68] Another employee, Joaquin Aguilar, when asked how the strikers blocked the ingress of the company, replied that the strikers hold around, joining hands, moving picket and, because of the moving picket, no employee or vehicle could come in and go out of the premises.691[69]

The evidence adduced in the present case cannot be ignored. On balance, it supports the companys submission that the respondent PILA officers and members committed acts during the strike prohibited under Article 264(e) of the Labor Code. The testimonies of non-striking employees, who were prevented from gaining entry into the company premises, and confirmed no less by two officers of the union, are on record.

The photographs of the strike scene, also on record, depict the true character of the picket; while moving, it, in fact, constituted a human blockade, obstructing free ingress to and egress from the company premises, reinforced by benches planted directly in front of the company gates. The photographs do not lie these

photographs clearly show that the picketers were going in circles, without any break in their ranks or closely bunched together, right in front of the gates. Thus, company vehicles were unable to enter the company compound, and were backed up several meters into the street leading to the company gates.

Despite all these clear pieces of evidence of illegal obstruction, the NLRC looked the other way and chose not to see the unmistakable violations of the law on strikes by the union and its respondent officers and members. Needless to say, while the law protects the rights of the laborer, it authorizes neither the oppression nor the destruction of the employer.692[70] For grossly ignoring the evidence before it, the NLRC committed grave abuse of discretion; for supporting these gross NLRC errors, the CA committed its own reversible error.

Liabilities of union officers and members

In the determination of the liabilities of the individual respondents, the applicable provision is Article 264(a) of the Labor Code:

Art. 264. Prohibited activities. (a) x x x

x x x x

Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike.

We explained in Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc.

693[71]

that the

effects of illegal strikes, outlined in Article 264 of the Labor Code, make a distinction between participating workers and union officers. The services of an ordinary striking worker cannot be terminated for mere participation in an illegal strike; proof must be adduced showing that he or she committed illegal acts during the strike. The services of a participating union officer, on the other hand, may be terminated, not only when he actually commits an illegal act during a strike, but also if he knowingly participates in an illegal strike.
694[72]

In all cases, the striker must be identified. But proof beyond reasonable doubt is not required; substantial evidence, available under the attendant circumstances, suffices to justify the imposition of the penalty of dismissal on participating workers and union officers as above described.
695[73]

In the present case, respondents Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan, Maximo Pedro, Nathaniela Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo Ganitano, Alberto Basconcillo, and Ramon Falcis stand to be dismissed as participating union officers, pursuant to Article 264(a), paragraph 3, of the Labor Code. This provision imposes the penalty of dismissal on any union officer who knowingly participates in an illegal strike. The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment.
696[74]

PHIMCO was able to individually identify the participating union members thru the affidavits of PHIMCO employees Martimer Panis and the photographs
700[78] 697[75]

and Rodrigo A. Ortiz,

698[76]

and Personnel Manager Francis Ferdinand Cinco,

699[77]

of Joaquin Aguilar. Identified were respondents Angelita Balosa, Danilo Banaag,

Abraham Caday, Alfonso Claudio, Francisco Dalisay, Angelito Dejan, Philip Garces, Nicanor Ilagan, Florencio Libongcogon, Nemesio Mamonong, Teofilo Manalili, Alfredo Pearson, Mario Perea, Renato Ramos, Mariano Rosales, Pablo Sarmiento, Rodolfo Tolentino, Felipe Villareal, Arsenio Zamora, Danilo Baltazar, Roger Caber, Reynaldo Camarin, Bernardo Cuadra, Angelito de Guzman, Gerardo Feliciano, Alex Ibaez, Benjamin Juan, Sr., Ramon Macaalay, Gonzalo Manalili, Raul Miciano, Hilario Pea, Teresa Permocillo, Ernesto Rio, Rodolfo Sanidad, Rafael Sta. Ana, Julian Tuguin and Amelia Zamora as the union members who actively participated in the strike by blocking the ingress to and egress from the company premises and preventing the passage of non-striking employees. For participating in illegally blocking ingress to and egress from company premises, these union members stand to be dismissed for their illegal acts in the conduct of the unions strike.

PHIMCO failed to observe due process

We find, however, that PHIMCO violated the requirements of due process of the Labor Code when it dismissed the respondents.

Under Article 277(b)

701[79]

of the Labor Code, the employer must send the employee, who is about to be

terminated, a written notice stating the cause/s for termination and must give the employee the opportunity to be heard and to defend himself.

We explained in Suico v. National Labor Relations Commission,

702[80]

that Article 277(b), in relation to

Article 264(a) and (e) of the Labor Code recognizes the right to due process of all workers, without distinction as to the cause of their termination, even if the cause was their supposed involvement in strike-related violence prohibited under Article 264(a) and (e) of the Labor Code.

To meet the requirements of due process in the dismissal of an employee, an employer must furnish him or her with two (2) written notices: (1) a written notice specifying the grounds for termination and giving the employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer's decision to dismiss the employee.
703[81]

In the present case, PHIMCO sent a letter, on June 23, 1995, to thirty-six (36) union members, generally directing them to explain within twenty-four (24) hours why they should not be dismissed for the illegal acts they committed during the strike; three days later, or on June 26, 1995, the thirty-six (36) union members were informed of their dismissal from employment.

We do not find this company procedure to be sufficient compliance with the due process requirements that the law guards zealously. It does not appear from the evidence that the union officers were specifically informed of the charges against them and given the chance to explain and present their side. Without the specifications they had to respond to, they were arbitrarily separated from work in total disregard of their rights to due process and security of tenure.

As to the union members, only thirty-six (36) of the thirty-seven (37) union members included in this case were notified of the charges against them thru the letters dated June 23, 1995, but they were not given an ample opportunity to be heard and to defend themselves; the notice of termination came on June 26, 1995, only three (3) days from the first notice - a perfunctory and superficial attempt to comply with the notice requirement under the Labor Code. The short interval of time between the first and second notice speaks for itself under the circumstances of this case; mere token recognition of the due process requirements was made, indicating the

companys intent to dismiss the union members involved, without any meaningful resort to the guarantees accorded them by law.

Under the circumstances, where evidence sufficient to justify the penalty of dismissal has been adduced but the workers concerned were not accorded their essential due process rights, our ruling in Agabon v. NLRC
704[82]

finds full application; the employer, despite the just cause for dismissal, must pay the dismissed workers nominal damages as indemnity for the violation of the workers right to statutory due process. Prevailing jurisprudence sets the amount of nominal damages at P30,000.00, which same amount we find sufficient and appropriate in the present case.
705[83]

WHEREFORE, in light of all the foregoing, we hereby REVERSE and SET ASIDE the decision dated February 10, 2004 and the resolution dated December 12, 2005 of the Court of Appeals in CA-G.R. SP No. 70336, upholding the rulings of the National Labor Relations Commission.

The Decision, dated February 4, 1998, of Labor Arbiter Jovencio Ll. Mayor should prevail and is REINSTATED with the MODIFICATION that Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan, Maximo Pedro, Nathaniela Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo Ganitano, Alberto Basconcillo, Ramon Falcis, Angelita Balosa, Danilo Banaag, Abraham Caday, Alfonso Claudio, Francisco Dalisay, Angelito Dejan, Philip Garces, Nicanor Ilagan, Florencio Libongcogon, Nemesio Mamonong, Teofilo Manalili, Alfredo Pearson, Mario Perea, Renato Ramos, Mariano Rosales, Pablo Sarmiento, Rodolfo Tolentino, Felipe Villareal, Arsenio Zamora, Danilo Baltazar, Roger Caber, Reynaldo Camarin, Bernardo Cuadra, Angelito de Guzman, Gerardo Feliciano, Alex Ibaez, Benjamin Juan, Sr., Ramon Macaalay, Gonzalo Manalili, Raul Miciano, Hilario Pea, Teresa Permocillo, Ernesto Rio, Rodolfo Sanidad, Rafael Sta. Ana, Julian Tuguin, and Amelia Zamora are each awarded nominal damages in the amount of P30,000.00. No pronouncement as to costs.

SO ORDERED.

ARTURO D. BRION Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES Associate Justice

LUCAS P. BERSAMIN Associate Justice

ROBERTO A. ABAD Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

THIRD DIVISION

TUNAY NA PAGKAKAISA MANGGAGAWA SA ASIA BREWERY, Petitioner,

NG

G.R. No. 162025

Present:

CARPIO MORALES, J., - versus -

Chairperson, BRION, BERSAMIN, ABAD, and VILLARAMA, JR., JJ.

ASIA BREWERY, INC., Respondent.

Promulgated:

August 3, 2010 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

For resolution is an appeal by certiorari filed by petitioner under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision706[1] dated November 22, 2002 and Resolution707[2] dated January 28, 2004 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 55578, granting the petition of respondent company and reversing the Voluntary Arbitrators Decision708[3] dated October 14, 1999.

The facts are:

Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and distribution of beer, shandy, bottled water and glass products. ABI entered into a Collective Bargaining Agreement (CBA),709[4] effective for five (5) years from August 1, 1997 to July 31, 2002, with Bisig at Lakas ng mga Manggagawa sa Asia-Independent (BLMA-INDEPENDENT), the exclusive bargaining representative of ABIs rank-and-file employees. On October 3, 2000, ABI and BLMA-INDEPENDENT signed a renegotiated CBA effective from August 1, 2000 to 31 July 2003.710[5]

Article I of the CBA defined the scope of the bargaining unit, as follows: Section 1. Recognition. The COMPANY recognizes the UNION as the sole and exclusive bargaining representative of all the regular rank-and-file daily paid employees within the scope of the appropriate bargaining unit with respect to rates of pay, hours of work and other terms and conditions of employment. The UNION shall not represent or accept for membership employees outside the scope of the bargaining unit herein defined. Section 2. Bargaining Unit. The bargaining unit shall be comprised of all regular rankand-file daily-paid employees of the COMPANY. However, the following jobs/positions as herein defined shall be excluded from the bargaining unit, to wit: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Managers Assistant Managers Section Heads Supervisors Superintendents Confidential and Executive Secretaries Personnel, Accounting and Marketing Staff Communications Personnel Probationary Employees Security and Fire Brigade Personnel Monthly Employees Purchasing and Quality Control Staff711[6] [EMPHASIS SUPPLIED.]

Subsequently, a dispute arose when ABIs management stopped deducting union dues from eighty-one (81) employees, believing that their membership in BLMA-INDEPENDENT violated the CBA. Eighteen (18) of these affected employees are QA Sampling Inspectors/Inspectresses and Machine Gauge Technician who formed part of the Quality Control Staff. Twenty (20) checkers are assigned at the Materials Department of the Administration Division, Full Goods Department of the Brewery Division and Packaging Division. The rest are secretaries/clerks directly under their respective division managers.712[7] BLMA-INDEPENDENT claimed that ABIs actions restrained the employees right to self-organization and brought the matter to the grievance machinery. As the parties failed to amicably settle the controversy, BLMAINDEPENDENT lodged a complaint before the National Conciliation and Mediation Board (NCMB). The parties eventually agreed to submit the case for arbitration to resolve the issue of [w]hether or not there is restraint to employees in the exercise of their right to self-organization.713[8]

In his Decision, Voluntary Arbitrator Bienvenido Devera sustained the BLMA-INDEPENDENT after finding that the records submitted by ABI showed that the positions of the subject employees qualify under the rankand-file category because their functions are merely routinary and clerical. He noted that the positions occupied by the checkers and secretaries/clerks in the different divisions are not managerial or supervisory, as evident from the duties and responsibilities assigned to them. With respect to QA Sampling Inspectors/Inspectresses and Machine Gauge Technician, he ruled that ABI failed to establish with sufficient clarity their basic functions as to consider them Quality Control Staff who were excluded from the coverage of the CBA. Accordingly, the subject employees were declared eligible for inclusion within the bargaining unit represented by BLMA-INDEPENDENT.714[9]

On appeal, the CA reversed the Voluntary Arbitrator, ruling that: WHEREFORE, foregoing premises considered, the questioned decision of the Honorable Voluntary Arbitrator Bienvenido De Vera is hereby REVERSED and SET ASIDE, and A NEW ONE ENTERED DECLARING THAT: a) the 81 employees are excluded from and are not eligible for inclusion in the bargaining unit as defined in Section 2, Article I of the CBA;

b) the 81 employees cannot validly become members of respondent and/or if already members, that their membership is violative of the CBA and that they should disaffiliate from respondent; and c) petitioner has not committed any act that restrained or tended to restrain its employees in the exercise of their right to self-organization.

NO COSTS. SO ORDERED.715[10] BLMA-INDEPENDENT filed a motion for reconsideration. In the meantime, a certification election was held on August 10, 2002 wherein petitioner Tunay na Pagkakaisa ng Manggagawa sa Asia (TPMA) won. As the incumbent bargaining representative of ABIs rank-and-file employees claiming interest in the outcome of the case, petitioner filed with the CA an omnibus motion for reconsideration of the decision and intervention, with attached petition signed by the union officers.716[11] Both motions were denied by the CA.717[12]

The petition is anchored on the following grounds: (1) THE COURT OF APPEALS ERRED IN RULING THAT THE 81 EMPLOYEES ARE EXCLUDED FROM AND ARE NOT ELIGIBLE FOR INCLUSION IN THE BARGAINING UNIT AS DEFINED IN SECTION 2, ARTICLE 1 OF THE CBA[;] (2) THE COURT OF APPEALS ERRED IN HOLDING THAT THE 81 EMPLOYEES CANNOT VALIDLY BECOME UNION MEMBERS, THAT THEIR MEMBERSHIP IS VIOLATIVE OF THE CBA AND THAT THEY SHOULD DISAFFILIATE FROM RESPONDENT; (3) THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT PETITIONER (NOW PRIVATE RESPONDENT) HAS NOT COMMITTED ANY ACT THAT RESTRAINED OR TENDED TO RESTRAIN ITS EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION.718[13]

Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or

those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records.719[14] Confidential employees are thus excluded from the rank-and-file bargaining unit. The rationale for their separate category and disqualification to join any labor organization is similar to the inhibition for managerial employees because if allowed to be affiliated with a Union, the latter might not be assured of their loyalty in view of evident conflict of interests and the Union can also become company-denominated with the presence of managerial employees in the Union membership.720[15] Having access to confidential information, confidential employees may also become the source of undue advantage. Said employees may act as a spy or spies of either party to a collective bargaining agreement.721[16] In Philips Industrial Development, Inc. v. NLRC,722[17] this Court held that petitioners division secretaries, all Staff of General Management, Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems are confidential employees not included within the rank-and-file bargaining unit.723[18] Earlier, in Pier 8 Arrastre & Stevedoring Services, Inc. v. Roldan-Confesor,724[19] we declared that legal secretaries who are tasked with, among others, the typing of legal documents, memoranda and correspondence, the keeping of records and files, the giving of and receiving notices, and such other duties as required by the legal personnel of the corporation, fall under the category of confidential employees and hence excluded from the bargaining unit composed of rank-and-file employees.725[20] Also considered having access to vital labor information are the executive secretaries of the General Manager and the executive secretaries of the Quality Assurance Manager, Product Development Manager, Finance Director, Management System Manager, Human Resources Manager, Marketing Director, Engineering Manager, Materials Manager and Production Manager.726[21] In the present case, the CBA expressly excluded Confidential and Executive Secretaries from the rankand-file bargaining unit, for which reason ABI seeks their disaffiliation from petitioner. Petitioner, however, maintains that except for Daisy Laloon, Evelyn Mabilangan and Lennie Saguan who had been promoted to monthly

paid positions, the following secretaries/clerks are deemed included among the rank-and-file employees of ABI:727[22] NAME DEPARTMENT IMMEDIATE SUPERIOR

C1 ADMIN DIVISION

1. 2. 3. 4. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Angeles, Cristina C. Barraquio, Carina P. Cabalo, Marivic B. Fameronag, Leodigario C. Abalos, Andrea A. Algire, Juvy L. Anouevo, Shirley P. Aviso, Rosita S. Barachina, Pauline C. Briones, Catalina P. Caralipio, Juanita P. Elmido, Ma. Rebecca S. Giron, Laura P. Mane, Edna A.

Transportation Transportation Transportation Transportation Materials Materials Materials Materials Materials Materials Materials Materials Materials Materials

Mr. Melito K. Tan Mr. Melito K. Tan Mr. Melito K. Tan Mr. Melito K. Tan Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co

xxxx C2 BREWERY DIVISION 1. 1. 2. 3. 4. 1. 2. 1. 2. 3. 4. 1. 2. 3. 4. 5. 6. 1. Laloon, Daisy S. Arabit, Myrna F. Burgos, Adelaida D. Menil, Emmanuel S. Nevalga, Marcelo G. Mapola, Ma. Esraliza T. Velez, Carmelito A. Bordamonte, Rhumela D. Deauna, Edna R. Punongbayan, Marylou F. Saguan, Lennie Y. Alcoran, Simeon A. Cervantes, Ma. Sherley Y. Diongco, Ma. Teresa M. Mabilangan, Evelyn M. Rivera, Aurora M. Salandanan, Nancy G. Magbag, Ma. Corazon C. Brewhouse Bottling Production Bottling Production Bottling Production Bottling Production Bottling Maintenance Bottling Maintenance Bottled Water Bottled Water Bottled Water Bottled Water Full Goods Full Goods Full Goods Full Goods Full Goods Full Goods Tank Farm/ Cella Services 1. 1. 2. 3. 4. Capiroso, Francisca A. Alconaba, Elvira C. Bustillo, Bernardita E. Catindig, Ruel A. Sison, Claudia B. Quality Assurance Engineering Electrical Civil Works Utilities Ms. Regina Mirasol Mr. Clemente Wong Mr. Jorge Villarosa Mr. Roger Giron Mr. Venancio Alconaba Mr. William Tan Mr. Julius Palmares Mr. Julius Palmares Mr. Julius Palmares Mr. Julius Palmares Mr. Ernesto Ang Mr. Ernesto Ang Mr. Faustino Tetonche Mr. Faustino Tetonche Mr. Faustino Tetonche Mr. Faustino Tetonche Mr. Tsoi Wah Tung Mr. Tsoi Wah Tung Mr. Tsoi Wah Tung Mr. Tsoi Wah Tung Mr. Tsoi Wah Tung Mr. Tsoi Wah Tung Mr. Manuel Yu Liat

xxxx C3 PACKAGING DIVISION 1. 2. 3. Alvarez, Ma. Luningning L. Caiza, Alma A. Cantalejo, Aida S. GP Administration GP Technical GP Engineering Ms. Susan Bella Mr. Chen Tsai Tyan Mr. Noel Fernandez

4. 5. 6.

Castillo, Ma. Riza R. Lamadrid, Susana C. Mendoza, Jennifer L.

GP Production GP Production GP Technical

Mr. Tsai Chen Chih Mr. Robert Bautista Mr. Mel Oa

As can be gleaned from the above listing, it is rather curious that there would be several secretaries/clerks for just one (1) department/division performing tasks which are mostly routine and clerical. Respondent insisted they fall under the Confidential and Executive Secretaries expressly excluded by the CBA from the rank-and-file bargaining unit. However, perusal of the job descriptions of these secretaries/clerks reveals that their assigned duties and responsibilities involve routine activities of recording and monitoring, and other paper works for their respective departments while secretarial tasks such as receiving telephone calls and filing of office correspondence appear to have been commonly imposed as additional duties.728[23] Respondent failed to indicate who among these numerous secretaries/clerks have access to confidential data relating to management policies that could give rise to potential conflict of interest with their Union membership. Clearly, the rationale under our previous rulings for the exclusion of executive secretaries or division secretaries would have little or no significance considering the lack of or very limited access to confidential information of these secretaries/clerks. It is not even farfetched that the job category may exist only on paper since they are all daily-paid workers. Quite understandably, petitioner had earlier expressed the view that the positions were just being reclassified as these employees actually discharged routine functions.

We thus hold that the secretaries/clerks, numbering about forty (40), are rank-and-file employees and not confidential employees.

With respect to the Sampling Inspectors/Inspectresses and the Gauge Machine Technician, there seems no dispute that they form part of the Quality Control Staff who, under the express terms of the CBA, fall under a distinct category. But we disagree with respondents contention that the twenty (20) checkers are similarly confidential employees being quality control staff entrusted with the handling and custody of company properties and sensitive information.

Again, the job descriptions of these checkers assigned in the storeroom section of the Materials Department, finishing section of the Packaging Department, and the decorating and glass sections of the Production Department plainly showed that they perform routine and mechanical tasks preparatory to the delivery of the finished products.729[24] While it may be argued that quality control extends to post-production phase -- proper packaging of the finished products -- no evidence was presented by the respondent to prove that these daily-paid checkers actually form part of the companys Quality Control Staff who as such were exposed to sensitive, vital and confidential information about [companys] products or have knowledge of mixtures of the products, their defects, and even their formulas which are considered trade secrets. Such allegations of respondent must be supported by evidence.730[25]

Consequently, we hold that the twenty (20) checkers may not be considered confidential employees under the category of Quality Control Staff who were expressly excluded from the CBA of the rank-and-file bargaining unit.

Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two (2) criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the confidential employee rule.731[26] There is no showing in this case that the

secretaries/clerks and checkers assisted or acted in a confidential capacity to managerial employees and obtained confidential information relating to labor relations policies. And even assuming that they had exposure to internal business operations of the company, respondent claimed, this is not per se ground for their exclusion in the bargaining unit of the daily-paid rank-and-file employees.732[27]

Not being confidential employees, the secretaries/clerks and checkers are not disqualified from membership in the Union of respondents rank-and-file employees. Petitioner argues that respondents act of unilaterally stopping the deduction of union dues from these employees constitutes unfair labor practice as it restrained the workers exercise of their right to self-organization, as provided in Article 248 (a) of the Labor Code. Unfair labor practice refers to acts that violate the workers right to organize. The prohibited acts are related to the workers right to self organization and to the observance of a CBA. For a charge of unfair labor practice to prosper, it must be shown that ABI was motivated by ill will, 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 or grave anxiety resulted x x x733[28] from ABIs act in discontinuing the union dues deduction from those employees it believed were excluded by the CBA. Considering that the herein dispute arose from a simple disagreement in the interpretation of the CBA provision on excluded employees from the bargaining unit, respondent cannot be said to have committed unfair labor practice that restrained its employees in the exercise of their right to self-organization, nor have thereby demonstrated an anti-union stance. WHEREFORE, the petition is GRANTED. The Decision dated November 22, 2002 and Resolution dated January 28, 2004 of the Court of Appeals in CA-G.R. SP No. 55578 are hereby REVERSED and SET ASIDE. The checkers and secretaries/clerks of respondent company are hereby declared rank-and-file employees who are eligible to join the Union of the rank-and-file employees. No costs. SO ORDERED.

MARTIN S. VILLARAMA, JR. Associate Justice WE CONCUR:

CONCHITA CARPIO MORALES Associate Justice Chairperson

ARTURO D. BRION Associate Justice

LUCAS P. BERSAMIN Associate Justice

ROBERTO A. ABAD Associate Justice

ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice Chairperson, Third Division

CERTIFICATION Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

Republic of the Philippines Supreme Court Manila

THIRD DIVISION

SPIC N SPAN SERVICES CORPORATION, Petitioner,

G.R. No. 174084

Present:

versus -

CARPIO MORALES, J., Chairperson, BRION, BERSAMIN,

GLORIA PAJE, LOLITA GOMEZ, MIRIAM CATACUTAN, ESTRELLA ZAPATA, GLORIA SUMANG, JULIET DINGAL, MYRA AMANTE, and FE S. BERNANDO, Respondents.

VILLARAMA, JR., and SERENO, JJ.

Promulgated:

August 25, 2010 x----------------------------------------------------------------------------------------x DECISION

BRION, J.:

Before the Court is the petition for review on certiorari734[1] filed by Spic N Span Services Corporation (SNS) to seek the reversal of the October 25, 2004 Decision735[2] and the August 2, 2006 Resolution736[3] of the

Court of Appeals (CA) in CA-G.R. SP No. 83215, entitled "Gloria Paje, Lolita Gomez, Miriam Catacutan, Estrella Zapata, Gloria Sumang, Juliet Dingal, Myra Amante and Fe S. Bernardo v. National Labor Relations Commission, Spic N Span Service Corporation and Swift Foods, Inc. BACKGROUND FACTS

Swift Foods, Inc. (Swift) is a subsidiary of RFM Corporation that manufactures and processes meat products and other food products. SNSs business is to supply manpower services to its clients for a fee. Swift and SNS have a contract to promote Swift products.

Inocencio Fernandez, Edelisa F. David, Thelma Guardian, Juliet C. Dingal, Fe S. Bernardo, Lolita Gomez, Myra Amante, Miriam S. Catacutan, Gloria O. Sumang, Gloria O. Paje, and Estrella Zapata (complainants) worked as Deli/Promo Girls of Swift products in various supermarkets in Tarlac and Pampanga. They were all dismissed from their employment on February 28, 1998. They filed two complaints for illegal dismissal against SNS and Swift before the National Labor Relations Commission (NLRC) Regional Arbitration Branch III, San Fernando, Pampanga, docketed as Case Nos. 03-9131-98 and 07-9295-98. These cases were subsequently consolidated.

After two unsuccessful conciliation hearings, the Labor Arbiter ordered the parties to submit their position papers. Swift filed its position paper; SNS did not.737[4] The complainants position papers were signed by Florencio P. Peralta who was not a lawyer and who claimed to be the complainants representative, although he never showed any proof of his authority to represent them.

In their position papers, the complainants alleged that they were employees of Swift and SNS, and their services were terminated without cause and without due process. The termination came on the day they received their notices; thus, they were denied the procedural due process requirements of notice and hearing prior to their termination of employment.738[5] Swift, in its position paper, moved to dismiss the complaints on the ground that it entered into an independent labor contract with SNS for the promotion of its products; it alleged that the complainants were the employees of SNS, not of Swift.739[6]

The Labor Arbiter740[7] found SNS to be the agent of Swift, and ordered SNS and Swift to jointly and severally pay Edelisa David P115,637.50 and Inocencio Fernandez P192,197.50, representing their retirement pay and service incentive leave pay. He dismissed, without prejudice, the claims of the other complainants because they failed to verify their position paper. He also denied all other claims for lack of factual basis.741[8]

Both Swift and the complainants appealed to the NLRC. Swift filed a memorandum of appeal, while the complainants filed a partial memorandum of appeal.742[9]

The NLRC denied the complainants appeal for lack of merit.743[10] It dismissed the complaint against Swift, and ordered SNS to pay Edelisa David a total of P256,620.13, and Inocencio Fernandez a total of P280,912.63, representing backwages, separation pay, and service incentive leave pay. It dismissed all other claims for lack of merit. Thereafter, Edelisa David and Inocencio Fernandez agreed to a settlement, and their cases were thus closed.744[11]

The complainants whose claims were dismissed, namely, Gloria Paje, Lolita Gomez, Miriam Catacutan, Estrella Zapata, Gloria Sumang, Juliet Dingal, Myra Amante, and Fe S. Bernardo (respondents), moved for the reconsideration of the NLRCs ruling. This time, they were represented by the Public Attorneys Office. The NLRC denied their motion.745[12]

The respondents then sought relief with the CA through a petition for certiorari, based on the alleged grave abuse of discretion committed by the NLRC. The CA found the petition meritorious, in its assailed decision of October 25, 2004, and ruled that the respondents failure to sign the verification in their position paper was a formal defect that was not fatal to their case. It concluded that SNS was merely an agent of Swift; thus, the latter should not be exempt from liability. It ordered the remand of the case to the Labor Arbiter for the computation of

the respondents backwages, separation pay, and service incentive leave pay. SNS and Swift filed their motions for reconsideration which the CA denied.

SNS is now before us on a petition for review on certiorari, and submits the following

I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE CLAIMS OF HEREIN RESPONDENTS ON THE GROUND OF NON-SIGNING OF THE POSITION PAPER.

II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT ALTHOUGH THE RESPONDENTS WERE NOT REPRESENTED BY A LAWYER BUT BY ONE WHO IS NOT A MEMBER OF THE BAR, SAID FACT IS SUFFICIENT JUSTIFICATION FOR THE PETITIONERS FAILURE TO COMPLY WITH THE REQUIREMENTS OF LAW.

III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN REMANDING THE CASE TO THE LABOR ARBITER FOR THE COMPUTATION OF THE MONEY CLAIMS OF THE RESPONDENTS, TO WIT: 1) BACKWAGES, 2) SEPARATION PAY, AND 3) SERVICE INCENTIVE LEAVE, DESPITE THE FACT THAT NOWHERE IN THE DECISIONS OF THE LABOR ARBITER, THE NATIONAL LABOR RELATIONS COMMISSION, AND COURT OF APPEALS IS IT STATED THAT HEREIN RESPONDENTS WERE ILLEGALLY DISMISSED.746[13]

THE COURTS RULING

We find the petition unmeritorious.

SNS submits that since respondents did not sign the verification in their position paper, the CA erred when it ruled that the NLRC committed grave abuse of discretion in dismissing the respondents complaints. SNS stressed the importance of a signature in a pleading, and harped on the respondents failure to sign their position paper. 747[14] This, to SNS, is fatal to the respondents case.

We do not agree with SNS.

As we previously explained in Torres v. Specialized Packaging Development Corporation,748[15] where only two of the 25 real parties-in-interest signed the verification, the verification by the two could be sufficient assurance that the allegations in the petition were made in good faith, are true and correct, and are not speculative. The lack of a verification in a pleading is only a formal defect, not a jurisdictional defect, and is not necessarily fatal to a case.749[16] The primary reason for requiring a verification is simply to ensure that the allegations in the pleading are done in good faith, are true and correct, and are not mere speculations.750[17]

The CA, in its assailed decision, cited Philippine Telegraph and Telephone Corporation v. NLRC751[18] to emphasize that in labor cases, the deciding authority should use every reasonable means to speedily and objectively ascertain the facts, without regard to technicalities of law and procedure. Technical rules of evidence are not strictly binding in labor cases.752[19]

In the hierarchy observed in the dispensation of justice, rules of procedure can be disregarded in order to serve the ends of justice. This was explained by Justice Bernando P. Pardo, in Aguam v. Court of Appeals,753[20] when he said

Litigations must be decided on their merits and not on technicality. Every party litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the unacceptable plea of technicalities. Thus, dismissal of appeals purely on technical grounds is frowned upon where the policy of the court is to encourage hearings of appeals on their merits and the rules of procedure ought not to be applied in a very rigid, technical sense; rules of procedure are used only to help secure, not override substantial justice. It is a far better and more prudent course of action for the court to excuse a technical lapse and afford the parties a review of the case on appeal to attain the ends of justice rather than dispose of the case on technicality and cause a grave injustice to the parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a miscarriage of justice.754[21]

We should remember, too, that certain labor rights assume preferred positions in our legal hierarchy. Under the Constitution and the Labor Code, the State is bound to protect labor and assure the rights of workers to security of tenure.755[22] Article 4 of the Labor Code provides that all doubts in the implementation and

interpretation of its provisions (including its implementing rules and regulations) shall be resolved in favor of labor. The Constitution, on the other hand, characterizes labor as a primary social economic force. The State is bound to protect the rights of workers and promote their welfare,756[23] and the workers are entitled to security of tenure, humane conditions of work, and a living wage.757[24] Under these fundamental guidelines,

respondents right to security of tenure is a preferred constitutional right that technical infirmities in labor pleadings cannot defeat.

1.

SNS submits that the CA committed a serious error in ruling that the respondents

representatives non-membership in the bar is sufficient justification for their failure to comply with the requirements of the law. SNS argues that this ruling excuses the employment of a non-lawyer and places the acts of the latter on the same level as those of a member of the Bar.758[25] Our Labor Code allows a non-lawyer to represent a party before the Labor Arbiter and the Commission,759[26] but provides limitations: Non-lawyers may appear before the Commission or any Labor Arbiter only: (1) If they represent themselves; or (2) If they represent their organization or members thereof.760[27] Thus, SNS concludes that the respondents representative had no personality to appear before the Labor Arbiter or the NLRC, and his representation for the respondents should produce no legal effect.

Our approach to these arguments is simple as the problem boils down to a balance between a technical rule and protected constitutional interests. The cited technical infirmity cannot defeat the respondents preferred right to security of tenure which has primacy over technical requirements. Thus, we affirm the CAs ruling on this

point, without prejudice to whatever action may be taken against the representative, if he had indeed been engaged in the unauthorized practice of law.

2.

SNS also claims serious error on the part of the CA in remanding the case to the Labor Arbiter, for

computation of the respondents backwages, separation pay and service incentive leave pay despite the fact that nowhere in the decisions of the Labor Arbiter, the NLRC, and CA was there any finding that respondents had been illegally dismissed.

We find this to be the first argument of its kind from SNS, and, in fact, is the first ever submission from SNS before it filed a motion for reconsideration with the CA. To recall, SNS did not file its position paper before the labor arbiter, nor did it file its appeal before the NLRC; only Swift and the complainants did.761[28] It was only Swift, too, that filed its comment to the herein respondents petition for certiorari.762[29]

The records do not show if SNS filed its memorandum before the CA, although SNS filed a motion for reconsideration of the CA decision. It then claimed that the CA erred in ruling that the NLRC committed grave abuse of discretion when it dismissed respondents claim; that a petition for certiorari under Rule 65 of the Rules of Court is not the proper remedy to correct the NLRCs alleged grave abuse of discretion; and that the respondents were bound by the mistakes of their non-lawyer representative.763[30] Significantly, SNS did not raise the question of the CAs failure to state that the respondents had been illegally dismissed. At this point, it is too late for SNS to raise the issue.

Nothing on record indicates the reason for the respondents termination from employment, although the fact of termination was never disputed. Swift denied liability on the basis of its contract with SNS. The contract

was not presented before the Labor Arbiter, although Swift averred that under the contract, SNS would supply promo girls, merchandisers and other promotional personnel to handle all promotional aspects and merchandising strategy of Swift.764[31] We can assume, for lack of proof to the contrary, that the respondents termination from employment was illegal since neither SNS nor Swift, as employers, presented any proof that their termination from employment was legal. Upon proof of termination of employment, the employer has the burden of proof that the dismissal was valid; absent this proof, the termination from employment is deemed illegal, as alleged by the dismissed employees.

3.

In order that a labor relationship can be categorized as legitimate/permissible job contracting or

as prohibited labor-only contracting, the totality of the facts and the surrounding circumstances of the relationship ought to be considered.765[32] Every case is unique and has to be assessed on the basis of its facts and of the features of the relationship in question. In permissible job contracting, the principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. The test is whether the independent contractor has contracted to do the work according to his own methods and without being subject to the principals control except only as to the results, he has substantial capital, and he has assured the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.766[33]

The CA found SNS to be Swifts agent, and explained its ruling as follows767[34]

To be legitimate, contracting or subcontracting must satisfy the following requirements: 1) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manners and methods, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; 2) the contractor or subcontractor has substantial capital or investment; and 3) the agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of right to self-organization, security of tenure, and social and welfare benefit (Vinoya v. NLRC, 324 SCRA 469).

The parties failed to attach a copy of the agreement entered into between SNS and Swift. Neither did they attach a copy of the financial statement of SNS. Thus, we are constrained to rule on the issue involved on the basis of the findings of both the Labor Arbiter and the NLRC.

The Labor Arbiter, in finding that SNS was merely a labor-only contractor, cited the following reasons: First, the agreement between SNS and Swift shows that the latter exercised control over the promo girls and/or merchandisers through the services of coordinators. Second, it cannot be said that SNS has substantial capital. Third, the duties of the petitioners were directly related, necessary and vital to the day-to-day operations of Swift. Lastly, the uniform and identification cards used by the petitioners were subject to the approval of Swift.

The NLRC, on the other hand, in finding that SNS is an independent contractor gave the following reasons: First, there is no evidence that Swift exercised the power of control over the petitioners. Rather, it is SNS who exercised direct control and supervision over the nature and performance of the works of herein petitioners. Second, by law, Swift and SNS have distinct and separate juridical personality from each other.

The decision of the NLRC is bereft of explanation as to the existence of circumstances that would make SNS an independent contractor as would exempt the principal from liabilities to the employees.

Nowhere in the decision of both the Labor Arbiter and the NLRC shows that SNS had full control of the means and methods of the performance of their work. Moreover, as found by the Labor Arbiter, there was no evidence that SNS has substantial capital or investment. Lastly, there was no finding by the Labor Arbiter nor the NLRC that the agreement between the principal (Swift) and contractor (SNS) assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of right to self-organization, security of tenure, and social and welfare benefit.

In view of the foregoing, we conclude that the requisites above-mentioned are not obtaining in the present case. Hence, SNS is considered merely an agent of Swift which does not exempt the latter from liability.

We note that the present decision does not affect the settlement entered into between Edeliza David and Inocencio Fernandez, on the one hand and SNS, on the other. As held by the NLRC, their complaints are considered closed and terminated.

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Resolutions of the NLRC dated January 11, 2002 and December 23, 2003 are SET ASIDE in so far as the dismissal of the petitioners case is concerned and in so far as Swift is found not liable for the payment of the petitioners money claims.

The present case is hereby REMANDED to the Labor Arbiter for the computation of the money claims of the petitioners, to wit: 1) Backwages; 2) Separation Pay; and 3) Service Incentive Leave Pay.

The settlement of the claims of David and Fernandez is not affected by this decision.

We fully agree with this ruling. What we have before us, therefore, is a case of illegal dismissal perpetrated by a principal and its illegal contractor-agent. Thus, we affirm the ruling of the CA with the modification that the respondents are also entitled to nominal damages, for violation of their due process rights to notice and hearing, pursuant to our ruling in Agabon v. NLRC.768[35] We peg this amount at P30,000.00 for each of the respondents.

WHEREFORE, premises considered, we hereby AFFIRM the Court of Appeals October 25, 2004 Decision and August 2, 2006 Resolution in CA-G.R. SP No. 83215, with the modification that nominal damages in the amount of P30,000.00 should additionally be paid to each of the respondents, for violation of their procedural due process rights. Costs against the petitioner.

SO ORDERED.

ARTURO D. BRION Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES Associate Justice

LUCAS P. BERSAMIN Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

MARIA LOURDES P.A. SERENO Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA

Chief Justice

epublic of the Philippines Supreme Court Manila

THIRD DIVISION

BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH INTERNATIONAL, represented by SABINO F. GRAGANZA, Union President, and REYVILOSA TRINIDAD, Petitioners,

G.R. No. 167401

- versus -

SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT and TRIUMPH INTERNATIONAL (PHILS.), INC., Respondents. x ---------------------------------------- x TRIUMPH INTERNATIONAL (PHILS.), INC., Petitioner,

- versus -

BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH INTERNATIONAL, ELOISA FIGURA, JERRY JAICTEN, ROWELL FRIAS, MARGARITA PATINGO and ROSALINDA OLANGAR, Respondents.

G.R. No. 167407

Present:

CARPIO MORALES, J., Chairperson,

BRION, BERSAMIN, ABAD, and VILLARAMA, JR., JJ.

Promulgated:

July 5, 2010

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

DECISION

BRION, J.:

Before the Court are two separate petitions769[1] which were consolidated pursuant to our Resolution dated June 8, 2005.770[2] The first,771[3] filed by the Bagong Pagkakaisa ng Manggagawa ng Triumph

International (union), seeks to set aside the decision772[4] of the Court of Appeals (CA) in CA-G.R. SP No. 60516, and the subsequent resolution773[5] of March 10, 2005, on the parties motion for reconsideration. The second,774[6] filed by Triumph International (Phils.), Inc. (company), prays for the annulment of the same decision and resolution with respect to the illegal dismissal issue.

THE ANTECEDENTS

The relevant facts, clearly laid out in the challenged CA decision, are summarized below.

The union and the company had a collective bargaining agreement (CBA) that expired on July 18, 1999. The union seasonably submitted proposals to the company for its renegotiation. Among these proposals were economic demands for a wage increase of P180.00 a day, spread over three (3) years, as follows: P70.00/day from July 19, 1999; P60.00/day from July 19, 2000, and P50.00/day from July 19, 2001. The company countered with a wage increase offer, initially at P42.00 for three years, then increased it to P45.00, also for three years.

The negotiations reached a deadlock, leading to a Notice of Strike the union filed on October 15, 1999.775[7] The National Conciliation and Mediation Board (NCMB) exerted efforts but failed to resolve the deadlock.

On November 15, 1999, the company filed a Notice of Lock-out776[8] for unfair labor practice due to the unions alleged work slowdown. The union went on strike three days later, or on November 18, 1999.

On January 27, 2000, Secretary Bienvenido E. Laguesma (Labor Secretary) of the Department of Labor and Employment (DOLE) assumed jurisdiction over the labor dispute, pursuant to Article 263(g) of the Labor Code.777[9] The Labor Secretary directed all striking workers to return to work within twenty-four (24) hours from

receipt of the assumption order, while the company was directed to accept them back to work under the same terms and conditions existing before the strike. The Labor Secretary also required the parties to submit their respective position papers.

On February 2 and 3, 2000, several employees attempted to report for work, but the striking employees prevented them from entering the company premises.

In a petition dated February 8, 2000,778[10] the company asked the Labor Secretary to issue an order directing the union to allow free ingress to and egress from the company premises; to dismantle all structures obstructing free ingress and egress; and, to deputize the Philippine National Police to assist the DOLE in the peaceful implementation of the Labor Secretary's January 27, 2000 order.

The Labor Secretary reiterated his directives in another order dated February 22, 2000,779[11] and deputized Senior Superintendent Manuel A. Cabigon, Director of the Southern Police District, to assist in the peaceful and orderly implementation of this Order.

At a conciliation meeting held on February 29, 2000, the company agreed to extend the implementation of the return-to-work order until March 6, 2000.780[12] The union, through a letter dated March 2, 2000,781[13] advised the NCMB Administrator of the union executive boards decision to return to work the following day. In a letter also dated March 2, 2000,782[14] the company advised the NCMB Administrator that it was willing to accept all returning employees, without prejudice to whatever legal action it may take against those who committed illegal acts. The company also stated that all the union officers and members and the union board members would be placed under preventive suspension, pending investigation of their alleged illegal acts.

The striking employees returned to work on March 3 and 4, 2000 but twenty (20) union officers and a shop steward were not allowed entry into the company premises. The excluded union leaders were each served identical letters783[15] directing them to explain in writing why their employment should not be terminated or

why no disciplinary action should be imposed on them for defying and violating the Labor Secretarys assumption order of January 27, 2000 and the second return-to-work order of February 22, 2000; for blocking and resisting the entry of returning employees on February 2, 3, and 8, 2000; for acts of violence committed on February 24 and 25, 2000; and for defying the company's return-to-work order of all employees on February 8, 2000.784[16]

On March 6, 2000, the twenty-one (21) union officers, by motion, asked the Labor Secretary to issue a reinstatement order and to cite the company for contempt. On March 9, 2000, the Labor Secretary directed the company to accept the union officers and the shop steward back to work, without prejudice to the continuation of the investigation.785[17]

At the conciliation meeting of March 15, 2000, the company agreed to reinstate the union officers in the payroll effective March 13, 2000786[18] and withdrew its notice of lockout.787[19]

On March 21, 2000, the union officers again received identically worded letters requiring them to explain in writing within twenty-four (24) hours why no disciplinary action, including dismissal, should be taken against them for leading, instigating, and participating in a deliberate work slowdown during the CBA negotiations.788[20]

The union officers explained, as required, through their respective affidavits,789[21] and a hearing followed on May 5, 2000. Thereafter, the union officers were each served a notice of termination of employment effective at the close of office hours on May 11, 2000.790[22]

On June 8, 2000, the union and the officers filed a petition to cite the company and its responsible officers for contempt, and moved that a reinstatement order be issued.791[23] They claimed that: (1) the company

officials violated the Labor Secretarys return-to-work order when these officials placed them under preventive suspension and refused them entry into the company premises; (2) the company also violated the March 9, 2000 order of the Labor Secretary when they were reinstated only in the payroll; and (3) the company committed unfair labor practice and dismissed them without basis.

THE LABOR SECRETARYS DECISION

The Labor Secretary resolved the bargaining deadlock792[24] and awarded a wage increase of P48.00 distributed over three years, as follows:793[25]

Effective July 19, 1999 P15.00/day Effective July 19, 2000 P16.00/day Effective July 19, 2001 - P17.00/day

The unions other economic demands and non-economic proposals were all denied.

The union moved for the reconsideration794[26] of the Labor Secretarys decision, while the company moved for its own partial reconsideration.795[27] The Labor Secretary denied both motions, declaring that the petition to cite the company and its responsible officers for contempt had already been rendered moot and academic.796[28] He also ruled that the legality of the union officers dismissal properly falls within the original and exclusive jurisdiction of the labor arbiter under Article 217 of the Labor Code.

The union elevated the case to the CA, through a petition for certiorari under Rule 65 of the Rules of Court,797[29] on the following grounds:

1.

The Labor Secretary committed grave abuse of discretion amounting to lack or excess of jurisdiction when he denied the proposals of the 1,130 union members to improve the existing CBA.

2.

The Labor Secretary committed grave abuse of discretion when he declared that the issue of reinstatement of the officers of the union and the petition to cite the company and its responsible officers for contempt had become academic.

The union insisted on its demanded P180.00 daily wage increase distributed over three years (1999 to 2001), arguing that the demand is just, fair and reasonable based on the company's capacity to pay and the companys bargaining history. It noted that the company gave a P55.00 increase for the years 1993-1995, and P64.00 for the years 1996 to 1998. It also objected the rejection of its other economic demands and noneconomic proposals.

The union also contended that the company and its responsible officers should have been held in contempt for violating the Labor Secretarys return-to-work order. It argued that the officers should have been reinstated in the absence of substantial evidence supporting the charges against them.

The company responded by praying for the dismissal of the petition for lack of abuse of discretion on the part of the Labor Secretary. It posited that the P48.00 wage increase award is more than reasonable, and that the Labor Secretary properly stayed his hand on the issue of illegal dismissal as the matter was beyond his jurisdiction. The company likewise argued that any question on the award had been mooted by the workers acceptance of the wage increase.

While the petition was pending, individual settlements were reached between certain individual petitioners (Cenon N. Dionisio, Catalina N. Velasquez, Nila P. Tresvalles, Vivian A. Arcos, Delia N. Soliven, Leticia S. Santos, Emerita D. Maniebo, Conchita R. Encinas, Elpidia C. Cancino, Consolacion S. Umalia, Nenette N. Gonzales, Creselita D. Rivera, and Rolando O. Madera) and the company. These petitioners executed their respective Release, Waiver and Quitclaim after receiving their separation pay and other benefits from the company.798[30]

In light of these developments and the workers acceptance of the wage award (except for the union officers), the company moved for the dismissal of the petition.799[31] The union and the remaining union officers opposed the motion, contending that the workers acceptance of the awarded wage increase cannot be considered a waiver of their demand; the receipt of the P48.00 award was merely an advance on their demand. The Release, Waiver and Quitclaim executed by the 13 officers, on the other hand, cannot bind the officers who opted to maintain the petition.

On December 17, 2001, two more officers Juliana D. Galo and Remedios C. Barque also executed their respective Release, Waiver and Quitclaim.800[32]

THE CA DECISION

The CA found the petition partly meritorious. It affirmed the Labor Secretary's wage increase award, but modified his ruling on the dismissal of the union officers.801[33]

On the wage issue and related matters, the CA found the Labor Secretarys award legally in order. It noted the following factors supportive of the award:

1.

The average daily salary of an employee of P310.00 is more than the statutory minimum wage as admitted by the union itself.

2.

The company grants to its employees forty-two (42) other monetary and welfare benefits.

3.

The increase in the wages of the employees carries with it a corresponding increase in their salary-based benefits.

4.

The wage increase granted to workers employed in the industry is less than the increase proposed by the company.

5.

The Asian financial crisis.

The CA also noted that, in the meantime, the parties had executed a new CBA for the years 2002 to 2005 where they freely agreed on a total P45.00/day wage increase distributed over three years.

On the other hand, the CA faulted the Labor Secretary for not ruling on the dismissal of the union officers. It took exception to the Labor Secretary's view that the dismissal question is within the exclusive jurisdiction of the labor arbiter pursuant to Article 217 of the Labor Code. It invoked the ruling of this Court in Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc.,802[34] which, in turn, cited International Pharmaceuticals,

Inc. v. Secretary of Labor,803[35] where we held that the Labor Secretary has jurisdiction over all questions and controversies arising from an assumed dispute, including cases over which the labor arbiter has exclusive jurisdiction.

The CA pointed out that while the labor dispute before the Labor Secretary initially involved a bargaining deadlock, a related strike ensued and charges were brought against the union officers (for defiance of the returnto-work order of the Labor Secretary, and leading, instigating, and participating in a deliberate work slowdown during the CBA negotiations) resulting in their dismissal from employment; thus, the dismissal is intertwined with the strike that was the subject of the Labor Secretarys assumption of jurisdiction.

The CA, however, avoided a remand of the illegal dismissal aspect of the case to the Labor Secretary on the ground that it would compel the remaining six officers, lowly workers who had been out of work for four (4) years, to go through the calvary of a protracted litigation. In the CAs view, it was in keeping with justice and equity for it to proceed to resolve the dismissal issue itself.

The six remaining officers of the union Reyvilosa Trinidad, Eloisa Figura, Jerry Jaicten, Rowell Frias, Margarita Patingo, and Rosalinda Olangar (shop steward) all stood charged with defying (1) the Labor Secretarys return-to-work order of January 27, 2000,804[36] and (2) the companys general notice for the return of all employees on February 8, 2000.805[37] Later, they were also charged with leading, instigating, and participating in a deliberate slowdown during the CBA negotiations.

The charges were supported by the affidavits of Ernesto P. Dayag, Salvio Bayon, Victoria Sanchez, Lyndon Dinglasan, Teresita Nacion, Herman Vinoya, and Leonardo Gomez.806[38] The CA noted that in all these affidavits, no mention was ever made of *anyone+ of the six (6) remaining individual petitioners, save for Reyvilosa Trinidad. Also, none of the said affidavits even hinted at the culpabilities of petitioners Eloisa Figura, Jerry Jaicten, Rowell Frias, Margarita Patingo, and Rosalinda Olangar for the alleged illegal acts imputed to them.807[39]

For failure of the company to prove by substantial evidence the charges against the remaining officers, the CA concluded that their employment was terminated without valid and just cause, making their dismissal illegal.

With respect to Trinidad, the CA found that her presence in the picket line and participation in an illegal act obstructing the ingress to and egress from the company's premises were duly established by the affidavit of Bayon.808[40] For this reason, the CA found Trinidad's dismissal valid.

The appellate court thus affirmed the May 31, 2000809[41] order of the Labor Secretary and modified the resolution dated July 14, 2000.810[42]

The CA denied the motions for reconsideration that the union and its officers, and the company filed.811[43] Hence, the present petitions.

THE PETITIONS

G.R. No. 167401

The petition is anchored on the following grounds

1.

The CA erred in sustaining the Labor Secretary's wage increase award of P48.00/day spread over three years.

2.

The CA erred in finding the dismissal of Trinidad valid.

The union presents the following arguments

On the CBA Award

The union contends that the CBA wage increases from 1994 to 1998 ranged from P16.00/day to P27.00/day for every year of the CBA period; the arguments behind the companys decreased wage offer were the same arguments it raised in previous CBA negotiations; the alleged financial crisis in the region on which the CBA award was based actually did not affect the company because it sourced its raw materials from its mother company, thereby avoiding losses; the companys leading status in the industry in terms of wages should not be used in the determination of the award; rather, it should be based on the companys financial condition and its number one rank among 7,000 corporations in the country manufacturing ladies, girls, and babies garments, and number 46 in revenues with gross revenues of P1.08B, assets of P525.5M and stockholders equity of P232.1M; in granting only a wage increase out of 44 items in its proposal, the award disregarded the factors on which its demands were based such as the peso devaluation and the daily expenditure of P1,400.00/day for a family of six (6) as found by the National Economic and Development Authority.

On the Dismissal of Reyvilosa Trinidad

The union seeks a reversal of the dismissal of Trinidad. It argues that she was dismissed for alleged illegal acts based solely on the self-serving affidavits executed by officers of the company; the strike had not been declared illegal for the company had not initiated an action to have it declared illegal; Trinidad was discriminated against because of the four union officers mentioned in the affidavits, three were granted one month separation pay plus other benefits to settle the dispute in regard to the three; also the same arrangement was entered into with the other officers, which resulted in the signing of the waiver, quitclaim and release; the only statement in the affidavits against Trinidad was her alleged megaphone message to the striking employees not to return to work.

The union thus asks this Court to modify the assailed CA ruling through an order improving the CBA wage award and the grant of the non-wage proposals. It also asks that the dismissal of Trinidad be declared illegal, and that the company be ordered to pay the union moral and exemplary damages, litigation expenses, and attorney's fees.

G.R. No. 167407

For its part, the company seeks to annul the CA rulings on the dismissal issue, on the following grounds

1.

The CA erred in ruling that the Labor Secretary abused his discretion in not resolving the issue of the validity of the dismissal of the officers of the union.

2.

The CA erred in resolving the factual issue of dismissal instead of remanding the case for further proceedings.

3.

In resolving the issue, the company was deprived of its right to present evidence and, therefore, to due process of law.

The company submits that the Labor Secretary has no authority to decide the legality or illegality of strikes or lockouts, jurisdiction over such issue having been vested on the labor arbiters pursuant to Article 217 of the Labor Code; under Article 263 of the Code, the Labor Secretarys authority over a labor dispute encompasses only the issues, not the legality or illegality of any strike that may have occurred in the meantime.812[44] It points out that before the Labor Secretary can take cognizance of an incidental issue such as a dismissal question, it must first be properly submitted to him, as in the case of International Pharmaceuticals, Inc. v. Secretary of Labor813[45] where the Labor Secretary was adjudged to have the power to assume jurisdiction over a labor dispute and its incidental issues such as unfair labor practices subject of cases already ongoing before the National Labor Relations Commission (NLRC).

The company takes exception to the CA ruling that it submitted the dismissal issue to the Labor Secretary claiming that it can be seen from its opposition to the unions petition to cite the company for contempt;814[46] that it consistently maintained that the Labor Secretary has no jurisdiction over the dismissal issue; that the affidavits it submitted to the Labor Secretary were only intended to establish the unions violation of the return-towork orders and, to support its petition, on February 8, 2000,815[47] for the issuance of a return-to-work order; and, that the CA overstepped its jurisdiction when it ruled on a factual issue, the sole office of certiorari being the corrections of errors of jurisdiction, including the commission of grave abuse of discretion.

The company likewise disputes the CAs declaration that it took into consideration all the evidence on the dismissal issue, claiming that the evidence on record is deficient, for it did not have the opportunity to adduce evidence to prove the involvement of the union officers in the individual acts for which they were dismissed; had it been given the opportunity to present evidence, it could have done so. To prove its point, it included in its motion for partial reconsideration816[48] a copy of the information,817[49] charging union officers Nenette Gonzales and Margarita Patingo of malicious mischief for stoning a company vehicle on February 25, 2000, while the strike was ongoing.

Even assuming that it could no longer submit evidence on the dismissal of the union officers, the company posits that sufficient grounds exist to uphold the dismissals. It maintains that the officers are liable to lose their employment status for knowingly staging a strike after the assumption of jurisdiction by the Labor Secretary and in

defying the return-to-work mandated by the assumption, which are considered prohibited activities under Article 264(a) of the Labor Code, not to mention that without first having filed a notice, when the union officers and members engaged in and instigated a work slowdown, a form of strike, without complying with the procedural requirements for staging a strike, the union officers had engaged in an illegal strike.

The parties practically reiterated these positions and the positions taken below in their respective comments to each others petition.

THE COURT'S RULING

The CBA Award

We affirm the CA's disposition, upholding the Labor Secretarys award in resolving the bargaining deadlock between the union and the company for their 1999-2001 CBA.

We find no compelling justification to disturb the award. We are convinced, as the appellate court was, of the reasonableness of the award. It was based on the prevailing economic indicators in the workplace, in the industry, and in the local and regional economy. As well, it took into account the comparative standing of the company in terms of employees' wages and other economic benefits. We find the following factors as sufficient justification for the award:

1.

The regional financial crisis and the downturn in the economy at the time, impacting on the performance of the company as indicated in its negative financial picture in 1999.

2.

The companys favorable comparison with industry standards in terms of employee benefits, especially wages. Its average daily basic wage of P310.00 is 40% higher than the statutory minimum wage of P223.50, and superior to the industrys average of P258.00. For the years prior to the 1999 negotiations, its aggregate daily wage increase of P64.00 surpassed the statutory minimum increase of P33.00.

3.

The forty-two (42) non-wage benefit programs of the company which undeniably extend the reach of the employees' cash wage in enhancing the well-being of the employees and their families.

The Labor Secretary's Order of May 31, 2000 fully explained these considerations as follows:818[50]

We fully agree with the Union that relations between management and labor ought to be governed by the higher precepts of social justice as enshrined in the Constitution and in the laws. We further agree with it that the worker's over-all well-being is as much affected by his

wages as by other macro-economic factors as the CPI, cost of living, the varied needs of the family. Yet, the other macro-economic factors cited by the company such as the after-effects of the regional financial crisis, the existing unemployment rate, and the need to correlate the rate of wage increase with the CPI are equally important. Of course[,] other macro-economic factors such as the contraction of sales and production as well as the growing lack of direct investors, are also important considerations. It is noteworthy that both the Union and Management recognize that the entire gamut of macro-economic factors necessarily impact on the micro-economic conditions of an individual company even in terms of wage increases. The Union also makes mention of the need to factor in the industry where the employer belongs x x x. This is affirmed by the Company when it provides a comparison with the other key players in the industry. It has been properly shown that its prevailing levels of wages and other benefits are, generally, superior to its counterparts in the local garments industry. x x x But even as we agree with the Union that the Company's negative financial picture for 1999 should not be an overriding consideration in coming up with an adjudicated wage increase, We cannot make the historical wage increases as our starting point in determining the appropriate wage adjustment. The Companys losses for 1999 which, even the Union recognizes, amounts to millions of pesos, coupled with the current economic tailspin warrant a more circumspect view[.] Cognizance is likewise made of the Company's 42 non-wage benefits programs which substantially [answer] the Union's concerns with respect to the living wage and the needs of a family. It would not be amiss to mention that said benefits have their corresponding monetary valuations that in effect increase a worker's daily pay. Likewise, the needed family expenditure is answered for not solely by an individual family member's income alone, but also from other incomes derived by the entire family from all possible sources. Considering the foregoing circumstances, We deem it reasonable and fair to balance our award on wages.

The conclusions of the Labor Secretary, drawn as they were from a close examination of the submissions of the parties, do not indicate any legal error, much less any grave abuse of discretion. We accord respect to these conclusions as they were made by a public official especially trained in the delicate task of resolving collective bargaining disputes, and are on their face just and reasonable. *U+nless there is a clear showing of grave abuse of discretion, this Court cannot, and will not, interfere with the labor expertise of the public respondent Secretary of Labor, as the Court held in Pier Arrastre and Stevedoring Services v. Ma. Nieves Roldan-Confesor, et al.819[51]

We also note that during the pendency of the present dispute, the parties entered into a new CBA for the years 2000-2005, providing for a P45.00/day wage increase for the workers. The CA cited this agreed wage adjustment as an indication of the reasonableness of the disputed award. The Labor Secretary himself alluded to the letter-manifestation received by this Office on 15 June 2000 containing the signatures of some 700 employees of the Company indicating the acceptance of the award rendered in the 31 May 2000 Order.820[52] There was also the manifestation of the company dated February 7, 2006, advising the Court that it concluded another CBA with the union providing for a wage increase of P22.00/day effective July 19, 2005; P20.00/day for July 19, 2006; and P20.00/day for July 19, 2007.821[53] The successful negotiation of two collective agreements even before the

parties could sit down and formalize the 1999-2001 CBA highlights the need for the parties to abide by the decision of the Labor Secretary and move on to the next phase of their collective bargaining relationship.

The Illegal Dismissal Issue

Before we rule on the substantive aspect of this issue, we deem it proper to resolve first the companys submission that the CA erred: (1) in ruling that the Labor Secretary gravely abused his discretion in not deciding the dismissal issue; and, (2) in deciding the factual issue itself, instead of remanding the case, thereby depriving it of the right to present evidence on the matter.

We agree with the CA's conclusion that the Labor Secretary erred, to the point of abusing his discretion, when he did not resolve the dismissal issue on the mistaken reading that this issue falls within the jurisdiction of the labor arbiter. This was an egregious error and an abdication of authority on the matter of strikes the ultimate weapon in labor disputes that the law specifically singled out under Article 263 of the Labor Code by granting the Labor Secretary assumption of jurisdiction powers. Article 263(g) is both an extraordinary and a preemptive power to address an extraordinary situation a strike or lockout in an industry indispensable to the national interest. This grant is not limited to the grounds cited in the notice of strike or lockout that may have preceded the strike or lockout; nor is it limited to the incidents of the strike or lockout that in the meanwhile may have taken place. As the term assume jurisdiction connotes, the intent of the law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike or lockout; it includes and extends to all questions and controversies arising from or related to the dispute, including cases over which the labor arbiter has exclusive jurisdiction.822[54]

In the present case, what the Labor Secretary refused to rule upon was the dismissal from employment that resulted from the strike. Article 264 significantly dwells on this exact subject matter by defining the circumstances when a union officer or member may be declared to have lost his employment. We find from the records that this was an issue that arose from the strike and was, in fact, submitted to the Labor Secretary, through the unions motion for the issuance of an order for immediate reinstatement of the dismissed officers and the companys opposition to the motion. Thus, the dismissal issue was properly brought before the Labor Secretary and this development in fact gave rise to his mistaken ruling that the matter is legally within the jurisdiction of the labor arbiter to decide.

We cannot disagree with the CAs sympathies when it stated that a remand of the case would only compel the individual petitioners, x x x lowly workers who have been out of work for more than four (4) years, to tread once again the [calvary] of a protracted litigation.823[55] The dismissal issue and its resolution, however, go beyond the realm of sympathy as they are governed by law and procedural rules. The recourse to the CA was through the medium of a petition for certiorari under Rule 65 an extraordinary but limited remedy. The CA was correct in declaring that the Labor Secretary had seriously erred in not ruling on the dismissal issue, but was totally out of place in proceeding to resolve the dismissal issue; its action required the prior and implied act of

suspending the Rules of Court a prerogative that belongs to this Court alone. In the recent case of MarcosAraneta v. Court of Appeals,824[56] we categorically ruled that the CA cannot resolve the merits of the case on a petition for certiorari under Rule 65 and must confine itself to the jurisdictional issues raised. Let this case be another reminder to the CA of the limits of its certiorari jurisdiction.

But as the CA did, we similarly recognize that undue hardship, to the point of injustice, would result if a remand would be ordered under a situation where we are in the position to resolve the case based on the records before us. As we said in Roman Catholic Archbishop of Manila v. Court of Appeals:825[57] [w]e have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and for the expeditious administration of justice, has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice, would not be subserved by the remand of the case.826[58] Thus, we shall directly rule on the dismissal issue. And while we rule that the CA could not validly rule on the merits of this issue, we shall not hesitate to refer back to its dismissal ruling, where appropriate.

The first question to resolve is the sufficiency of the evidence and records before us to support a ruling on the merits. We find that the union fully expounded on the merits of the dismissal issue while the companys positions find principal support from the affidavits of Dayag, Bayon, Sanchez, Dinglasan, Nacion, Vinoya, and Gomez. The affidavits became the bases of the individual notices of termination of employment sent to the union officers. The parties affidavits and their submitted positions constitute sufficient bases to support a decision on the merits of the dismissal issue.

The dismissed union officers of the union originally numbered twenty-one (21), twenty (20) of whom led by union President Cenon Dionisio were executive officers and members of the union board. Completing the list was shop steward Olangar. As mentioned earlier, fifteen (15) of the dismissed officers, including Dionisio, executed a Release, Waiver and Quitclaim and readily accepted their dismissal.827[59] Those who remained to contest their dismissal were Reyvilosa N. Trinidad, 2nd Vice-President; Eloisa Figura, Asst. Secretary; Jerry Jaicten, PRO; Rowell Frias, Board Member; Margarita Patingo, Board Member; and Rosalinda Olangar, Shop Steward.

The officers of the union subject of the petition were dismissed from the service for allegedly committing illegal acts (1) during the CBA negotiations and (2) during the strike declared by the union, shortly after the negotiations reached a deadlock. The acts alluded to under the first category828[60] involved leading,

instigating, participating in a deliberate slowdown during the CBA negotiations and, under the second,829[61] the alleged defiance and violation by the union officers of the assumption of jurisdiction and the return-to-work order of the Labor Secretary dated January 27, 2000, as well as the second return-to-work order dated February 22, 2000. More specifically, in the course of the strike, the officers were charged with blocking and preventing the entry of returning employees on February 2, 3, and 8, 2000; and on February 24 and 25, 2000, when acts of violence were committed. They likewise allegedly defied the company's general return-to-work notice for the return of all employees on February 8, 2000.830[62]

The CA erred in declaring that except for Trinidad, the company failed to prove by substantial evidence the charges against the remaining union officers, thus making this dismissal illegal. The appellate court noted that in all the affidavits the company submitted as evidence no mention was ever made of *anyone+ of the six (6) remaining individual petitioners, save for Reyvilosa Trinidad. Also, none of the said affidavits even hinted at the culpabilities of petitioners Eloisa Figuna, Jerry Jaicten, Rowell Frias, Margarita Patingo and Rosalinda Olangar for the alleged illegal acts imputed to them.831[63]

The charges on which the company based its decision to dismiss the union officers and the shop steward may be grouped into the following three categories: (1) defiance of the return-to-work order of the Labor Secretary, (2) commission of illegal acts during the strike, and (3) leading, instigating and participating in a deliberate work slowdown during the CBA negotiations.

While it may be true that the affidavits the company submitted to the Labor Secretary did not specifically identify Figuna, Jaiden, Frias, Patingo and Olangar to have committed individual illegal acts during the strike, there is no dispute that the union defied the return-to-work orders the Labor Secretary handed down on two occasions, first on January 27, 2000 (more than two months after the union struck on November 18, 1999) and on February 22, 2000. In decreeing a return-to-work for the second time, the Labor Secretary noted:

To date, despite the lapse of the return-to-work period indicated in the Order, the Union continues with its strike. A report submitted by NCMB-NCR even indicated that all gates of the Company are blocked thereby preventing free ingress and egress to the premises.832[64]

Under the law,833[65] the Labor Secretary's assumption of jurisdiction over the dispute or its certification to the National Labor Relations Commission for compulsory arbitration shall have the effect of automatically enjoining the intended or impending strike or lockout and 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 before the strike or lockout. The union and its officers, as well as the workers, defied the Labor Secretary's assumption of jurisdiction, especially the accompanying return-to-work order within twenty-four (24) hours; their defiance made the strike illegal under the law834[66] and applicable jurisprudence.835[67] Consequently, it constitutes a valid ground for dismissal.836[68] Article 264(a), paragraph 3 of the Labor Code provides that Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status.

The union officers were answerable not only for resisting the Labor Secretary's assumption of jurisdiction and return-to-work orders; they were also liable for leading and instigating and, in the case of Figura, for participating in a work slowdown (during the CBA negotiations), a form of strike837[69] undertaken by the union without complying with the mandatory legal requirements of a strike notice and strike vote. These acts are similarly prohibited activities.838[70]

There is sufficient indication in the case record that the union officers, collectively, save for shop steward Olangar, were responsible for the work slowdown, the illegal strike, and the violation of the Labor Secretary's assumption order, that started with the slowdown in July 1999 and lasted up to March 2000 (or for about ten (10) months).839[71] These illegal concerted actions could not have happened at the spur of the moment and could not have been sustained for several months without the sanction and encouragement of the union and its officers; undoubtedly, they resulted from a collective decision of the entire union leadership and constituted a major component of the unions strategy to obtain concessions from the company management during the CBA

negotiations.

That the work slowdown happened is confirmed by the affidavits840[72] and the documentary evidence submitted by the company. Thus, Ernesto P. Dayag, a security officer of the agency servicing the company (Tamaraw Security Service, Inc.) stated under oath that in October 1999, the union members were engaging in a noise-barrage everyday and when it was time to go back to work at noontime, they would mill around the production area or were at the toilet discussing the ongoing CBA negotiations (among others), and were slow in their movements; in late October (October 27, 1999), they did the same thing at about seven oclock in the morning which was already time for work; even those who were already working were deliberately slow in their movements. On November 12, 1999, when union officer Lisa Velasquez talked to the union members at lunchtime regarding the CBA negotiations, only about 50% of the union members returned to their work stations.

Victoria P. Sanchez, a sewer in the company's production department, deposed that sometime in the middle of September 1999, the sewers were told by the shop stewards to reduce their efficiency below 75%. They followed the order as it came from a decision of the union officers at a meeting. It was not difficult to comply with the order because they only had to slow down at the pre-production and early segments of the production line so that the rest of the line would suffer.

Teresita T. Nacion, another sewer, corroborated Sanchez's deposition stating that in mid-September 1999, during the CBA negotiations, the sewers were told by the shop stewards to reduce their efficiency below 75% pursuant to the union decision to slow down production so that the company would suffer losses.

The work slowdown resulted in production losses to the company which it documented and submitted in evidence841[73] before the Labor Secretary and was summarized in the affidavit842[74] of Leonardo T. Gomez, who testified on the impact of the decrease of the workers production efficiency that peaked in September, October, and November 1999, resulting in a financial loss to the company of P69.277M. Specifically, the

companys efficiency record for the year 1999843[75] posted Eloisa C. Figuras844[76] work performance from April to June 1999 at 77.19% and from July to November 1999 at 51.77%, a substantial drop in her efficiency.

The unions two-pronged strategy to soften the companys stance in the CBA negotiations culminated in its declaration of a strike on November 18, 1999, which prompted the Labor Secretarys intervention through an assumption of jurisdiction. Judging from the manner the union staged the strike, it is readily apparent that the unions objective was to paralyze the company and to maintain the work stoppage for as long as possible.

This is the economic war that underlies the Labor Codes strike provisions, and which the same Code also tries to temper by regulation. Thus, even with the assumption of jurisdiction and its accompanying return-to-work order, the union persisted with the strike and prevented the entry to the company premises of workers who wanted to report back for work. In particular, Salvio Bayon, a company building technician and a member of the union, deposed that at about seven o'clock in the morning of February 3, 2000, he and ten (10) of his co-employees attempted to enter the company premises, but they were prevented by a member of the strikers, led by union President Cenon Dionisio and other officers of the union; the same thing happened on February 8, 24 and 28, 2000.845[77]

In the face of the union's defiance of his first return-to-work order, the Labor Secretary issued a second return-to-work directive on February 22, 2000 where the labor official noted that despite the lapse of the returnto-work period indicated in the order, the union continued with its strike.846[78] At a conciliation meeting on February 29, 2000, the company agreed to extend the implementation of the return-to-work order to March 6, 2000.847[79] The union, through a letter dated March 2, 2000,848[80] advised the NCMB administrator of the decision of the union executive board for the return to work of all striking workers the following day. In a letter also dated March 2, 2000,849[81] the company also advised the NCMB Administrator that it was willing to accept all returning employees, without prejudice to whatever legal action it may take against those who committed illegal acts.

The above union letter clearly shows the involvement of the entire union leadership in defying the Labor Secretary's assumption of jurisdiction order as well as return-to-work orders. From the illegal work slowdown to

the filing of the strike notice, the declaration of the strike, and the defiance of the Labor Secretary's orders, it was the union officers who were behind the every move of the striking workers; and collectively deciding the twists and turns of the strike which even became violent as the striking members prevented and coerced returning workers from gaining entry into the company premises. To our mind, all the union officers who knowingly participated in the illegal strike knowingly placed their employment status at risk.

In a different vein, the union faulted the company for having dismissed the officers, there being no case filed on the legality or illegality of the strike. We see no merit in this argument. In Gold City Integrated Port Service, Inc. v. NLRC,850[82] we held that *t+he law, in using the word may, grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment. We reiterated this principle in San Juan De Dios Educational Foundation Employees Union-Alliance of Filipino Workers v. San Juan De Dios Educational Foundation, Inc.,851[83] where we stated that Despite the receipt of an order from the SOLE to return to their respective jobs, the Union officers and members refused to do so and defied the same. Consequently, then, the strike staged by the Union is a prohibited activity under Article 264 of the Labor Code. Hence, the dismissal of its officers is in order. The respondent Foundation was, thus, justified in terminating the employment of the petitioner Union's officers.

The union attempted to divert attention from its defiance of the return-to-work orders with the specious submission that it was the company which violated the Labor Secretary's January 27, 2000 order, by not withdrawing its notice of lockout.852[84]

The evidence indicates otherwise. The Labor Secretary himself, in his order of February 22, 2000,853[85] noted that the union continued its strike despite the lapse of the return-to-work period specified in his January 27, 2000 order. There is also the report of the NCMB-NCR clearly indicating that all gates of the company were blocked, thereby preventing free ingress to and egress from the company premises. There, too, was the letter of the company personnel manager, Ralph Funtila, advising the union that the company will comply with the Labor Secretary's January 27, 2000 order; Funtila appealed to the striking employees and the officers to remove all the obstacles and to lift their picket line to ensure free ingress and egress.854[86] Further, as we earlier noted, the union itself, in its letter of March 2, 2000, advised the NCMB that the union board of directors had decided to

return to work on March 3, 2000 indicating that they had been on strike since November 18, 1999 and were defiant of the return-to-work orders since January 28, 2000.

As a final point, the extension of the return-to-work order and the submission of all striking workers, by the company, cannot in any way be considered a waiver that the union officers can use to negate liability for their actions, as the CA opined in its assailed decision.855[87] In the first place, as clarified by Funtila's letter to the NCMB dated March 2, 2000,856[88] the company will accept all employees who will report for work up to March 6, 2000, without prejudice to whatever legal action it may take against those who committed illegal acts. He also clarified that it extended the return-to-work, upon request of the union and the DOLE to accommodate employees who were in the provinces, who were not notified, and those who were sick.

As a point of law, we find that the company did not waive the right to take action against the erring officers, and this was acknowledged by the Labor Secretary himself in his order of March 9, 2000,857[89] when he directed the company to accept back to work the twenty (20) union officers and one (1) shop steward*,+ without prejudice to the Company's exercise of its prerogative to continue its investigation. The order was issued upon complaint of the union that the officers were placed under preventive suspension.

For having participated in a prohibited activity not once, but twice, the union officers, except those our Decision can no longer reach because of the amicable settlement they entered into with the company, legally deserve to be dismissed from the service. For failure of the company, however, to prove by substantial evidence the illegal acts allegedly committed by Rosalinda Olangar, who is a shop steward but not a union officer, we find her dismissal without a valid cause.

WHEREFORE, premises considered, judgment is hereby rendered AFFIRMING with MODIFICATION the challenged decision and

resolution of the Court of Appeals in CA-G.R. SP No. 60516, as follows:

1.

The collective bargaining award of DOLE Secretary Bienvenido E. Laguesma, contained in his order dated May 31, 2000, is fully AFFIRMED;

2. 3.

The dismissal of REYVILOSA TRINIDAD, union 2 Vice-President, is likewise AFFIRMED; The dismissal of ELOISA FIGURA, Assistant Secretary; JERRY JAICTEN, Press Relations Officer; and ROWELL FRIAS, Board Member, is declared VALID and for a just cause; and

nd

4.

The dismissal of ROSALINDA OLANGAR is declared illegal. The CA award is SUSTAINED in her case.

SO ORDERED.

ARTURO D. BRION Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES Associate Justice Chairperson

LUCAS P. BERSAMIN Associate Justice

ROBERTO A. ABAD Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Chairperson

Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

Republic of the Philippines Supreme Court Manila

SECOND DIVISION

ERECTOR ADVERTISING SIGN GROUP, INC. and ARCH. JIMMY C. AMOROTO, Petitioners,

G.R. No. 167218

Present:

CARPIO, J., Chairperson, - versus NACHURA, PERALTA, ABAD, and MENDOZA, JJ. NATIONAL LABOR RELATIONS COMMISSION, Respondent. Promulgated:

July 2, 2010 x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioner Erector Advertising Sign Group, Inc. assails the February 16, 2005 Decision858[1] of the Court of Appeals in CA-G.R. SP No. 80027. The challenged Decision affirmed the February 28, 2003 Resolution859[2] of the National Labor Relations Commission in NLRC NCR CA No. 028711-01. In turn, the said Decision reversed and set aside the March 30, 2001

Decision860[3] of the Labor Arbiter, which dismissed for lack of merit the complaint for illegal dismissal filed by respondent Expedito Cloma. The basic facts follow.

Petitioner Erector Advertising Sign Group, Inc. is a domestic corporation engaged in the business of constructing billboards and advertising signs. Sometime in the middle of 1996, petitioner engaged the services of Expedito Cloma (Cloma) as company driver and the latter had served as such until his dismissal from service in May 2000.861[4]

In his Complaint862[5] filed with the National Labor Relations Commission (NLRC), Cloma alleged that he was illegally suspended and then dismissed from his employment without due process of law. He likewise claimed his unpaid monetary benefits such as overtime pay, premium pay for worked rest days, service incentive leave pay and 13th month pay, as well as moral, exemplary and actual damages and attorneys fees.

It is conceded by petitioner that Cloma has been suspended several times from work due to frequent tardiness and absenteeism, but the instant case appears to be likewise the result of documented instances of absenteeism without prior notice to and approval from his superior, and of misbehavior. The former happened between May 12 and May 15, 2000 when Cloma supposedly failed to report for work without prior notice and prior leave approval863[6] which thus effectively prevented the other workers from being transported to the job site as there was no other driver available; whereas the latter incident happened on May 11, 2000 when allegedly, Cloma, without authority, suddenly barged into the premises of the Outright Division and, without being provoked, threatened the employees with bodily harm if they did not stop from doing their work.864[7] This second incident was supposedly narrated fully in a letter dated May 13, 2000 addressed to the personnel manager and signed by one Victor Morales and Ruben Que.865[8]

As a result of these incidents, petitioner served on Cloma two (2) Suspension Orders dated May 15, 2000 and May 17, 2000, both signed by Nelson Clavacio (Clavacio), personnel and production manager of petitioner company, and approved by Architect Jimmy C. Amoroto (Amoroto), president and chief executive officer. For easy reference, the suspension orders are reproduced as follows:

May 15, 2000 Para kay: MR. EXPEDITO CLOMA Company Driver Paksa: SUSPENSION ORDER Dahil sa iyong pagliban mula pa nuong Mayo 12 hanggang Mayo 15, 2000 na wala man lang pasabi o paalam, ikaw ay binibigyan ng tatlong araw na suspensyon na magsisimula ngayon Mayo 15 hanggang Mayo 17, 2000. Ito ay bilang paggawad ng batas at disiplina sa ating sarili at sa iba upang huwag ng pamarisan pa. Malinaw na nakasaad sa Company Rules and Regulations SECTION 1, PARAGRAPH 4: Ang pagliban ng walang paalam na sunod-sunod ay may kalakip na kaparusahan. Dalawang araw na absent ay katumbas ng tatlong araw na suspension.866[9]

May 17, 2000 Para kay: MR. EXPEDITO CLOMA Company Driver Paksa: SUSPENSION ORDER Ikaw ay ginagawaran ng isang linggong Suspensyon mula bukas, Mayo 18, 2000 hanggang Mayo 24, 2000. Ito ay dahil sa [sumusunod] na dahilan: 1. Ang pagpigil sa mga trabahador ni Ms. Anne Dongel na tagaOutright Division na magtrabaho nuong Mayo 11, 2000 at pananakot sa mga trabahador ni Ms. Anne Dongel samantalang iba naman ang kanilang Division. (SECTION 2 PARAGRAPH 2/PANANAKOT ISANG LINGGONG SUSPENSYON) Ang iyong suspension ay epektibo kaagad bukas at makakabalik ka lamang sa Mayo 25, 2000. Ang parusang nabanggit ay para sa pagpapairal ng disiplina sa atin at sa ating mga kapwa manggagawa.867[10]

When Cloma reported back for work on May 25, 2000, he was taken by surprise when the security guard on duty prevented him from entering the companys premises and, instead, handed him a termination letter dated May 20, 2000, signed and approved by Clavacio and Amoroto.868[11] The letter states: May 20, 2000 Para kay: MR. EXPEDITO CLOMA Company Driver Paksa: Notice of Termination Ginoong Expedito Cloma:

Malungkot naming ibinabalita sa iyo na napagpasyahan ng Pamunuang ito na tanggalin ka na sa iyong serbisyo bilang Company Driver. Ito ay dahil sa mga sumusunod na kadahilanan: 1. 2. 3. 4. Ang pagliban ng dalawang araw na wala man lang pasabi o paalam. Ang pananakot sa kapwa manggagawa o trabahador na nagresulta sa pagkauwi ng mga trabahador ng Outright Division. Ang pagpigil sa operasyon ng ibang Department sa pamamalakad ni Ms. Anne Dongel. Maraming pagkakataon na late na naging dahilan ng pagsabotahe ng operasyon ng mga Production Crews.

Mula sa mga dahilan na nabanggit, ito ay sapat na dahilan upang tanggalin ka sa iyong posisyon, nagpapakita lamang na hindi mo nagampanan ng maayos ang iyong trabaho katulad ng inaasahan sa iyo ng Pamunuang ito.869[12]

Ridden with angst and anxiety, Cloma walked away and filed the instant complaint for illegal dismissal.

Following the submission of position papers and other documentary exhibits by both parties, the Labor Arbiter, after evidentiary evaluation, issued its March 30, 2001 Decision dismissing Clomas complaint for lack of merit.870[13] In so ruling, the Labor Arbiter put much weight on the evidence presented by petitioner company bearing on Clomas frequent tardiness and unauthorized absences, as well as the several incidents of misbehavior and misconduct in which Cloma figured as the protagonist. It went on to say that while the onus of proving the existence of the cause for termination and the observance of due process lie on the employer, petitioner company was actually able to establish the validity of Clomas dismissal by its evidence.871[14] It also noted that while the company, by memorandum/notice, had directed Cloma to submit his explanation on his alleged infractions, the latter nevertheless did not comply with the directive and instead ignored the same. In this connection, the Labor Arbiter declared that a plea of denial of procedural due process would not lie when he who had been given an opportunity to be heard had chosen not to avail of such opportunity.872[15]

Aggrieved, Cloma appealed to the NLRC.873[16]

On February 28, 2003, the NLRC issued its

Resolution874[17] reversing and setting aside the Labor Arbiters decision.

The NLRC pointed out that not only was Cloma dismissed without due process but also, that he was dismissed without just cause. The NLRC based its finding on the termination letter served by petitioner on Cloma such that with respect to the first ground of termination, i.e., Ang pagliban ng dalawang araw na wala man lang pasabi o paalam, the letter did not state the dates when these two absences had been incurred; that in relation to the second and third grounds, i.e., Ang pananakot sa kapwa manggagawa x x x and Ang pagpigil sa operasyon ng ibang Department x x x, petitioner did not profess having conducted investigation on these matters that would have afforded Cloma the opportunity to confront his witnesses and that Cloma had already been sanctioned for this offense under the May 17, 2000 suspension order; and that as to the last ground, i.e., Maraming pagkakataon na late x x x, the NLRC noted that the best proof on this allegation would have been Clomas corresponding daily time record but which, however, petitioner failed to make of record at the hearing of the case.875[18] Hence, finding that Cloma was dismissed without just cause and without due process, the NLRC ordered petitioner to pay full backwages, allowances and other benefits, as well as separation pay in lieu of reinstatement.876[19] The appeal was disposed of as follows:

WHEREFORE, premises considered, Complainants appeal is GRANTED. The Labor Arbiters decision in the above-entitled case is hereby REVERSED and SET ASIDE. A new one is entered declaring that Complainants dismissal from employment is illegal. Respondents are hereby ordered to jointly as (sic) severally pay Complainant the amount of P271,673.08 as backwages and separation pay, plus ten percent (10%) of his total monetary award as attorneys fees. SO ORDERED.877[20]

Petitioners motion for reconsideration was denied,878[21] and forthwith it elevated the case to the Court of Appeals on petition for certiorari.879[22]

On February 16, 2005, the Court of Appeals rendered the assailed Decision880[23] adopting the findings and conclusions of the NLRC as follows:

WHEREFORE, the instant petition is DENIED. The resolution of the National Labor Relations Commission dated 28 February 2003 reversing the decision of the Labor Arbiter dated 30 March 2001 in NLRC CASE No. 00-05-02887-2000 is hereby AFFIRMED. SO ORDERED.

Hence, this petition, which raises the sole issue of whether Cloma was dismissed with just cause and with due process of law.

Petitioner insists that the just cause for Clomas termination abounds in the records, alluding to several infractions and violations of company rules and regulations for which he has been suspended many times from work. In addition, it likewise enumerates a number of Clomas other acts of misbehavior work under the influence of alcohol, picking fights with co-workers and others such as reporting for

which the management merely let

pass but which, nevertheless, could constitute valid grounds for dismissal. Yet significantly, petitioner admits that it is Clomas repeated infractions which gave the company the motivation to finally terminate his services.881[24]

Also, petitioner maintains that it observed due process in deciding to dismiss Cloma from service. It claims that the decision to let go of Cloma was the result of a thorough consideration of the totality of the many infractions he has committed, as well as of his general behavior toward his work. It reasons that ample time, prior to May 20, 2000, has been afforded Cloma so that he could explain why he should not be dismissed, but he nevertheless failed to comply despite the fact that he was residing only a few houses away from the company.882[25]

Commenting on the petition, Cloma maintains that petitioners evidence is insubstantial to support the theory that the dismissal has complied with due process and is with just cause. He stresses that the evidence presented by petitioner hardly supports the grounds relied on for his termination and that, more importantly, petitioner did not comply with the two-notice rule required by law to validate an employees dismissal from service, that is, a written notice stating the cause for termination and a written notice of the intention to terminate employment stating clearly the reason therefor.883[26]

We find no merit in the petition.

The validity of an employees dismissal from service hinges on the satisfaction of the two substantive requirements for a lawful termination. These are, first, whether the employee was accorded due process the basic components of which are the opportunity to be heard and to defend himself. This is the procedural aspect. And second, whether the dismissal is for any of the causes provided in the Labor Code of the Philippines. This constitutes the substantive aspect.884[27]

With respect to due process requirement, the employer is bound to furnish the employee concerned with two (2) written notices before termination of employment can be legally effected. One is the notice apprising the employee of the particular acts or omissions for which his dismissal is sought and this may loosely be considered as the proper charge. The other is the notice informing the employee of the managements decision to sever his employment. This decision, however, must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge, thereby giving him ample opportunity to be heard and defend himself with the assistance of his representative should he so desire. The requirement of notice, it has been stressed, is not a mere technicality but a requirement of due process to which every employee is entitled.885[28]

In this case, we find that Clomas dismissal from service did not comply with this basic precept.

We recall that the notice of termination served by petitioner on Cloma cites three reasons why the management has arrived at the decision to dismiss him from service: first, his absence from work for two (2) days without prior notice and approval; second, his act of barging into the premises of the Outright Division and threatening the members of the said division with bodily harm if they did not stop doing their work; and third, his frequent tardiness in reporting for work.

Certainly, nowhere in the records does it appear that Cloma attempted to deny these allegations, yet it is equally certain that the records do not contain any suggestion that petitioner, with respect to these three grounds with which Cloma is charged, has tried to notify the latter of the said charges. Indeed, we find that petitioner has not complied with the basic requirement of serving a pre-dismissal notice on Cloma. What is clear from the records is that the only notice that was given to Cloma prior to his termination is the May 20, 2000 notice of termination informing him that his employment in the company has been severed for the causes mentioned.

Be that as it may, petitioner insists that Cloma has been sufficiently informed of the acts constituting the grounds for his termination and that with respect thereto, ample opportunity was thereafter given to him to be heard thereon, only that he did not choose to avail of that opportunity. Petitioner seems to be referring to the May 15 and May 17, 2000 Suspension Orders which it previously served on Cloma. These orders, however, hardly constitute the first notice required by law prior to termination. Here is why: a fleeting glance at these two orders readily reveals that the alleged offenses mentioned therein were not to be used as grounds for termination, but rather merely

for suspension. The wording of the orders conveys the idea that as a result of his shortcomings, Cloma was going to be meted the penalty of suspension in accordance with the provisions of the companys rules and regulations, but not that he might be dismissed from service upon the same grounds. There is not an allusion in the said orders that petitioner was giving Cloma sufficient opportunity to submit his defenses or explanation. Instead, what it implies is that the management has already decided, for causes stated therein, to suspend Cloma from work in the company, and nothing more.

Moreover, the May 15, 2000 Order, in particular, could not have constituted the first notice relative to the charge that Cloma has incurred unauthorized absences for two days as stated in the notice of termination. This, inasmuch as the order refers to a four (4)day absence supposedly incurred between May 12, 2000 and May 15, 2000 for which Cloma has actually been sanctioned with suspension. In this regard, it suffices to say that even assuming that the May 15, 2000 order could validly take the place of the first notice, still, Clomas dismissal cannot be validly effected, because an employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment.886[29] The same is true with the third ground of termination, i.e., that Cloma has frequently been late in reporting for work. Observably, aside from the fact that Cloma, with respect to this ground, has not been furnished a pre-dismissal notice, the notice of termination does not state the inclusive dates on which Cloma actually reported late for his work.

Moreover, we agree with the Court of Appeals that not only did petitioner fail to comply with the procedural due process requirements in terminating Clomas employment, but also that petitioner has not overcome the quantum of substantial evidence needed to establish the existence of just causes for dismissal in this case. With respect to the charges of frequent tardiness and incurring an unauthorized two-day leave of absence, it is plain in the records that the same have not been sufficiently proved by petitioner. For one, petitioner could not identify the dates when Cloma incurred the alleged tardiness in reporting for work. Add to that the fact that Clomas daily time records, which would have been the best evidence on the matter, have not been made of record when they are actually within petitioners power to produce and submit at the trial. The same applies to the charge of unauthorized absences.

Finally, anent the charge that Cloma had terrorized the staff of the Outright Division and incited a work stoppage, it is clear, from the May 17, 2000 suspension order, that he has already been penalized with suspension for this offense and, hence, this act may no longer be added to support the imposition of the ultimate penalty of dismissal from service nor may it be used as an independent ground to that end.887[30]

All told, we find that no error has been committed by the Court of Appeals in ruling that Clomas dismissal from service was both without just cause and without due process of law.

WHEREFORE, the petition is DENIED. The February 16, 2005 Decision of the Court of Appeals in CAG.R. SP No. 80027, affirming the February 28, 2003 Resolution of the National Labor Relations Commission in NLRC NCR CA No. 028711-01, is hereby AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice Chairperson

ANTONIO EDUARDO B. NACHURA Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE CATRAL MENDOZA Associate Justice

ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO Associate Justice Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

Republic of the Philippines Supreme Court Manila

FIRST DIVISION

NEW PUERTO COMMERCIAL RICHARD LIM, Petitioners,

and

G.R. No. 169999

Present: CORONA, C. J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, DEL CASTILLO, and PEREZ, JJ.

- versus -

RODEL LOPEZ and FELIX GAVAN, Promulgated: July 26, 2010

Respondents.

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

DECISION

DEL CASTILLO, J.:

In order to validly dismiss an employee, he must be accorded both substantive and procedural due process by the employer. Procedural due process requires that the employee be given a notice of the charge against him, an ample opportunity to be heard, and a notice of termination. Even if the aforesaid procedure is conducted after the filing of the illegal dismissal case, the legality of the dismissal, as to its procedural aspect, will be upheld provided that the employer is able to show that compliance with these requirements was not a mere afterthought.

This Petition for Review on Certiorari seeks to reverse and set aside the Court of Appeals (CAs) June 2, 2005 Decision888[1] in CA-G.R. SP. No. 83577, which affirmed with modification the October 28, 2003 Decision889[2] of the National Labor Relations Commission (NLRC) in NCR CA No. 034421-03, and the September 23, 2005 Resolution890[3]

denying petitioners motion for partial reconsideration.

Factual Antecedents

Petitioner New Puerto Commercial hired respondent Felix Gavan (Gavan) as a delivery panel driver on February 1, 1999 and respondent Rodel Lopez (Lopez) as roving salesman on October 12, 1999. Petitioner Richard Lim is the operations manager of New Puerto Commercial.

Under a rolling store scheme, petitioners assigned respondents to sell goods stocked in a van on cash or credit to the sari-sari stores of far-flung barangays and municipalities outside Puerto Princesa City, Palawan. Respondents were duty-bound to collect the accounts receivables and remit the same upon their return to petitioners store on a weekly basis.

On November 3, 2000, respondents filed a Complaint891[4] for illegal dismissal and non-payment of monetary benefits against petitioners with the Regional Office of the Department of Labor and Employment in Puerto Princesa City. On November 20, 2000, a conciliation conference was held but the parties failed to reach an amicable settlement. As a result, the complaint was endorsed for compulsory arbitration at the Regional Arbitration Branch of the NLRC on February 13, 2001.

Previously or on November 28, 2000, petitioners sent respondents notices to explain why they should not be dismissed for gross misconduct based on (1) the alleged misappropriation of their sales collections, and (2) their absence without leave for more than a month. The notice also required respondents to appear before petitioners lawyer on December 2, 2000 to give their side with regard to the foregoing charges. Respondents refused to attend said hearing.

On December 6, 2000, petitioners filed a complaint for three counts of estafa before the prosecutors office against respondents in connection with the alleged misappropriation of sales collections.

Thereafter, petitioners sent another set of notices to respondents on December 7, 2000 to attend a hearing on December 15, 2000 but respondents again refused to attend. On December 18, 2000, petitioners served notices of termination on respondents on the grounds of gross misconduct and absence without leave for more than one month.

On February 5, 2001, an information for the crime of estafa was filed by the city prosecutor against respondents with the Municipal Trial Court in Puerto Princesa City.

In due time, the parties submitted their respective position papers.

Labor Arbiters Ruling

On August 29, 2002, Labor Arbiter Cresencio G. Ramos, Jr. rendered a Decision892[5] dismissing the complaint for illegal dismissal but ordering petitioners to pay respondents proportionate 13th month pay:

WHEREFORE, in the light of the foregoing premises, the above case for illegal dismissal is hereby DISMISSED for being devoid of legal merit. Respondents, however, are directed to pay herein complainants their proportionate 13th month pay for the year 2002893[6] [sic] as follows: (1.) (2.) Rodel Lopez- P2,998.67 Felix Gavan- P2,998.67

SO ORDERED.894[7]

The Labor Arbiter ruled that there is substantial evidence tending to establish that respondents committed the misappropriation of their sales collections from the rolling store business. These acts constituted serious misconduct and formed sufficient bases for loss of confidence which are just causes for termination. The records also showed that respondents were given opportunities to explain their side. Both substantive and procedural due processes were complied with, hence, the dismissal is valid. Petitioners, however, failed to prove that they paid the proportionate amount of 13th month pay due to respondents at the time of their dismissal. Thus, the Labor Arbiter ordered petitioners to pay respondents the same.

National Labor Relations Commissions Ruling

On October 28, 2003, the NLRC rendered a Decision affirming the ruling of the Labor Arbiter, viz:

WHEREFORE, the appeal is DENIED. The Decision of the Labor Arbiter dated August 29, 2002 is AFFIRMED en toto.

SO ORDERED.895[8]

The NLRC agreed with the Labor Arbiter that respondents act of misappropriating company funds constitutes gross misconduct resulting in loss of confidence. It noted that respondents never denied that (1) they failed to surrender their collections to petitioners, and (2) they stopped reporting for work during the last week of October 2000. Further, respondents admitted misappropriating the subject collections before the hearing officer of the Palawan labor office during the

conciliation conference on November 20, 2000. The NLRC also observed that the investigation on the misappropriation of company funds was not a mere afterthought and complied with the twin-notice rule. Last, it ruled that damages cannot be awarded in favor of respondents because their dismissal was for just causes.

Court of Appeals Ruling

The CA, in its June 2, 2005 Decision, affirmed with modification the ruling of the NLRC, viz:

WHEREFORE, in view of the foregoing, the Decision of the NLRC dated 29 August 2002896[9] is hereby MODIFIED in that private respondents are ordered to pay petitioners nominal damages of P30,000.00 each. The decision is affirmed in all other respect. SO ORDERED.897[10]

The appellate court held that it was bound by the factual findings of the NLRC because a petition for certiorari is limited to issues of want or excess of jurisdiction, or grave abuse of discretion. Thus, the failure of respondents to report for work and their misappropriation of company funds have become settled. These acts constitute grave misconduct which is a valid cause for termination under Article 282 of the Labor Code.

While the dismissal was for just cause, the appellate court found, however, that respondents were denied procedural due process. It held that the formal investigation of respondents for misappropriation of company funds was a mere afterthought because it was conducted after petitioners had notice of the complaint filed before the labor office in Palawan. In consonance

with the ruling in Agabon v. National Labor Relations Commission,898[11] respondents are entitled to an award of

P30,000.00 each as nominal damages for failure of petitioners to comply with the twin requirements of notice and hearing before dismissing the respondents.

From this decision, only petitioners appealed.

Issues

Petitioners raise the following issues for our resolution:

1.

Whether x x x the Court of Appeals erred in construing that the investigation held by petitioners is an afterthought; and

2.

Whether x x x the Court of Appeals erred in awarding the sum of P30,000.00 each to the respondents as nominal damages.899[12]

Petitioners Arguments

Petitioners contend that the investigation of respondents was not an afterthought. They stress the following peculiar circumstances of this case: First, when the labor complaint was filed on November 3, 2000, respondents had not yet been dismissed by petitioners. Rather, it was respondents who were guilty of not reporting for work; Lopez starting on October 23, 2000 and Gavan on October 28, 2000. Second, at this time also, petitioners were still in the process of collecting evidence on the alleged misappropriation of company funds after they received reports of respondents fraudulent acts. Considering the distance between the towns serviced by respondents and Puerto Princesa City, it took a couple of weeks for petitioners representative, Armel Bagasala (Bagasala), to unearth the anomalies committed by respondents. Thus, it was only on November 18, 2000 when Bagasala finished the investigation and submitted to petitioners the evidence establishing that respondents indeed misappropriated company funds. Naturally, this was the only time when they could begin the formal investigation of respondents wherein they followed the twin-notice rule and which led to the termination of respondents on December 18, 2000 for gross misconduct and absence without leave for more than a month.

Petitioners lament that the filing of the labor complaint on November 3, 2000 was purposely sought by respondents to pre-empt the results of the then ongoing investigation after respondents got wind that petitioners were conducting said investigation because respondents were reassigned to a different sales area during the period of investigation.

Respondents Arguments

Respondents counter that their abandonment of employment was a concocted story. No evidence was presented, like the daily time record, to establish this claim. Further, the filing of the illegal dismissal complaint negates abandonment. Assuming arguendo that respondents abandoned their work, no proof was presented that petitioners served a notice of abandonment at respondents last known addresses as required by Section 2, Rule XVI, Book V of the Omnibus Rules Implementing the Labor Code. According to respondents, on November 3, 2000, petitioners verbally advised them to look for another job because the company was allegedly suffering from heavy losses. For this reason, they sought help from the Palawan labor office which recommended that they file a labor complaint.

Respondents also contest the finding that they misappropriated company funds. They claim that the evidence is insufficient to prove that they did not remit their sales collections to petitioners. Neither were the minutes of the proceedings before the labor officer presented to prove that they admitted misappropriating the company funds. Respondents add that they did not hold a position of trust and confidence. They claim that the criminal cases for estafa against respondents were belatedly filed in order to further justify their dismissal from employment and act as leverage relative to the subject labor case they filed against petitioners.

Our Ruling

The petition is meritorious.

When the requirements of procedural due process are satisfied, the award of nominal damages is improper.

At the outset, we note that respondents did not appeal from the decision of the CA which found that, as to the issue of substantive due process, the dismissal was valid because it was based on just causes (i.e., grave misconduct and loss of trust and confidence) due to respondents misappropriation of their sales collections. Thus, the only proper issue for our determination, as raised in the instant petition, is whether respondents were denied procedural due process justifying the award of nominal damages in accordance with the ruling in Agabon v. National Labor Relations Commission.900[13]

In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employers decision to dismiss him. The requirement of a hearing is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.901[14] As we explained in Perez v. Philippine Telegraph and Telephone Company:902[15] An employees right to be heard in termination cases under Article 277 (b) as implemented by Section 2 (d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the charges against him and to submit evidence in support thereof.

A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy. To be heard does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings. Therefore, while the phrase ample opportunity to be heard [in Article 277 of the Labor Code] may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal trial-type hearing, although preferred, is not absolutely necessary to satisfy the employee's right to be heard.903[16]

In the instant case, the appellate court ruled that there are two conflicting versions of the events and that, in a petition for certiorari under Rule 65 of the Rules of Court, the courts are precluded from resolving factual issues. Consequently, the factual findings of the Labor Arbiter, as affirmed by the NLRC, that petitioners stopped reporting from work and misappropriated their sales collection are binding on the courts. However, the CA found that respondents were denied their right to procedural due process because the investigation held by petitioners was an afterthought considering that it was called after they had notice of the complaint filed before the labor office in Palawan.904[17]

Indeed, appellate courts accord the factual findings of the Labor Arbiter and the NLRC not only respect but also finality when supported by substantial evidence.905[18] The Court does not substitute its own judgment for that of the tribunal in determining where the weight of evidence lies or what evidence is credible. It is not for the Court to re-examine conflicting evidence, re-evaluate the credibility of the witnesses nor substitute the findings of fact of an administrative tribunal which has gained expertise in its specialized field.906[19]

However, while we agree with the CA that the labor tribunals factual determinations can no longer be disturbed for failure of respondents to show grave abuse of discretion on the part of the Labor Arbiter and NLRC, as in fact respondents effectively accepted these findings by their failure to appeal from the decision of the CA, we find that the appellate court misapprehended the import of these factual findings. For if it was duly established, as affirmed by the appellate court itself, that respondents failed to report for work starting from October 22, 2000 for respondent Lopez and October 28, 2000 for respondent Gavan,907[20] then at the time of the filing of the complaint with the labor office on November 3, 2000, respondents were not yet dismissed from employment. Prior to this point in time, there was, thus, no necessity to comply with the twin requirements of notice and hearing.

The mere fact that the notices were sent to respondents after the filing of the labor complaint does not, by itself, establish that the same was a mere afterthought. The surrounding circumstances of this case adequately explain why the requirements of procedural due process were satisfied only after the filing of the labor complaint. Sometime in the third week of October 2000, petitioners received information that respondents were not remitting their sales collections to the company. Thereafter, petitioners initiated an investigation by sending one of their trusted salesmen, Bagasala, in the route being serviced by respondents. To prevent a possible cover up, respondents were temporarily reassigned to a new route to service. Subsequently, respondents stopped reporting for work (i.e., starting from October 22, 2000 for respondent Lopez and October 28, 2000 for respondent Gavan) after they got wind of the fact that they were being investigated for misappropriation of their sales collection, and, on November 3, 2000, respondents filed the subject illegal dismissal case to pre-empt the outcome of the ongoing investigation. On November 18, 2000, Bagasala returned from his month-long investigation in the far-flung areas previously serviced by respondents and reported that respondents indeed failed to remit P2,257.03 in sales collections. As a result, on November 28, 2000, termination proceedings were commenced against respondents by sending notices to explain with a notice of hearing scheduled on December 2, 2000. As narrated earlier, respondents failed to give their side despite receipt of said notices. Petitioners sent another set of notices to respondents on December 7, 2000 to attend a hearing on December 15, 2000 but respondents again refused to attend. Thus, on December 18, 2000, petitioners served notices of termination on respondents for gross misconduct in misappropriating their sales collections and absence without leave for more than a month.

As can be seen, under the peculiar circumstances of this case, it cannot be concluded that the sending of the notices and setting of hearings were a mere afterthought because petitioners were still awaiting the report from Bagasala when respondents pre-empted the results of the ongoing investigation by filing the subject labor complaint. For this reason, there was sufficient compliance with the twin requirements of notice and hearing even if the notices were sent and the hearing conducted after the filing of the labor complaint. Thus, the award of nominal damages by the appellate court is improper.

WHEREFORE, the petition is GRANTED. The June 2, 2005 Decision and September 23, 2005 Resolution in CAG.R. SP. No. 83577 are REVERSED and SET ASIDE. The October 28, 2003 Decision of the National Labor Relations Commission in NCR CA No. 034421-03 is REINSTATED and AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO Associate Justice

WE CONCUR:

RENATO C. CORONA Chief Justice Chairperson

PRESBITERO J. VELASCO, JR. Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

JOSE PORTUGAL PEREZ Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice Republic of the Philippines Supreme Court Manila

SECOND DIVISION

CENTRAL AZUCARERA DE TARLAC, Petitioner, Present: G.R. No. 188949

CARPIO, J., - versus Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ. CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU, Respondent. July 26, 2010 Promulgated:

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

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision908[1] dated May 28, 2009, and the Resolution909[2] dated July 28, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 106657.

The factual antecedents of the case are as follows:

Petitioner is a domestic corporation engaged in the business of sugar manufacturing, while respondent is a legitimate labor organization which serves as the exclusive bargaining representative of petitioners rank-and-file employees. The controversy stems from the interpretation of the term basic pay, essential in the computation of the 13 -month pay.
th

The facts of this case are not in dispute. In compliance with Presidential Decree (P.D.) No. 851, petitioner granted its employees the mandatory thirteenth (13 ) - month pay since 1975. The formula used by petitioner in computing the 13 -month pay was: Total Basic Annual Salary divided by twelve (12). Included in petitioners computation of the Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and sick leaves for each year. Throughout the years, petitioner used this computation until 2006.910[3]
th th

On November 6, 2004, respondent staged a strike. During the pendency of the strike, petitioner declared a temporary cessation of operations. In December 2005, all the striking union members were allowed to return to work. Subsequently, petitioner declared another temporary cessation of operations for the months of April and May 2006. The suspension of operation was lifted on June 2006, but the rank-and-file employees were allowed to report for work on a fifteen (15) day-per-month rotation basis that lasted until September 2006. In December 2006, petitioner gave the employees their 13 -month pay based on the employees total earnings during the year divided by 12.911[4]
th

Respondent objected to this computation. It averred that petitioner did not adhere to the usual computation of the 13 -month pay. It claimed that the divisor should have been eight (8) instead of 12, because the employees worked for only 8 months in 2006. It likewise asserted that petitioner did not observe the company practice of giving its employees the guaranteed amount equivalent to their one month pay, in instances where the computed 13 -month pay was less than their basic monthly pay.912[5]
th th

Petitioner and respondent tried to thresh out their differences in accordance with the grievance procedure as provided in their collective bargaining agreement. During the grievance meeting, the representative of petitioner explained that the change in the computation of the 13 -month pay was intended to rectify an error
th

in the computation, particularly the concept of basic pay which should have included only the basic monthly pay of the employees.913[6]

For failure of the parties to arrive at a settlement, respondent applied for preventive mediation before the National Conciliation and Mediation Board. However, despite four (4) conciliatory meetings, the parties still failed to settle the dispute. On March 29, 2007, respondent filed a complaint against petitioner for money claims based on the alleged diminution of benefits/erroneous computation of 13 -month pay before the Regional Arbitration Branch of the National Labor Relations Commission (NLRC).914[7]
th

On October 31, 2007, the Labor Arbiter rendered a Decision915[8] dismissing the complaint and declaring that the petitioner had the right to rectify the error in the computation of the 13 -month pay of its employees.916[9] The fallo of the Decision reads:
th

WHEREFORE, premises considered, the complaint filed by the complainants against the respondents should be DISMISSED with prejudice for utter lack of merit.

SO ORDERED.917[10]

Respondents filed an appeal. On August 14, 2008, the NLRC rendered a Decision918[11] reversing the Labor Arbiter. The dispositive portion of the Decision reads:

WHEREFORE, the decision appealed is reversed and set aside and respondent-appellee Central Azucarera de Tarlac is hereby ordered to adhere to its established practice of granting th 13 [-] month pay on the basis of gross annual basic which includes basic pay, premium pay for work in rest days and special holidays, night shift differential and paid vacation and sick leaves for each year.

Additionally, respondent-appellee is ordered to observe the guaranteed one[-]month th pay by way of 13 month pay.

SO ORDERED. 919[12]

Petitioner filed a motion for reconsideration. However, the same was denied in a Resolution dated November 27, 2008. Petitioner then filed a petition for certiorari under Rule 65 of the Rules of Court before the CA.920[13] On May 28, 2009, the CA rendered a Decision921[14] dismissing the petition, and affirming the decision and resolution of the NLRC, viz.:

WHEREFORE, the foregoing considered, the petition is hereby DISMISSED and the assailed August 14, 2008 Decision and November 27, 2008 Resolution of the NLRC, are hereby AFFIRMED. No costs.

SO ORDERED.922[15]

Aggrieved, petitioner filed the instant petition, alleging that the CA committed a reversible error in affirming the Decision of the NLRC, and praying that the Decision of the Labor Arbiter be reinstated.

The petition is denied for lack of merit.

The 13 -month pay mandated by Presidential Decree (P.D.) No. 851 represents an additional income based on wage but not part of the wage. It is equivalent to one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. All rank-and-file employees, regardless of their designation or employment status and irrespective of the method by which their wages are paid, are entitled to this benefit, provided that they have worked for at least one month during the calendar year. If the employee worked for only a portion of the year, the 13 -month pay is computed pro rata.923[16]
th

th

Petitioner argues that there was an error in the computation of the 13 -month pay of its employees as a result of its mistake in implementing P.D. No. 851, an error that was discovered by the management only when respondent raised a question concerning the computation of the employees 13 -month pay for 2006. Admittedly, it was an error that was repeatedly committed for almost thirty (30) years. Petitioner insists that the length of time during which an employer has performed a certain act beneficial to the employees, does not prove that such an act was not done in error. It maintains that for the claim of mistake to be negated, there must be a clear showing that the employer had freely, voluntarily, and continuously performed the act, knowing that he is under no obligation to do so. Petitioner asserts that such voluntariness was absent in this case.924[17]
th

th

The Rules and Regulations Implementing P.D. No. 851, promulgated on December 22, 1975, defines 13 month pay and basic salary as follows:

th

Sec. 2. Definition of certain terms. - As used in this issuance:

(a) an

"Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of employee within a calendar year;

(b) "Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.

On January 16, 1976, the Supplementary Rules and Regulations Implementing P.D. No. 851 was issued. The Supplementary Rules clarifies that overtime pay, earnings, and other remuneration that are not part of the basic salary shall not be included in the computation of the 13 -month pay.
th

On November 16, 1987, the Revised Guidelines on the Implementation of the 13 -Month Pay Law was issued. Significantly, under this Revised Guidelines, it was specifically stated that the minimum 13 -month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.
th

th

Furthermore, the term basic salary of an employee for the purpose of computing the 13 -month pay was interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13 -month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.
th

th

Based on the foregoing, it is clear that there could have no erroneous interpretation or application of what is included in the term basic salary for purposes of computing the 13 -month pay of employees. From the inception of P.D. No. 851 on December 16, 1975, clear-cut administrative guidelines have been issued to insure uniformity in the interpretation, application, and enforcement of the provisions of P.D. No. 851 and its implementing regulations.
th

As correctly ruled by the CA, the practice of petitioner in giving 13 -month pay based on the employees gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn.

th

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten. 925[18] The rule against diminution of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened into a practice over a long period of time and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is done soon after discovery of the error.926[19]

The argument of petitioner that the grant of the benefit was not voluntary and was due to error in the interpretation of what is included in the basic salary deserves scant consideration. No doubtful or difficult question

of law is involved in this case. The guidelines set by the law are not difficult to decipher. The voluntariness of the grant of the benefit was manifested by the number of years the employer had paid the benefit to its employees. Petitioner only changed the formula in the computation of the 13 -month pay after almost 30 years and only after the dispute between the management and employees erupted. This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith.
th

Furthermore, petitioner cannot use the argument that it is suffering from financial losses to claim exemption from the coverage of the law on 13 -month pay, or to spare it from its erroneous unilateral computation of the 13 -month pay of its employees. Under Section 7 of the Rules and Regulations Implementing P.D. No. 851, distressed employers shall qualify for exemption from the requirement of the Decree only upon prior authorization by the Secretary of Labor.927[20] In this case, no such prior authorization has been obtained by petitioner; thus, it is not entitled to claim such exemption.
th th

WHEREFORE, the Decision dated May 28, 2009 and the Resolution dated July 28, 2009 of the Court of Appeals in CA-G.R. SP No. 106657 are hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice Chairperson

DIOSDADO M. PERALTA Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE CATRAL MENDOZA Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO Associate Justice Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice Republic of the Philippines

Supreme Court Manila

THIRD DIVISION

LYDIA ESCARCHA, for and in behalf of JOSEPH ERWIN M. ESCARCHA, SHEILA MAY ESCARCHA, and ALYSSA M. ESCARCHA, Petitioner,

G.R. No. 182740

Present:

CARPIO MORALES, J., Chairperson, versus BRION, BERSAMIN, ABAD, and LEONIS NAVIGATION CO., INC. and/or WORLD MARINE PANAMA, S.A., Respondents. VILLARAMA, JR., JJ.

Promulgated:

July 5, 2010 x-----------------------------------------------------------------------------------------x DECISION BRION, J.:

We review in this petition for review on certiorari928[1] the October 17, 2007 decision929[2] and the April 29, 2008 resolution930[3] of the Court of Appeals (CA) in CA-G.R. SP No. 98719 that reversed and set aside

the December 29, 2006931[4] and the March 12, 2007932[5] resolutions of the National Labor Relations Commission (NLRC). The NLRC resolutions, in turn, reversed the Labor Arbiters decision,933[6] dismissing the complaint for death compensation benefits of petitioner Lydia Escarcha, for and in behalf of Joseph Erwin Escarcha, Sheila May Escarcha, and Alyssa Escarcha (collectively, the petitioners).

ANTECEDENT FACTS

On February 16, 1999, Eduardo S. Escarcha (Eduardo) entered into a one-year contract of employment with Leonis Navigation Company, Inc. and World Marine Panama, S.A. (collectively, the respondents). He was employed as a First Engineer on board the M.V. Diamond Glory with a basic monthly salary of US$950.00.934[7] Eduardo submitted himself to the required Pre-Employment Medical Examination (PEME), and was pronounced fit to work by the company-designated physician.935[8] He boarded the M.V. Diamond Glory on March 11, 1999.

Sometime in April 1999 (or roughly a month after coming on board), Eduardo became ill while M.V. Diamond Glory was on its way to New Orleans. On May 3, 1999, Eduardo was brought to the Touro Infirmary when M.V. Diamond Glory docked at the port of New Orleans. Eduardo was found to be suffering from serious febrile illness. He was also declared unfit for regular duty and unfit to travel.936[9]

Eduardos condition worsened despite medical attention, and he became comatose. The attending physician, Dr. James R. Patterson (Dr. Patterson), found Eduardo to be suffering from advanced mycobacterium

tuberculosis, advanced Human Immunodeficiency Virus (HIV) disease, cardiac dysrhythmias, and anemia. Dr. Pattersons discharge summary also stated that Eduardos Acquired Immune Deficiency Syndrome (AIDS) was under treatment.937[10]

On June 17, 1999, Eduardo was repatriated to the Philippines, and was confined at the San Lazaro Hospital for further treatment and evaluation. He was discharged from the hospital after one and a half months, but was ordered to report back for a series of medical check-ups.

Despite continued treatment, Eduardo died on June 9, 2001 (approximately two years after repatriation). The death certificate listed pneumonia as the immediate cause; Pulmonary Tuberculosis, Tuberculosis Meningitis, Disseminated Candidiasis, Anemia Secondary to Chronic Disease, Wasting Syndrome, Scabies, and Seborrheic Dermatitis as antecedent causes; and AIDS as underlying cause.938[11]

At the time of his death, Eduardo left behind his wife Lydia, and their three children Joseph Erwin, Sheila May, and Alyssa.

The petitioners demanded the payment of death benefits from the respondents which refused to grant the demand. The petitioners then sought the assistance of the Associated Marine Officers and Seamens Union of the Philippines, Eduardos labor union, in pursuing their claim. A series of grievance meetings was held which proved unfruitful. With the failure of conciliation, the petitioners proceeded to file their complaint for death compensation benefits against the respondents with the NLRC.

THE LABOR ARBITRATION RULINGS

Labor Arbiter Jose G. de Vera (LA de Vera) dismissed the petitioners complaint.939[12] He held that Eduardos illness was pre-existing; Eduardo was already afflicted with HIV when he boarded the respondents vessel. LA de Vera noted that Eduardo admitted to Nigel Griffiths (Griffiths), a foreign nurse, that he had concealed his condition from the respondents.

The NLRC, in its resolution of December 29, 2006,940[13] set aside LA de Veras decision and ordered the respondents to pay US$60,000.00 death benefits to Eduardos wife, Lydia, and US$15,000.00 death benefits to each of their three children.

The NLRC held that LA de Vera erred in concluding that Eduardos illness was pre-existing based on (1) the result of the HIV test conducted by the National Reference Testing Center for HIV Testing, and (2) Griffiths report. It did not consider the HIV test result as competent evidence of a pre-existing HIV condition, as it did not mention Eduardos name, nor did it particularly state that an HIV test was conducted on Eduardo. The NLRC noted that the respondents failed to corroborate their allegation that Eduardo deliberately shopped for agencies that required a PEME without HIV testing. Similarly, the NLRC declared Griffiths report without evidentiary value as it was unsigned.

The NLRC further ruled that Eduardos illness was aggravated by his employment. As First Engineer, Eduardo monitored the ships engine on a daily basis; he was responsible for its mechanical propulsion, maintenance, and operation. He also supervised welding job orders. In undertaking these tasks, he was exposed to various engine toxics and deleterious residues and substances such as metallic iron, oxides, asbestos and carbon monoxides.

The respondents moved for the reconsideration of this resolution, but the NLRC dismissed their motion in its resolution of March 12, 2007.941[14]

THE CA DECISION

The respondents filed a petition for certiorari before the CA, docketed as CA-G.R. SP No. 98719. While the respondents petition was pending, the petitioners moved for the execution of the NLRC resolutions. Despite the respondents opposition, the labor arbiter issued a writ of execution. To prevent the execution of the NLRCs judgment, the respondents agreed to pay the petitioners P4,737,810.00, without prejudice to the outcome of their

petition for certiorari before the CA. The petitioners, in turn, agreed to desist from pursuing the execution proceedings they initiated.942[15]

The CA reversed and set aside the NLRC resolutions.943[16] According to the CA, death arising from a pre-existing illness is not compensable. Although Eduardo was pronounced fit to work after undergoing the PEME, the CA declared the PEME result unreliable to determine a persons real state of health because a PEME is not exploratory. Thus, the CA held that the petitioners cannot be compensated for Eduardos death because the latter did not disclose that he was already afflicted with HIV when he applied for the position of first engineer. Moreover, the petitioners failed to show a reasonable connection between Eduardos work and his sickness, or that the working conditions increased the risk of contracting the disease.

The petitioners moved for the reconsideration of this decision, but the CA denied their motion in its resolution of April 29, 2008.944[17]

THE PETITION FOR REVIEW ON CERTIORARI

The petitioners allege that the CA erred in denying the award of death compensation benefits.

The petitioners argue that Eduardo had no pre-existing illness because he underwent a PEME and was declared fit to work. In addition, the petitioners claim that a reasonable connection existed between Eduardos work and the illnesses that caused his death. In fact, pneumonia and pulmonary tuberculosis are listed as compensable illnesses. Even if it were otherwise, the petitioners contend it was not necessary to prove the workrelatedness of Eduardos illnesses. Unlike the 2000 Philippine Overseas Employment Agency (POEA) Standard Employment Contract (SEC), the 1996 POEA-SEC, which governs Eduardos employment contract with the respondents, does not require proof of work-relatedness as condition sine qua non for the claim of death compensation benefits. It is enough that death occur during the term of the contract.

In their Comment,945[18] the respondents maintain that death benefits are not payable if the death occurred beyond the term of the employment contract or if the deceased fraudulently concealed his real state of health. The respondents likewise pray that the petitioners be ordered to return the amount of P4,737,810.00.

THE COURTS RULING

We do not find the petition meritorious.

The Rule on Death Benefits

POEA Memorandum Circular No. 055-96 or the Revised Standard Employment Terms and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-going Vessels946[19] provides for the minimum requirements for Filipino seafarers overseas employment. Section 20(A) of the 1996 POEA-SEC, which is based on POEA Memorandum Circular No. 055-96, clearly states:

Section 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR DEATH

1. In case of death of the seafarer during the term of his contract, the employer shall pay his beneficiaries the Philippine Currency equivalent to the amount of Fifty Thousand US dollars (US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to each child under the age of twenty-one (21) but not exceeding four (4) children, at the exchange rate prevailing during the time of payment.

x x x x

4. The other liabilities of the employer when the seafarer dies as a result of injury or illness during the term of employment are as follows:

a.

The employer shall pay the deceaseds beneficiary all outstanding obligations due the seafarer under this Contract.

b.

The employer shall transport the remains and personal effects of the seafarer to the Philippines at employers expense except if the death occurred in a port where local government laws or regulations do not permit the transport of such remains. In case death occurs at sea, the disposition of the remains shall be handled or dealt with in accordance with the masters best judgment. In all cases, the employer/master shall communicate with the manning agency to advise for disposition of seafarers remains.

c.

The employer shall pay the beneficiaries of the seafarer the Philippine currency equivalent to the amount of One Thousand US dollars (US$1,000) for burial expenses at the exchange rate prevailing during the time of payment. [Emphases supplied.]

Stated differently, for death of a seafarer to be compensable under this provision, the death must occur during the term of his contract of employment; it is the only condition for compensability. The employer is liable upon proof that the seaman died during the effectivity of his employment contract.947[20]

Corollary, Section 18(B) (1) of the 1996 POEA-SEC further provides that the employment of the seafarer is terminated when he signs-off and is disembarked for medical reasons pursuant to Section 20 (B) [4] of [the] Contract.948[21] In the present case, Eduardo was repatriated for medical reasons; he arrived in the Philippines on June 17, 1999, to undergo further evaluation and treatment after being diagnosed with advanced mycobacterium tuberculosis, advanced HIV disease, cardiac dysrhythmias, and anemia. Eduardos employment was therefore terminated upon his repatriation on June 17, 1999. Thus, when Eduardo died on June 9, 2001, approximately two (2) years after his repatriation, his employment with the respondents had long been terminated. As we held in Prudential Shipping and Management Corporation v. Sta. Rita:

The death of a seaman during the term of employment makes the employer liable to his heirs for death compensation benefits. Once it is established that the seaman died during the effectivity of his employment contract, the employer is liable. However, if the seaman dies after the termination of his contract of employment, his beneficiaries are not entitled to the death benefits enumerated above.949[22] [Emphasis supplied.]

The Collective Bargaining Agreement

The petitioners likewise cannot seek refuge from the Collective Bargaining Agreement (CBA)950[23] executed between the respondents and the Associated Marine Officers and Seamens Union of the Philippines, Eduardos sole bargaining representative. Section 1, Article XX of this CBA reads:

The Company shall pay to the covered Seafarers next-of-kin US$60,000.00 for death provided that such covered Seafarer dies while on board the ship, or while travelling to or from the Ship. x x x If the Union has paid a part of the death compensation in accordance with x x x SECTION 2 below, the Company shall pay the balance remaining x x x after deducting the amounts advanced by the Union to the Seafarers next-of-kin.951[24] [Emphases supplied.]

As earlier stated, Eduardo boarded the ship on March 11, 1999, and was repatriated on June 17, 1999. He died two years later on June 9, 2001. Clearly, Eduardo did not die on board the respondents ship, or while travelling to or from the ship, so as to entitle him to death compensation under the CBA. What legal basis the petitioners rely upon after admitting that Eduardo died two years after repatriation truly escapes us.

Work-relatedness Issues

The petitioners argue that work-relatedness of the illnesses that caused Eduardos death is not a material issue under the 1996 POEA-SEC, as it only requires that death occur during the term of the contract.952[25] We agree with this position, but given that Eduardo died two years after the termination of his employment contract, we see no point in belaboring this issue.

Alternatively, the petitioners argue that Eduardos death should be compensable because his work triggered the illnesses or worsened them.953[26]

Eduardos death which occurred two years after his repatriation is covered by a death certificate that listed pneumonia as the immediate cause; Pulmonary Tuberculosis, Tuberculosis Meningitis, Disseminated Candidiasis, Anemia Secondary to Chronic Disease, Wasting Syndrome, Scabies and Seborrheic Dermatitis as antecedent causes; and AIDS as underlying cause. Properly understood, these findings are significant as they point us to a definite conclusion on the issue of work-relatedness or work-aggravation.

Pneumonia, the immediate cause of Eduardos death, is listed under the Implementing Rules and Regulations of the Labor Code (ECC Rules) as an occupational disease. But for a disability or death from this cause to be compensable, all the following conditions must be satisfied:

(1) The *seafarers+ work must involve the risks described herein; (2) The disease was contracted as a result of the [seafarers] exposure to the described risks;

(3) The disease was contracted within a period of exposure and under such other factors necessary to contract it; [and]

(4) There was no notorious negligence on the part of the [seafarer]. [Emphases supplied.] Corollary, the ECC Rules specifically requires for compensability that pneumonia must have been contracted under the following conditions: (a) There must be an honest and definite history of wetting and chilling during the course of employment and also, of injury to the chest wall with or without rib fracture, or inhalation of noxious gases, fumes and other deleterious substances in the place of work. There must be a direct connection between the offending agent or event and the workers illness. The signs of consolidation should appear soon (within a few hours) and the symptoms of initial chilling and fever should at least be 24 hours after the injury or exposure. The patient must manifest any of the following symptoms within a few days of the accident: (1) severe chill and fever; (2) headache and pain, agonizing in character, in the side of the body; (3) short, dry, painful cough with blood-tinged expectoration; and (4) physical signs of consolidation, with fine rales.

(b)

(c)

(d)

Significantly, these are the very same conditions required under the POEA-SEC for pneumonia to be considered a compensable occupational disease.954[27] Our consideration of the attendant facts shows the petitioners failed to adduce evidence establishing these required conditions. On the contrary, the causes of Eduardos death, as shown by his death certificate, indicate that pneumonia was simply the final illness that immediately brought about Eduardos death. The long road to pneumonia started from an underlying cause AIDS that rendered him susceptible to the antecedent cause of tuberculosis, and to pneumonia as the immediate cause of death. This is discussed at length below in the discussion on AIDS. Suffice it to state for now that no evidence on record shows that Eduardos working conditions on board as a First Engineer caused the pneumonia that brought on his death two years after he had disembarked from his vessel.

Pulmonary Tuberculosis955[28] was listed as one of the antecedent causes of Eduardos death, i.e., it was a condition that led to or precipitated the immediate cause of his death, as recorded in the death

certificate.956[29] Related to pneumonia as the immediate cause of death, this means that Eduardos pneumonia directly sprang from and was directly linked and traceable to pulmonary tuberculosis, that in turn traced itself to AIDS. Parenthetically, tuberculosis is listed under the ECC Rules and the POEA-SEC as an occupational disease. Eduardo, however, was not engaged in any of the occupations where tuberculosis is a listed illness. Moreover, no evidence on record shows how Eduardos working conditions brought on or aggravated the tuberculosis that became the antecedent cause of his death two years after repatriation.

An underlying cause is defined by the World Health Organization as the disease or injury that initiated the train of events leading directly to death, or the circumstances of the accident or violence that produced the fatal injury.957[30] AIDS, described in Eduardos death certificate as the underlying cause of death, is a human disease characterized by a marked decrease of helper-induced T-lymphocyte cells, resulting in a general breakdown of the bodys immune system.958[31] In simpler terms, it is a disease that attacks a persons immune system, leaving it so damaged that certain diseases (opportunistic infections) or cancers develop. AIDS is the final and most serious stage of HIV infection,959[32] and it takes time for HIV to progress to AIDS.960[33]

According to the Merck Manual of Medical Information, the virus that causes AIDS can only be transmitted in the following ways: (a) sexual relation with an infected person; (b) injection or infusion of contaminated blood; and (c) transfer of the virus from an infected mother to a child before or during birth.961[34] HIV is not transmitted by casual contact or even by close, nonsexual contact at work, school or home. No contact of HIV transmission has been traced to the coughing or sneezing of an infected person or to a mosquito bite.962[35]

Opportunistic infections that develop with AIDS are infections by organisms that do not cause disease in people with healthy immune systems. Both the HIV infection and the opportunistic infections and cancers produce the symptoms of AIDS.963[36]

Pneumonia caused by the fungus Pneumocystis carinii is a common and recurring opportunistic infection in people with AIDS, and is the first opportunistic infection to develop. Tuberculosis is more frequent and deadlier in people who have HIV infection than in those who do not, and is difficult to treat if the strain of the

tuberculosis is resistant to antibiotics. Another mycobacterium, Mycobacterium avium complex, is a common cause of fever, weight loss, and diarrhea in people with the advanced disease.964[37]

AIDS is not listed as an occupational disease both under the POEA-SEC and the ECC Rules. Thus, the claimant bears the burden of reasonably proving the relationship between the work of the deceased and AIDS, or that the risk of contracting AIDS was increased by the working conditions of the deceased.

In the present case, we do not find Eduardos AIDS to have been work-related. Records have shown that it was a pre-existing illness that Eduardo did not disclose during his PEME with the respondents medical testing center.

The evidence reveals that Eduardo had undergone a previous PEME on October 29, 1997 (or two years before his deployment with the respondents) as a prerequisite for his employment with another agency Southfield Agencies (Southfield). The PEME was conducted by the PROBE Polyclinic and Diagnostic Center (PROBE), Southfields designated testing center. Dr. Laura S. Gonzales, the examining physician, found Eduardo positive for HIV, and declared him unfit for sea duty.965[38] Eduardo was then advised to proceed to the Department of Healths National Reference Testing Center for HIV Testing for further examination and tests. The National Reference Testing Center for HIV Testing confirmed the findings of PROBE, and declared Eduardo to be HIV positive.966[39]

Eduardo underwent another PEME, this time in relation to his application with the respondents in 1999 (or two years after PROBEs test). The PEME was conducted by the respondents designated testing center the Holy Angel Medical Clinic.967[40] Fortunately or unfortunately for Eduardo, this testing center did not require an AIDS clearance test, and he did not disclose that he had been tested HIV positive when he filled up the PEME form. In fact, he answered No to the question, Has applicant suffered from, or been told he had, any of the following conditions: x x x 21) Sexually Transmitted Disease.968[41] Thus, through a confluence of events a testing center that for some reason did not test a prospective seaman for AIDS, and the seamans own failure to disclose his affliction Eduardo was able to board the respondents vessel in March 1999 despite his HIV positive condition.

Records show that within a short two months after deployment with the respondents vessel, Eduardo was diagnosed to be suffering from, among others, advanced HIV. Dr. Patterson of the Touro Infirmary in New Orleans, where Eduardo was admitted in May 1999,969[42] mentioned in the Physicians Discharge Summary that Eduardos AIDS was under treatment; and that the [p]atient had a very stormy course related to his advanced HIV disease, which was discovered here, but which the patient knew about 18 months prior to

admission.970[43] Apparently, it was only at this point that the respondents came to fully know that Eduardo had AIDS.

The nature of HIV and AIDS negates the petitioners claim that the illnesses that caused Eduardos death were acquired during his employment on board the respondents vessel because he passed the companys PEME. Three reasons, already touched upon in the discussions above, militate against this claim.

First, the respondents testing center did not test for HIV, and Eduardo did not disclose his HIV positive condition. Under these circumstances, a PEME cannot lead to the conclusion that Eduardo was HIV-free when he boarded the respondents vessel and acquired his HIV/AIDS only while on board the vessel. We have had occasion to recognize in the past that a PEME, in the way it is conducted in the maritime industry, is generally not exploratory in nature, nor is it a totally in-depth and thorough examination of an applicants medical condition. The PEME, usually cursorily made, determines whether one is fit to work at sea or fit for sea service; it does not reveal the real state of health of an applicant.971[44] In the present case, the worthlessness of the respondents PEME for AIDS determination purposes is hardly disputable.

Second, from the causes of AIDS we pointed out above, it appears in the absence of any record of blood transfusion while on board that Eduardo acquired his AIDS through sexual relations with an infected person and not because of his brief two-month stay on board or of his working conditions during that period. As discussed above, HIV/AIDS, while communicable, can be transmitted only under specific conditions. By a process of elimination, Eduardo could have acquired his AIDS only through sexual transmission a claim made by the respondents, albeit through an unsigned report by a foreign nurse who was not available for examination during the arbitration and whose statement cannot therefore be appreciated as evidence.972[45]

Third, HIV/AIDS is a disease of the immune system that does not progress to the point of attracting opportunistic infections until the immune system has substantially been weakened by the progress of the disease. It does not reach this advanced stage in two months time as established medical literature shows. Eduardo did not succumb to the disease and the opportunistic infections it carried until after two years from the respondents discovery of the disease, and four years after he was tested positive by PROBE.

Based on these considerations, we cannot escape the conclusion that the petition is without merit and that the CA was correct when it reversed and set aside the NLRC award of death benefits to the petitioners as heirs of Eduardo. This is a conclusion that cannot be helped nor swayed by the intent of our laws and jurisprudence to be read liberally in their application to our overseas Filipino workers. Liberal construction is not a license to disregard the evidence on record or to misapply our laws.973[46] That the petitioners have now secured the execution of the NLRC decision involving a very sizeable sum is unfortunate, but is a situation that is not irremediable since the parties themselves agreed that this would be a live issue subject to the final outcome of the case.

WHEREFORE, premises considered, we DENY the petition for lack of merit, and accordingly AFFIRM the challenged decision and resolution of the Court of Appeals in CA-G.R. SP No. 98719. In light of this judgment, the petitioners are hereby ORDERED to RETURN the amount of Four Million Seven Hundred Thirty-Seven Thousand Eight Hundred Ten Pesos (P4,737,810.00) to the respondents. Costs against the petitioners.

SO ORDERED.

ARTURO D. BRION Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES Associate Justice Chairperson

LUCAS P. BERSAMIN Associate Justice

ROBERTO A. ABAD Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA

Chief Justice

Republic of the Philippines Supreme Court Manila

SECOND DIVISION

DANSART SECURITY FORCE & ALLIED SERVICES COMPANY and DANILO A. SARTE, Petitioners,

G.R. No. 168495

Present:

CARPIO, J., Chairperson, - versus NACHURA, PERALTA, ABAD, and MENDOZA, JJ. JEAN O. BAGOY,* Respondent. Promulgated:

July 2, 2010 x----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the Decision974[1] dated January 17, 2005 of the Court of Appeals (CA), in CA-G.R. SP No. 84758 reversing the judgment of the National Labor Relations Commission (NLRC), and the CA Resolution975[2] dated June 8, 2005 denying herein petitioner's motion for reconsideration, be reversed and set aside.

The undisputed facts are as follows.

Respondent Jean O. Bagoy was employed by Dansart Security Force and Allied Services Company to guard the establishments of its various clients such as Ironcorn, Chowking and Hindu Temple. However, from April 1999 until November 2001, respondent had allegedly been caught sleeping on the job and incurred absences without leave, for which he was given notices of disciplinary action.

On May 14, 2002, respondent filed with the Regional Arbitration Branch a Complaint976[3] against petitioners for underpayment of salaries and non-payment of overtime pay, holiday pay, premium pay, 13 month pay and service incentive leave pay. In her Position Paper, respondent alleged: (1) that she had been required to report for work daily from 7:00 a.m to 7:00 p.m. with a salary rate of P166.00 per day, which was increased to P180.00 in January 2001; (2) that she was required to work even on Sundays and holidays but was not paid holiday pay, 13 month pay and service incentive leave pay; and (3) that since December 2001, she had been on floating status, tantamount to constructive dismissal.
th th

Petitioners countered that it was respondent who abandoned her work beginning November 2001. Petitioners, likewise, presented several reports issued by the National Capital Region, Department of Labor and Employment (DOLE) stating that all mandatory wage increases and other related monetary benefits were complied with by petitioner security agency, in rebuttal of respondent's claim of non-payment of wages and benefits.

On January 31, 2003, the Labor Arbiter issued a Decision977[4] favorable to respondent with regard to her money claims, but did not rule on the issue

of illegal dismissal as this was not included in her complaint. The dispositive portion of the Decision reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondents Dansart Security Force and Allied Co. and/or Danilo Sarte to pay complainant Jean O. Bagoy the amount of ONE HUNDRED SEVENTY-NINE THOUSAND ONE HUNDRED NINETY-SIX PESOS (P179,196.00) representing [her] monetary awards as above-computed.

All other claims are DISMISSED for lack of merit.

SO ORDERED.978[5]

The foregoing Decision was appealed to the NLRC which in turn issued its Decision979[6] dated September 30, 2003, reversing the Labor Arbiter's ruling. The NLRC held that the DOLE reports, stating that petitioner security agency had been complying with all mandatory wage increases and other monetary benefits, should be given proper respect. The dispositive portion of the NLRC Decision is set forth hereunder:

WHEREFORE, in view of the foregoing, the Decision appealed from is hereby SET ASIDE and a new one entered declaring the complaint DISMISSED for lack of merit.

SO ORDERED.980[7]

Respondent moved for reconsideration of the NLRC Decision, but the same was denied in a Resolution981[8] dated February 20, 2004.

Respondent then filed a petition for certiorari with the CA under Rule 65 of the Rules of Court and, on January 17, 2005, the CA rendered the assailed Decision which disposed, thus:

WHEREFORE, premises considered, the present petition is hereby PARTLY GIVEN DUE COURSE and the writ prayed for, GRANTED. The challenged decision and resolution of the NLRC are hereby ANNULLED and SET ASIDE, and the Decision dated January 31, 2003 of Labor Arbiter Fatima Jambaro-Franco in NLRC NCR Case No. 00-06-03073-02 is hereby REINSTATED.

No pronouncement as to costs.

SO ORDERED.982[9]

Petitioners' motion for reconsideration of the above Decision was denied per Resolution of the Court of Appeals dated June 8, 2005. Hence, this petition where it is alleged that:

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO GIVE CONSIDERATION TO THE VALID AND CONCLUSIVE FINDINGS OF THE DEPARTMENT OF LABOR AND EMPLOYMENT THAT PETITIONER DID NOT VIOLATE THE LABOR STANDARDS PROVISIONS OF THE LABOR CODE.983[10]

The petition lacks merit.

The issue boils down to whether the DOLE Certifications should be considered as sufficient proof that petitioners paid respondent proper wages and all other monetary benefits to which she was entitled as an employee.

The foregoing question is a factual one which, as a general rule, cannot be entertained in a petition for review on certiorari where only questions of law are allowed.984[11] Considering, however, that the Labor Arbiter's findings were reversed by the NLRC, whose Decision was in turn overturned by the CA, reinstating the Labor Arbiter's Decision, it behooves the Court to re-examine the records and resolve the conflicting rulings.985[12]

The Labor Arbiter, as sustained by the CA, ruled that the DOLE reports stating that petitioners have not violated any provision of the Labor Code, nor is there any pending case with said government agency filed against the respondent as of May 16, 2002, and the Order of the DOLE Regional Director dated January 17, 2001 stating that petitioner security agency has complied with the payment of backwages for 279 guards, are insufficient to prove that petitioners have indeed paid respondent whatever is due her. On the other hand, the NLRC considered the very same pieces of evidence as substantial proof of payment.

Petitioners do not deny that said DOLE reports and Order are the only evidence they presented to prove payment of respondent's money claims. Petitioners only assail the weight ascribed by the Labor Arbiter and the CA to the evidence, asseverating that such documents from the DOLE must be given greater importance as the NLRC did.

The Court has repeatedly ruled that any doubt arising from the evaluation of evidence as between the employer and the employee must be resolved in favor of the latter.986[13] Moreover, it is settled jurisprudence that the burden of proving payment of monetary claims rests on the employer.987[14] Thus, as reiterated in G & M Philippines, Inc. v. Cuambot,988[15] to wit:

x x x one who pleads payment has the burden of proving it. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service incentive leave, and other claims of workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer. Thus, the burden of showing with legal certainty that the obligation has been discharged with payment falls on the debtor, in accordance with the rule that one who pleads payment has the burden of proving it. x x x 989[16]

In this case, petitioners failed to discharge such burden of proof.

The Certifications990[17] from the

DOLE stated that there are no pending labor cases against petitioners filed before said office, but said certifications do not cover cases filed before the National Labor Relations Commission and the National Conciliation and

Mediation Board. The Order991[18] dated January 17, 2001 issued by the DOLE, in fact, showed that in the year 2000, petitioner security agency was found to have committed the following violations: underpayment of overtime pay, underpayment of 13
th

month pay, underpayment of 5 days Service Incentive Leave Pay, and

underpayment of night shift differential pay. Then, said Order stated that, since petitioner security agency had submitted *p+ayrolls showing backwages of the above-noted violations amounting to x x x (P443,512.51)

benefitting 279 guards to show compliance with labor laws, the DOLE considered the inspection closed and terminated. For the years 2001and 2002, the DOLE Reports992[19] stated only that based on records submitted by petitioners, it had no violations. Verily, such documents from the DOLE do not conclusively prove that respondent, in particular, has been paid all her salaries and other benefits in full. In fact, the Order dated January 17, 2001 even bolsters respondent's claim that she had not been paid overtime pay, 13 month pay, and Service Incentive Leave Pay. The statement in said Order, that backwages for 279 guards had been paid, does not in any way prove that respondent is one of those 279 guards, since petitioners failed to present personnel files, payrolls, remittances, and other similar documents which would have proven payment of respondent's money claims. It was entirely within petitioners' power to present such employment records that should necessarily be in their possession; hence, failure to present such evidence must be taken against them.
th

IN VIEW OF THE FOREGOING, the Petition is DENIED for lack of merit. The Decision of the Court of Appeals dated January 17, 2005, in CA-G.R. SP. No. 84758, is AFFIRMED. Costs against petitioners.

SO ORDERED.

DIOSDADO M. PERALTA Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice Chairperson

ANTONIO EDUARDO B. NACHURA Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE CATRAL MENDOZA Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO Associate Justice Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice Republic of the Philippines Supreme Court Manila

EN BANC

VIRGINIA D. BAUTISTA, Petitioner,

G.R. No. 185215 Present: CORONA, C. J., CARPIO, CARPIO MORALES, VELASCO, JR., NACHURA, LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, and MENDOZA, JJ. Promulgated: July 22, 2010

- versus -

CIVIL SERVICE COMMISSION and DEVELOPMENT BANK OF THE PHILIPPINES, Respondents.

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

DECISION

DEL CASTILLO, J.:

There is demotion when an employee is appointed to a position resulting to a diminution in duties, responsibilities, status or rank which may or may not involve a reduction in salary.993[1] Where an employee is appointed to a position with the same duties and responsibilities but a rank and salary higher than those enjoyed in his previous position, there is no demotion and the appointment is valid. While this principle and its corollary are plain, it is through the use of misleading premises that a semblance of demotion was attempted to be passed off in this case. Thus, we take this opportunity to again remind litigants to use only fair and honest means to plead their cause in order not to waste the precious time and resources of our courts.

This Petition for Review on Certiorari assails the October 31, 2008 Decision994[2] of the Court of Appeals (CA) in CA-G.R. SP No. 98934 which affirmed the Resolution No. 070765995[3] dated April 16, 2007 of the Civil Service Commission (CSC). The CSC dismissed petitioners complaint based on the finding that the latter was not demoted upon her appointment as Bank Executive Officer II (BEO II) in the Development Bank of the Philippines (DBP).

Factual Antecedents

Petitioner began her career in DBP on June 1, 1978 when she was appointed as Chief of Division. On December 1, 1982, she was promoted to the position of Technical Assistant. On December 3, 1986, then President Corazon C. Aquino issued Executive Order No. 81996[4] which authorized, among others, the reorganization of DBP pursuant to Sections 32997[5] and 33998[6] thereof. As part of DBPs reorganization, petitioner was temporarily appointed in January 1987 as Account Officer with an annual salary of P62,640.00 which is equivalent to the 14th step of Salary Grade (SG)-20. In November 1988, this appointment was made permanent subject to the result of the ongoing reorganization of DBP and the approval of the

CSC.999[7]

Republic Act No. 6758 (RA 6758), or The Compensation and Classification Act of 1989, took effect on July 1, 1989. To implement the aforesaid law, the Department of Budget and Management (DBM) promulgated the Government Financial Institutions (GFIs) Index of Occupational Services which mandated GFIs, like the DBP, to adopt a uniform set of position titles in their plantilla. On October 2, 1989, the DBM issued Corporate Compensation Circular No. 10 (DBM-CCC No. 10) which authorized the GFIs to match their current set of position titles to those prescribed by the GFIs Index of Occupational Services. As a consequence, on February 15, 1991, petitioner was appointed on a permanent status as BEO II with an annual salary of P131,250.00 or the 8th step of SG-24 which was made to retroact to July 1, 1989 (the date of effectivity of RA 6758). Prior to her appointment thereto, petitioner occupied the position of Account Officer with SG-20 (24th step) with an annual salary of P102,000.00.1000[8]

Proceedings before the Development Bank of the Philippines

In a letter1001[9] dated March 23, 1993, petitioner protested her appointment as BEO II before the Head of the Personnel Administration Department of the DBP because it allegedly amounted to a demotion. According to petitioner, prior to the reorganization of DBP, she occupied the position of Account Officer which, under the GFIs Index of Occupational Services, was assigned a salary grade of 25 while that of BEO II has a salary grade of 24. She thus opined that her appointment to the position of BEO II constituted a demotion due to the attendant diminution of benefits and emoluments arising from said appointment.

On February 8, 1994, petitioner reiterated her protest in a letter1002[10] addressed to the Vice-Chairman of DBP.

Proceedings before the Department of Budget and Management

Petitioners complaint was referred to the DBM, which found the same to be lacking in merit. It held that the position of Account Officer in DBP is not in the rank of Assistant Department Manager II. Therefore, to allocate [the] subject positions to Account Officer, SG-25 [under the GFIs Index of Occupational Services] will be highly illogical and totally out of context of

the accepted organizational set-up for GOCCs1003[11]/GFIs.1004[12]

Proceedings before the Civil Service Commission

Undaunted, petitioner appealed to the CSC through several letters dated September 26 1996,1005[13] October 24, 1997,1006[14] and February 23, 19981007[15] but the latter failed to act on the same. On October 8, 2001, while applying for early retirement, she again wrote a letter-complaint to the CSC. This time the CSC required DBP to comment.

In its comment,1008[16] DBP asserted that when the bank started to reorganize in 1987, petitioner was appointed to the position of Account Officer with SG-20 on a temporary status. Pursuant to DBM-CCC No. 10 implementing RA 6758, the position of Account Officer with SG-20 was matched with BEO II with SG-24 (8th step). Contrary to petitioners claim, there was, thus, no demotion because her salary grade was even increased from 20 to 24.

On April 16, 2007, the CSC rendered a decision dismissing petitioners complaint for lack of merit. The CSC ruled that the appointment of petitioner to the position of BEO II was done pursuant to a valid reorganization. Moreover, petitioner only raised her claim to the contested position on September 26, 1996 or more than seven years from the time of her appointment. She is, thus, deemed to have slept on her rights under the equitable doctrine of laches.

Proceedings before the Court of Appeals

Petitioner thereafter appealed to the CA. On the issue of laches, the CA disagreed with the CSC. It found that petitioner timely protested her alleged demotion through several letter-complaints and appeals; first with the DBP a month after her appointment as BEO II, and, later on, through several letter-appeals with the CSC. Thus, petitioner did not sleep on her

rights. If at all, the delay was attributable to the CSCs inaction on her protests which spanned several years.

On the issue of demotion, the CA upheld the findings of the CSC that the appointment of petitioner to BEO II did not constitute a demotion because this was done in good faith and pursuant to a valid reorganization. It ruled that the DBP undertook the matching of positions in order to conform to the GFIs Index of Occupational Services based on the employees nature of function, hierarchy of jobs, and existing salary range. Petitioners duties and responsibilities as Account Officer with SG-20 and as BEO II with SG-24 are practically the same as shown by her BC-CSC Form 1 (Position Description Form). Rather than lowering her rank and salary, petitioners appointment as BEO II had, in fact, resulted to an increase thereof from SG-20 to SG24, thus, negating petitioners claim of demotion.

Issues

Before this Court, petitioner attributes the following errors to the CA:

1.

The CA erred in holding that petitioners appointment from Account Officer to BEO II did not result in a demotion in rank and salary, and

2.

The CA erred in holding that DBPs reorganization was valid and done in good faith.1009[17]

Petitioners Arguments

Petitioner argues that her appointment as BEO II with SG-24 constitutes a demotion because prior to the reorganization of DBP, she was an incumbent Account Officer with SG-25. The position of Account Officer with SG-25 was not abolished after the reorganization. Thus, there was a decrease in her rank and salary from SG-25 to SG-24. Citing Department of Trade and Industry v. Chairman and Commissioners of Civil Service Commission,1010[18] petitioner claims that she should have been appointed to a position comparable to her former position. She decries that the assailed reorganization did not promote economy and efficiency but led to the demoralization of the employees who were not appointed to their old position.

Respondents Arguments

DBP counters that the appointment of petitioner to BEO II was done in good faith and pursuant to a valid reorganization. It claims that petitioner failed to prove that she held the position of Account Officer with SG-25 under the GFIs Index of Occupational Services prior to the reorganization of the bank. Rather, the evidence duly established that petitioner occupied the position of Account Officer with SG-20. The position of Account Officer with SG-20 is not the same as Account Officer with SG-25 under the GFIs Index of Occupational Services. When RA 6758 was passed by Congress, the DBM approved the GFIs Index of Occupational Services which mandated the GFIs, including DBP, to adopt the position titles therein. As a result, DBP fixed the positions of its employees to appropriate positions to conform to the GFIs Index of Occupational Services based on the nature of their functions, hierarchy of jobs, and existing salary range. Thus, the position of Account Officer with SG-20 was matched to the position of BEO II with SG-24. Petitioners duties and responsibilities as Account Officer and as BEO II remained essentially the same. Taken together, there can be no demotion because petitioners salary grade was even increased from 20 to 24.

The CSC, represented by the Solicitor General, is fully in accord with the afore-stated position of the DBP. It emphasizes that petitioner failed to prove that there was a reduction in her duties, responsibilities, status or rank as a result of her appointment to the position of BEO II.

Our Ruling

We affirm the findings of the CA and DENY the petition. There was no demotion when petitioner was appointed as BEO II.

In this jurisdiction, a reorganization is valid provided that it is done in good faith. As a general rule, the test of good faith lies in whether the purpose of the reorganization is for economy or to make the bureaucracy more efficient.1011[19] Removal from office as a result of reorganization must, thus, pass the test of good faith.1012[20] A demotion in office, i.e., the movement from one position to another involving the issuance of an appointment with diminution in duties, responsibilities, status or rank which may or may not involve a reduction in salary,1013[21] is tantamount to removal, if no cause is shown for it.1014[22] Consequently, before a demotion may be effected pursuant to a reorganization, the observance of the rules on bona

fide abolition of public office is essential.1015[23]

There was no demotion because petitioner was appointed to a position comparable to the one she previously occupied. There was even an increase in her rank and salary.

Petitioner claims that she was illegally demoted when she was appointed from Account Officer with SG-25 to BEO II with SG-24 after the reorganization of DBP in 1989.

Petitioners contention is untenable and misleading.

The records show that prior to her appointment as BEO II, petitioner occupied the position of Account Officer with SG-20 and not Account Officer with SG-25. This is stated in petitioners own evidence consisting of her service record1016[24] as well as the admissions in her letter-complaints before the DBP and CSC. Curiously, in her arguments before the CA and this Court, petitioner modified her position by claiming that she was an Account Officer with SG-25 prior to her appointment to the position of BEO II with SG-24. We must, therefore, express our disapproval over the manner by which petitioner pleaded her cause which, to our mind, is nothing but an attempt to mislead this Court.

As correctly found by the CA, petitioner failed to prove that the position of Account Officer with SG-20 in the plantilla of DBP prior to its reorganization and the position of Account Officer with SG-25 under the GFIs Index of Occupational Services are the same. Upon the passage of RA 6758, the DBM promulgated the GFIs Index of Occupational Services which mandated the adoption of a uniform system of position titles in GFIs, including DBP. The DBM then issued DBM-CCC No. 10 which authorized DBP to match its current set of position titles to those prescribed under the GFIs Index of Occupational Services based on the nature of duties and responsibilities, qualification requirements for the position, hierarchy of jobs, and existing salary range. Consequently, petitioners position of Account Officer with SG-20 was matched to the position of BEO II with SG-24 because she exercised supervisory functions over certain bank personnel.

It will also be recalled that the DBM had earlier denied petitioners request that her position as Account Officer with SG-20 be matched to Account Officer with SG-25 under the GFIs Index of Occupational Services because the Account Officer position in DBP is not commensurate with the position of Account Officer with SG-25 under the said index.1017[25] While there was a change in title from Account Officer to Bank Executive Officer, petitioners duties and responsibilities before and after the reorganization remained practically the same. Thus, her new appointment merely stated as reason therefor:

Change in Item Number due to Reorganization.1018[26] What is more, said appointment resulted to an increase of her salary grade from 20 to 24 translating to an increase of her annual salary from P102,000.00 to P131,250.00. Under these circumstances, there is no room for us to rule that a demotion took place because petitioner even benefited from an increase in rank and salary.

Petitioner did not assail the alleged reduction in the scope of her duties and responsibilities.

In a last ditch effort to save her case, petitioner posits for the first time on appeal that the supervisory function of BEO II is less than her former position. However, as correctly observed by the DBP and CSC, petitioner never assailed the reduction in the scope of her duties and responsibilities arising from her appointment as BEO II in the proceedings below. Instead, she limited her claim of demotion on the alleged decrease of her salary grade from 25 to 24 which, as stated earlier, has no legal and factual bases to stand on. Well-settled is the rule that points of law, theories, issues and arguments not adequately brought to the attention of the lower tribunal will not be ordinarily considered by a reviewing court as they cannot be raised for the first time on appeal.1019[27] Besides, even if we were to relax this rule, petitioner proffered no evidence to establish the extent of the alleged reduction of her duties and responsibilities other than her self-serving allegations. Interestingly, petitioner even admitted before the CA that she continued to exercise supervisory functions over bank personnel after she was appointed as BEO II.1020[28] She further claimed that in 1993 she was assigned to head a unit where she exercised supervisory functions over more than 20 bank personnel.1021[29] Thus, we uphold the findings of the CA that petitioners duties and responsibilities after the reorganization remained substantially the same.

The reorganization of the DBP was made in good faith.

Finally, petitioners reliance on the case of Department of Trade and Industry v. Chairman and Commissioners of Civil Service Commission1022[30] is misplaced. In said case, we affirmed the ruling of the CSC which found that the reorganization of the Department of Trade and Industry (DTI) was done in bad faith. We noted that when the position of therein respondent Espejo was abolished, there was a corresponding increase in the new staffing pattern of the DTI after the reorganization. Further, the incumbents were replaced by those less qualified in terms of educational qualification, performance and merit. Within this context, there was a clear intent to ease out the incumbents in order to favor less qualified individuals in the guise of a reorganization plan. In contrast, herein petitioner has failed to prove that DBP acted in bad faith when it appointed her as BEO II.

None of the circumstances under Section 21023[31] of RA 66561024[32] which would be indicia of bad faith in the process of reorganization is present here. Quite the contrary, the reorganization worked in petitioners favor as her salary grade was increased from 20 to 24.

All in all, we agree with the findings of the CA that there was no demotion because petitioner was appointed to a position comparable to her former position. In fact, her new position entailed an increase in her salary grade from 20 to 24. There is, thus, no evidence to suggest that DBP acted in bad faith. Given that these findings are supported by substantial evidence, we adhere to the settled principle that the findings of an administrative body, when supported by substantial evidence, are accorded not only respect but also finality by this Court.1025[33]

WHEREFORE, the petition is DENIED. The October 31, 2008 Decision of the Court of Appeals in CA-G.R. SP No. 98934, affirming Resolution No. 070765 of the Civil Service Commission which found that petitioners appointment as Bank Executive Officer II in the Development Bank of the Philippines did not result to her demotion, is AFFIRMED.

Costs against petitioner. SO ORDERED.

MARIANO C. DEL CASTILLO Associate Justice

WE CONCUR:

RENATO C. CORONA Chief Justice

ANTONIO T. CARPIO Associate Justice

CONCHITA CARPIO MORALES Associate Justice

PRESBITERO J. VELASCO, JR. Associate Justice

ANTONIO EDUARDO B. NACHURA Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

ARTURO D. BRION Associate Justice

(No part) DIOSDADO M. PERALTA Associate Justice LUCAS P. BERSAMIN Associate Justice

ROBERTO A. ABAD Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

JOSE PORTUGAL PEREZ Associate Justice

JOSE CATRAL MENDOZA Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

RENATO C. CORONA Chief Justice