G.R. No. 120132. December 4, 1995.* CRISANTA GALAY, ET AL., petitioners, vs.

COURT OF APPEALS and VIRGINIA WONG, represented by her Administrator, ATTY. REYNALDO B. HERNANDEZ, respondents. Compromise Agreements; Judgments; Words and Phrases; Compromise, Defined; A judgment upon a compromise is a judgment embodying a compromise agreement entered into by the parties in which they make reciprocal concessions in order to terminate a litigation already instituted.A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical agreement by the Civil Code. It is defined in Article 2208 of the Code, as a contract whereby the parties by making reciprocal concessions, avoid a litigation or put an end to one already commenced. Thus, a judgment upon a compromise is a judgment embodying a compromise agreement entered into by the parties in which they make reciprocal concessions in order to terminate a litigation already instituted. Same; Same; Where it appears that nowhere in the judgment did it appear, nor can it be inferred therefrom, that the courts disposition took into account any agreement or concessions made by the parties, the judgment is not based on a compromise agreement but a decision rendered entirely on the merits.In the present suit, the assailed decision, far from being a judgment based on a compromise agreement, is undoubtedly a decision rendered entirely on the merits. Contrary to petitioners assertion, the dispositive portion of the decision is very explicit in exclusively adverting to RA 7279 as the basis for the judgment. Nowhere did it appear nor can it be inferred therefrom that respondent courts disposition took into account any agreement or concessions made by the parties that is indicative of a judgment on a compromise. A scrutiny of the assailed portions of the decision allegedly embodying the compromise agreement revealed that the same are nothing but admissions made by the parties intended to clarify the applicable provisions of RA 7279. In fact the said admissions are expressly laid out in Section 28(c)(8) of RA 7279 and thus could not have been the subject of any compromise agreement as the same are already provided in the law. Squatting; Statutes; R.A. 7279; Although private individuals are not prohibited from taking part in the relocation of squatters, there is nothing in the law either that compels them to undertake such task on a mandatory basis.Anent petitioners claim that private respondent must also share the responsibility of relocating petitioners, the same is also without any basis. The aforecited provision is very explicit that the task of relocating the

homeless and the underprivileged shall be the responsibility of the local government unit concerned and the National Housing Authority with the assistance of the other government agencies. Although private individuals are not prohibited from taking part in the relocation, there is nothing in the law either that compels them to undertake such task on a mandatory basis, otherwise, such obligation should have been included in the provision, either expressly or impliedly. Thus, petitioners attempt to further burden private respondent with their relocation is unwarranted. Same; Social Justice; The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivilegedat best it may mitigate the penalty but it certainly will not condone the offense.Equally unpersuasive is petitioners plea for social justice. In previous cases, this Court has emphasized that never is it justified to prefer the poor simply because they are poor, or to reject the rich simply because they are rich, for justice must always be served, for poor and rich alike, according to the mandate of the law. In the same vein, it has been held that the policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Same; Same; Social justice cannot condone the violation of law nor does it consider that very wrong to be a justification for priority in the enjoyment of a right.In closing, we find it fitting to advert to the following pronouncements made in the case of Martires vs. Court of Appeals: While we sympathize with the millions of our people who are unable to afford the basic necessity of shelter, let alone the comforts of a decent home, this sympathy cannot extend to squatting, which is a criminal offense. Social justice cannot condone the violation of law nor does it consider that very wrong to be a justification for priority in the enjoyment of a right. This is what the petitioner wants us to grant him. But we cannot heed his unjust plea because the rule of law rings louder in our ears. *Galay vs. Court of Appeals, 250 SCRA 629(1995)]

G.R. No. 120132 December 4, 1995 CRISANTA GALAY, ET AL., petitioners, vs.

COURT OF APPEALS and VIRGINIA WONG, represented by her Administrator, ATTY. REYNALDO B. HERNANDEZ, respondents. FRANCISCO, J.: In an effort to uplift the living conditions in the poorer sections of the communities in urban areas, the legislature enacted Republic Act No. 7279 otherwise known as the "Urban Development and Housing Act of 1992", envisioned to be the antidote to the pernicious problem of squatting in the metropolis. Nevertheless, the courts continue to be swamped with cases arising from disputes in the proper implementation of the aforementioned legislation, particularly on matters involving the eviction, demolition and resettlement of squatters. The present suit is among such cases. The instant petition for review on certiorari seeks to annul the decision of respondent Court of Appeals dated September 20, 1994 in CA-G.R. SP No. 33761 entitled "Crisanta Galay, et al. vs. Judge Mariano I. Bacalla and Virginia Wong, represented by her Administrator, Atty. Reynaldo B. Hernandez". Petitioners claim that the assailed decision was based on an unauthorized compromise agreement to which they never consented nor had any knowledge thereof. Material hereto are the following antecedents: Private respondent Virginia Wong, as represented by her Administrator and Attorney-in fact, Reynaldo B. Hernandez filed an ejectment suit (Civil Case No. 38-5830) against herein petitioners, who were alleged to have been illegally occupying private respondents' 405 square meter lot located in Quezon City which is covered by Transfer Certificate of Title No. 51589 of the Registry of Deeds of Quezon City. Although petitioners do not claim ownership over the subject premises, they however disputed private respondents' claim of ownership and alleged that they have been in possession of the property in question since 1972 by virtue of the tolerance and permission of the alleged real owner, Dr. Alejo Lopez. On August 3, 1992, judgment was rendered by the Metropolitan Trial Court of Quezon City, Branch 38, ordering the ejectment of the petitioners from the disputed premises. 1

Upon appeal to the Regional Trial Court of Quezon City, Branch 83, the decision of the Metropolitan Trial Court was affirmed in toto. 2 Still not satisfied, petitioners proceeded to the Court of Appeals and filed a petition for review, but the petition was dismissed outright for failure to state the material dates to show that the petition was filed on time and for not being accompanied by certified true copies of the disputed decision. 3 No further appeal was interposed by petitioner, hence, the judgment became final. This prompted private respondent to file a Motion for Issuance of an Alias Writ of Execution which was granted by the Metropolitan Trial Court in its order dated March 25, 1994, 4 taking into account that the judgment has already become final and executory. In an attempt to prevent the execution of the judgment and their consequent eviction, petitioners filed a complaint for Injunction with Preliminary Injunction and Temporary Restraining Order before the Regional Trial Court at Quezon City, Branch 216, 5 alleging that herein private respondent must first comply with the mandatory requirements of Section 28(c) of R.A. 7279 regarding eviction and demolition by court order. In its order dated April 5, 1994, 6 the lower court denied the prayer for the issuance of a restraining order as the act sought to be enjoined was pursuant to a lawful order of the court. Thereafter, petitioners again sought recourse from the Court of Appeals via Petition for Certiorari with Preliminary Injunction and Temporary Restraining Order, claiming that the latter order was tainted with grave abuse of discretion for being arbitrary, unjust and oppressive, and reiterating that they cannot be evicted unless there is compliance with Section 28(c) of R.A. 7279. 7 On April 28, 1994, respondent Court of Appeals gave due course to the petition and granted petitioners' prayer for preliminary injunction, enjoining the ejection of petitioners until further orders from the court. 8 On July 18, 1994, counsel for private respondent filed a Motion To Lift And/Or Dissolve Preliminary Injunction, contending among others that the Urban Poor Affairs Office [People's Bureau] has already been notified, as mandated by RA 7279, and that more than 45 days had already lapsed since the notice

was made in April, 1994. Thus, private respondent has substantially complied with the requirements of RA 7279 and therefore the enforcement of the final judgment and ejectment of petitioners is in order. 9 Objecting to private respondent's motion, petitioners argued that RA 7279 requires not only the 45-day notice, but also the relocation of petitioners and the grant of financial assistance to them prior to their relocation. Furthermore, petitioners maintain that there is no extreme urgency for petitioners' eviction on account of private respondent's affluence. 10 The case was subsequently set for hearing and oral argument, after which, respondent court rendered the assailed decision on September 20, 1994 ordering as follows:
WHEREFORE, pursuant to RA 7279, the People's Bureau is hereby ordered to relocate the herein petitioners from subject lot of private respondent not later than October 30, 1994. Should the relocation of petitioners be not finished on or before October 30, 1994, the People's Bureau shall pay petitioners a daily allowance of P145.00 for every day of delay of relocation but in no case shall such allowance last for more than sixty (60) days. Petitioners are hereby ordered to vacate the premises in question not later than October 30, 1994, on which date the private respondent shall have the right to take over possession thereof and, if necessary, to ask for a writ of execution for the implementation of this disposition. No pronouncement as to costs. SO ORDERED.
11

When the case was called for hearing on September 14, 1994, as scheduled, both parties were represented. Atty. Rogelio Directo stood up for the People's Bureau (Urban Poor Affairs Office). And the parties, including the said representative of the People's Bureau, agreed that petitioners herein are all qualified to avail of the protection and benefits under RA 7279 and through counsel, manifested their willingness and readiness to be relocated in accordance with said law. It was likewise agreed by all concerned that should petitioners be not relocated within the period of 45 days, from September 15 to October 30, 1994, the People's Bureau shall pay them an allowance of P145.00, equivalent to the minimum wage, per day of delay of relocation, until their actual transfer to the relocation site to be designated for them. It is understood, however, that the daily allowance for petitioners shall be for a period not exceeding sixty (60) days, starting October 31, 1994. In other words, should the delay of relocation of petitioners be for more than sixty (60) days, they shall only be entitled to the daily allowance of P145.00 per day of delay of relocation for not more than sixty (60) days. It was likewise agreed that on October 31, 1994, whether petitioners shall have been relocated or not, the private respondent shall then be entitled to the execution and implementation of this judgment, and to cause the ejectment of petitioners from subject property litigated upon. (Emphasis 13 supplied).

In its Resolution dated May 4, 1995, respondent Court of Appeals denied petitioners' Motion to Set Aside Decision 14 and reiterated that the assailed decision dated September 20, 1994 was a decision based on the merits and not upon a compromise agreement. Hence, the instant petition. Petitioners adamantly argue that the decision of respondent court dated September 20, 1994 was based on an unauthorized compromise agreement, sans their knowledge, consent and authority. Additionally, petitioners interpose the following issues: 1) whether there can be eviction and demolition without actual relocation; 2) can the petitioners be considered as homeless and underprivileged?; and 3) whose duty is it to relocate them? A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical agreement by the Civil Code. It is defined in Article 2208 of the Code as "a contract whereby the parties by making reciprocal concessions, avoid a litigation or put an end to one already commenced". 15 Thus, a judgment upon a compromise is a judgment embodying a compromise

On October 25, 1994, a new counsel entered his appearance for petitioners and filed a motion to set aside the aforequoted decision. 12 As initially mentioned, petitioners assert that the assailed decision was rendered based on a compromise agreement to which they never gave their consent nor authorized their former counsel to enter into, and for which reason said former counsel has withdrawn his appearance as counsel of record. Petitioners contend that the judgment of respondent Court of Appeals was indeed based on a compromise agreement which is evident from the following portions of the decision:
xxx xxx xxx

agreement entered into by the parties in which they make reciprocal concessions in order to terminate a litigation already instituted. 16 In the present suit, the assailed decision, far from being a judgment based on a compromise agreement, is undoubtedly a decision rendered entirely on the merits. Contrary to petitioners' assertion, the dispositive portion of the decision is very explicit in exclusively adverting to RA 7279 as the basis for the judgment. Nowhere did it appear nor can it be inferred therefrom that respondent court's disposition took into account any agreement or concessions made by the parties that is indicative of a judgment on a compromise. A scrutiny of the assailed portions of the decision allegedly embodying the compromise agreement revealed that the same are nothing but admissions made by the parties intended to clarify the applicable provisions of RA 7279. In fact the said admissions are expressly laid out in Section 28(c) (8) of RA 7279 and thus could not have been the subject of any compromise agreement as the same are already provided in the law. Further negating petitioners' contention are the following ratiocinations made by respondent court in denying the Motion to Set Aside Decision, with which we are in complete accord:
After a careful study, We find movant's stance barren of merit. Our Decision promulgated on September 20, 1994 in this case was not rendered as a Judgment by Compromise. It resolved the petition on the merits, after the lawyers of the parties and the representative of the Urban Poor Affairs Office agreed on the applicability of Rep. Act No. 7279 to petitioner's situation. As a result of such development of the case, Our judgment granted petitioners more than what they have came here for. All they prayed for was to hold in abeyance execution of subject final and executory Decision of the Quezon Metropolitan Trial Court, ordering their ejectment; until after the expiration of forty-five (45) days from date of notice of their ejectment to the Urban Poor Affairs Office. But the judgment in question has recognized not only petitioner's right not to be ejected sans the 45-day notice to the Urban Poor Affairs Office, but also the right to a daily allowance of P145.00 for each day of delay or relocation, for a period of not more than sixty (60) days, should 17 there be a delay in their relocation, as mandated by law.

petitioners maintain that private respondent is also duty bound to share in the task of relocating them. The contentions are without merit. It is beyond dispute that the ejectment suit against petitioners has already been resolved with finality way back on February 16, 1994 when the petitioners' appeal was dismissed outright by the Court of Appeals and they did not interpose any further appeal therefrom. The subsequent proceedings merely sought to enforce the decision ordering their ejectment from the disputed premises, which petitioners however, repeatedly tried to thwart by invoking non-compliance with Section 28(c) of RA 7279. Thus, upon compliance by private respondent with the requirements of the aforesaid law, particularly on the notice to the People's Bureau (Urban Poor Affairs Office) and the expiration of 45 days from said notice, petitioners' right to remain in the subject lot ceased. Resultingly, petitioners' eviction must now proceed in accordance with Section 28(c) (8), to wit:
. . . Provided, however, That in cases of eviction and demolition pursuant to a court order involving underprivileged and homeless citizens, relocation shall be undertaken by the local government unit concerned and the National Housing Authority with the assistance of other government agencies within forty-five (45) days from service of notice of final judgment by the court, after which period the said order shall be executed: Provided, further, That should relocation not be possible within the said period, financial assistance in the amount equivalent to the prevailing minimum daily wage multiplied by sixty (60) days shall be extended to the affected families by the local government unit concerned.

Finally, in a desperate move to prolong the execution of the decision ordering their eviction, petitioners invoke the principle of social justice and plead that as underprivileged and homeless citizen, their eviction and demolition of their homes cannot be effected unless there is adequate relocation. Moreover,

Anent petitioners' claim that private respondent must also share the responsibility of relocating petitioners, the same is also without any basis. The aforecited provision is very explicit that the task of relocating the homeless and the underprivileged shall be the responsibility of the local government unit concerned and the National Housing Authority with the assistance of the other government agencies. Although private individuals are not prohibited from taking part in the relocation, there is nothing in the law either that compels them to undertake such task on a mandatory basis, otherwise, such obligation should have been included in the provision, either expressly or impliedly. Thus, petitioners attempt to further burden private respondent with their relocation is unwarranted.

Equally unpersuasive is petitioners' plea for social justice. In previous cases, this Court has emphasized that "never is it justified to prefer the poor simply because they are poor, or to reject the rich simply because they are rich, for justice must always be served, for poor and rich alike, according to the mandate of the law." 18 In the same vein, it has been held that "the policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege." 19 Further militating against petitioners' appeal for compassion is the fact that only recently, President Ramos himself, in the exercise of his veto power, vetoed a congress-approved measure 20 intended to extend the moratorium on the demolition of squatter colonies throughout the country. The President's action was intended to curtail the negative influences to general growth and development in urban areas brought about by the problem of squatting and to prevent the legitimate landowners from being unduly deprived of the immediate use of their properties. In closing, we find it fitting to advert to the following pronouncements made in the case of Martires vs. Court of Appeals 21 :
While we sympathize with the millions of our people who are unable to afford the basic necessity of shelter, let alone the comforts of a decent home, this sympathy cannot extend to squatting, which is a criminal offense. Social justice cannot condone the violation of law nor does it consider that very wrong to be a justification for priority in the enjoyment of a right. This is what the petitioner wants us to grant him. But we cannot heed his unjust plea because the rule of law rings louder in our ears.

1 Rollo, p. 50, Annex D. 2 Rollo, p. 62, Annex H. 3 Rollo, p. 74, Annex J. 4 Rollo, p. 75, Annex K. 5 Rollo, p. 78, Annex L. 6 Annex M. 7 Rollo, p. 82, Annex O. 8 Rollo, p. 87, Annex P. 9 Rollo, p. 92. 10 Ibid. 11 Rollo, p. 91. 12 Rollo, p. 108. 13 Rollo, pp. 115-116. 14 Rollo, p. 26, Annex A. 15 Osmea vs. Commission on Audit, 238 SCRA 463, 471 (1994). 16 United Housing Corporation vs. Dayrit, 181 SCRA 285, 293 (1990) citing Binamira vs. Ogan-Occena, 148 SCRA 677 (1987). 17 Rollo, p. 32. 18 Gelos vs. Court of Appeals, 208 SCRA 608, 616 (1992).

WHEREFORE, in view of the foregoing considerations, the instant petition is hereby DENIED for lack of merit. SO ORDERED. Narvasa, C.J., Regalado, Puno and Mendoza, JJ., concur. Footnotes

19 Philippine Long Distance Telephone Co. vs. NLRC 164 SCRA 671, 682683 (1988); Philippine National Construction Corporation vs. NLRC 170 SCRA 207, 210 (1989). 20 House Bill No. 13001.

21 188 SCRA 306, 312 (1990).

G.R. No. 172724. August 23, 2010.* PHARMACIA and UPJOHN, INC. (now PFIZER PHILIPPINES, INC.), ASHLEY MORRIS, ALEDA CHU, JANE MONTILLA & FELICITO GARCIA, petitioners, vs. RICARDO P. ALBAYDA, JR., respondent. Appeals; The scope of the Supreme Courts review in petitions filed under Rule 45 is limited to errors of law or jurisdictionthe Court leaves the evaluation of facts to the trial and appellate courts which are better equipped for this task; Exceptions.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. 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. Labor Law; Management Prerogatives; Transfers; It is a 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.Juris-pru-dence 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. 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 employees transfer shall be tantamount to constructive dismissal. Same; Same; Same; Findings of fact of the National Labor Relations Commission (NLRC), affirming those of the LA, are entitled to great weight and will not be disturbed if they are supported by substantial evidence.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. Substantial evidence is an amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. As explained in Ignacio v. Coca-Cola Bottlers Phils., Inc., 365 SCRA 418 (2001): 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. Same; Same; Same; In the absence of arbitrariness, the Court of Appeals should not look into the wisdom of a management prerogative.In the absence of arbitrariness, the CA should not have lookedinto 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. 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. Same; Same; Same; The rule is well-settled that labor laws discourage interference with an employers judgment in the conduct of his businesseven 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 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 employers 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 companys 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. Same; Same; Same; Salesmen; The very nature of a sales man is that it is mobile and ambulant.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, he checked the box which asks, Are you willing to be relocated anywhere in the Philippines? In addition, in respondents Contract of Employment, 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. Same; Same; Same; The 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. 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. 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) of the Labor Code. Same; Termination of Employment; Due Process; Even if no actual hearing was conducted before the employer dismissed the employee, 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 processthe requirement of due process had been met since they were accorded a chance to explain their side of the controversy.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. 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. Accordingly, this Court is guided by Solid Development Corporation Workers Association v. Solid Development Corporation, 530 SCRA 132 (2007), (Solid), where the validity of the dismissal of two employees was upheld notwithstanding that no hearing was conducted, to wit: [W]ellsettled 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.

Same; Same; Equity; Words and Phrases; While an employee 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.This Court, however, is not unmindful of previous rulings, wherein separation pay has been granted to a validly dismissed employee after giving considerable weight to long years of employment. 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. Same; Same; Same; Corporate Mergers; Even as the employee has only been in service for four years at the time of separation since the merger of Pharmacia and Upjohn took place in 1996, equity considerations dictate that such employees tenure be computed from 1978, the year when he started working for Upjohn.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 respondents actions constituted a valid ground to terminate his services, the same is to this Courts mind not so reprehensible as to warrant complete disregard of his long years of service. It also appears that the same is respondents 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 respondents tenure be computed from 1978, the year when respondent started working for Upjohn. [Pharmacia and Upjohn, Inc. vs. Albayda, Jr., 628 SCRA 544(2010)]

Before this Court is a petition for review on certiorari,1[1] under Rule 45 of the Rules of Court, seeking to set aside the November 30, 2005 Decision2[2] and May 5, 2006 Resolution3[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

DECISION PERALTA, J.:

territorial configuration for the new marketing and sales direction for the year 2000. In December 1999, respondent received a Memorandum4[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 letter5[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

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 letter6[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 district sales managers 2000 re-alignment. On February 16, 2000, respondent wrote a letter7[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. both reprensentatives and

have been re-located in the past and in the year

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

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 letter8[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

Respondent replied through a letter9[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 memorandum10[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

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

memorandum11[11] dated May 15, 2000, Montilla informed respondent of the clinic schedule of the company appointed doctor.

transfer respondent was purely a business decision.

In a letter12[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 letter13[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 memorandum14[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 letter15[15] dated May 31, 2000, respondent reiterated the concerns he raised in his previous letters.

Montilla sent respondent another memorandum16[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 letter17[17] dated June 8, 2000, respondent told Montilla that he will be airing his grievance before the National Labor Relations Commission (NLRC). In a memorandum18[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 memorandum19[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 memorandum20[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, 2000.21[21]

On July 12, 2002, the Labor Arbiter (LA) rendered a Decision23[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.24[24]

On August 14, 2000, respondent filed a Complaint22[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 Pres ident. Since mandatory conciliation failed between the parties, both sides were directed to submit their position papers. Respondent appealed to the NLRC. In a Decision25[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.

On November 30, 2005, the CA rendered a Decision ruling in

SO ORDERED.26[26]

favor of respondent, the dispositive portion of which reads:

Respondent filed a Motion for Reconsideration,27[27] which was denied by the NLRC in a Resolution28[28] dated November 10, 2004.

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.30[30]

Aggrieved, respondent filed a Petition for Certiorari29[29] before the CA. 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.31[31]

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

The petition is meritorious.

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

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.32[32] This Court leaves the evaluation of facts to the trial and appellate courts which are better equipped for this task.

premised on the supposed absence of evidence and contradicted by the evidence on record.33[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. 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 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.

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

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

shall be tantamount to constructive dismissal.35[35]

Both the LA and the NLRC ruled that the reassignment of respondent was a valid exercise of petitioners 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.34[34]

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 1999.36[36]

Lastly, the LA pointed out that in respondents contract of 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. 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 On respondents allegation that his family stands to lose income from his wifes business, the LA ruled:
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

employment, he agreed to be assigned to any work or workplace as may be determined by the company whenever the operations require such assignment.

of respondent, to wit:

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.37[37]

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.38[38]

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.42[42]

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.39[39] Substantial evidence is an amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.40[40] As explained in Ignacio v. Coca-Cola Bottlers Phils., Inc:41[41] 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
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

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:

various areas of its business operations in order to ascertain where they

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.43[43]

will function with maximum benefit to the company.44[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

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

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

circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld.45[45]

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. 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 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 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,46[46] he checked the box which asks, Are you willing In to be relocated in anywhere in the of Philippines?47[47] addition, respondents Contract

Employment,48[48] item (8) reads:

for allegedly terminating his employment when he refused to accept his

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.49[49]

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:

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.
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.51[51]

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,50[50] which involved a complaint filed by a medical representative against his employer drug company for illegal dismissal

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:

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.52[52]

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

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 x53[53]

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)55[55] of the Labor Code.

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.

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.56[56]

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.54[54] Such being the case, respondent 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:

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:

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.57[57]

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.58[58]

Corporation

Workers

Association

v.

Solid

Development

Corporation61[61] (Solid), where the validity of the dismissal of two employees was upheld notwithstanding that no hearing was conducted, to 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 employer s 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.59[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.60[60] Accordingly, this Court is guided by Solid Development
[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

wit:

met since they were accorded a chance to explain their side of the controversy62[62]

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 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 memorandum63[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 memorandum64[64] This Court, however, is not unmindful of previous rulings,65[65] wherein separation pay has been granted to a validly dismissed employee after giving considerable weight to long years of employment.66[66] 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.

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.67[67]

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

Civil Code which provides: (I)n case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.

WHEREFORE,

premises

considered,

the

petition

is
Same; Same; Contracts; Contracts which are not ambiguous are to be interpreted according to their literal meaning and not beyond their obvious intendment.The above provisions state that employees transferred from Makati City to Bauan, Batangas are entitled to a monthly relocation allowance of P1,500.00, provided their transfer is permanent or for a period exceeding one month. Such provisions need no interpretation for they are clear. Contracts which are not ambiguous are to be interpreted according to their literal meaning and not beyond their obvious intendment.

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.
Same; Same; Same; The terms and conditions of a collective bargaining contract constitute the law between the parties.In Mactan Workers Union vs. Aboitiz, we held that the terms and conditions of a collective bargaining contract constitute the law between the parties. Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for redress. *Babcock-Hitachi (Phils.), Inc. vs. Babcock-Hitachi (Phils.), Inc., Makati Employees Union (BHPIMEU), 453 SCRA 156(2005)]

SO ORDERED.

THIRD DIVISION
G.R. No. 156260. March 10, 2005.* BABCOCK-HITACHI (PHILS.), INC., petitioner, vs. BABCOCK-HITACHI (PHILS.), INC., MAKATI EMPLOYEES UNION (BHPIMEU), respondent.

[G.R. No. 156260. March 10, 2005] BABCOCK-HITACHI (PHILS.), INC., petitioner, vs. BABCOCK-HITACHI (PHILS.), INC., MAKATI EMPLOYEES UNION (BHPIMEU), respondent. DECISION

Labor Law; Collective Bargaining Agreement; Any doubt or ambiguity in the contract between management and the union members should be resolved in favor of the latter. To begin with, any doubt or ambiguity in the contract between management and the union members should be resolved in favor of the latter. This is pursuant to Article 1702 of the

SANDOVAL-GUTIERREZ, J.: At bar is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision[1] dated May 14, 2002 and

Resolution[2] dated November 26, 2002 rendered by the Court of Appeals in CAG.R. SP No. 65260, entitled Babcock-Hitachi (Phils.), Inc. vs. Babcock-Hitachi (Phils.), Inc., Makati Employees Union (BHPIMEU). The facts as borne by the records are: Babcock-Hitachi (Phils.), Inc., petitioner, is a manufacturing corporation, with branches at Makati City and Bauan, Batangas. Sometime in December 1997, petitioner, to improve the operating efficiency and coordination among its various departments, formulated a plan to transfer the Design Department from its Makati office to Bauan, Batangas. With this development, petitioner, on February 24, 1999, sent separate notices to Justiniano G. Iniego, Xavier Aguila and Bonifacio B. Vergara, who occupied Engineer 1 positions at the Design Department, of their re-assignment and transfer to Bauan, Batangas effective April 1, 1999. This prompted them to claim for their relocation allowance provided by Sections 1 and 2, Article XXI of the collective bargaining agreement (CBA).[3] However, petitioner refused to implement the CBA, claiming that the affected employees are not entitled to relocation allowance under Policy Statement No. BHPIG-044A dated October 1, 1996[4] considering that they are residents of Bauan or its adjacent towns.[5] Thus, the affected union members (Justiniano Iniego, et al.), represented by BabcockHitachi (Phils.), Inc., Makati Employees Union, respondent, filed with the National Conciliation and Mediation Board (NCMB) a complaint for payment of relocation allowance against petitioner. In a Submission Agreement dated March 18, 1999, the parties stipulated to submit the case for voluntary arbitration. On July 25, 2000, after the parties submitted their pleadings and position papers, the Voluntary Arbitrator rendered a Decision ordering petitioner to pay respondents concerned members their relocation allowances. Petitioner then filed a motion for reconsideration but was denied in a Resolution dated May 30, 2001. Thereafter, petitioner filed with the Court of Appeals a petition for review with prayer for issuance of a temporary restraining order and/or writ of preliminary injunction.

On May 14, 2002, the Appellate Court promulgated its Decision affirming the Voluntary Arbitrators assailed Decision. The Court of Appeals ratiocinated as follows: After a thorough study of the case at hand, we are convinced that the affected employees are entitled to the relocation allowance provided for in the Collective Bargaining Agreement (CBA) entered into and signed by both the Union and petitioner Company on July 18, 1997. We share the posture adopted by the Voluntary Arbitrator in rejecting petitioners arguments that the affected employees are not entitled to relocation allowance. Pursuant to the basic and irrefragable rule that in carrying out and interpreting the provisions of the Labor Code and its implementing rules and regulations, the workingmans welfare should be the primordial and paramount consideration. Undoubtedly, this rule must likewise find application in the interpretation and meaning of the CBA entered into by both the parties, for the same is the law between the parties. x x x. xxx xxx

In the case before this Court, petitioner Companys contention that the policy statement they issued still finds application in the present CBA is misplaced. With the advent of the new CBA dated July 18, 1997, the policy statement, which previously finds application can no longer be controlling in the present situation. Had it been the intent of the proponents of the CBA, then it could have been incorporated in the agreement or contract, otherwise, it contravenes the very essence and purpose of the CBA. Obviously, the purpose of collective bargaining agreement is the reaching of an agreement resulting in a contract binding on the parties. Moreover, the policy statement being invoked by petitioner Company is not a part of the contract or CBA, thus, it cannot remain in full force and effect even beyond the stipulated term, especially, in the light of the present CBA. Under the circumstances, the policy statement issued by the petitioner company is a unilateral policy, which is contrary to the provisions of the CBA. The CBA operates as the law that governs the employer-employee relationship of herein petitioner Company and the Union. Second. Petitioner Company contends that the rationale behind the CBA provision on relocation allowance is clearly spelled out in the company policy on relocation allowance.

Under the circumstances obtaining in this case, petitioner Companys argument falters. The benefits available in the present CBA (dated July 18, 1997) does not provide for any qualification, it was written in straight and unequivocal terms, not susceptible to any other interpretation. x x x. xxx xxx

Section 1. The COMPANY shall provide a relocation allowance of ONE THOUSAND EIGHT HUNDRED PESOS (P1,800.00) per month for employees who will be transferred from Bauan to Makati. For employees who will be transferred from Makati to Bauan, the relocation assistance shall be ONE THOUSAND FIVE HUNDRED PESOS (P1,500.00). Section 2. Employees can avail this provision provided their transfer is on a permanent basis or for a duration exceeding one (1) month. The above provisions state that employees transferred from Makati City to Bauan, Batangas are entitled to a monthly relocation allowance of P1,500.00, provided their transfer is permanent or for a period exceeding one month. Such provisions need no interpretation for they are clear. Contracts which are not ambiguous are to be interpreted according to their literal meaning and not beyond their obvious intendment. [7] In Mactan Workers Union vs. Aboitiz,[8] we held that the terms and conditions of a collective bargaining contract constitute the law between the parties. Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for redress. Finally, we sustain the finding of the Court of Appeals that the policy statement being invoked by petitioner is not a part of the CBA which is the law between the parties. Thus, the Court of Appeals did not commit any error when it rendered the assailed Decision and Resolution, the same being consistent with law and jurisprudence. WHEREFORE, the petition is DENIED. The assailed Decision dated May 14, 2002 and Resolution dated November 26, 2002 rendered by the Court of Appeals in CAG.R. SP No. 65260 are AFFIRMED. Costs against petitioner. SO ORDERED. Panganiban, (Chairman), Corona, and Garcia, JJ., concur. Carpio-Morales, J., on leave.

WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED for lack of merit. SO ORDERED. On November 26, 2002, the Court of Appeals issued a Resolution denying petitioners motion for reconsideration. Hence, this petition for review on certiorari. Petitioner contends that the Court of Appeals, in affirming the Voluntary Arbitrators Decision, erred in relying solely upon the parties CBA providing that employees transferred from Makati to Bauan, Batangas are entitled to relocation allowance equivalent to P1,500.00. Petitioner invokes Policy Statement No. BHPI-G-044A (earlier quoted) expressly providing that employees, who are residents of Bauan or adjacent Batangas towns and assigned permanently back to the Bauan Plant, are not entitled to relocation allowance. Petitioners contention lacks merit. The basic issue for our resolution is whether union members are entitled to relocation allowance in light of the CBA between the parties. To begin with, any doubt or ambiguity in the contract between management and the union members should be resolved in favor of the latter. This is pursuant to Article 1702 of the Civil Code which provides: (I)n case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.[6] Pertinent are Sections 1 and 2, Article XXI of the CBA which provide:

EXCEPTIONS xxx
[1] Penned

xxx

by Justice Perlita J. Tria Tirona, and concurred in by Justices Buenaventura J. Guerrero (retired) and Rodrigo V. Cosico, Annex A of the Petition, Rollo at 31-43.
[2] Annex [3]

2. Enjoyment shall cease upon permanent transfer back to the original place of employment (Makati Office or Bauan Plant) where the residence is proximate. xxx xxx

B, id. at 44-45. ARTICLE XXI RELOCATION ASSISTANCE 4.Resident of Bauan or adjacent Batangas town and assigned permanently back to the Bauan Plant. xxx
[5] Xavier

x x x.

Section 1. The COMPANY shall provide a relocation allowance of ONE THOUSAND EIGHT HUNDRED PESOS (P 1,800.00) per month for employees who will be transferred from Bauan to Makati. For employees who will be transferred from Makati to Bauan, the relocation assistance shall be ONE THOUSAND FIVE HUNDRED PESOS (P 1,500.00). Section 2. Employees can avail this provision provided their transfer is on a permanent basis or for a duration exceeding one (1) month.
[4] The RELOCATION

Aguila, Bonifacio B. Vergara and Justiniano G. Iniego are permanent residents of Bayanan, San Pascual, Batangas; Tubigan, Lemery, Batangas and Cuenca, Batangas, respectively.
[6] Plastic

Town Center Corporation vs. NLRC, G.R. No. 81176, April 19, 1989, 172 SCRA 580, 587, cited in Mindanao Steel Corporation vs. Minsteel Free Workers Organization (MINFREWO-NFL) Cagayan de Oro, G.R. No. 130693, March 4, 2004 at 6.
[7] See Id., [8] G.R.

ASSISTANCE is, therefore, created to cover what is considered a reasonable, safe, comfortable and presentable means of transportation, from Batangas to Manila and vice versa. Furthermore, the assistance is intended to help defray the relatively higher meal expenses after the relocation takes effect. x x x COVERAGE AND ELIGIBILITY 1. Those employees whose residence or birthplace is situated in Bauan or any adjacent town, who applied and were hired for employment in the Bauan Plant, but transferred to Makati Office. 2. Those who live in Metro Manila whose family is also based in Metro Manila, but assigned to work at the Bauan plant. xxx xxx

citing Herrera vs. Petrophil Corp., 146 SCRA 385 (1986).

No. L-30241, June 30, 1972, 45 SCRA 577, 581, citing Shell Oil Workers Union vs. Shell Company of the Philippines, 39 SCRA 276 (1971).

G.R. No. 76645. July 23, 1991.* PHILIPPINE TELEGRAPH AND TELEPHONE CORPORATION, petitioner, vs. ALICIA LAPLANA, Hon. RICARDO ENCARNACION, and NATIONAL LABOR RELATIONS COMMISSION, respondents.

Labor Law; Illegal Dismissal; Employer has the inherent right to transfer or assign an employee in the pursuit of its legitimate business interest subject only to the condition that it be not motivated by discrimination or bad faith.There can be no quarrel with the Arbiters formulation of the general principle governing an employers prerogative to transfer his employees from place to place or from one position to another. The Arbiter acknowledges the inherent right of an employer to transfer or assign an employee in the pursuit of its legitimate business interests subject only to the condition that it be not motivated by discrimination or (made) in bad faith, or xx effected as a form of punishment or demotion without sufficient cause. This is a principle uniformly adhered to by this Court.

486

486

SUPREME COURT REPORTS ANNOTATED Same; Same; Security of Tenure; An employees right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him.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. An employees right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or diminution of his salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal.

Phil. Telegraph and Telephone Corp. vs. Laplana

suggesting the reason thereforretrenchment. When so dismissed, she accepted separation pay. On the other hand, the employer has not been shown to be acting otherwise than in good faith, and in the legitimate pursuit of what it considered its best interests, in deciding to transfer her to another office. There is no showing whatever that the employer was transferring Laplana to another work place, not because she would be more useful there, but merely as a subterfuge to rid x x (itself) of an undesirable worker, or to penalize an employee for x x union activities x x.

Same; Same; Same; The employee (Laplana) had to all intents and purposes resigned from her position.In this case, the employee (Laplana) had to all intents and purposes resigned from her position. She had unequivocally asked that she be considered dismissed, herself

________________

* FIRST DIVISION.

Same; Same; Same; Court cannot accept the proposition that when an employee opposes his employers decision to transfer him to another work place, there being no bad faith or underhanded motives on the part of either party, it is the employees wishes that should be made to prevail.The situation here presented is of an employer transferring an employee to another office in the exercise of what it took to be sound business judgment and in accordance with predetermined and established office policy and practice, and of the latter having what was believed to be legitimate reasons for declining that transfer, rooted in considerations of personal convenience and difficulties for the family. Under these circumstances, the solution proposed by the employee herself, of her voluntary termination

of her employment and the delivery to her of corresponding separation pay, would appear to be the most equitable. Certainly, the Court cannot accept the proposition that when an employee opposes his employers decision to transfer him to another work place, there being no bad faith or underhanded motives on the part of either party, it is the employees wishes that should be made to prevail. [Phil. Telegraph and Telephone Corp. vs. Laplana, 199 SCRA 485(1991)]

Baguio Branch be trained for the purpose. She set out her reasons therefor in her letter to Mrs. Arogo dated March 27, 1984, viz.:
1. I have established Baguio City as my permanent residence. Working in Laoag will involve additional expenses like for my board and lodgingly, fare, and other miscellaneous expenses. My salary alone will not be enough there will be no savings and my family will spend more on account of my transfer. 2. I will be away from my family. A far assignment would be a big sacrifice on my part keeping me away from my husband and family which might affect my efficiency.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

3. Since I have been with PT & T for more than six years already, I have learned to work with my co-employees here more effectively. Working in another place with entirely different environment will require long adjustment period, thereby affecting performance of my job.

G.R. No. 76645 July 23, 1991 PHILIPPINE TELEGRAPH AND TELEPHONE CORPORATION, petitioner, vs. ALICIA LAPLANA, Hon. RICARDO ENCARNACION, and NATIONAL LABOR RELATIONS COMMISSION, respondents. D.P. Mercado & Associates for petitioner.

On April 12, 1984, Mrs. Arogo reiterated her directive for Laplana's transfer to the Laoag Branch, this time in the form of a written Memorandum, informing Laplana that "effective April 16, 1984, you will be reassigned to Laoag branch assuming the same position of branch cashier," and ordering her "to turn over your accountabilities such as PCF, undeposited collections, used and unused official receipts, other accountable forms and files to Rose Caysido who will be in charge of cashiering in Baguio." Apparently Laplana was not allowed to resume her work as Cashier of the Baguio Branch when April 16, 1984 came. She thereupon wrote again to Mrs. Arogo advising that the directed transfer was unacceptable, reiterating the reasons already given by her in her first letter dated March 27, 1984. On April 30, 1984, Laplana received a telegram from Mrs. Arogo reading as follows:
PLEASE REPORT TO MANILA ON MAY 2, 1984 FOR NEW JOB ASSIGNMENT IF YOU DON'T REPORT ON MAY 2, 1984, WE WILL CONSIDER THIS AS ABANDONMENT OF YOUR JOB AND THIS MIGHT CONSTRAIN US TO IMPOSE DISCIPLINARY ACTION AGAINST YOU YOU CAN GET YOUR CASH ADVANCE FOR TRANSPORTATION PETITION FROM MRS. BAUTISTA TODAY.

NARVASA, J.:p Alicia Laplana was the cashier of the Baguio City Branch Office of the Philippine Telegraph and Telephone Corporation (hereafter, simply PT & T). Sometime in March 1984, PT & T's treasurer, Mrs. Alicia A. Arogo, directed Laplana to transfer to the company's branch office at Laoag City. Laplana refused the reassignment and proposed instead that qualified clerks in the

On May 8, 1984, Laplana in turn sent a telex message to Mrs. Arogo which reads as follows:
I LOVE WORKING FOR OUR COMPANY HOWEVER I AM SORRY I CANNOT ACCEPT YOUR JOB OFFER IN MANIIA THANK YOU AND RETRENCH ME INSTEAD. MY BEST REGARDS.

Thereafter, Laplana sent a letter to Mrs. Arogo on May 15, 1984, expatiating on her telex message and reiterating her request to be retrenched, as follows:
Dear Mrs. Arogo: Thank you for the job in Manila. However, I cannot accept the said offer because I have established Baguio City as my permanent residence. Considering the high cost of living in Manila it will surely involve additional expenses on my part. My salary alone will not be enough to sustain my expenses. Furthermore, a far assignment will be a big sacrifice on my part keeping me away from my husband which might affect my health due to an entirely new environment and climate, thereby affecting my efficiency. In view of the above reasons, I hereby request management to retrench me. xxx xxx xxx

right of action, that "when she insisted on her right of refusing to be transferred, the Defendants made good its warning by terminating her services on May 16, 1984 on alleged ground of "retrenchment," although the truth is, she was forced to be terminated and that there was no ground at all for the retrenchment;" that the company's "act of transferring is not only without any valid ground but also arbitrary and without any purpose but to harass and force . . . (her) to eventually resign." In answer, the defendants alleged that
1) Laplana "was being transferred to Laoag City because of increase in sales due to the additional installations of vodex line;" 2) in connection with her transfer, Laplana had been informed "that she would be given ten (10) days. relocation allowance and transportation expense from Baguio to Laoag City;" 3) the company "was exercising management prerogatives in transferring complainant . . . and there is no showing that this exercise was arbitrarily and whimsically done;" 4) Laplana's services were terminated on her explicit declaration that "she was willing to be retrenched rather than be assigned to Laoag City or Manila;" 5) in any event, the company had been actually suffering losses; in fact, in June, 1984, several employees "were retrenched because of losses incurred due to rising costs in wages, rentals, production supplies and other operational costs."

Termination of Laplana's employment on account of retrenchment thereupon followed. On May 19, 1984, PT & T issued an "Employees's Service Report" which contained the following remarks regarding Laplana: "Services terminated due to retrenchment with corresponding termination pay effective May 16, 1984. " And on June 30, 1984, Mrs. Arogo sent a Memorandum to the company's Baguio Branch Manager embodying the computation of the separation and 13th month pay due to Laplana, together with a check for the amount thereof, P2,512.50 and a quitclaim deed, and instructing said manager to "have the quitclaim signed by Alicia Laplana before releasing the check and return all copies of said form . . . immediately." On July 4, 1984, Laplana signed the quitclaim and received the check representing her 13th month and separation pay. On October 9, 1984, Laplana filed with the Labor Arbiters' Office at Baguio City, thru the CLAO, a complaint against PT & T its "Baguio Northwestern Luzon Branch, Baguio City," and Paraluman Bautista, Area Manager. In her complaint, she set forth substantially the facts just narrated, and alleged, as

Upon the issues thus raised, judgment was rendered on March 28, 1985 by the Labor Arbiter in Laplana's favor. 1 The Arbiter's verdict was made to rest essentially on the following pronouncements (made avowedly in reliance on the doctrine laid down by this Court in Helmut Dosch v. NLRC and Northwest Airlines, Inc., G.R. No. 51182, July 5, 1983 2), to wit:
Transferring an employee from one place to another is not by itself unlawful. It is within the inherent right of an employer to transfer or assign an employee in the pursuit of its legitimate business interests. However, this right is not absolute.

Transfer becomes unlawful where it is motivated by discrimination or in bad faith, or is effected as a form of punishment or demonition without sufficient cause. The transfer of the complainant from Baguio City to Laoag City or to Manila is patently a demotion and a form of punishment without just cause and would cause untold suffering on the part of the complainant. . . .

The case law on the matter is succinctly set out by a noted commentator on Labor Relations Law as follows: 5
. . . Except as limited by special laws, the employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers, and the discipline, dismissal and recall of workers. This flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of his business and does not deprive the employer of the right to select or dismiss his employees for any cause, except in cases of unlawful discrimination (NLU v. Insular-Yebana Tobacco Corp., 2 SCRA 924, 931; Republic Savings Bank v. CIR, 21 SCRA 226, 235). . . . The employer has the prerogative of making transfers and reassignment of employees to meet the requirements of the business. Thus, where the rotation of employees from the day shift to the night shift was a standard operating procedure of management, an employee who had been on the day shift for some time may be transferred to the night shift (Castillo v. CIR, 39 SCRA 81). Similarly, transfers effected pursuant to a company policy to transfer employees from one theater to other theaters operated by the employer, in order to prevent connivance among them, was sustained (Cinema, Stage and Radio Entertainment Free Workers v. CIR, 18 SCRA 1071). Similar transfers and re-assignments of employees have been upheld such as the re-assignment of one from a position of supervisor to that of engineer at the power house (Interwood Employees Assn. v. Interwood, 99 Phil. 82), or the transfer of the union president from his position of messenger clerk in a hotel to purely office work and two other unionists from the position of hotel guard to line and elevator men, without diminution of pay or other employee's rights (Bay View Hotel Employees Union v. Bay View Hotel, L-10393, March 30, 1960), or the temporary assignment of a sales clerk to another section of the store (Marcaida v. PECO, 63 O.G. 8559).

With these premises in mind, the Arbiter ruled "that the complainant was illegally dismissed . . . (and her) acceptance of separation pay . . . cannot cure the illegality of her dismissed because it was forced upon her she was compelled to accept the lesser evil," and that there was "no evidence to show that the complainant was retrenched to prevent losses," but that on the contrary, "it is continuously expanding and improving its facilities, and hiring new employees." Accordingly, he ordered
1) PT & T "to reinstate immediately the complainant, Alicia R. Laplana, to her former position or equivalent position without loss of seniority rights and benefits earned with full backwages and benefits less P2,512.50, the amount she received as separation, from the time her compensation was suspended until reinstated;" 2) the dismissal of the claim for moral and exemplary damages for lack of merit; and 3) the dismissal of the case against Mrs. Paraluman Bautista also for lack of merit.

The National Labor Relations Commission affirmed the Arbiter's judgment and dismissed the respondents' appeal, by Resolution dated August 5, 1986.
3

There can be no quarrel with the Arbiter's formulation of the general principle governing an employer's prerogative to transfer his employees from place to place or from one position to another. The Arbiter acknowledges "the inherent right of an employer to transfer or assign an employee in the pursuit of its legitimate business interests" subject only to the condition that it be not "motivated by discrimination or (made) in bad faith, or . . . effected as a form of punishment or demotion without sufficient cause." This is a principle uniformly adhered to by this Court. 4

Subsequent decisions of this Court have made no deviation from the doctrine. In Philippine Japan Active Carbon Corp. v. NLRC, promulgated on March 8, 1989 6 this Court made the following pronouncement, to wit:
It is the employer's prerogative, based on its assessment and perception of its employees' qualifications, aptitudes, and competence, to move them around in the various areas of its business operations in order to ascertain where they will function with maximum benefit to the company. An employee's right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his

assignment or transfer him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or diminution of his salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal.

insubordination in refuse to accept his transfer from the Philippines to an overseas post. Said the Court:
. . . The only piece of evidence on which (respondent employer) Northwest bases the charge of contumacious refusal is petitioner's letter dated August 28, 1975 to R.C. Jenkins wherein petitioner acknowledged receipt of the former's memorandum dated August 18, 1975, appreciated his promotion to Director of International Sales but at the same time regretted "that at this time for personal reasons and reasons of my family, I am unable to accept the transfer from the Philippines' and thereafter expressed his preference to remain in my Position of Manager-Philippines until such time that my services in that capacity are no longer required by Northwest Airlines." From this evidence, We cannot discern even the slightest hint of defiance, much less imply insubordination on the part of petitioner.

In Yuco Chemical Industries, Inc. v. MOLE et al. (judgment promulgated on May 28, 1990) 7 the same "general principles on transfer" were re-stated. The Court said:
. . . In a number of cases, the Court has recognized and upheld the prerogative of management to transfer an employee from one office to another within the business establishment provided that there is no demotion in rank or diminution of his salary, benefits and other privileges. This is a privilege inherent in the employer's right to control and manage its enterprise effectively. Even as the law is solicitous of the employees' welfare, it cannot ignore the right of the employer to exercise what are clearly and obviously management prerogatives. The freedom of management to conduct its business operations to achieve its purpose cannot be denied. But like all other rights, there are limits. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right must be exercised. Thus it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. Nor when the real reason is to penalize an employee for his union activities and thereby defeat his right to selforganization. But the transfer can be upheld when there is no showing that it is unnecessary, inconvenient and prejudicial to the displaced employee.

Withal, it is evident that the courteous tone of the employee's letter did not alter the actuality of his refusal to accept the transfer decreed by his employer in the exercise of its sound business judgment and discretion; and that the transfer of an employee to an overseas post cannot be likened to a transfer from a city to another within the country, as in the case at bar. In this case, the employee (Laplana) had to all intents and purposes resigned from her position. She had unequivocally asked that she be considered dismissed, herself suggesting the reason therefor retrenchment. When so dismissed, she accepted separation pay. On the other hand, the employer has not been shown to be acting otherwise than in good faith, and in the legitimate pursuit of what it considered its best interests, in deciding to transfer her to another office. There is no showing whatever that the employer was transferring Laplana to another work place, not because she would be more useful there, but merely "as a subterfuge to rid . . . (itself) of an undesirable worker," or "to penalize an employee for . . . union activities. . . ." The employer was moreover not unmindful of Laplana's initial plea for reconsideration of the directive for her transfer to Laoag; in fact, in response to that plea not to be moved to the Laoag Office, the employer opted instead to transfer her to Manila, the main office, offering at the same time the normal benefits attendant upon transfers from an office to another. The situation here presented is of an employer transferring an employee to another office in the exercise of what it took to be sound business judgment

The acceptability of the proposition that transfers made by an employer for an illicit or underhanded purpose e.g., to evade the duty to bargain collectively, or to defeat the welfare, right of collective bargaining, or discriminate against one or some of them on account of their union activities is self-evident and cannot be gainsaid. The difficulty lies in the situation where no such illicit, improper or underhanded purpose can be ascribed to the employer, the objection to the transfer being ground solely upon the, personal inconvenience or hardship that will be caused to the employee by reason of the transfer. What then? In Dosch v. NLRC, supra, this Court found itself unable to agree with the NLRC that the petitioner employee was guilty of disobedience and

and in accordance with pre-determined and established office policy and practice, and of the latter having what was believed to be legitimate reasons for declining that transfer, rooted in considerations of personal convenience and difficulties for the family. Under these circumstances, the solution proposed by the employee herself, of her voluntary termination of her employment and the delivery to her of corresponding separation pay, would appear to be the most equitable. Certainly, the Court cannot accept the proposition that when an employee opposes his employer's decision to transfer him to another work place, there being no bad faith or underhanded motives on the part of either party, it is the employee's wishes that should be made to prevail. In adopting that proposition by way of resolving the controversy, the respondent NLRC gravely abused its discretion. WHEREFORE, the writ of certiorari prayed for is GRANTED and the Resolution of August 5, 1986 of respondent NLRC is thereby nullified and set aside, and the termination of services of private respondent is declared legal and proper. No costs. SO ORDERED. Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

a bargaining agency, constitutes discrimination within the interdiction of the statute. . . ." 5 Fernandez, P.V., Labor Relations Law, 1985 ed., pp. 44, 45. 6 By the First Division, Grio-Aquino, J., ponente: 171 SCRA 164. 7 By the Third Division, Fernan, C.J., ponente: 185 SCRA 727.

G.R. No. 80767. April 22, 1991.* BOY SCOUTS OF THE PHILIPPINES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FORTUNATO ESGUERRA, ROBERTO MALABORBOR, ESTANISLAO MISA, VICENTE EVANGELISTA, and MARCELINO GARCIA, respondents.

Footnotes
1 Rollo, pp. 44-45. The decision was written by Labor Arbiter Ricardo Q. Encarnacion. 2 123 SCRA 296. 3 Rollo, pp. 74-79. The resolution was promulgated by the Third Division, composed of Presiding Commissioner Guillermo C. Medina, Commissioner Miguel B. Varela, and Commissioner Gabriel M. Gatchalian, the first two concurring "IN THE RESULTS." 4 The rule is the same in American Law: 51A CJS, 225-226; 48 Am Jur 2d, 745-746: e.g., while it is "the normal right of an employer to transfer employees in the course of business, the transfer of an employee, or the change in status of an employee from permanent to temporary, traceable to membership or nonmembership in a labor union, or to activities on behalf of

Constitutional Law; Public Corporations; BSPs functions as set out in its statutory charter do have a public aspect; Case at bar.Examining the relevant statutory provisions and the arguments outlined above, the Court considers that the following need to be considered in arriving at the appropriate legal characterization of the BSP for purposes of determining whether its officials and staff members are embraced in the Civil Service. Firstly, BSPs functions as set out in its statutory charter do have a public aspect. BSPs functions do relate to the fostering of the public virtues of citizenship and patriotism and the general improvement of the moral spirit and fiber of our youth. The social value of activities like those to which the BSP dedicates itself by statutory mandate have in fact, been accorded constitutional recognition. Article II of the 1987 Constitution includes in the Declaration of Principles and State Policies, the following: Sec. 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. At the same time, BSPs functions do not relate to the governance of any part of territory of the Philippines; BSP is not a public corporation in the same sense that municipal corporations or local governments

are public corporations. BSPs functions can not also be described as proprietary functions in the same sense that the func-

_______________

* THIRD DIVISION.

177

VOL. 196, APRIL 22, 1991

Same; Same; Same; Agency and instrumentality defined.We are fortified in this conclusion when we note that the Administrative Code of 1987 designates the BSP as one of the attached agencies of the Department of Education, Culture and Sports (DECS). An agency of the Government is defined as referring to any of the various units of the Government including a department, bureau, office, instrumentality, government-owned or-controlled corporation, or local government or distinct unit therein. Government instrumentality is in turn defined in the 1987 Administrative Code in the following manner: Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. This term includes regulatory agencies, chartered institutions and government-owned or controlled corporations. (Italics supplied) The same Code describes a chartered institution in the following terms: Chartered institutionrefers to any agency organized or operating under a special charter, and vested by law with functions relating to specific constitutional policies or objectives. This term includes the state universities and colleges, and the monetary authority of the State. (Italics supplied) We believe that the BSP is appropriately regarded as a government instrumentality under the 1987 Administrative Code. [Boy Scouts of the Philippines vs NLRC, 196 SCRA 176(1991)]

177

Boy Scouts of the Philippines vs NLRC

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

tions or activities of government-owned or controlled corporations like the National Development Company or the National Steel Corporation can be described as proprietary or business-like in character. Nevertheless, the public character of BSPs functions and activities must be conceded, for they pertain to the educational, civic and social development of the youth which constitutes a very substantial and important part of the nation.

G.R. No. 80767 April 22, 1991 BOY SCOUTS OF THE PHILIPPINES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FORTUNATO

ESGUERRA, ROBERTO MALABORBOR, ESTANISLAO MISA, VICENTE EVANGELISTA, and MARCELINO GARCIA, respondents. Julio O. Lopez for petitioner.

FELICIANO, J.:p This Petition for Certiorari is directed at (1) the Decision, 1 dated 27 February 1987, and (2) the Resolution 2 dated 16 October 1987, both issued by the National Labor Relations Commission ("NLRC") in Case No. 1637-84. Private respondents Fortunato C. Esquerra, Roberto O. Malaborbor, Estanislao M. Misa, Vicente N. Evangelista and Marcelino P. Garcia, had all been rank-and-file employees of petitioner Boy Scouts of the Philippines ("BSP"). At the time of termination of their services in February 1985, private respondents were stationed at the BSP Camp in Makiling, Los Baos, Laguna. The events which led to such termination of services are as follows: On 19 October 1984, the Secretary-General of petitioner BSP issued Special Orders Nos. 80, 81, 83, 84 and 85 addressed separately to the five (5) private respondents, informing them that on 20 November 1984, they were to be transferred from the BSP Camp in Makiling to the BSP Land Grant in Asuncion, Davao del Norte. These Orders were opposed by private respondents who, on 4 November 1984, appealed the matter to the BSP National President. On 6 November 1984, petitioner BSP conducted a pre-transfer briefing at its National Headquarters in Manila. Private respondents were in attendance during the briefing and they were there assured that their transfer to Davao del Norte would not involve any diminution in salary, and that each of them would receive a relocation allowance equivalent to one (1) month's basic pay. This assurance, however, failed to persuade private respondents to abandon their opposition to the transfer orders issued by the BSP Secretary-General.

On 13 November 1984, a complaint 3 (docketed as NLRC Case No. 16-84J) for illegal transfer was filed with the then Ministry of Labor and Employment, Sub-Regional Arbitration Branch IV, San Pablo City, Laguna. Private respondents there sought to enjoin implementation of Special Orders Nos. 80, 81, 83, 84 and 85, alleging, among other things, that said orders were "indubitable and irrefutable action[s] prejudicial not only to [them] but to [their] families and [would] seriously affect [their] economic stability and solvency considering the present cost of living." On 21 November 1984 (or the day immediately following the date of scheduled transfer), the BSP Camp Manager in Makiling issued a Memorandum requiring the five (5) private respondents to explain why they should not be charged administratively for insubordination. The Memorandum was a direct result of the refusal by private respondents, two (2) days earlier, to accept from petitioner BSP their respective boat tickets to Davao del Norte and their relocation allowances. Meanwhile, in a letter of the same date, the BSP National President informed private respondents that their refusal to comply with the Special Orders was not sufficiently justified and constituted rank disobedience. Memoranda subsequently issued by the BSP Secretary-General stressed that such refusal as well as the explanations proffered therefor, were unacceptable and could altogether result in termination of employment with petitioner BSP. These warnings notwithstanding, private respondents continued pertinaciously to disobey the disputed transfer orders. Petitioner BSP consequently imposed a five-day suspension on the five (5) private respondents, in the latter part of January 1985. Subsequently, by Special Order dated 12 February 1985 issued by the BSP Secretary-General, private respondents' services were ordered terminated effective 15 February 1985. On 22 February 1985, private respondents amended their original complaint to include charges of illegal dismissal and unfair labor practice against petitioner BSP. 4 The Labor Arbiter thereafter proceeded to hear the complaint. In a decision 5 dated 31 July 1985, the Labor Arbiter ordered the dismissal of private respondents' complaint for lack of merit.

On 27 February 1987, however, the ruling of the Labor Arbiter was reversed by public respondent, NLRC, which held that private respondents had been illegally dismissed by petitioner BSP. The dispositive portion of the NLRC decision read:
WHEREFORE, premises considered the Decision appealed from is hereby SET ASIDE and a new one entered ordering the respondent-appellee [petitioner BSP] to reinstate the complainants-appellants [private respondents] to their former positions without loss of seniority rights and other benefits appurtenant thereto and with full backwages from the time they were illegally dismissed from the service up to the date of their actual reinstatement. SO ORDERED.

The Civil Service embraces all branches, subdivisions, instrumentality mentalities and agencies of the Government, including government-owned or controlled corporations with original charters. xxx xxx xxx

The answer to the central issue will determine whether or not private respondent NLRC had jurisdiction to render the Decision and Resolution which are here sought to be nullified. The responses of the parties, on the one hand, and of the Office of the Solicitor General and the Office of the Government Corporate Counsel, upon the other hand, in compliance with the Resolution of this Court of 9 August 1989, present a noteworthy uniformity. Petitioner BSP and private respondents submit substantially the same view "that the BSP is a purely private organization". In contrast, the Solicitor General and the Government Corporate Counsel take much the same position, that is, that the BSP is a "public corporation' or a "quasi-public corporation" and, as well, a "government controlled corporation." Petitioner BSP's compliance with our Resolution invokes the following provisions of its Constitution and By-laws:
The Boy Scouts of the Philippines declares that it is an independent, voluntary, non-political, non-sectarian and non-governmental organization, with obligations towards nation building and with international orientation.

The Court notes at the outset that in the Position Paper 6 filed by petitioner BSP with the Labor Arbiter, it was alleged in the second paragraph thereof, that petitioner is a "civic service, non-stock and non-profit organization, relying mostly [on] government and public support, existing under and by virtue of Commonwealth Act No. 111, as amended, by Presidential Decree No. 460 . . . " A similar allegation was contained in the Brief for Appellee 7 and in the Petition 8 and Memorandum 9 filed by petitioner BSP with public respondent NLRC and this Court, respectively. The same allegation, moreover, appeared in the Comment 10 (also treated as the Memorandum) submitted to this Court by the Solicitor General on behalf of public respondent NLRC; for their part, private respondents stated in their Appeal Memorandum 11 with the NLRC that petitioner BSP is "by mandate of law a Public Corporation," a statement reiterated by them in their Memorandum 12 before this Court. In a Resolution dated 9 August 1989, this Court required the parties and the Office of the Government Corporate Counsel to file a comment on the question of whether or not petitioner BSP is in fact a government-owned or controlled corporation. Petitioner, private respondents, the Office of the Solicitor General and the Office of the Government Corporate Counsel filed their respective comments. The central issue is whether or not the BSP is embraced within the Civil Service as that term is defined in Article IX (B) (2) (1) of the 1987 Constitution which reads as follows:

The BSP, petitioner stresses, does not receive any monetary or financial subsidy from the Government whether on the national or local level. 13 Petitioner declares that it is a "purely private organization" directed and controlled by its National Executive Board the members of which are, it is said, all "voluntary scouters," including seven (7) Cabinet Secretaries. 14 Private respondents submitted a supplementary memorandum arguing that while petitioner BSP was created as a public corporation, it had lost that status when Section 2 of Commonwealth Act No. 111 as amended by P.D. No. 460 conferred upon it the powers which ordinary private corporations organized under the Corporation Code have:
Sec. 2. The said corporation shall have perpetual succession with power to sue and be sued; to hold such real and personal estate as shall be

necessary for corporate purposes, and to receive real and personal property by gift, devise, or bequest; to adopt a seal, and to alter or destroy the same at pleasure; to have offices and conduct its business and affairs in the City of Manila and in the several provinces; to make and adopt by-laws, rules and regulations not inconsistent with the laws of the Philippines, and generally to do all such acts and things (including the establishment of regulations for the election of associates and successors: as may be necessary to carry into effect the provisions of the Act and promote the purposes of said corporation.

Private respondents also point out that the BSP is registered as a private employer with the Social Security System and that all its staff members and employees are covered by the Social Security Act, indicating that the BSP had lost its personality or standing as a public corporation. It is further alleged that the BSP's assets and liabilities, official transactions and financial statements have never been subjected to audit by the government auditing office, i.e., the Commission on Audit, being audited rather by the private auditing firm of Sycip Gorres Velayo and Co. Private respondents finally state that the appointments of BSP officers and staff were not approved or confirmed by the Civil Service Commission. The views of the Office of the Solicitor General and the Office of the Government Corporate Counsel on the above issue appeared to be generally similar. The Solicitor General's Office, although it had appeared for the NLRC and filed a Comment on the latter's behalf on the merits of the Petition for Certiorari, submitted that the BSP is a government-owned or controlled corporation, having been created by virtue of Commonwealth Act No. 111 entitled "An Act to Create a Public Corporation to be known as the Boy Scouts of the Philippines and to Define its Powers and Purposes." The Solicitor General stressed that the BSP was created in order to "promote, through organization, and cooperation with other agencies the ability of boys to do things for themselves and others, to train them in scoutcraft, and to teach them patriotism, courage, self-reliance, and kindred virtues, using the methods which are now in common use by boy scouts." 5 He further noted that the BSP's objectives and purposes are "solely of a benevolent character and not for pecuniary profit by its members. 16 The Solicitor General also underscored the extent of government participation in the BSP under its charter as reflected in the composition of its governing body:

The governing body of the said corporation shall consist of a National Executive Board composed of (a) the President of the Philippines or his representative; (b) the charter and life members of the Boy Scouts of the Philippines; (c) the Chairman of the Board of Trustees of the Philippine Scouting Foundation; (d) the Regional Chairman of the Scout Regions of the Philippines; (e) the Secretary of Education and Culture, the Secretary of Social Welfare, the Secretary of National Defense, the Secretary of Labor, the Secretary of Finance, the Secretary of Youth and Sports, and the Secretary of local Government and Community Development; (f) an equal number of individuals from the private sector; (g) the National President of the Girl Scouts of the Philippines; (h) one Scout of Senior age from each Scout Region to represent the boy membership; and (i) three representatives of the cultural minorities. Except for the Regional Chairman who shall be elected by the Regional Scout Councils during their annual meetings, and the Scouts of their respective regions, all members of the National Executive Board shall be either by appointment or cooption, subject to ratification and 17 confirmation by the Chief Scout, who shall be the Head of State. . . . (Emphasis supplied)

The Government Corporate Counsel, like the Solicitor General, describes the BSP as a "public corporation" but, unlike the Solicitor General, suggests that the BSP is more of a "quasi corporation" than a "public corporation." The BSP, unlike most public corporations which are created for a political purpose, is not vested with political or governmental powers to be exercised for the public good or public welfare in connection with the administration of civil government. The Government Corporate Counsel submits, more specifically, that the BSP falls within the ambit of the term "governmentowned or controlled corporation" as defined in Section 2 of P.D. No. 2029 (approved on 4 February 1986) which reads as follows:
A government-owned or controlled corporation is a stock or a non-stock corporation, whether performing governmental or proprietary functions, which is directly chartered by special law or if organized under the general corporation law is owned or controlled by the government directly, or indirectly through a parent corporation or subsidiary corporation, to the extent of at least a majority of its outstanding capital stock or its outstanding voting capital stock. xxx xxx xxx (Emphasis supplied)

Examining the relevant statutory provisions and the arguments outlined above, the Court considers that the following need to be considered in arriving at the appropriate legal characterization of the BSP for purposes of determining whether its officials and staff members are embraced in the Civil Service. Firstly, BSP's functions as set out in its statutory charter do have a public aspect. BSP's functions do relate to the fostering of the public virtues of citizenship and patriotism and the general improvement of the moral spirit and fiber of our youth. The social value of activities like those to which the BSP dedicates itself by statutory mandate have in fact, been accorded constitutional recognition. Article II of the 1987 Constitution includes in the "Declaration of Principles and State Policies," the following:
Sec. 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs.

appointments of the Regional Chairman and Scouts of Senior age from the various Scout Regions, are subject to ratification and confirmation by the Chief Scout, who is the President of the Philippines. Vacancies to the Board are filled by a majority vote of the remaining members thereof, but again subject to ratification and confirmation by the Chief Scout. 18 We must assume that such confirmation or ratification involves the exercise of choice or discretion on the part of ratifying or confirming power. It does appears therefore that there is substantial governmental (i.e., Presidential) participation or intervention in the choice of the majority of the members of the National Executive Board of the BSP. The third aspect relates to the character of the assets and funds of the BSP. The original assets of the BSP were acquired by purchase or gift or other equitable arrangement with the Boy Scouts of America, of which the BSP was part before the establishment of the Commonwealth of the Philippines. The BSP charter, however, does not indicate that such assets were public or statal in character or had originated from the Government or the State. According to petitioner BSP, its operating funds used for carrying out its purposes and programs, are derived principally from membership dues paid by the Boy Scouts themselves and from property rentals. In this respect, the BSP appears similar to private non-stock, non-profit corporations, although its charter expressly envisages donations and contributions to it from the Government and any of its agencies and instrumentalities. 19 We note only that BSP funds have not apparently heretofore been regarded as public funds by the Commission on Audit, considering that such funds have not been audited by the Commission. While the BSP may be seen to be a mixed type of entity, combining aspects of both public and private entities, we believe that considering the character of its purposes and its functions, the statutory designation of the BSP as "a public corporation" and the substantial participation of the Government in the selection of members of the National Executive Board of the BSP, the BSP, as presently constituted under its charter, is a government-controlled corporation within the meaning of Article IX. (B) (2) (1) of the Constitution. We are fortified in this conclusion when we note that the Administrative Code of 1987 designates the BSP as one of the attached agencies of the Department of Education, Culture and Sports ("DECS"). 20 An "agency of the Government" is defined as referring to any of the various units of the

At the same time, BSP's sanctions do not relate to the governance of any part of territory of the Philippines; BSP is not a public corporation in the same sense that municipal corporations or local governments are public corporations. BSP's functions can not also be described as proprietary functions in the same sense that the functions or activities of government-owned or controlled corporations like the National Development Company or the National Steel Corporation can be described as proprietary or "business-like" in character. Nevertheless, the public character of BSP's functions and activities must be conceded, for they pertain to the educational, civic and social development of the youth which constitutes a very substantial and important part of the nation. The second aspect that the Court must take into account relates to the governance of the BSP. The composition of the National Executive Board of the BSP includes, as noted from Section 5 of its charter quoted earlier, includes seven (7) Secretaries of Executive Departments. The seven (7) Secretaries (now six [6] in view of the abolition of the Department of Youth and Sports and merger thereof into the Department of Education, Culture and Sports) by themselves do not constitute a majority of the members of the National Executive Board. We must note at the same time that the appointments of members of the National Executive Board, except only the

Government including a department, bureau, office, instrumentality, government-owned or-controlled corporation, or local government or distinct unit therein. 21 "Government instrumentality" is in turn defined in the 1987 Administrative Code in the following manner:
Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy usually through a charter. This term includes regulatory agencies, chartered 22 institutions and government-owned or controlled corporations. (Emphasis supplied)

The Civil Service embraces every branch, agency, subdivision and instrumentality of the Government, including every government-owned or controlled corporation. . . . The 1935 Constitution had a similar provision in its Section 1, Article XII which stated: A Civil Service embracing all branches and subdivisions of the Government shall be provided by law. The inclusion of "government-owned or controlled corporations" within the embrace of the civil service shows a deliberate effort of the framers to plug an earlier loophole which allowed government-owned or controlled corporations to avoid the full consequences of the all encompassing coverage of the civil service system. The same explicit intent is shown by the addition of "agency" and "instrumentality" to branches and subdivisions of the Government. All offices and firms of the government are covered. The amendments introduced in 1973 are not idle exercises or meaningless gestures. They carry the strong message that civil service coverage is broad and all-embracing insofar as employment in the government in any of its 25 governmental or corporate arms is concerned.

The same Code describes a "chartered institution" in the following terms:

Chartered institution refers to any agency organized or operating under a special charter, and vested by law with functions relating to specific constitutional policies or objectives. This term includes the state universities 23 and colleges, and the monetary authority of the State. (Emphasis supplied)

We believe that the BSP is appropriately regarded as "a government instrumentality" under the 1987 Administrative Code. It thus appears that the BSP may be regarded as both a "government controlled corporation with an original charter" and as an "instrumentality" of the Government within the meaning of Article IX (B) (2) (1) of the Constitution. It follows that the employees of petitioner BSP are embraced within the Civil Service and are accordingly governed by the Civil Service Law and Regulations. It remains only to note that even before the effectivity of the 1987 Constitution employees of the BSP already fell within the scope of the Civil Service. In National Housing Corporation v. Juco, 24 decided in 1985, the Court, speaking through Mr. Justice Gutierrez, held:
There should no longer be any question at this time that employees of government-owned or controlled corporations are governed by the civil service law and civil service rules and regulations. Section 1, Article XII-B of the [19731 Constitution specifically provides:

The complaint in NLRC Case No. 1637-84 having been filed on 13 November 1984, when the 1973 Constitution was still in force, our ruling in Juco applies in the case at bar. 26 In view of the foregoing, we hold that both the Labor Arbiter and public respondent NLRC had no jurisdiction over the complaint filed by private respondents in NLRC Case No. 1637-84; neither labor agency had before it any matter which could validly have been passed upon by it in the exercise of original or appellate jurisdiction. The appealed Decision and Resolution in this case, having been rendered without jurisdiction, vested no rights and imposed no liabilities upon any of the parties here involved. That neither party had expressly raised the issue of jurisdiction in the pleadings poses no obstacle to this ruling of the Court, which may motu proprio take cognizance of the issue of existence or absence of jurisdiction and pass upon the same. 27 ACCORDINGLY, the Decision of the Labor Arbiter dated 31 July 1985, and the Decision dated 27 February 1987 and Resolution dated 16 October 1987, issued by public respondent NLRC, in NLRC Case No. 1637-84, are hereby SET ASIDE. All other orders and resolutions rendered in this case by the

Labor Arbiter and the NLRC are likewise SET ASIDE. No pronouncement as to costs. Fernan, C.J., Gutierrez, Jr., Bidin and Davide Jr., JJ., concur.

17 Section 5, Id. 18 Section 5, Id. 19 Section 8, Id. 20 Book IV, Title VI, Chapter 8, Section 20, Administrative Code of 1987.

Footnotes
1 Rollo, pp. 49-53. 2 Id., pp. 83-86. 3 Annex "A" of Petition, Rollo, pp. 21-22. 4 Annex "C" of Petition, Rollo, p. 29. 5 Annex "D" of Petition, Rollo, pp. 31-37. 6 Annex "B" of Petition, Rollo, pp. 23-28.

21 Introductory Provisions, Section 2 (4), Id. 22 Section 2 (5), Id. 23 Section 2 (12), Id. 24 134 SCRA 172 (1985); Emphasis supplied. 25 134 SCRA at 176-177. 26 See Hagonoy Water District v. Hon. National Labor Relations Commission, G.R. No. 81490, 31 August 1988. 27 Dy v. National Labor Relations Commission, 145 SCRA 211 (1986). 7 Annex "F" of Petition, Rollo, pp. 43-48 at 43. 8 Id., pp. 5-20 at 5. 9 Id., pp. 132-145 at 132.

G.R. No. 149273. June 5, 2009.*

10 Id., pp. 107-117 at 107. 11 Annex "E" of Petition, Rollo, pp. 38-41 at 39. 12 Rollo, pp. 147-152. 13 Compliance, p. 1; Temporary Rollo. 14 Id. 15 Section 3, Commonwealth Act No. 111, as amended by P.D. No. 460. 16 Section 4, Id.

BIENVENIDO C. GILLES, petitioner, vs. COURT OF APPEALS, SCHEMA KONSULT, and EDGARDO ABORES, respondents.

Labor Law; Constructive Dismissals; Termination of Employment; Labor Arbiters; National Labor Relations Commission (NLRC); Jurisdiction; Labor Arbiters and the National Labor Relations Commission (NLRC) vested with exclusive jurisdiction to hear and decide cases involving termination disputes and all other cases arising from employer-employee relations.Article 217 of the Labor Code vests in Labor Arbiters and the NLRC exclusive

jurisdiction to hear and decide cases involving termination disputes and all other cases arising from employer-employee relations.

299

Gilles vs. Court of Appeals Same; Same; Same; Same; Same; Contrary to the stance of Schema Konsult, Inc. (SKI), the case is not an intra-corporate dispute but a labor controversy.The NLRC has jurisdiction over the illegal dismissal case filed by Gilles. Contrary to the stance of SKI, the case is not an intra-corporate dispute but a labor controversy. Gilles sought reinstatement; he wanted to recover his position as Principal Engineer of SKI. He also prayed for backwages, moral damages, and attorneys fees.

just and valid causes, which must be supported by clear and convincing evidence; and procedurally, the employee must be given notice and an adequate opportunity to be heard before his actual dismissal for cause.

Same; Same; Two requisites for a valid termination of employment by the employer.A valid termination of employment by the employer must comply with two requisites, namely: (1) the dismissal must be for any of the causes provided under Article 282 of the Labor Code; and (2) the employee must be afforded an opportunity to be heard and to defend himself. Substantively, the employer can terminate the services of an employee for

Same; Same; Willful Disobedience; Elements for willful disobedience of the employers lawful orders as a just cause for dismissal of an employee.Willful disobedience of the employers lawful orders, as a just cause for dismissal of an employee, requires the concurrence of two (2) elements: (1) the employees assailed conduct must have been willful, i.e., characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.

_______________ Same; Same; Constructive Dismissals; Constructive dismissal exists when the employee involuntarily resigns due to the harsh, hostile, and unfavorable conditions set by the employer.We, therefore, find that Gilles was constructively dismissed from employment. Constructive dismissal exists when the employee involuntarily resigns due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when there is clear discrimination, insensibility, or disdain by an employer and this becomes unbearable to the employee.

* THIRD DIVISION.

299

VOL. 588, JUNE 5, 2009

Same; Same; Same; The test of constructive dismissal is whether a reasonable person in the employees position would have felt compelled to give up his position under the circumstances.The law recognizes and resolves such a situation in favor of the employees in order to protect their rights from the coercive acts of the employer. Resignation

contemplates a voluntary act; thus, an employee who is forced to relinquish his position due to the employers unfair or unreasonable treatment is deemed to have been illegally terminated or discharged. The test of constructive dismissal is whether a reasonable person in the employees position would have felt compelled to give up his position under the circumstances.

initiated his removal prior to his departure from India. [Gilles vs. Court of Appeals, 588 SCRA 298(2009)]

DECISION

Same; Same; Neglect of Duty; As a just cause for an employees dismissal, neglect of duty must not only be gross but also habitual; A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee.SKI alleges neglect of duty as a ground for dismissing Gilles, saying Gilles unceremonious return to the Philippines constituted abandonment. The contention is untenable. As a just cause for an employees dismissal, neglect of duty must not only be gross but also habitual. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. Prior to his abrupt departure from India,

NACHURA, J.:

300

Before the Court is a petition for certiorari under Rule 65 of the Rules of Court assailing the Decision70[1] dated January 29, 2001 and

300

the Resolution dated June 14, 2001 of the Court of Appeals (CA) in CAG.R. SP No. 58467.

SUPREME COURT REPORTS ANNOTATED

Gilles vs. Court of Appeals

Gilles had no derogatory record in the company. Besides, if it was true that the performance of Gilles was unsatisfactory or if he habitually neglected his duties, SKI or CBI should have

The Facts

President for Finance and Administration from 1992 to 1993 and Principal Engineer of SKI from 1987 to March 1993.73[4]

The antecedents of the case are as follows: In 1993, SKI entered into an Agreement Regarding Staff Provision74[5] (Agreement) with Carl Bro International (CBI), a Respondent Schema Konsult, Inc. (SKI) is a company engaged in all phases of project consulting, management, and supervision of services, including investment studies, feasibility studies, microprocessing analysis, and detailed scheme formulation, for all types of industrial plants, and installation, infrastructure, and development projects.71[2] Respondent Edgardo C. Abores (Abores) was the corporation organized under the laws of Denmark. CBI entered into a joint venture with Aquatic Farms, Ltd., a foreign corporation under contract with the government of India for the provision of consultancy assistance on the Shrimp and Fish Culture Project (Project).75[6] The Project involved the development of shrimp farms in different parts of India, funded from a loan extended to the Government of India, particularly its Ministry of Agriculture, by the International Bank for Reconstruction and Development.76[7] The Ministry of Agriculture

President of SKI at the time material to the case.72[3] On the other hand, petitioner Bienvenido C. Gilles (Gilles) was an incorporator, stockholder, and member of the Board of Directors from 1987 to March 1993, Vice-

signed a contract with Aquatic Farms, Ltd., in association with CBI, for provision of consultancy assistance to the Project. CBI contracted SKI to provide a qualified aquaculture engineer for the Project.77[8]

in India, he would be considered as a regular employee of SKI, but all the conditions in the Agreement between SKI and CBI would apply.80[11]

In January 1993, prior to Gilles departure for India, he received Gilles applied for, and was accepted as, Water Systems/Irrigation Engineer of the Project for a period of two (2) years, commencing on January 24, 1993.78[9] The Agreement provided that: (1) CBI would pay SKI a monthly fee of US$4,000.00; (2) Gilles basic salary of US$2,500.00 would be taken from the said fee; and (3) during Gilles first sixty (60) days in India, he would receive a subsistence allowance of US$87.00 per calendar day to defray his expenses for accommodation, board and lodging, and hotel room accommodation during project travels away from the duty station.79[10] For the duration of Gilles assignment US$5,000.00 from SKI as an advance of his subsistence allowance to sustain him during his initial months in India.81[12] While in India, he twice received 43,000 Indian Rupees (INR), equivalent to Php43,000.00, to cover his expenses from April 1-30, 1993 and from May 1-15, 1993.82[13]

On May 10, 1993, Gilles tendered his Resignation Letter83[14] to Mr. Torben R. Schou (Schou) of CBI. The pertinent portions of the letter read:

On May 14, 1993, Schou faxed a Letter85[16] to Abores, informing him of the abrupt departure of Gilles from the Project and its attendant consequences. The letter reads:

For the past several weeks, I have been burdened by serious personal and financial problems. I have tried to put these problems out of my mind but they still keep on bothering me that my physical condition and capacity to concentrate with my work are affected. Because of these, I have decided to go back to the Philippines and face these problems. It is, therefore, with deep regret that I should tender my irrevocable resignation effective 15 May 1993. Thank you for giving me the opportunity to work with a great team.

We have on 10 May 1993 received Mr. Gilles resignation, dated 5 May 1993, which was incorrectly addressed to us, and we understand that he left India on 11 May 1993. We regret that his personal problems caused this to happen. His decision has resulted in a very serious and critical situation as regards our contractual obligations towards the Min. of Agric. in India, and Aquatic Farms Ltd. (AFL) has informed that Biens work has been very unsatisfactory for several weeks before his departure. In order to ensure that we meet the deadlines for design, AFL has brought in a temporary substitute for Bien, but this substitute is not billable to the project. You are kindly requested to inform what actions you propose to take regarding replacement of Bien.

On May 11, 1993, Gilles left India.84[15] An Inter-Office Memorandum,86[17] dated May 18, 1993, was sent to Gilles requesting him to attend the Board of Directors meeting

scheduled on May 19, 1993 at 2:00 p.m., at which the matter of his resignation would be discussed.

month. The attached memorandum of Mr. Clyde Simon supported the aforementioned schedule by recommending that construction of only three farms be started this year. In this memorandum, Mr. Clyde emphasized that quality of work should never be compromised. In our initial review of the design undertaken by CICEF on all 13 proposed farms (the design costs the Indian Government approximately 8.0 million Rupees), we found that major changes on the design criteria should be made (pages 12 to 18 of the Inception Report). Although these changes necessitate redesign for all proposed farms, the original work schedule can still be made applicable with only slight modifications. However, on April 1 during a meeting in Delhi attended by our Project Advisor, he committed the completion of the design (including construction drawings, cost estimates, feasibility and design reports, technical specifications and other documents necessary for tendering) of three proposed farms by the end of May and the completion of the design for the other 10 sites by the end of 1993. This means that we have to finish the design for 1.5 sites per month (the farm area ranges from 52 to 1,671 ha.) This commitment was made by our Senior Project Advisor to the World Bank, Indias Central Government and State Officials. Since I was the water systems engineer in the group, much of the pressure of keeping up with our Senior Project Advisors commitment was passed on to me. I had to work 18 hours on the average every day seven days a week. xxxx 4) I was made to expect when I left for this assignment that I will be better off financially. However, for the

At the board meeting on May 19, 1993, Abores explained that the meeting was called precisely to discuss the resignation of Gilles from his assignment in India. Abores read before the Members of the Board the Letter87[18] of Gilles dated May 15, 1993, pertinent portions of which state:

Resigning from my assignment in India as a Carl Bro employee was one of the most difficult and painful decisions I made in my life. I did not only give up the chance to be better off financially but most of all end my career as a consultant. The following has created a very discouraging and depressing working environment for me in India which pushed me to make such decision. 1) In our contract with Carl Bro (page 3/6, Annex 1 which is the same Annex in the contract between Aquatic Farms and the Indian Government), it is stated that design works for the 13 proposed prawn farms are to be undertaken from the 5th month (May 1993) to the 27th

last three and a half months now, Carl Bro has not paid my salary (3.5 months) and my subsistence allowance for my first 60 days stay in Bangalore. How could I be expected to fulfill my financial obligations here in the Philippines? I have an 80-year old mother to support, loans to amortize, relatives to help with their medical expenses, etc. Although, SCHEMA was kind to have given me an advance of US$5,000. During my first sixty days in Bangalore, as consultants, we were made to stay in five star hotel. I spent on the average US$70 per day for a total of US$4,200 in 60 days. Several times I have made personal long distance calls to SCHEMA to follow-up on my salary and to talk to management about the other items mentioned above. RMS, EEA and EAV were so kind to listen to my problems as well as do something within the limits of their positions. However, the person who could have helped me most refused to talk to me. I felt that I was abandoned by SCHEMA management. I was already in a very discouraged, depressed, exhausted and dejected state hence, I decided to leave Bangalore before my replacement was found. I wrote this letter to explain the reasons why I left my post in India before my replacement was found. This is not intended to ask management for reconsideration on its decision of terminating my services with SCHEMA. My request to management is to be kind enough to grant me separation benefits of one month per year of service and other benefits normally given to leaving employees. I am also requesting management to facilitate the payment of my 3.5 months salary by Carl Bro. I can claim, with a clear conscience, that I have earned, up to the last cent, my wage in India. As I have already mentioned in the earlier part of this letter that my resignation from my assignment in India has ended my career as a consultant. Hence, the granting of my aforementioned request would help me in venturing into new sources of livelihood.

Abores explained that the management was unaware of the difficulties encountered by Gilles in India, as no communication, official or otherwise, was received from Gilles. He said that Gilles never submitted any written progress report on the Project, contrary to the companys standard operating procedures.88[19] The Board of Directors then

decided to terminate the services of Gilles effective June 7, 1993,89[20] and a notice of termination was sent to him.90[21]

On September 6, 1993, Gilles filed a complaint for illegal dismissal against respondents, seeking reinstatement, moral damages, and other monetary claims.91[22]

alleged meeting where his termination by the Board was the principal item in the agenda.93[24] Gilles alleged that there was a deliberate scheme to ease him out of the Project and ultimately out of SKI. He believed that Abores was behind it. He said that while he was in India, his salary from the Project was not given to him on time. He claimed that he tried to communicate with SKI representatives, particularly with Abores, relative to the difficulties he encountered in India, but his calls were ignored. Moreover, the March 20, 1993 election of officers of SKI was not relayed to him on time, which resulted in his failure to attend the meeting or to send a proxy and, thus, was not elected officer of the company, a position that he consistently held in the past.92[23] He also challenged the May 19, 1993 Board of Directors meeting as a hoax. He alleged that the meeting did not take place. He claimed that he talked to two (2) or three (3) On the other hand, SKI dismissed the allegations of Gilles as mere fabrication. SKI averred that Gilles was well provided in India; that his resignation from CBI and his departure from India were not known nor approved by SKI; that the May 19, 1993 board meeting was real and Gilles was informed of such meeting at which his side was heard, but he was asked to step out of the meeting for displaying a temper; that the proceedings were properly recorded in the minutes; that the Board of Directors decided to terminate Gilles services effective June 7, 1993; and that SKI paid Gilles what was due him from the Project in India even if CBI had yet to pay the consultancy fees.94[25]

members of the Board of Directors and they confirmed to him that his termination from employment was not the subject of the said meeting. However, to his disbelief, Abores was able to produce minutes of the

On July 10, 1997, the Labor Arbiter rendered a Decision,95[26] the dispositive portion of which reads:

WHEREFORE, the respondents are hereby ordered, jointly and severally: 1.) To reinstate the complainant to his former position as Vice-President for Finance/Administration, with full backwages from the date his salary was withheld until he is actually reinstated which as of date has reached P1,274,000.00. If reinstatement should become improbable, then, the complainant should be paid separation pay equivalent to one-half month salary for every year of service rendered in addition to the grant of backwages; [and] 2.) To pay the complainant the sum of P500,000.00 as moral damages.

The respondents are, likewise, assessed the sum of P127,400.00 representing 10% of the benefits awarded as attorneys fees. SO ORDERED.96[27]

SKI moved for reconsideration.

The motion was denied in a Unsatisfied, SKI filed a

Resolution dated January 31, 2000.99[30]

petition for certiorari and prohibition under Rule 65 of the Rules of Court before the CA, raising the following issues: (a) the controversy was an intra-corporate dispute exclusively cognizable by the Securities and

On appeal, the National Labor Relations Commission (NLRC) affirmed the decision of the Labor Arbiter with modification in a Resolution97[28] dated November 29, 1999. The fallo of the resolution reads:

Exchange Commission (SEC), and beyond the jurisdiction of the NLRC; and (b) the finding of the Labor Arbiter that Gilles was illegally dismissed was bereft of merit.

On January 29, 2001, the CA rendered a Decision granting the

WHEREFORE, the decision appealed from is AFFIRMED, with modification deleting the award of attorneys fee and reducing the award of moral damages to P100,000.00. SO ORDERED.98[29] WHEREFORE, foregoing premises considered, the petition having merit, in fact and in law, is hereby GIVEN DUE COURSE. ACCORDINGLY, the decision/judgment of the Labor Arbiter and public respondent National Labor Relations Commission (3rd Division), are hereby SET ASIDE and ANNULLED for having

petition of SKI,100[31] disposing, as follows:

been rendered without jurisdiction, and the complaint of private respondent ordered DISMISSED. Public respondents or any of their agent/s are hereby permanently enjoined/restrained from executing their judgment. No costs. SO ORDERED.101[32]

The Issues

The CA ratiocinated that the removal of Gilles as Vice-President of SKI was an intra-corporate controversy that was within the jurisdiction of the SEC. Furthermore, Gilles was not illegally dismissed from service, considering that he resigned from his assignment in India even before a replacement was found.102[33]

Gilles raises the following issues for our resolution:

I WHETHER [OR] NOT THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT THE LABOR ARBITER HAS NO JURISDICTION OVER THE ILLEGAL DISMISSAL CASE OF HEREIN PETITIONER? II WHETHER OR NOT THE DISPOSITIVE PORTION OF THE LABOR ARBITERS DECISION CONTAINING REINSTATEMENT FOR THE POSITION OF VICE-PRESIDENT INSTEAD OF HIS REGULAR EMPLOYMENT AS PRINCIPAL ENGINEER WOULD DIVEST THE JURISDICTION OF NLRC OVER THE ILLEGAL DISMISSAL CASE OF HEREIN PETITIONER? III WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE IN DISTURBING THE FINDING OF THE LABOR ARBITER AND AFFIRMED BY THE NATIONAL LABOR RELATIONS COMMISSION (3rd DIVISION)

Gilles filed a motion for reconsideration. On June 14, 2001, the CA issued a Resolution dismissing the motion.

Hence, this petition.

THAT THE PETITIONER WAS ILLEGALLY DISMISSED FROM HIS REGULAR EMPLOYMENT?103[34] ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION.

These issues may be reduced to the following: (1) whether the NLRC has jurisdiction over the illegal dismissal case; and (2) whether Gilles was illegally dismissed from employment.

(a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases;

The Ruling of the Court

2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; [and] 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

Article 217 of the Labor Code vests in Labor Arbiters and the NLRC exclusive jurisdiction to hear and decide cases involving termination disputes and all other cases arising from employer-employee relations, as it provides:

(c) Cases arising from the interpretation [or implementation] of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements.

claimed that the issue involved is an intra-corporate controversy which falls under the exclusive jurisdiction of the Securities and Exchange Commission.

Based on this provision, the NLRC has jurisdiction over the illegal dismissal case filed by Gilles. Contrary to the stance of SKI, the case is not an intra-corporate dispute but a labor controversy. Gilles sought reinstatement; he wanted to recover his position as Principal Engineer of SKI. He also prayed for backwages, moral damages, and attorneys fees.

The motion must be denied. The complainant lost his position as VP-Finance/Administration and Treasurer when he was not voted in the 20 March 1993 stockholders meeting. His remaining relationship with the respondent firm after that date was his job position of Principal Engineer. Moreover, the issue here is one of termination of employment, arising from circumstances on complainants assignment in India. No incident of intra-corporate character has been linked to the employment issue. It appears, therefore, that the element of intracorporate controversy is absent [in the case which gives this Office the jurisdiction] to arbitrate the termination issue.104[35]

Based on the records of the case, Gilles never sought to regain his seat in However, the Labor Arbiter committed an error when, in the dispositive portion of the July 10, 1997 Decision, he ordered the reinstatement of Gilles to his former position as Vice-President for Finance of SKI. That ruling finds no legal support in the ratio decidendi of the Decision itself, which reads: the Board of Directors; he actually claimed reinstatement as Principal Engineer of SKI. The Labor Arbiters decision was muddled with a lengthy discussion on the Board of Directors positions that Gilles held in the past, his failure to participate in the March 19, 1993 SKI Board of Directors elections due to the delayed receipt of the notice of the meeting, and the circumstances which led him to believe that there was an overt plan to oust him from the company.
Respondents, through counsel, moved for the dismissal of the case on the ground that this Office lacks the jurisdiction to arbitrate the same. It is argued that the complainant is not an ordinary employee, being the Vice-President for Finance/Administration and Treasurer, in addition to his job position as Principal Engineer. It is[,] likewise[,]

terminate his employment with or without just cause for any of the grounds enumerated under Article 285108[39] of the Labor Code. Nonetheless, despite the tangled web of premises in the Labor Arbiters disquisition, what emerges is a clear case of a labor dispute, properly cognizable by the NLRC. A valid termination of employment by the employer must comply with two requisites, namely: (1) the dismissal must be for any of the causes provided under Article 282 of the Labor Code; and (2) the II employee must be afforded an opportunity to be heard and to defend himself. Substantively, the employer can terminate the services of an employee for just and valid causes, which must be supported by clear and Employment may be severed either by the employee or by the employer. An employer-initiated termination must be based on just or authorized causes enumerated in Articles 282, 283,105[36] 284,106[37] and 287107[38] of the Labor Code. On the other hand, an employee may convincing evidence; and procedurally, the employee must be given notice and an adequate opportunity to be heard before his actual dismissal for cause.109[40]

In this case, Gilles questions the validity of his dismissal as the Principal Engineer of SKI. He contends that he only resigned as a

consultant for the Project in India and not as a regular employee of SKI. Furthermore, he contests the genuineness of the May 19, 1993 board meeting and denies that he was given the opportunity to explain his side.

(e)

Other causes analogous to the foregoing.

Willful disobedience of the employers lawful orders, as a just cause for dismissal of an employee, requires the concurrence of two (2) elements: (1) the employees assailed conduct must have been willful,

SKI maintains that Gilles was terminated for willful disobedience and gross neglect of his duties, just causes recognized in Article 282 of the Labor Code, viz.:

i.e., characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.110[41]

ART. 282. Termination by employer. An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties;

Gilles resignation from CBI and sudden departure from India was not approved by SKI. When he asked the companys permission to return to Manila, the management instructed him to stay in India until a suitable replacement was found.111[42] He knew of the critical stage of the Project due to the accelerated period of its completion.112[43] Thus,

(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

when he left the Project, despite the clear and lawful instructions of the management for him to stay, his act constituted willful disobedience and gross neglect of duty under Article 282 of the Labor Code.

stand that Gilles was paid his salaries for the 3 months when he was already back in Manila.113[44] Added to this were the problems he encountered due to the acceleration of the job completion period, the obligations he had to meet at home for his aged mother at that time, now deceased, and the relatives who needed his financial support. Clearly,

But SKI was guilty of violating Article 103 of the Labor Code. SKI was remiss in paying the compensation of Gilles as Aquaculture Engineer of the Project on time. Based on the findings of fact of the Labor Arbiter, as confirmed by the NLRC, Gilles was not paid his salaries for the three and half (3) months of his stay in India. Article 103 of the Labor Code mandates that wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days and that no employer shall make payment with less frequency than once a month.

Gilles had a valid reason to leave India.

It should be noted that all the time Gilles was employed as Aquaculture Engineer of the Project, he remained a regular employee of SKI.114[45] reads: This is borne out by the Agreement which pertinently

Gilles departure from India, despite the instruction of SKI for him to stay, was impelled by the financial difficulties he encountered thereat. The money given to him before he left for India was already spent. Rickie Sarque, the Chief Accountant of SKI, admitted on the witness

Based on these TOR [Terms of Reference], SK [Schema Konsult, Inc.] has selected Mr. Bienvenido C. Gilles as the qualified Aquaculture (Water Systems) Engineer, and [the] MOA [Ministry of Agriculture] has accepted his assignment as a member of the AFL/CBI

[Aquatic Farms Ltd./Carl Bro International] team. B.C. Gilles shall be employed by SK.115[46]

SKI, as the principal employer of Gilles, had the responsibility to pay Gilles his salaries and to defray his expenses while he was engaged in the Project in India. Again, the Agreement explicitly covers this obligation, viz.:
insurance

Social charges All personal insurances, including: Health insurance Travel insurance Personal belongings insurance Accident and life insurance Employers liability and workers

compensation

Leave pay and sick leave pay Leave on official Indian Holidays and on non-Indian holidays Taxes and duties Relocation costs All living expenses beyond the subsistence allowance Third party motor vehicle liability insurance xxxx The total monthly rate, the USD subsistence allowance, the international travel per diem and expenses to be reimbursed by CBI shall be invoiced monthly and paid by CBI to SK not later than 30 days after CBIs receipt from SK of invoice and documentation acceptable to CBI including copies of receipts and filled in timesheets approved by the AFL/CBI SPA. Payment shall be effected by a bank transfer to a bank account informed by SK. CBI shall pay only for the bank charges payable to CBIs bank. Reimbursement of eligible expenses in INR shall be effected directly to B.C. Gilles in India by the AFL/CBI SPA on behalf of CBI against presentation of receipts.116[47]

4.

Remuneration and Expenses

During the period of assignment, CBI shall pay to SK a total monthly rate of USD4,000.00, broken down as follows: USD 2,500.00 1,500.00 4,000.00

Basic Salary to B.C. Gilles SK Office overhead and profit Total monthly rate

In case B.C. Gilles assignment commences or terminates during a month, a daily rate of USD 140.00/per working day shall be used for calculating the payment to SK. The total monthly or daily rate is the full remuneration to SK for the services of B.C. Gilles, and includes: Salary to B.C. Gilles

SKIs failure to pay Gilles salary on time was intolerable. For neglecting its duties as an employer, SKI may, thus, be considered to have acted in bad faith. It may be deemed as utter disregard by SKI of the welfare and well-being of its employee, especially at a time when he was far away from home.

unfair or unreasonable treatment is deemed to have been illegally terminated or discharged. The test of constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to give up his position under the circumstances.118[49]

The disobedience committed by Gilles cannot be characterized as We, therefore, find that Gilles was constructively dismissed from employment. Constructive dismissal exists when the employee involuntarily resigns due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when there is clear discrimination, insensibility, or disdain by an employer and this becomes unbearable to the employee.117[48] wrongful or perverse per se, given the conditions he was subjected to while in India. He left the Project primarily because of the financial difficulties he encountered, owing to his failure to receive his salary and because of the adverse working conditions in India.119[50] The Senior Project Advisor accelerated the time schedule of the Project, and Gilles had to work on the job at an average of eighteen (18) hours daily.120[51]

Invariably, the law recognizes and resolves such a situation in favor of the employees in order to protect their rights from the coercive acts of the employer. Resignation contemplates a voluntary act; thus, an employee who is forced to relinquish his position due to the employer's

Further, SKI alleges neglect of duty as a ground for dismissing Gilles, saying Gilles unceremonious return to the Philippines constituted abandonment. The contention is untenable. As a just cause for an employees dismissal, neglect of duty must not only be gross but also habitual. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. Prior to his abrupt departure from India, Gilles had no derogatory record in the company. Besides, if it was true that the performance of Gilles was unsatisfactory or if he habitually neglected his duties, SKI or CBI should have initiated his removal prior to his departure from India. The Agreement121[52] contains an adequate provision for the removal or replacement of Gilles if the employers are dissatisfied with his performance. The said provision reads:

experience similar to B.C. Gilles or better and acceptable to CBI, AFL and MOA.122[53]

Article 279 of the Labor Code mandates that an employee who was unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, as well as to other benefits or their monetary equivalent computed from the time his compensation was withheld up to the time of his actual reinstatement. Since the circumstances obtaining in this case do not warrant Gilles reinstatement due to his strained relations with the company, an award of separation pay, in lieu of reinstatement, equivalent to one month pay for every year of service, in addition to full backwages, allowances, and other benefits or the monetary equivalent thereof, is in order.

15.

Removal and/or Replacement of Personnel

If CBI (i) finds that B.C. Gilles has conducted serious misconduct or has been charged with having committed a criminal action, or (ii) has reasonable cause to be dissatisfied with the performance of B.C. Gilles, then SK shall, at CBIs written request specifying the ground thereof, forthwith provide a replacement with qualifications and

As to the liability of Abores as President of SKI, it is basic that a corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, while acting as

corporate agents, are not their personal liability but the direct accountability of the corporation they represent. As a rule, they are only solidarily liable with the corporation for the termination of employees if they acted with malice or bad faith.123[54] In the case at bar, malice or bad faith on the part of Abores in the constructive dismissal of Gilles was not sufficiently proven to justify holding him solidarily liable with SKI.
G.R. No. 113051. April 22, 1998.* TEOFILO GENSOLI & CO., GLORIA GENSOLI, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and NFSW-FGT/RODRIGO MONARCA, ET AL., respondents.

SO ORDERED.

WHEREFORE, the assailed Decision dated January 29, 2001 and Resolution dated June 14, 2001 of the Court of Appeals in CA-G.R. SP No. 58467 are hereby SET ASIDE. Petitioner Bienvenido C. Gilles is awarded separation pay equivalent to one month pay for every year of service and full backwages, other privileges and benefits, or the monetary equivalent thereof, computed from the date of his illegal dismissal on June 7, 1993 until the finality of this decision. Respondent Edgardo C. Abores is ABSOLVED from any liability adjudged against corespondent Schema Konsult, Inc. Respondent Schema Konsult, Inc. is likewise ORDERED to pay Gilles One Hundred Thousand Pesos (Php100,000.00) as moral damages.
* THIRD DIVISION. _______________ Labor Law; Labor Code; Appeal; For the perfection of the appeal on the merits, to be threshed out by the NLRC, the requirements of the law should be given a liberal interpretation.Salutory and prevailing is the rule that technical rules be not strictly followed and the spirit and intent of the Labor Code be taken into account. (Oriental Mindoro Electric Cooperative, Inc. v. NLRC, 246 SCRA 801 [1995]). True it is, Article 223 of the Labor Code, as amended by Republic Act No. 6715, requires a cash or surety bond in an amount equal to the monetary award in the judgment appealed from. But for the perfection of the appeal on the merits, to be threshed out by the NLRC, the requirements of the law should be given a liberal interpretation.

408

408

SUPREME COURT REPORTS ANNOTATED

Teofilo Gensoli & Co. vs. National Labor Relations Commission

Same; Same; Same; Court relaxed in Sun Insurance Office, Ltd. vs. Maximiano C. Asuncion the ruling in Manchester Development Corporation vs. Court of Appeals, by permitting a liberal interpretation of the rule that payment of docket fee is jurisdictional.In Sun Insurance Office, Ltd. vs. Maximiano C. Asuncion, 170 SCRA 274 [1989], this Court relaxed the ruling in Manchester Development Corporation vs. Court of Appeals, 149 SCRA 562 [1987], by permitting a liberal interpretation of the rule that payment of docket fee is jurisdictional. More so, when the party involved demonstrated his willingness to abide by the rules by paying the docket fee needed. Applying this principle of liberal interpretation to the payment of docket fee, the petitioners, in the case of YBL (Your Bus Line), et al. v. NLRC, were given a chance to post the requisite bond and to avail of the remedy of appeal. [Teofilo Gensoli & Co. vs. National Labor Relations Commission, 289 SCRA 407(1998)]

Same; Same; Same; Indeed, well entrenched is the principle of liberal interpretation of the Labor Code, as amended.Indeed, well entrenched is the principle of liberal interpretation of the Labor Code, as amended. The circumstances under which petitioners posted a deficient bond justify a liberal application of the provision of law. Petitioners had repeatedly offered to private respondents, Two Hundred Fifty Two Thousand Seven Hundred Eighty Three and 40/100 (P252,783.40) Pesos, in payment of their separation pay, the said amount not being controverted. And in good faith, petitioners posted a supersedeas bond enough to cover the excess amount of One Hundred Eighty One Thousand Nine Hundred Sixty Nine and 10/100 (P181,969.10) Pesos, being disputed on appeal, and petitioners did later evince willingness to comply with the rules, by offering to give an additional cash bond to take care of the undisputed amount, not appealed from.

THIRD DIVISION [G.R. No. 113051. April 22, 1998] TEOFILO GENSOLI & CO., GLORIA GENSOLI, ET AL., petitioners vs. NATIONAL LABOR RELATIONS COMMISSION and NFSW-FGT/RODRIGO MONARCA, ET AL, respondents. DECISION PURISIMA, J.:

Same; Same; Same; There is a clear distinction between the filing of an appeal within the reglementary period, and its perfection.To repeat; there is a clear distinction between the filing of an appeal within the reglementary period, and its perfection. Perfection may take place after the end of the reglementary period for appealing. (Star Angel Handicraft v. NLRC, supra) It is beyond cavil that petitioners appeal was filed on time although not perfected by reason of the deficient amount of the bond, a defect which may be corrected by the simple expedient of posting the additional bond required.

This special civil action for certiorari seeks to set aside and annul the Order dated August 11, 1993 of the National Labor Relations Commission (NLRC) dismissing petitioners appeal, and its subsequent Order of September 23, 1993 denying their motion for reconsideration for failure to post the required surety bond. Private respondents are farm workers of Hacienda Vista Alegre and Gloria, two (2) sugar farms formerly owned by Teofilo Gensoli and Company, a registered partnership. In 1988, after the death of original partner Mercedes Gensoli Siasat, the remaining partners agreed to dissolve the partnership. After the partnership was liquidated, petitioner Gloria F. Gensoli informed

private respondents of the dissolution of the partnership and cessation of its operations, and offered to pay them separation pay equivalent to fifteen (15) days for every year of service rendered, and to give them a relocation site at Calumangan, Bago City, and a relocation allowance of One Thousand (P1,000.00) Pesos for each family. Some of the workers accepted such offer but the others, including the herein private respondents, demanded a higher separation pay. Dissatisfied with what was offered to them, the private respondents filed with NLRC a Complaint for illegal dismissal against the herein petitioners, praying for reinstatement with backwages and damages. During a preliminary conference, petitioners reiterated the same offer to private respondents but again, the latter rejected it. So, on December 1, 1992, at the subsequent preliminary mandatory conference between the parties, the Labor Arbiter ruled, thus: During the mandatory conference, the parties agreed to submit as an issue the validity of the complainants separation from work. Respondents are ordered to show valid cause for the complainants separation from work. SO ORDERED. (p. 9, Rollo) In compliance therewith, the parties submitted their respective position papers, pleadings, and arguments. Petitioners pleadings focused on the validity of private respondents separation from work. On May 26, 1993, the Labor Arbiter rendered a decision, holding that the dismissal of private respondents was legal and valid, and ordered petitioners to pay separation pay equivalent to fifteen (15) days salary for every year of service or a total amount of Four Hundred Thirty Four Thousand Seven Hundred Fifty Two and 50/100 (P434,752.50) Pesos, plus ten percent (10%) of the award, as attorneys fees. (p. 10, Rollo) Petitioners appealed the aforesaid decision to the NLRC; assailing the computation of private respondents separation pay and award of attorneys

fees, for having no factual and legal basis, and for having been made by the Labor Arbiter without due process. More specifically, petitioners complain that they were never afforded an opportunity to be heard and to present evidence on the actual length of service of private respondents, which is material to the determination of the amount of separation pay. In perfecting their appeal, petitioners filed with NLRC a supersedeas bond to cover only the amount of One Hundred Eighty One Thousand Nine Hundred Sixty Nine and 10/100 (P181,969.10) Pesos, the excess amount disputed on appeal. To the appeal of petitioners, private respondents interposed their opposition on the ground that the supersedeas bond posted by petitioners did not equal the monetary award of Four Hundred Thirty Four Thousand Seven Hundred Fifty Two and 50/100 (P434,752.50) Pesos and attorneys fees. As the appeal from subject Decision was not perfected within the 10-day reglementary period; on August 11, 1993, the NLRC dismissed the appeal, holding, thus XXX The Commission (Fourth Division) after due deliberation, RESOLVED to DISMISS the instant appeal for failure of respondent-appellants to comply with the requirement for the perfection of an appeal specifically the posting of the required cash or surety bond equivalent to the monetary award. The monetary award in the judgment appealed from is P434,752.50, whereas the supersedeas bond posted is only P181,969.10, and therefore, deficient by P252,783.40. The law and the present Rules of Procedure of the NLRC are very explicit in the matter of posting a cash or surety bond equivalent to the monetary award in order to perfect an appeal by an employer (Article 223 of the Labor Code of the Philippines, as amended, and Sections 3 (a) and 6, Rule VI of the New Rules of Procedure of the NLRC, as amended). As held by the Supreme Court, x x x perfection of an appeal in the manner x x x prescribed by law is not only mandatory but jurisdictional and failure to perfect an appeal as required by the Rules has the effect of rendering the judgment final and executory. (Filcon Manufacturing Corp. vs. NLRC, 199 SCRA 814). This appeal was not perfected in accordance with law and the Rules. SO ORDERED. (pp. 186-187, Rollo)

Petitioners moved for reconsideration of the aforesaid Order, and submitted an Ex-Parte Manifestation, to inform NLRC of their willingness to put up an additional cash bond of Two Hundred Fifty Two Thousand Seven Hundred Eighty Three and 40/100 (P252, 783.40) Pesos, to fully cover the monetary award of Four Hundred Thirty Four Thousand Seven Hundred Fifty Two Pesos and 50/100 (P434,752.50) Pesos. On September 22, 1993, however, the NLRC denied petitioners motion for reconsideration for lack of merit. (p. 28, Rollo) Undaunted, petitioners found their way to this Court via the present petition, contending that the NLRC gravely abused its discretion in dismissing their appeal. The petition is impressed with merit. Salutory and prevailing is the rule that technical rules be not strictly followed and the spirit and intent of the Labor Code be taken into account. (Oriental Mindoro Electric Cooperative, Inc. v. NLRC 246 SCRA 801 [1995]. True it is, Article 223 of the Labor Code, as amended by Republic Act No. 6715, requires a cash or surety bond in an amount equal to the monetary award in the judgment appealed from. But for the perfection of the appeal on the merits, to be threshed out by the NLRC, the requirements of the law should be given a liberal interpretation. (Blancaflor v. NLRC, 218 SCRA 371 [1993], YBL (Your Bus Line), et al. vs. NLRC, et al., 190 SCRA 160 [1990], Erectors, Inc. v. NLRC, 202 SCRA 605-606 [1991], Manila Mandarin Employees Union v. NLRC, 264 SCRA 331 [1996], Star Angel Handicraft v. NLRC 236 SCRA 580 [1994], UERM-Memorial Medical Center v. NLRC 269 SCRA 70 [1997]. This policy of liberal interpretation was unequivocably ratiocinated and amply settled in the case of Oriental Mindoro Cooperative, Inc. v. NLRC (246 SCRA 801 [1995]), to wit: The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word only makes it perfectly clear,

that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employers appeal may be perfected. That requirement is intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees just and lawful claims. Considering , however, that the current policy is not to strictly follow technical rules but rather to take into account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of the case, especially since petitioner disputes the allegation that private respondent was illegally dismissed. x x x Indeed, well entrenched is the principle of liberal interpretation of the Labor Code, as amended. The circumstances under which petitioners posted a deficient bond justify a liberal application of the provision of law. Petitioners had repeatedly offered to private respondents, Two Hundred Fifty Two Thousand Seven Hundred Eighty Three and 40/100 (P252,783.40) Pesos, in payment of their separation pay, the said amount not being controverted. And in good faith, petitioners posted a supersedeas bond enough to cover the excess amount of One Hundred Eighty One Thousand Nine Hundred Sixty Nine and 10/100 (P181,969.10) Pesos, being disputed on appeal, and petitioners did later evince willingness to comply with the rules, by offering to give an additional cash bond to take care of the undisputed amount, not appealed from. To repeat; there is a clear distinction between the filing of an appeal within the reglementary period, and its perfection. Perfection may take place after the end of the reglementary period for appealing. (Star Angel Handicraft v. NLRC, supra) It is beyond cavil that petitioners appeal was filed on time although not perfected by reason of the deficient amount of the bond, a defect which may be corrected by the simple expedient of posting the additional bond required. In Sun Insurance Office, Ltd. vs. Maximiano C. Asuncion, 170 SCRA 274 [1989], this Court relaxed the ruling in Manchester Development Corporation vs. Court of Appeals, 149 SCRA 562 [1987], by permitting a liberal interpretation of the rule that payment of docket fee is jurisdictional. More so,

when the party involved demonstrated his willingness to abide by the rules by paying the docket fee needed. Applying this principle of liberal interpretation to the payment of docket fee, the petitioners, in the case of YBL (Your Bus Line), et al. v. NLRC (supra), were given a chance to post the requisite bond and to avail of the remedy of appeal. Considering that in their appeal below, the herein petitioners posed the issue of due process - as to whether or not they (petitioners) were given adequate opportunity to adduce evidence on the frequency of private respondents work, to be used as the basis for the computation of separation pay, it would be prudent for NLRC to look into the merits of the case - to the end that petitioners be not deprived arbitrarily of their property in the cash amount of One Hundred Eighty One Thousand Nine Hundred Sixty Nine and 10/100 (P181,969.10) Pesos. We therefore hold that petitioners should be allowed to provide the requisite bond, and to avail of the remedy of appeal. WHEREFORE, the petition is GRANTED; the Orders of NLRC dated August 11, 1993 and September 23, 1993, respectively, are set aside, and NLRC is hereby ordered to give due course to the appeal of petitioners. No pronouncement as to costs. SO ORDERED. Narvasa, C.J., Romero, and Kapunan, JJ., concur.