The Lawphil Project - Arellano Law Foundation

IBAEZ, Celina Z.
Re: Termination of Services; Reorganization
Decision of RTC Directing Payment of
Separation Pay of Employees who Opted
to Retire; Request for Opinion
x------------------------------------------------------------x



RESOLUTION NO. 02-0435

Celina Z. Ibaez, Information Officer III, City Government of Cadiz,
requests a ruling on whether there is a legal impediment to her reappointment
as Information Officer III in the City Government (as directed by the
Commission in Civil Service Commission Resolution No. 01-1203 dated July
16, 2001) in view of the decision by the Regional Trial Court dated June 20,
2001 directing instead the payment of separation pay and other benefits to
those employees who opted to retire during the reorganization. The instant
request was made because Ibaez previously applied for the payment of her
termination leave pay as a result of the reorganization but subsequently
questioned the validity thereof before the Commission and thereafter she was
one of the employees ordered by this Commission to be reappointed.
In her request, Ibaez represented, as follows:
"Since Mayor Varela was defeated in the last Local election, Mayor
Salvador Escalante, the newly elected city mayor, was ordered by the
Commission through CSC Resolution No. 011203 to execute and implement
the order by reinstating or re-appointing us to the next similar or comparable
position in the new staffing pattern.
"Subsequently I and my group were re-appointed to the next
similar/comparable position last July 1, 2001 in compliance with the writ of
execution ordered by the honorable commission. I was appointed as
Information Officer III next or lower to my former position, Information Officer
IV xxx.
"Recently, the civil case filed by some of terminated employees in the
Regional Trial Court of Cadiz City, won and declared the following: the
reorganization is null and void, 166 terminated employees were ordered to be
reinstated with full back wages. However, item no. 3 of the said order barred
the reinstatement of employees who opted to retire and had claimed
separation benefit. Xxx
"There are 49 employees who had claimed terminal, separation and
retirement benefits. Some of them were already 60 years and above, old age
and physically unfit. Few of us had filed our complaint or appeal to the Civil
Service Commission questioning the validity of our termination.
"To those of us who obtained retirement and separation benefits but
was ordered by the Civil Service Commission to be reinstated or re-appointed
are in a dilemma as to the status of our reinstatement.
"The City Mayor had issued an Executive Order implementing the
Decision of Court, Section 4 of Civil Case No. 547-C xxx suspending the
reinstatement of those who obtained retirement benefits which takes effect on
August 10, 2001 to which our services is also terminated. Our reinstatement
was held in abeyance until it is settled by the proper authorities.
"In this connection, I am again requesting the honorable commission to
give us their opinion on the following query:
`1. Does obtaining retirement and separation benefits prevent me from re-
instatement or re-appointment despite of the reinstatement/re-appointment
order of the commission?
`2. Does the Supreme Court Ruling on Yulo vs. the CSC case (219 SCRA
470-479) where the appellants had also received separation and terminal
benefits but still ordered by the supreme court to reinstate with full back
wages less the amount of what they received, also applicable to our case?
`3. If reinstatement is ordered, are we entitled for back wages?
`4. If we cannot be reinstated and desired to re-apply in the same position, are
we entitled to be appointed to the same position or grade level?
"We are hoping that the honorable commission will give us their
immediate attention and have their opinion in an earliest possible time. We
are also praying for our reinstatement and the amount we received will also be
deducted in the back wages for the continuity of our services."
Submitted together with the request are the copies of the Writ of
Execution in Civil Case No. 574-C in the case of Daisy Revalez, et al. versus
Honorable Mayor Eduardo C. Varela, Mayor of Cadiz City as the plaintiff and
defendant, respectively, issued by Christy E. Uriarte, Clerk of Court VI and Ex-
Officio Sheriff of Regional Trial Court of Negros Occidental and Executive
Order No. 10-SGE-2001 (An Order Directing the Implementation of the
Decision of in Civil Case No. 547-C, For the Plaintiffs Entitled to
Reinstatement to Assume Their Office on August 10, 2001 and For Other
Purposes) issued by incumbent Mayor Salvador Escalante.
It may be recalled that Celina Z. Ibaez, Lilia C. Bayot, Jocelyn S.
Buenafe, Susan A. Ascura, Romeo C. Gonzales, Jesusa B. Castillano,
Percival V. Balela, Lilia F. Paragsa, Fernando E. Olaira and MarianoE.
Edullan, all employees of the City Government of Cadiz, jointly filed their
appeal before the Commission questioning the validity of their separation from
the service as a result of the reorganization undertaken by said city. The
reorganization was authorized through Resolution No. 98-112, Series of 1998
enacted by the Sangguniang Panlungsod of said City.
In CSC Resolution No. 00-1132 dated May 4, 2000, the Commission
declared not in order Ibaez, et al.s separation from the service. In said
resolution, the Commission directed Mayor Varela to reappoint said affected
employees to positions equivalent or comparable to the positions previously
held by them. A motion for reconsideration was interposed by the Mayor
assailing the resolution. Pending the decision of said motion, Ibaez, et
al. filed a Motion to Resolve Pending Incident. Apparently, the motion prays
that the decision be executed pending reconsideration of the Mayor.
On February 8, 2001, the Commission denied Mayor Varelas motion
for reconsideration in CSC Resolution No. 01-0399. Henceforth, the records
do not show that a relief was taken by the Mayor from said decision either
before the Commission a quo or courts of law.
Thereafter Ibaez, et al. moved for the execution of CSC Resolution
No. 00-1132. The Commission granted the same in CSC Resolution No. 01-
0730 dated April 2, 2001. Without the Commission being furnished a copy of
the pertinent pleading, Mayor Varela filed a Petition for Review to CSC
Resolution 01-0730 before the Court of Appeals and is now pending
consideration thereat.
Records further show that Mayor Varela ran for a reelection on May 14,
2001 but lost to Salvador Escalante. Upon the assumption of the latter as the
City Mayor, the Commission, in CSC Resolution No. 01-1203, directed him to
implement the reinstatement of the employees of the city who were unlawfully
terminated by former Mayor under different decisions by the Commission, as
follows: CSC Resolution Nos. 00-1165 (Bedayos, Mary Grace, et al.), 00-1132
(Ibaez, Celina, et al.) and 99-2624 (Revalez, Daisy). In compliance to the
order of implementation, incumbent Mayor Escalante re-appointed all of said
employees into the new staffing pattern on January 1, 2001. Ibaez was re-
appointed as Information Officer III considering that the position of Information
Officer IV which she formerly held has been abolished.
On the basis of the documents submitted in this request, it appears that
certain reorganized out employees filed simultaneously (with the appeal from
their separation from the service before the Commission) a civil case before
the Regional Trial Court (RTC) of Negros Occidental seeking the nullification
of Sangguniang Panglunsod Resolution No. 98-112. The filing and the
pendency of said case was not disclosed to the Commission.
On June 20, 2001, the RTC rendered a favorable judgment. A copy of
said decision was not, however, furnished the Commission. In the Writ of
Execution, it declared SP Resolution No. 98-112 null and void and ordered the
reinstatement in the service all the plaintiffs with payment of backwages
commencing from January 1, 1999. Likewise directed is the payment of
separation and other benefits for the plaintiffs who opted to retire or can no
longer be reinstated in the service. For emphasis, the pertinent portions of
Writ of Execution dated August 31, 2001 read, as follows:
"1. Declaring Resolution No. 98-112, series of 1998, of the Sangguniang
Panlungsod of Cadiz City, NULL and VOID;
"2. Ordering the immediate reinstatement of all plaintiffs to their employment
in the City Government of Cadiz with payment of back wages from January 1,
1999 until fully reinstated to their former positions or their equivalent without
loss of seniority rights and benefits, under existing laws;
"3. Ordering the payment of separation and other benefits for plaintiffs who
opted to retire or cannot be reinstated;
"4. Ordering the defendant to pay each of the plaintiffs P10,000.00 as moral
damages;
"5. Ordering defendant to pay plaintiffs attorneys fees of P200,000.00,
litigation expenses of P20,000.00 and court appearance fees at rate of
P3,000.00 per hearing.
"The counterclaim of defendant is dismissed for lack of merit.
"WHEREAS, on Motion for Execution Pending the Appeal, this Court
issued an Order dated July 25, 2001, which reads:
"This is to resolve plaintiffs Motion for Execution Pending Appeal. The
Court heard the parties on July 11, 2001.
"Plaintiffs argue that many of plaintiffs are beyond the threshold of
middle age and further delay in the implementation of reinstatement to their
former position would only exacerbate the precarious economic condition they
are now in. Most of them are financially distressed and living on the charity of
relatives and friends. Their children have lost two years of their quest for
education and better life. Not a few are facing foreclosures on mortgages they
have unwillingly entered into have the money to tide them over. A few have
died, and many have gotten sick. Any delay would drive deeper the knife of
injustice, which had inflicted untold injury and misery.
"As provided for in Section 2(a) of Rule 39, of the 1997 Rules of Civil
Procedure, let a Writ of Execution Pending Appeal issues.
"The Clerk of Court is directed to issue the corresponding Writ of
Execution.
"SO ORDERED.
"Cadiz City, July 25, 2001."
In compliance with the Writ, incumbent Mayor Escalante issued
Executive Order No. 10-SGE-2001 dated August 9, 2001. Under Section 4
thereof, the reinstatement of those employees who opted to retire were held in
abeyance by the Mayor. Their reinstatement was conditioned on the full
settlement by the proper authorities of the issue of whether or not reinstated
employees pursuant to CSC Resolutions and who previously applied for
payment of terminal leave pay will no longer be reinstated but be paid instead
their retirement benefits. Based on the records of the Commission, Ibaez
was among those employees who applied for the payment of terminal leave
pay but who nonetheless questioned their separation from the service.
However, it is unclear whether she was among those plaintiffs ordered by the
RTC to receive instead payment of separation and other benefits. Pertinently,
the Section reads, as follows:
"Section 4. Suspension of Reinstatement of Plaintiffs who Obtained
Retirement Benefits. The reinstatement of those plaintiffs who opted to retire
under any retirement law shall, in the meantime, be held in abeyance until the
issue on their entitlement to reinstatement shall have been fully settled by the
proper authorities. The City Legal Officer is hereby directed to settle this issue
not later than August 20, 2001."
Subsequently, records show that the City Government informed the
Commission of the reinstatement of the separated employees in the service
and the appropriation and funding of their salaries in compliance to
aforementioned writ of execution issued by the court. This information was
contained in a letter dated September 25, 2001 sent by Atty. Michael S.
Borromeo, City Legal Officer. Accordingly, excluded from the reinstatement in
the service are those who have reached the compulsory retirement age.
Taking into account the fact that the Commission in CSC Resolution 00-
1132 allowed Ibaez to question her termination notwithstanding her
application for retirement benefits following the decision of the Supreme Court
in Yulo vs. CSC (219 SCRA 470) and had in fact ordered her reinstatement in
CSC Resolution Nos. 01-0730 and 01-1203 vis-a-vis the ruling of the RTC
ordering the payment of retirement benefits to those plaintiffs who opted to
retire, Ibaez is inquiring if there is a legal impediment to her re-appointment
considering her application for retirement and collection of terminal leave pay.
The issue is squarely settled in the case of Yulo vs. CSC wherein the
Supreme Court unequivocally declared that employees who opted to retire as
a result of reorganization and thereafter received their separation benefits are
not precluded from assailing their termination and claim for reinstatement.
Pertinently, said ruling reads, as follows:
"Neither can we sustain petitioners claim that the overt acts of
Mamplata, et al. in filing their separation clearances and accepting terminal
leave benefits estop them from further claiming reinstatement. xxx In any
event, receipt by private respondents of their separation benefits does not
preclude them from assailing the termination of their services and praying for
their reinstatements."
The fact that the employees illegally dismissed received their terminal
leave pay cannot be considered as waiver of their right to question the
termination of their services (Urgelio vs. Osmena, Jr., 10 SCRA 253). This is
reiterated in CSC Resolution No. 99-1068 (Mary Grace Bedayos, et al.
dated May 21, 1999), to wit:
"x x x the fact that the appellants applied for the payment of their
terminal leave. Said act cannot be construed as acquiescence to the
termination and will not estop them from questioning the legality of their
separation from the service."
The Commission takes notice of Ibaez financial condition at the time
she was informed of her separation from the service. Low salaried, as she is,
without stable and fixed source of income other than those coming from her
employment in government, naturally, she will succumb to the monetization of
her leave credit, it being the immediate source of financial relief. She cannot,
therefore, be faulted to have applied for and collected the benefit in order to
feed her family.
Relative to question of whether the ruling of the Supreme Court in the
aforementioned, Yulo case wherein it directed for the reinstatement of the
separated employees and payment of backwages deducting therefrom the
amount received by said employees representing the separation and terminal
benefits finds application to her and other employees similarly reiterated, the
answer is in the affirmative. The Supreme Court is unequivocal in the matter.
In the dispositive portion, it ruled that the amount received by the affected
employees as their separation and terminal benefits shall be deducted from
the backwages awarded to them. For clarity, the dispositive portion of the
pertinent case is reproduced hereunder en toto:
"WHEREFORE, the petition is DISMISSED for lack of merit.
Accordingly, the Municipality of Calamba, Laguna is hereby ordered to
REINSTATE the twenty (20) personnel named in CSC Resolution No. 90-472
and pay their backwages equivalent to five (5) years (Cristobal v. Melchor, 78
SCRA 175 [1997]; Ginzon v. Municipality of Murcia, 158 SCRA 1 [1988]) less
the amount of terminal pay received, it appearing from private respondents
manifestation dated January 11, 1993 that they are still jobless from the time
of their removal from the service up to the present."
As regards the payment of backwages in case reinstatement is ordered,
the answer is also in the affirmative. It should be stressed that when a
government employee is declared to have been illegally dismissed and
reinstatement was later on ordered, for all intents and purposes he is
considered as not to have left his office. Thus, he is entitled to all the right and
privileges and emoluments that accrue to him by virtue of his office (Taala
vs. Legaspi, 13 SCRA 567 cited in CSC Resolution No. 94-5306 Orogo,
Manuel T.). In Ibaez case, her separation from the service was declared not
in order, consequently, she is entitled to receive backsalaries.
Finally, on the issue of her reappointment. The Commission sees no
legal impediment to her reappointment. Section 4 of Republic Act No. 6656
(An Act to Protect the Security of Tenure of Civil Service Officers and
Employees in the Implementation of Government
Reorganization) explicitly provides that officers and employees holding
permanent appointments enjoy preferential right of reappointment to their
former position or in case there are not enough comparable positions, to
positions next lower in rank. Thus, ones entitlement to be reappointed in a
position in the new staffing pattern is guided by the rule of preference .
Needless to say, the employee should possess the qualifications required of
the position (Section 6, supra).
Considering that Ibaez was already issued a re-appointment as
Information Officer III on January 1, 2001 and presumably assumed the duties
of the office, such appointment can no longer be withdrawn much less
withheld pursuant to the order of RTC. Section 1, Rule IV of MC No. 40, s.
1998 provides:
"SEC. 1. An appointment issued in accordance with pertinent laws and
rules shall take effect immediately upon its issuance by the appointing
authority, and if the appointee has assumed the duties of the position, he shall
be entitled to receive his salary at once without awaiting the approval of his
appointment by the Commission. The appointment shall remain effective until
disapproved by the Commission. In no case shall an appointment take effect
earlier than the date of its issuance."
Thus, an appointment proposed as permanent and approved as such
by the Commission cannot unilaterally be withdrawn or held in abeyance. This
is so because upon its issuance and the appointees assumption, the latter
acquired a vested right not merely equitable right such that she can only be
removed for cause.
At this juncture, it bears to stress that the jurisdiction over cases
involving reorganization in national as well as local government is vested by
law to the Commission. Section 8 of Republic Act No. 6656 expressly bestows
upon the Commission the authority to decide appeals filed by employees
aggrieved by appointments or non-appointments resulting from
reorganization. Section 8 reads, as follows:
"SECTION 8. An officer or employee who is still not satisfied with the
decision of the appointing authority may further appeal within ten (10) days
from receipt thereof to the Civil Service Commission which shall render a
decision within thirty (30) days from filing thereof."
Thus, the Commission shall render a decision within thirty (30) days
from the filing of the appeal. Its decision shall be final and executory (Section
19 (3), Rules on Government Reorganization) unless a seasonal relief is
taken therefrom before the Court of Appeals via a petition for review under
Rule 43 of the Rules of Court. Therefore, in the absence of any
declaration/pronouncement from the Court of Appeals or Supreme Court
reversing or modifying the final decision of this Commission, the order of the
Regional Trial Court cannot operate to bar or hold in abeyance, muchless
qualify this Commissions order of reinstatement/reappointment.
WHEREFORE, the Civil Service Commission rules that there is no legal
impediment to the reappointment of Celina Z. Ibaez to the position of
Information Officer III. Accordingly, the Decision of the Regional Trial Court
dated June 20, 2001 directing for the payment of separation pay to employees
who opted to retire shall not operate to bar or hold in abeyance the
implementation of Civil Service Commission Resolution No. 01-1230 dated
June 16, 2001 directing for her reinstatement in the service in consonance to
the ruling of Supreme Court in the ofYulo vs. CSC (219 SCRA 470).
The Commission further rules that employees ordered by the
Commission to be reappointed in the new staffing pattern pursuant to the
Resolution is entitled to receive backsalaries computed from the time they
were unlawfully dismissed until actual reinstatement. From the amount of the
backwages awarded, there shall be deducted any amounts received as
terminal pay.
Finally, employees who cannot be reinstated in the new staffing pattern
pursuant to the provision of Republic Act No. 6656 are entitled to separation
and retirement benefits in accordance with Section 21 of the Rules in
Government Reorganization.
Quezon City, March 20, 2002.


(Signed)
JOSE F. ERESTAIN, JR.
Commissioner
(Signed)
KARINA CONSTANTINO-DAVID
Chairman



(Signed)
J. WALDEMAR V. VALMORES
Commissioner


Attested by:


(Signed)
ARIEL G. RONQUILLO
Director III

CPS.AGR.pvp.cm09-2002
FPG/JTS/RTM/X1/X8/jca171
NDC-99-0858
20010828-027 /ibaezr




Republic of the Philippines
Supreme Court
Manila

EN BANC



REPUBLIC OF THE
PHILIPPINES, represented by
the CIVIL SERVICE
COMMISSION,
Petitioner,







- versus -








MINERVA M.P. PACHEO,
Respondent.

G.R. No. 178021

Present:

CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.


Promulgated:
January 25, 2012

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

D E C I S I O N


MENDOZA, J.:


Before this Court is a petition for review on certiorari under Rule 45 of the
Rules of Court filed by petitioner Republic of the Philippines, represented by the
Office of the Solicitor General (OSG), which assails the February 22, 2007
Decision
[1]
and the May 15, 2007 Resolution
[2]
of the Court of Appeals (CA) in
CA-G.R. SP No. 93781. The CA reversed the November 21, 2005 Resolution of
the Civil Service Commission (CSC) declaring the re-assignment of respondent
Minerva M.P. Pacheos (Pacheo) not valid and ordering her reinstatement to her
original station but without backwages under the principle of no work, no pay.

The Facts

Pacheo was a Revenue Attorney IV, Assistant Chief of the Legal Division of
the Bureau of Internal Revenue (BIR) in Revenue Region No. 7 (RR7), Quezon
City.

On May 7, 2002, the BIR issued Revenue Travel Assignment
Order (RTAO) No. 25-2002,
[3]
ordering the reassignment of Pacheo as Assistant
Chief, Legal Division from RR7 in Quezon City to RR4 in San Fernando,
Pampanga. The BIR cited exigencies of the revenue service as basis for the
issuance of the said RTAO.

Pacheo questioned the reassignment through her Letter dated May 9,
2002
[4]
addressed to Rene G. Banez, then Commissioner of Internal
Revenue (CIR). She complained that the transfer would mean economic dislocation
since she would have to spend 200.00 on daily travel expenses or approximately
4,000.00 a month. It would also mean physical burden on her part as she would
be compelled to wake up early in the morning for her daily travel from Quezon
City to San Fernando, Pampanga, and to return home late at night from San
Fernando, Pampanga to Quezon City. She was of the view that that her
reassignment was merely intended to harass and force her out of the BIR in the
guise of exigencies of the revenue service. In sum, she considered her transfer
from Quezon City to Pampanga as amounting to a constructive dismissal.

Due to the then inaction of the BIR, Pacheo filed a
complaint
[5]
dated May 30, 2002, before the CSC- National Capital Region (CSC-
NCR), praying for the nullification of RTAO No. 25-2002. In its July 22, 2002
Order,
[6]
the CSC-NCR treated Pacheos Complaint as an appeal and dismissed the
same, without prejudice, for failure to comply with Sections 73 and 74 of Rule
V(b) of the Uniform Rules on Administrative Cases in the Civil Service.
[7]


In its Letter-reply
[8]
dated September 13, 2002, the BIR, through its
Deputy Commissioner for Legal and Inspection Group, Edmundo P.
Guevara (Guevara), denied Pacheos protest for lack of merit. It contended that her
reassignment could not be considered constructive dismissal as she maintained her
position as Revenue Attorney IV and was designated as Assistant Chief of Legal
Division. It emphasized that her appointment to the position of Revenue Attorney
IV was without a specific station. Consequently, she could properly be reassigned
from one organizational unit to another within the BIR. Lastly, she could not
validly claim a vested right to any specific station, or a violation of her right to
security of tenure.

Not in conformity with the ruling of the BIR, Pacheo appealed her case
before the CSC.

On November 21, 2005, the CSC issued Resolution No. 051697
[9]
granting
Pacheos appeal, the dispositive portion of which reads:

WHEREFORE, the instant appeal of Minerva M.P. Pacheo is
hereby GRANTED. The Bureau of Internal Revenue Revenue Travel
Assignment Order No. 25-2002 datedMay 7, 2002, on the reassignment of
Pacheo to the Legal Division Revenue Region No. 4 San Fernanado,
Pampanga, is hereby declared NOT VALID. ACCORDINGLY, Pacheo
should now be recalled to her original station. This Commission, however
rules and so holds that the withholding by the BIR of Pacheos salary for
the period she did not report to work is justified.

The CSCRO No. III is directed to monitor the implementation of
this Resolution.

In granting Pacheos appeal, the CSC explained:

On the second issue, this Commission finds merit in appellants
contention that her reassignment in not valid.

Of pertinent application thereto is Rule III, Section 6 of CSC
Memorandum Circular No. 40, series of 1998, dated December 14,
1998, which provides:

Section 6. Other Personnel Movements. The following
personnel movements which will not require issuance of an
appointment shall nevertheless require an office order by
duly authorized official.

a. Reassignment Movement of an employee
from one organizational unit to another in the same
department or agency which does not involve reduction in
rank, status or salary. If reassignment is done without
consent of the employee being reassigned it shall be allowed
for a maximum period of one year. Reassignment is
presumed to be regular and made in the interest of public
service unless proven otherwise or it constitutes constructive
dismissal.

No assignment shall be undertaken if done
indiscriminately or whimsically because the law is not
intended as a convenient shield for the appointing/
disciplining authority to harass or oppress a subordinate on
the pretext of advancing and promoting public interest.

Reassignment of small salaried employee is not
permissible if it causes significant financial dislocation.

Although reassignment is a management prerogative, the same
must be done in the exigency of the service without diminution in rank,
status and salary on the part of the officer or employee being temporarily
reassigned. Reassignment of small salaried employees, however is not
allowed if it will cause significant financial dislocation to the employee
reassigned. Otherwise the Commission will have to intervene.

The primary purpose of emphasizing small salaried employees in
the foregoing rule is to protect the rank and file employees from possible
abuse by the management in the guise of transfer/reassignment. The
Supreme Court in Alzate v. Mabutas, (51 O.G. 2452) ruled:

x x x [T]he protection against invalid transfer is
especially needed by lower ranking employees. The Court
emphasized this need when it ruled that officials in the
unclassified service, presidential appointees, men in the
government set up occupy positions in the higher echelon
should be entitled to security of tenure, unquestionable a
lesser sol[ci]itude cannot be meant for the little men, that
great mass of Common underprivileged employees-
thousand there are of them in the lower bracket, who
generally are without connections and who pin their hopes
of advancement on the merit system instituted by our civil
service law.

In other words, in order to be embraced in the term small-salaried
employees, the latter must belong to the rank and file; and, his/her
salary would be significantly reduced by virtue of the
transfer/reassignment. Rank and file was categorized as those occupying
the position of Division Chief and below, pursuant to CSC Resolution No.
1, series of 1991, dated January 28, 1991.

The facts established on record show that Pacheo belongs to the
rank and file receiving an average monthly salary of Twenty Thousand
Pesos (20,000.00) under the salary standardization law and a monthly
take home pay of Fourteen Thousand Pesos (14,000.00). She has to
spend around Four Thousand Pesos (4,000.00) a month for her
transportation expenses as a consequence of her reassignment, roughly
twenty eight percent (28%) of her monthly take home pay. Clearly,
Pacheos salary shall be significantly reduced as a result of her
reassignment.






In ANORE, Ma. Theresa F., this Commission ruled:

Anore, a lowly salaried employee, was reassigned to
an isolated island 15 kilometers away from her original
place of assignment. She has to travel by boat with only one
trip a day to report to her new place of assignment in an
office without any facilities, except its bare structure. Worst,
the municipality did not provide her with transportation
allowance. She was forced to be separated from her family,
look for a boarding house where she can stay while in the
island and spend for her board and lodging. The
circumstances surrounding Anores reassignment is exactly
the kind of reassignment that is being frowned upon by
law.

This Commission, however, rules and so holds that the withholding
by the BIR of her salaries is justified as she is not entitled thereto since she
is deemed not to have performed any actual work in the government on
the principle of no work no pay.

Accordingly, Pacheo should now be reinstated to her original
station without any right to claim back salary as she did not report to work
either at her new place of assignment or at her original
station.
[10]
[Emphases in the original]

Still not satisfied, Pacheo moved for reconsideration. She argued that the
CSC erred in not finding that she was constructively dismissed and, therefore,
entitled to back salary.

On March 7, 2006, the CSC issued Resolution No. 060397
[11]
denying
Pacheos motion for reconsideration.

Undaunted, Pacheo sought recourse before the CA via a petition for review.

In its February 22, 2007 Decision, the CA reversed the CSC Resolution and
ruled in favor of Pacheo, the fallo of which states:

WHEREFORE, the petition is GRANTED. Resolution nos.
051697 and 060397 dated November 21, 2005 and March 7, 2006,
respectively, of the Civil Service Commission are REVERSED and SET
ASIDE. A new judgment is hereby entered finding petitioner to have been
constructively dismissed and ordering her immediate reinstatement with
full backwages and benefits.

SO ORDERED.
[12]


In setting aside CSC Resolution Nos. 051697 and 060397, the CA held that:

While this Court agrees that petitioners reassignment was not valid
considering that a diminution in salary is enough to invalidate such
reassignment, We cannot agree that the latter has not been constructively
dismissed as a result thereof.

It is well to remember that constructive dismissal does not always
involve forthright dismissal or diminution in rank, compensation, benefits
and privileges. For an act of clear discrimination, insensibility, or disdain
by an employer may become so unbearable on the part of the employee
that it could foreclose any choice by him except to forgo his continued
employment.

The management prerogative to transfer personnel must be
exercised without grave abuse of discretion and putting to mind the basic
elements of justice and fair play. The employer must be able to show that
the transfer is not unreasonable, inconvenient, or prejudicial to the
employee.

In this case, petitioners reassignment will result in the reduction of
her salary, not to mention the physical burden that she would suffer in
waking up early in the morning to travel daily from Quezon City to San
Fernando, Pampanga and in coming home late at night.

Clearly, the insensibility of the employer is deducible from the
foregoing circumstances and petitioner may have no other choice but to
forego her continued employment.

Moreover, it would be inconsistent to hold that the reassignment
was not valid due to the significant reduction in petitioners salary and
then rule that there is no constructive dismissal just because said
reduction in salary will not render petitioner penniless if she will report to
her new place of assignment. It must be noted that there is constructive
dismissal when the reassignment of an employee involves a diminution in
pay.



Having determined that petitioner has been constructively
dismissed as a result of her reassignment, We shall resolve whether or not
she is entitled to backwages.

In denying petitioners claim for backwages, the CSC held:

This Commission, however, rules and so holds that the
withholding by the BIR of her salaries is justified as she is
not entitled thereto since she is deemed not to have
performed any actual work in the government on the
principle of no work no pay.

Accordingly, Pacheo should now be reinstated to her
original station without any right to claim back salary as she
did not report for work either at her new place of assignment
or at her original station.

Pacheo, while belonging to the rank-and-file
employees, is holding a responsible position as an Assistant
Division Chief, who could not just abandon her duties merely
because she protested her re-assignment and filed an appeal
afterwards.


We do not agree.

If there is no work performed by the employee there can be no wage
or pay, unless of course the laborer was able, willing and ready to work but
was illegally locked out,dismissed or suspended. The No work, no pay
principle contemplates a no work situation where the employees
voluntarily absent themselves.

In this case, petitioner was forced to forego her continued
employment and did not just abandon her duties. In fact, she lost no time
in protesting her reassignment as a form of constructive dismissal. It is
settled that the filing of a complaint for illegal dismissal is inconsistent
with a charge of abandonment. The filing of the complaint is proof enough
of his desire to return to work, thus negating any suggestion of
abandonment.

Neither do we agree with the OSG when it opined that:

No one in the Civil Service should be allowed to decide
on whether she is going to accept or not any work dictated
upon by the exigency of the service. One should consider
that public office is a public trust and that the act of
respondent CIR enjoys the presumption of regularity. To
uphold the failure of respondent to heed the RTAO would
result in chaos. Every employee would put his or her vested
interest or personal opinion over and above the smooth
functioning of the bureaucracy.



Security of tenure is a right of paramount value as recognized and
guaranteed under Sec. 3, Art. XIII of the 1987 Constitution.

The State shall afford full protection to labor, xxx and
promote full employment and equality of employment
opportunities for all. It shall guarantee the rights
of all workers to xxx security of tenure xxx


Such constitutional right should not be denied on mere speculation
of any similar unclear and nebulous basis.

In Garcia, et al. v. Lejano, et al., the Supreme Court rejected the
OSGs opinion that when the transfer is motivated solely by the interest of
the service of such act cannot be considered violative of the Constitution,
thus:

We do not agree to this view. While temporary
transfers or assignments may be made of the personnel of a
bureau or department without first obtaining the consent of
the employee concerned within the scope of Section 79 (D) of
the Administrative Code which party provides that The
Department Head also may, from time to time, in the
interest of the service, change the distribution among the
several Bureaus and offices of his Department of the
employees or subordinates authorized by law, such cannot
be undertaken when the transfer of the employee is with a
view to his removal. Such cannot be done without the
consent of the employee. And if the transfer is resorted to as
a scheme to lure the employee away from his permanent
position, such attitude is improper as it would in effect result
in a circumvention of the prohibition which safeguards the
tenure of office of those who are in the civil service. It is not
without reason that this Court made the following
observation:

To permit circumvention of the constitutional prohibition in
question by allowing removal from office without lawful
cause, in the form or guise of transfers from one office to
another, or from one province to another, without the
consent of the transferee, would blast the hopes of these
young civil service officials and career men and women,
destroy their security and tenure of office and make for a
subservient, discontented and inefficient civil service force
that sways with every political wind that blows and plays up
to whatever political party is in the saddle. That would be far
from what the framers of our Constitution contemplated and
desired. Neither would that be our concept of a free and
efficient Government force, possessed of self-respect and
reasonable ambition.

Clearly, the principle of no work, no pay does not apply in this
case. As held in Neeland v. Villanueva, Jr:

We also cannot deny back salaries and other
economic benefits on the ground that respondent Clerk of
Court did not work. For the principle of no work, no pay
does not apply when the employee himself was forced out of
job. Xxx Indeed, it is not always true that back salaries are
paid only when work is done. Xxx For another, the poor
employee could offer no work since he was forced out of
work. Thus, to always require complete exoneration or
performance of work would ultimately leave the dismissal
uncompensated no matter how grossly disproportionate the
penalty was. Clearly, it does not serve justice to simply
restore the dismissed employee to his position and deny him
his claim for back salaries and other economic benefits on
these grounds. We would otherwise be serving justice in
halves.

An illegally dismissed government employee who is later ordered
reinstated is entitled to back wages and other monetary benefits from the
time of his illegal dismissal up to his reinstatement. This is only fair and
sensible because an employee who is reinstated after having been illegally
dismissed is considered as not having left his office and should be given a
comparable compensation at the time of his reinstatement.

When a government official or employee in the classified civil
service had been illegally dismissed, and his reinstatement had later been
ordered, for all legal purposes he is considered as not having left his office,
so that he is entitled to all the rights and privileges that accrue to him by
virtue of the office that he held.
[13]


The CSC moved for reconsideration but its motion was denied by the CA in its May 15,
2007 Resolution.

Hence, this petition.



THE ISSUES

WHETHER OR NOT THE ASSAILED DECISION IS LEGALLY
CORRECT IN DECLARING THAT RESPONDENT WAS
CONSTRUCTIVELY DISMISED AND ENTITLED TO BACK WAGES,
NOTWITHSTANDING RESPONDENTS REFUSAL TO COMPLY WITH
BIR RTAO No. 25-2002 WHICH IS IMMEDIATELY EXECUTORY
PURSUANT TO SECTION 24 (F) OF P.D. 807.

WHETHER OR NOT RESPONDENT SUFFERED A DIMINUTION IN
HER SALARY IN RELATION TO SECTION 6, RULE III OF CSC
MEMORANDUM CIRCULAR No. 40, SERIES OF 1998, DATED
DECEMBER 14, 1998, AS A RESULT OF THE ISSUANCE [OF] BIR
RTAO No. 25-2002 ORDERING HER REASSIGNMENT FROM BIR RR
No. 7 IN QUEZON CITY TO BIR RR No. 4 IN SAN FERNANDO,
PAMPANGA.
[14]


In her Memorandum,
[15]
Pacheo asserts that RTAO No. 25-2002, on the
pretense of the exigencies of the revenue service, was solely meant to harass her
and force her to resign. As a result of her invalid reassignment, she was
constructively dismissed and, therefore, entitled to her back salaries and monetary
benefits from the time of her illegal dismissal up to her reinstatement.

In its own Memorandum,
[16]
the CSC, through the OSG, argues that
constructive dismissal is not applicable in this case because it was Pacheo herself
who adamantly refused to report for work either in her original station or new
place of assignment in clear violation of Section 24 (f) of Presidential
Decree (PD) No. 807.
[17]
Citing jurisprudence,
[18]
the CSC avers that the RTAO is
immediately executory, unless otherwise ordered by the CSC. Therefore, Pacheo
should have first reported to her new place of assignment and then appealed her
case to the CSC if she indeed believed that there was no justification for her
reassignment. Since Pacheo did not report for work at all, she is not entitled to
backwages following the principle of no work, no pay.

THE COURTS RULING

The petition fails to persuade.

It appears undisputed that the reassignment of Pacheo was not valid. In its
memorandum, the OSG initially argues for the validity of RTAO No. 25-2002
authorizing Pacheos reassignment from Quezon City to San Fernando, Pampanga.
Later, however, it specifically prays for the reinstatement of CSC Resolution Nos.
051697 and 060397, which categorically declared RTAO No. 25-2002 as not valid.
In seeking such relief, the OSG has effectively accepted the finding of the CSC, as
affirmed by the CA, that Pacheos reassignment was indeed invalid. Since the issue
of Pacheos reassignment is already settled, the Court finds it futile to pass upon
the same at this point.

The question that remains to be resolved is whether or not Pacheos
assignment constitutes constructive dismissal and, thus, entitling her to
reinstatement and backwages. Was Pacheo constructively dismissed by reason of
her reassignment?

The Court agrees with the CA on this point.

While a temporary transfer or assignment of personnel is permissible even
without the employee's prior consent, it cannot be done when the transfer is a
preliminary step toward his removal, or a scheme to lure him away from his
permanent position, or when it is designed to indirectly terminate his service, or
force his resignation. Such a transfer would in effect circumvent the provision
which safeguards the tenure of office of those who are in the Civil Service.
[19]


Significantly, Section 6, Rule III of CSC Memorandum Circular No. 40,
series of 1998, defines constructive dismissal as a situation when an employee
quits his work because of the agency heads unreasonable, humiliating, or
demeaning actuations which render continued work impossible. Hence, the
employee is deemed to have been illegally dismissed. This may occur although
there is no diminution or reduction of salary of the employee. It may be a transfer
from one position of dignity to a more servile or menial job.

The CSC, through the OSG, contends that the deliberate refusal of Pacheo to
report for work either in her original station in Quezon City or her new place of
assignment in San Fernando, Pampanga negates her claim of constructive dismissal
in the present case being in violation of Section 24 (f) of P.D. 807 [now Executive
Order (EO) 292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (6)].
[20]
It
further argues that the subject RTAO was immediately executory, unless otherwise
ordered by the CSC. It was, therefore, incumbent on Pacheo to have reported to her
new place of assignment and then appealed her case to the CSC if she indeed
believed that there was no justification for her reassignment.


Anent the first argument of CSC, the Court cannot sustain the proposition. It
was legally impossible for Pacheo to report to her original place of assignment
in Quezon Cityconsidering that the subject RTAO No. 25-2002 also reassigned
Amado Rey B. Pagarigan (Pagarigan) as Assistant Chief, Legal Division, from
RR4, San Fernando, Pampanga to RR7, Quezon City, the very same position
Pacheo formerly held. The reassignment of Pagarigan to the same position
palpably created an impediment to Pacheos return to her original station.

The Court finds Itself unable to agree to CSCs argument that the subject
RTAO was immediately executory. The Court deems it necessary to distinguish
between a detail and reassignment, as they are governed by different rules.

A detail is defined and governed by Executive Order 292, Book V, Title 1,
Subtitle A, Chapter 5, Section 26 (6), thus:
(6) Detail. A detail is the movement of an employee from one agency to
another without the issuance of an appointment and shall be allowed, only
for a limited period in the case of employees occupying professional,
technical and scientific positions. If the employee believes that there is no
justification for the detail, he may appeal his case to the Commission.
Pending appeal, the decision to detail the employee shall be executory
unless otherwise ordered by the Commission. [Underscoring supplied]

On the other hand, a reassignment is defined and governed by E.O. 292,
Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7), thus:
(7) Reassignment.An employee may be reassigned from one
organizational unit to another in the same agency; Provided, That such
reassignment shall not involve a reduction in rank, status or salaries.
[Underscoring supplied]



The principal distinctions between a detail and reassignment lie in the place
where the employee is to be moved and in its effectivity pending appeal with the
CSC. Based on the definition, a detail requires a movement from one agency to
another while a reassignment requires a movement within the same agency.
Moreover, pending appeal with the CSC, an order to detail is immediately
executory, whereas a reassignment order does not become immediately effective.

In the case at bench, the lateral movement of Pacheo as Assistant Chief,
Legal Division from Quezon City to San Fernando, Pampanga within the same
agency is undeniably a reassignment. The OSG posits that she should have first
reported to her new place of assignment and then subsequently question her
reassignment. It is clear, however, fromE.O. 292, Book V, Title 1, Subtitle A,
Chapter 5, Section 26 (7) that there is no such duty to first report to the new place
of assignment prior to questioning an alleged invalid reassignment imposed upon
an employee. Pacheo was well within her right not to report immediately to
RR4, San Fernando, Pampanga, and to question her reassignment.

Reassignments involving a reduction in rank, status or salary violate an
employees security of tenure, which is assured by the Constitution, the
Administrative Code of 1987, and the Omnibus Civil Service Rules and
Regulations. Security of tenure covers not only employees removed without cause,
but also cases of unconsented transfers and reassignments, which are tantamount to
illegal/constructive removal.
[21]


The Court is not unaware that the BIR is authorized to assign or reassign
internal revenue officers and employees as the exigencies of service may require.
This authority of the BIR, however, should be prudently exercised in accordance
with existing civil service rules.

Having ruled that Pacheo was constructively dismissed, is she entitled to
reinstatement and back wages? The Court agrees with the CA that she is entitled to
reinstatement, but finds Itself unable to sustain the ruling that she is entitled to full
back wages and benefits. It is a settled jurisprudence
[22]
that an illegally dismissed
civil service employee is entitled to back salaries but limited only to a maximum
period of five (5) years, and not full back salaries from his illegal dismissal up to
his reinstatement.

WHEREFORE, the petition is DENIED. The assailed February 22,
2007 Decision and May 15, 2007 Resolution of the Court of Appeals, in CA-G.R.
SP No. 93781, are hereby AFFIRMED with MODIFICATION that respondent
Minerva M.P. Pacheo is hereby ordered reinstated without loss of seniority rights
but is only entitled to the payment of back salaries corresponding to five (5) years
from the date of her invalid reassignment on May 7, 2002.

SO ORDERED.





JOSE CATRAL MENDOZA
Associate Justice



WE CONCUR:




RENATO C. CORONA
Chief Justice





ANTONIO T. CARPIO PRESBITERO J. VELASCO, JR.
Associate Justice Associate Justice





TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION
Associate Justice Associate Justice





DIOSDADO M. PERALTA LUCAS P. BERSAMIN
Associate Justice Associate Justice




(On Leave)
MARIANO C. DEL CASTILLO ROBERTO A. ABAD
Associate Justice Associate Justice





MARTIN S. VILLARAMA, JR. JOSE PORTUGAL PEREZ
Associate Justice Associate Justice







(On Leave)
MARIA LOURDES P. A. SERENO BIENVENIDO L. REYES
Associate Justice Associate Justice





ESTELA M. PERLAS-BERNABE
Associate Justice


C E R T I F I C A T I O N


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




RENATO C. CORONA
Chief Justice






[1]
Rollo, pp. 59-70. Penned by Associate Justice Magdangal M. De Leon with Associate Justice Rebecca De Guia-
Salvador and Associate Justice Ricardo R. Rosario, concurring.
[2]
Id. at 72-73.
[3]
Id. at 118.
[4]
Id. at 119-121.
[5]
Id. at 122.
[6]
Id. at 123-124.
[7]
Section 73. Requirement of Filing. The appellant shall furnish a copy of his appeal to the head of department or
agency concerned who shall submit his comment, together with the records, to the Commission within ten (10) days
from receipt thereof. Proof of service of the appeal on the head of department or agency shall be submitted with the
Commission.
Section 74. Grounds for Dismissal. An appeal involving non-disciplinary cases shall be dismissed on any of the
following grounds:
a. The appeal is filed beyond the reglementary period;
b. The filing fee of Three Hundred (300.00) has not been paid, or
c. The appeal does not contain a certification on non-forum shopping.
[8]
Rollo, pp. 125.
[9]
Id. at 148-155.
[10]
Id. at 79-81.
[11]
Id. at 82-85.
[12]
Id. at 69.
[13]
Citations omitted, id. at 64-69.
[14]
Id. at 45-46.
[15]
Id. at 279-283.
[16]
Id. at 254-273.
[17]
Section 24. Personnel Actions.
xxx
(f) Detail. A detail is the movement on an employee from one agency to another without the issuance of an
appointment and shall be allowed, only for a limited period in the case of employees occupying professional,
technical and scientific positions. If the employee believes that there is no justification for the detail, he may appeal
his case to the Commission. Pending appeal, the decision to detail the employee shall be executory unless otherwise
ordered by the Commission.(Underscoring supplied)
[18]
Teotico v. Agda, 274 Phil. 960 (1991).
[19]
Bentain v. Court of Appeals, G.R. No. 89452, June 9, 1992, 209 SCRA 644, 648.
[20]
Section 26. Personnel Actions.
xxx
(6) Detail. A detail is the movement on an employee from one agency to another without the issuance of an
appointment and shall be allowed, only for a limited period in the case of employees occupying professional,
technical and scientific positions. If the employee believes that there is no justification for the detail, he may appeal
his case to the Commission. Pending appeal, the decision to detail the employee shall be executory unless otherwise
ordered by the Commission. (Underscoring supplied)
[21]
Yenko v. Gungon, G.R. No. 165450, August 13, 2009, 595 SCRA 562, 576-577.
[22]
Id. at 580, citing Adiong v. Court of Appeals, 422 Phil. 713, 721 (2001); Marohombsar v. Court of Appeals, 382
Phil. 825, 836 (2000); San Luis v. Court of Appeals, Tan, Jr. v. Office of the President, G.R. No. 110936, February
4, 1994, 229 SCRA 677, 679; Salcedo v. Court of Appeals, 171 Phil. 368, 375 (1978); Balquidra v. CFI of Capiz,
Branch II, 170 Phil. 208,221 (1977); Cristobal v. Melchor, 168 Phil. 328, 341 (1977).



Republic of the Philippines
Supreme Court
Manila

EN BANC


THE CIVIL SERVICE G.R. No. 187858
COMMISSION,
Petitioner, Present:

CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
- versus - BERSAMIN,
DEL CASTILLO,
*

ABAD,
**

VILLARAMA, JR.,
PEREZ,
MENDOZA,
**
and
SERENO, JJ.

Promulgated:
RICHARD G. CRUZ,
Respondent. AUGUST 9, 2011
x---------------------------------------------------------------------------------------x

D E C I S I O N

BRION, J .:

This petition for review on certiorari assails the decision
[1]
and the
resolution
[2]
of the Court of Appeals (CA) in CA-G.R. SP No. 105410. These
assailed CA rulings reversed and set aside the ruling of the Civil Service
Commission (CSC) in Resolution No. 080305
[3]
that denied respondent Richard G.
Cruzs prayer for the award of back salaries as a result of his reinstatement to his
former position.

THE FACTS

The respondent, Storekeeper A of the City of Malolos Water District
(CMWD), was charged with grave misconduct and dishonesty by CMWD General
Manager (GM) Nicasio Reyes. He allegedly uttered a false, malicious and
damaging statement (Masasamang tao ang mga BOD at General Manager) against
GM Reyes and the rest of the CMWD Board of Directors (Board); four of the
respondents subordinates allegedly witnessed the utterance. The dishonesty
charge, in turn, stemmed from the respondents act of claiming overtime pay
despite his failure to log in and out in the computerized daily time record for three
working days.

The respondent denied the charges against him. On the charge of grave
misconduct, he stressed that three of the four witnesses already retracted their
statements against him. On the charge of dishonesty, he asserted that he never
failed to log in and log out. He reasoned that the lack of record was caused by
technical computer problems. The respondent submitted documents showing that
he rendered overtime work on the three days that the CMWD questioned.

GM Reyes preventively suspended the respondent for 15 days. Before the
expiration of his preventive suspension, however, GM Reyes, with the approval of
the CMWD Board, found the respondent guilty of grave misconduct and
dishonesty, and dismissed him from the service.
[4]


CSC RULING

The respondent elevated the findings of the CMWD and his dismissal to the
CSC, which absolved him of the two charges and ordered his reinstatement. In
CSC Resolution No. 080305, the CSC found no factual basis to support the charges
of grave misconduct and dishonesty.

In ruling that the respondent was not liable for grave misconduct, the CSC
held:

Cruz was adjudged guilty of grave misconduct for his alleged utterance of such
maligning statements, MASASAMANG TAO ANG MGA BOD AT GENERAL
MANAGER. However, such utterance, even if it were true, does not constitute a
flagrant disregard of rule or was actuated by corrupt motive. To the mind of the
Commission, it was a mere expression of disgust over the management style of
the GM and the Board of Directors, especially when due notice is taken of the fact
that the latter officials were charged with the Ombudsman for various anomalous
transactions.
[5]


In ruling that the charge of dishonesty had no factual basis, the CSC
declared:

Based on the records of the case, the Commission is not swayed that the
failure of Cruz to record his attendance on April 21 and 22, 2007 and May 5,
2007, while claiming overtime pay therefor, amounts to dishonesty. Cruz duly
submitted evidence showing his actual rendition of work on those days. The
residents of the place where he worked attested to his presence thereat on the days
in question.
[6]


The CSC, however, found the respondent liable for violation of reasonable
office rules for his failure to log in and log out. It imposed on him the penalty of
reprimand but did not order the payment of back salaries.

The CMWD and the respondent separately filed motions for reconsideration
against the CSC ruling. CMWD questioned the CSCs findings and the
respondents reinstatement. The respondent, for his part, claimed that he is entitled
to back salaries in light of his exoneration from the charges of grave misconduct
and dishonesty. The CSC denied both motions.

Both the CMWD and the respondent elevated the CSC ruling to the
CA via separate petitions for review under Rule 43 of the Rules of Court. The CA
dismissed the CMWDs petition and this ruling has lapsed to finality.
[7]
Hence, the
issue of reinstatement is now a settled matter. As outlined below, the CA ruled in
the respondents favor on the issue of back salaries. This ruling is the subject of the
present petition with us.

CA RULING

Applying the ruling in Bangalisan v. Hon. CA,
[8]
the CA found merit in the
respondents appeal and awarded him back salaries from the time he was dismissed
up to his actual reinstatement. The CA reasoned out that CSC Resolution No.
080305 totally exonerated the respondent from the charges laid against him. The
CA considered the charge of dishonesty successfully refuted as the respondent
showed that he performed overtime service. The CA thereby rejected the CSCs
contention that the charge of dishonesty had been merely downgraded to a lesser
offense; the CA saw the finding in CSC Resolution No. 080305 to be for an
offense (failing to properly record his attendance) entirely different from the
dishonesty charge because their factual bases are different. Thus, to the CA, CSC
Resolution No. 080305 did not wholly restore the respondents rights as an
exonerated employee as it failed to order the payment of his back salaries. The CA
denied the CSCs motion for reconsideration.

ISSUE

WHETHER OR NOT [THE] RESPONDENT IS ENTITLED TO BACK
SALARIES AFTER THE CSC ORDERED HIS REINSTATEMENT TO HIS
FORMER POSITION, CONSONANT WITH THE CSC RULING THAT HE
WAS GUILTY ONLY OF VIOLATION OF REASONABLE OFFICE
RULES AND REGULATIONS.
[9]



CSCs position

The CSC submits that the CA erred in applying the ruling in Bangalisan,
requiring as a condition for entitlement to back salaries that the government
employee be found innocent of the charge and that the suspension be unjustified.
CSC Resolution No. 080305 did not fully exculpate the respondent but found him
liable for a lesser offense. Likewise, the respondents preventive suspension
pending appeal was justified because he was not exonerated.

The CSC also submits that the factual considerations in Bangalisan are
entirely different from the circumstances of the present case. In Bangalisan, the
employee, Rodolfo Mariano, a public school teacher, was charged with grave
misconduct for allegedly participating, together with his fellow teachers, in an
illegal mass action. He was ordered exonerated from the misconduct charge
because of proof that he did not actually participate in the mass action, but was
absent from work for another reason. Although the employee was found liable for
violation of office rules and regulations, he was considered totally exonerated
because his infraction stemmed from an act entirely different (his failure to file a
leave of absence) from the act that was the basis of the grave misconduct charge
(the unjustified abandonment of classes to the prejudice of the students).

The CSC argues that in the present case, the charge of dishonesty and the
infraction committed by the respondent stemmed from a single act his failure to
properly record his attendance. Thus, the respondent cannot be considered totally
exonerated; the charge of dishonesty was merely downgraded to a violation of
reasonable office rules and regulations.

Accordingly, the CSC posits that the case should have been decided
according to our rulings in Jacinto v. CA
[10]
and De la Cruz v. CA
[11]
where we held
the award of back salaries to be inappropriate because the teachers involved were
not fully exonerated from the charges laid against them.

The respondents position

The respondent maintains that he is entitled to reinstatement and back
salaries because CSC Resolution No. 080305 exonerated him from the charges laid
against him; for the purpose of entitlement to back salaries, what should control is
his exoneration from the charges leveled against him by the CMWD. That the
respondent was found liable for a violation different from that originally charged is
immaterial for purposes of the back salary issue.

The respondent also asserts that the Bangalisan ruling squarely applies since
the CSC formally admitted in its Comment to CMWDs petition for review before
t
he CA that the penalty of reprimand is not a reduced penalty for the penalty of
dismissal imposable for grave misconduct and dishonesty.
[12]


THE COURTS RULING

We deny the petition for lack of merit.

The issue of entitlement to back salaries, for the period of suspension
pending appeal,
[13]
of a government employee who had been dismissed but was
subsequently exonerated is settled in our jurisdiction. The Courts starting point for
this outcome is the no work-no pay principle public officials are only entitled
to compensation if they render service. We have excepted from this general
principle and awarded back salaries even for unworked days to illegally dismissed
or unjustly suspended employees based on the constitutional provision that no
officer or employee in the civil service shall be removed or suspended except for
cause provided by law;
[14]
to deny these employees their back salaries amounts to
unwarranted punishment after they have been exonerated from the charge that led
to their dismissal or suspension.
[15]


The present legal basis for an award of back salaries is Section 47, Book V
of the Administrative Code of 1987.

Section 47. Disciplinary Jurisdiction. x x x.

(4) An appeal shall not stop the decision from being executory, and in case the
penalty is suspension or removal, the respondent shall be considered as having
been under preventive suspension during the pendency of the appeal in the event
he wins an appeal. (italics ours)


This provision, however, on its face, does not support a claim for back salaries
since it does not expressly provide for back salaries during this period; our
established rulings hold that back salaries may not be awarded for the period
of preventive suspension
[16]
as the law itself authorizes its imposition so that its
legality is beyond question.

To resolve the seeming conflict, the Court crafted two conditions before an
employee may be entitled to back salaries: a) the employee must be found innocent
of the charges and b) his suspension must be unjustified.
[17]
The reasoning behind
these conditions runs this way: although an employee is considered under
preventive suspension during the pendency of a successful appeal, the law itself
only authorizes preventive suspension for a fixed period; hence, his suspension
beyond this fixed period is unjustified and must be compensated.

The CSCs rigid and mechanical application of these two conditions may
have resulted from a misreading of our rulings on the matter; hence, a look at our
jurisprudence appears in order.

Basis for award of back salaries


The Court had the occasion to rule on the issue of entitlement to back
salaries as early as 1941,
[18]
when Section 260 of the Revised Administrative Code
of 1917 (RAC)
[19]
was the governing law. The Court held that a government
employee, who was suspended from work pending final action on his
administrative case, is not entitled to back salaries where he was ultimately
removed due to the valid appointment of his successor. No exoneration or
reinstatement, of course, was directly involved in this case; thus, the question of
back salaries after exoneration and reinstatement did not directly arise. The Court,
however, made the general statement that:

As a general proposition, a public official is not entitled to any compensation
if he has not rendered any service, and the justification for the payment of
salary during the period of suspension is that the suspension was
unjustified or that the official was innocent. Hence, the requirement that, to
entitle to payment of salary during suspension, there must be either reinstatement
of the suspended person or exoneration if death should render reinstatement
impossible.
[20]
(emphasis and underscoring ours)


In Austria v. Auditor General,
[21]
a high school principal, who was penalized
with demotion, claimed payment of back salaries from the time of his suspension
until his appointment to the lower position to which he was demoted. He argued
that his later appointment even if only to a lower position of classroom teacher
amounted to a reinstatement under Section 260 of the RAC. The Court denied his
claim, explaining that the reinstatement under Section 260 of the RAC refers to the
same position from which the subordinate officer or employee was suspended and,
therefore, does not include demotional appointments. The word reinstatement
was apparently equated to exoneration.

In the 1961 case of Gonzales v. Hon. Hernandez, etc. and
Fojas
[22]
interpreting the same provision, the Court first laid down the requisites for
entitlement to back salaries. Said the Court:

A perusal of the decisions of this Court
[23]
x x x show[s] that back salaries are
ordered paid to an officer or an employee only if he is exonerated of the
charge against him and his suspension or dismissal is found and declared to
be illegal. In the case at bar, [the employee] was not completely exonerated,
because although the decision of the Commissioner of Civil Service [ordering
separation from service] was modified and [the employee] was allowed to be
reinstated, the decision [imposed upon the employee the penalty of two months
suspension without pay]. [emphasis and underscoring ours]


Obviously, no exoneration actually resulted and no back salary was due; the
liability for the offense charged remained, but a lesser penalty was imposed.

In Villamor, et al. v. Hon. Lacson, et al.,
[24]
the City Mayor ordered the
dismissal from the service of city employees after finding them guilty as charged.
On appeal, however, the decision was modified by considering the suspension of
over one year x x x, already suffered x x x [to be] sufficient punishment
[25]
and by
ordering their immediate reinstatement to the service. The employees thereupon
claimed that under Section 695 of the RAC, the punishment of suspension without
pay cannot exceed two (2) months. Since the period they were not allowed to work
until their reinstatement exceeded two months, they should be entitled to back
salaries corresponding to the period in excess of two months. In denying the
employees claim for back salaries, the Court held:

The fallacy of [the employees] argument springs from their assumption that the
modified decision had converted the penalty to that of suspension. The modified
decision connotes that although dismissal or resignation would be the proper
penalty, the separation from work for the period until their reinstatement, would
be deemed sufficient. Said decision did not, in the least, insinuate that suspension
should have been the penalty.

x x x [T]he modified decision did not exonerate the petitioners. x x x
And even if we consider the punishment as suspension, before a public official or
employee is entitled to payment of salaries withheld, it should be shown that the
suspension was unjustified or that the employee was innocent of the charges
proffered against him.
[26]



On the whole, these rulings left the application of the conditions for the
award of back salaries far from clear. Jurisprudence did not strictly observe the
requirements earlier enunciated in Gonzales as under subsequent rulings, the
innocence of the employee alone served as basis for the award of back salaries.

The innocence of the employee as sole basis for
an award of back salaries


In Tan v. Gimenez, etc., and Aguilar, etc.,
[27]
we ruled that the payment of
back salary to a government employee, who was illegally removed from office
because of his eventual exoneration on appeal, is merely incidental to the ordered
reinstatement.

Tan was subsequently reiterated in Taala v. Legaspi, et al.,
[28]
a case
involving an employee who was administratively dismissed from the service
following his conviction in the criminal case arising from the same facts as in the
administrative case. On appeal, however, he was acquitted of the criminal charge
and was ultimately ordered reinstated by the Office of the President. Failing to
secure his actual reinstatement, he filed a mandamus petition to compel his
superiors to reinstate him and to pay his back salaries from the date of his
suspension to the date of his actual reinstatement. We found merit in his plea and
held:


[The employee] had been acquitted of the criminal charges x x x, and the
President had reversed the decision x x x in the administrative case which ordered
his separation from the service, and the President had ordered his reinstatement to
his position, it results that the suspension and the separation from the service of
the [employee] were thereby considered illegal. x x x.

x x x [In this case,] by virtue of [the Presidents order of reinstatement],
[the employees] suspension and separation from the service x x x was thereby
declared illegal, so that for all intents and purposes he must be considered as not
having been separated from his office. The lower court has correctly held that the
[employee] is entitled to back salaries.
[29]


The Taala ruling was reiterated in Cristobal v. Melchor,
[30]
Tan, Jr. v.
Office of the President,
[31]
De Guzman v. CSC
[32]
and Del Castillo v. CSC
[33]
- cases
involving government employees who were dismissed after being found
administratively liable, but who were subsequently exonerated on appeal.

In Garcia v. Chairman Commission on Audit,
[34]
the Court held that where
the employee, who was dismissed after being found administratively liable for
dishonesty, was acquitted on a finding of innocence in the criminal case (for
qualified theft) based on the same acts for which he was dismissed the executive
pardon granted him in the administrative case (in light of his prior acquittal)
entitled him to back salaries from the time of his illegal dismissal up to his actual
reinstatement.

The above situation should be distinguished from the case of an employee
who was dismissed from the service after conviction of a crime and who was
ordered reinstated after being granted pardon. We held that he was not entitled to
back salaries since he was not illegally dismissed nor acquitted of the charge
against him.
[35]


Incidentally, under the Anti-Graft and Corrupt Practices Act,
[36]
if the public
official or employee is acquitted of the criminal charge/s specified in the law, he is
entitled to reinstatement and the back salaries withheld during his
suspension, unless in the meantime administrative proceedings have been filed
against him.

In Tan, Jr. v. Office of the President,
[37]
the Court clarified that the silence of
Section 42 (Lifting of Preventive Suspension Pending Administrative
Investigation) of the Civil Service Decree
[38]
on the payment of back salaries,
unlike its predecessor,
[39]
is no reason to deny back salaries to a dismissed civil
servant who was ultimately exonerated.

Section 42 of P.D. No. 807, however, is really not in point x x x [as] it
does not cover dismissed civil servants who are ultimately exonerated and ordered
reinstated to their former or equivalent positions. The rule in the latter instance,
just as we have said starting with the case of Cristobal vs. Melchor is that when "a
government official or employee in the classified civil service had been illegally
dismissed, and his reinstatement had later been ordered, for all legal purposes he
is considered as not having left his office, so that he is entitled to all the rights and
privileges that accrue to him by virtue of the office that he held."
[40]



These cited cases illustrate that a black and white observance of the
requisites in Gonzales is not required at all times. The common thread in these
cases is either the employees complete exoneration of the administrative charge
against him (i.e., the employee is not found guilty of any other offense), or the
employees acquittal of the criminal charge based on his innocence. If the case
presented falls on either of these instances, the conditions laid down
in Gonzales become the two sides of the same coin; the requirement that the
suspension must be unjustified is automatically subsumed in the other requirement
of exoneration.

I llegal suspension as sole basis for an award of
back salaries


By requiring the concurrence of the two conditions, Gonzales apparently
made a distinction between exoneration and unjustified suspension/dismissal. This
distinction runs counter to the notion that if an employee is exonerated, the
exoneration automatically makes an employees suspension unjustified. However,
in Abellera v. City of Baguio, et al.,
[41]
the Court had the occasion to illustrate the
independent character of these two conditions so that the mere illegality of an
employees suspension could serve as basis for an award of back salaries.

Abellera, a cashier in the Baguio City Treasurers Office, was ordered
dismissed from the service after being found guilty of dishonesty and gross
negligence. Even before the period to appeal expired, the City of Baguio dismissed
him from the service. On appeal, however, the penalty imposed on him was
reduced to two months suspension, without pay although the appealed decision
was affirmed in all other respects.

When the issue of Abelleras entitlement to back salaries reached the Court,
we considered the illegality of Abelleras suspension - i.e., from the time he was
dismissed up to the time of his actual reinstatement to be a sufficient ground to
award him back salaries.

The rule on payment of back salaries during the period of suspension of a
member of the civil service who is subsequently ordered reinstated, is already
settled in this jurisdiction. Such payment of salaries corresponding to the period
when an employee is not allowed to work may be decreed not only if he is found
innocent of the charges which caused his suspension (Sec. 35, RA 2260), but also
whenthe suspension is unjustified.

In the present case, upon receipt of the [Civil Service Commissioners]
decision x x x finding [Abellera] guilty, but even before the period to appeal had
expired, [the Baguio City officials] dismissed [Abellera] from the service and
another one was appointed to replace him. [Abelleras] separation x x x before
the decision of the Civil Service Commissioner had become final was
evidently premature. [The Baguio City officials] should have realized that
[Abellera] still had the right to appeal the Commissioner's decision to the Civil
Service Board of Appeals within a specified period, and the possibility of that
decision being reversed or modified.
[42]
As it did happen on such appeal x x x the
penalty imposed by the Commissioner was reduced x x x to only 2 months
suspension. And yet, by [theBaguio City officials] action, [Abellera] was
deprived of work for more than 2 years. Clearly, Abelleras second suspension
from office [i.e., from the time he was dismissed up to his actual
reinstatement] was unjustified, and the payment of the salaries corresponding
to said period is, consequently, proper.
[43]
(emphases and underscoring ours)


The import of the Abellera ruling was explained by the Court in the
subsequent case of Yarcia v. City of Baguio
[44]
that involved substantially similar
facts. The Court clarified that the award of back salaries in Abellera was based on
the premature execution of the decision (ordering the employees dismissal from
the service), resulting in the employees unjustified second suspension. Under
the then Civil Service Rules, the Commissioner of Civil Service had the discretion
to order the immediate execution of his decision in administrative cases in the
interest of public service. Unlike in Abellera, this discretion was exercised
in Yarcia; consequently, the employees separation from the service pending his
appeal remained valid and effective until it was set aside and modified with the
imposition of the lesser penalty.
[45]


The unjustified second suspension mentioned in Abellera actually refers to
the period when the employee was dismissed from the service up to the time of his
actual reinstatement. Under our present legal landscape, this period refers to
suspension pending appeal.
[46]


In Miranda v. Commission on Audit,
[47]
the Court again had the occasion to
consider the illegality of the suspension of the employee as a separate ground to
award back salaries. Following the filing of several administrative charges against
him, Engr. Lamberto Miranda was preventively suspended from June 2,
1978 to May 7, 1986. He was reinstated on May 22, 1986. On October 7, 1986, the
administrative case against him was finally dismissed for lack of evidence.
When his claim for back salaries (from the time he was preventively suspended
up to his actual reinstatement) was denied by the Commission on Audit, he brought
a certiorari petition with this Court.

In granting the petition, the Court ruled that since the law
[48]
limits the
duration of preventive suspension to a fixed period, Engr. Mirandas suspension
for almost eight (8) years is unreasonable and unjustified. Additionally, the
Court observed that the dropping of the administrative case against Engr. Miranda
for lack of evidence is even an eloquent manifestation that the suspension is
unjustified.
[49]
The Court held:

This being so, Engineer Miranda is entitled to backwages during the period of his
suspension as it is already settled in this jurisdiction that a government official or
employee is entitled to backwages not onlyif he is exonerated in the
administrative case but also when the suspension is unjustified.
[50]
(emphases
and underscoring ours)


J urisprudential definition of exoneration

The mere reduction of the penalty on appeal does not entitle a government
employee to back salaries if he was not exonerated of the charge against him. This
is the Courts teaching in City Mayor of Zamboanga v. CA.
[51]
In this case, the
employee was initially found guilty of disgraceful and immoral conduct and was
given the penalty of dismissal by the City Mayor of Zamboanga. On appeal,
however, the CA limited the employees guilt to improper conduct and
correspondingly reduced the penalty to six-months suspension without pay with a
stern warning that repetition of the same or similar offense will be dealt with more
severely."
[52]
The CA also awarded him full backwages.
[53]


We held that the CA erred in awarding back salaries by reiterating the
principle that back salaries may be ordered paid to an officer or employee only if
he is exonerated of the charge against him and his suspension or dismissal is found
and declared to be illegal.
[54]


The Court had the occasion to explain what constitutes exoneration
in Bangalisan v. Hon. CA,
[55]
the respondents cited case. In this case, the
Secretary of Education found the public school teachers guilty as charged and
imposed on them the penalty of dismissal. On appeal, the CSC affirmed the
Secretarys ruling but reduced the penalty imposed to suspension without pay.
However, the CSC found one of the teachers (Mariano) guilty only of violation of
reasonable office rules and regulations, and only penalized her with reprimand.
None of the petitioning public school teachers were awarded back salaries.

On appeal to this Court, we awarded back salaries to Mariano. We explained
that since the factual premise of the administrative charges against him - i.e., his
alleged participation in the illegal mass actions, and his suspension - was amply
rebutted, then Mariano was in effect exonerated of the charges against him and
was, thus, entitled to back salaries for the period of his suspension pending
appeal.

With respect to petitioner Rodolfo Mariano, payment of his back wages is
in order. A reading of the resolution of the [CSC] will show that he was
exonerated of the charges which formed the basis for his suspension. The
Secretary of the DECS charged him with and he was later found guilty of grave
misconduct x x x [and] conduct prejudicial to the best interest of the service x x x
for his participation in the mass actions x x x. It was his alleged participation in
the mass actions that was the basis of his preventive suspension and, later, his
dismissal from the service.

However, the [CSC], in the questioned resolution, made [the] finding that
Mariano was not involved in the "mass actions" but was absent because he was in
Ilocos Sur to attend the wake and interment of his grandmother. Although the
CSC imposed upon him the penalty of reprimand, the same was for his violation
of reasonable office rules and regulations because he failed to inform the school
or his intended absence and neither did he file an application for leave covering
such absences.

x x x x

However, with regard to the other petitioners, the payment of their back
wages must be denied. Although the penalty imposed on them was only
suspension, they were not completely exonerated of the charges against them. The
CSC made specific findings that, unlike petitioner Mariano, they indeed
participated in the mass actions. It will be noted that it was their participation in
the mass actions that was the very basis of the charges against them and their
subsequent suspension.
[56]



Bangalisan clearly laid down the principle that if the exoneration of the
employee is relative (as distinguished from complete exoneration), an inquiry into
the factual premise of the offense charged and of the offense committed must be
made. If the administrative offense found to have been actually committed is of
lesser gravity than the offense charged, the employee cannot be considered
exonerated if the factual premise for the imposition of the lesser penalty remains
the same. The employee found guilty of a lesser offense may only be entitled to
back salaries when the offense actually committed does not carry the penalty of
more than one month suspension or dismissal.
[57]


Bangalisan reiterated that the payment of back salaries, during the period of
suspension of a member of the civil service who is subsequently ordered reinstated,
may be decreed only if the employee is found innocent of the charges which
caused the suspension and when the suspension is unjustified. This
pronouncement was re-echoed in Jacinto v. CA,
[58]
De la Cruz v. CA,
[59]
and Hon.
Gloria v. CA.
[60]
Taking off from Bangalisan, the Court in De la Cruz categorically
stated:

The issue of whether back wages may be awarded to teachers ordered
reinstated to the service after the dismissal orders x x x were commuted by the
CSC to six (6) months suspension is already settled.

In Bangalisan v. Court of Appeals, we resolved the issue in the negative
on the ground that the teachers were neither exonerated nor unjustifiably
suspended, two (2) circumstances necessary for the grant of back wages in
administrative disciplinary cases.
[61]



In Hon. Gloria, involving the same factual situation as Bangalisan, the CA
awarded the public school teachers back salaries - for the period beyond the
allowable period of preventive suspension - since they were ultimately exonerated.
In affirming the CA, the Court
distinguished preventive suspension from suspension pending appeal for the
purpose of determining the extent of an employees entitlement to back salaries.
The Court ruled that under Executive Order (E.O.) No. 292, there are two kinds of
preventive suspension of civil service employees who are charged with offenses
punishable by removal or suspension: (i) preventive suspension pending
investigation
[62]
and (ii) preventive suspension pending appeal;
[63]
compensation is
due only for the period of preventive suspension pending appeal should the
employee be ultimately exonerated.
[64]
Citing Floyd R. Mechem's A Treatise on the
Law of Public Offices and Officers,
[65]
Hon. Gloria ruled:

Thus, it is not enough that an employee is exonerated of the charges
against him. In addition, his suspension must be unjustified. The case
of Bangalisan v. Court of Appeals itself similarly states that "payment of salaries
corresponding to the period [1] when an employee is not allowed to work may be
decreed if he is found innocent of the charges which caused his
suspension and [2] when the suspension is unjustified.
[66]
(emphases and
underscoring ours)


A careful reading of these cases would reveal that a strict observance of the
second condition for an award of back salaries becomes important only if the
employee is not totally innocent of any administrative infraction. As previously
discussed, where the employee is completely exonerated of the
administrative charge or acquitted in the criminal case arising from the same facts
based on a finding of innocence, the second requirement becomes subsumed in the
first. Otherwise, a determination of the act/s and offense/s actually committed and
of the corresponding penalty imposed has to be made.

Unjustified suspension


On the suspension/dismissal aspect, this second condition is met upon a
showing that the separation from office is not warranted under the circumstances
because the government employee gave no cause for suspension or dismissal. This
squarely applies in cases where the government employee did not commit the
offense charged, punishable by suspension or dismissal (total exoneration); or the
government employee is found guilty of another offense for an act different from
that for which he was charged.

Bangalisan, J acinto and De la Cruz illustrate
the application of the two conditions


Both the CA and the respondent applied Bangalisan to justify the award of
back salaries. The CSC argues against this position with the claim that the rulings
in Jacinto andDe la Cruz, not Bangalisan, should apply. After due consideration,
we see no reason why the cited rulings and their application should be pitted
against one another; they essentially espouse the same conclusions after applying
the two conditions for the payment of back salaries.

Bangalisan, Jacinto and De la Cruz all stemmed from the illegal mass
actions of public school teachers in Metro Manila in 1990. The teachers were
charged with grave misconduct, gross neglect of duty, and gross violation of civil
service law, rules and regulations, among others. The then Secretary of Education
found them guilty and dismissed them from the service. The CSC, on appeal,
ordered the teachers reinstated, but withheld the grant of their back salaries. The
CSC found the teachers liable for conduct prejudicial to the best interest of the
service and imposed on them the penalty of suspension. The CSC reasoned that
since the teachers were not totally exculpated from the charge (but were found
guilty of a lesser offense), they could not be awarded back salaries.

When these cases reached the Court, the issue of the teachers entitlement to
back salaries was raised. The teachers claimed that they were entitled to back
salaries from the time of their dismissal or suspension until their reinstatement,
arguing that they were totally exonerated from the charges since they were found
guilty only of conduct prejudicial to the best interest of the service.

Under this factual backdrop, we applied the two conditions and
distinguished between the teachers who were absent from their respective classes
because they participated in the illegal mass action, on one hand, and the teachers
who were absent for some other reason, on the other hand.

With respect to the teachers who participated in the illegal mass actions, we
ruled that they were not entitled to back salaries since they were not exonerated.
We explained that liability for a lesser offense, carrying a penalty less than
dismissal, is not equivalent to exoneration. On the second condition, we ruled that
their suspension is not unjustified since they have given a ground for their
suspension i.e., the unjustified abandonment of their classes to the prejudice of
their students, the very factual premise of the administrative charges against them
for which they were suspended.

With respect to the teachers who were away from their classes but did not
participate in the illegal strike, the Court awarded them back salaries, considering
that: first, they did not commit the act for which they were dismissed and
suspended; and second, they were found guilty of another offense, i.e., violation of
reasonable office rules and regulations which is not penalized with suspension or
dismissal. The Court ruled that these teachers were totally exonerated of the
charge, and found their dismissal and suspension likewise unjustified since the
offense they were found to have committed only merited the imposition of the
penalty of reprimand.

These cases show the Courts consistent stand in determining the propriety
of the award of back salaries. The government employees must not only be found
innocent of the charges; their suspension must likewise be shown to be unjustified.

The Present Case

We find that the CA was correct in awarding the respondent his back salaries
during the period he was suspended from work, following his dismissal until his
reinstatement to his former position. The records show that the charges of grave
misconduct and dishonesty against him were not substantiated. As the CSC found,
there was no corrupt motive showing malice on the part of the respondent in
making the complained utterance. Likewise, the CSC found that the charge of
dishonesty was well refuted by the respondents evidence showing that he rendered
overtime work on the days in question.

We fully respect the factual findings of the CSC especially since the CA
affirmed these factual findings. However, on the legal issue of the respondents
entitlement to back salaries, we are fully in accord with the CAs conclusion that
the two conditions to justify the award of back salaries exist in the present case.

The first condition was met since the offense which the respondent was
found guilty of (violation of reasonable rules and regulations) stemmed from an act
(failure to log in and log out) different from the act of dishonesty
(claiming overtime pay despite his failure to render overtime work) that he was
charged with.

The second condition was met as the respondents committed offense merits
neither dismissal from the service nor suspension (for more than one month), but
only reprimand.

In sum, the respondent is entitled to back salaries from the time he was
dismissed by the CMWD until his reinstatement to his former position - i.e., for the
period of his preventive suspension pending appeal. For the period of his
preventive suspension pending investigation, the respondent is not entitled to any
back salaries per our ruling in Hon. Gloria.
[67]


WHEREFORE, the petition is hereby DENIED. Costs against the
petitioner.

SO ORDERED.



ARTURO D. BRION
Associate Justice

WE CONCUR:



RENATO C. CORONA
Chief Justice





ANTONIO T. CARPIO
Associate Justice
PRESBITERO J. VELASCO, JR.
Associate Justice



TERESITA J. LEONARDO-DE CASTRO
Associate Justice



DIOSDADO M. PERALTA
Associate Justice



LUCAS P. BERSAMIN
Associate Justice


(no part)
MARIANO C. DEL CASTILLO
Associate Justice


(on leave)
ROBERTO A. ABAD
Associate Justice



MARTIN S. VILLARAMA, JR.
Associate Justice



JOSE PORTUGAL PEREZ
Associate Justice


(on leave)
JOSE CATRAL MENDOZA
Associate Justice



MARIA LOURDES P. A. SERENO
Associate Justice


CERTIFICATION

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



RENATO C. CORONA
Chief Justice





*
No part.
**
On official leave.
[1]
Penned by Associate Justice (now Supreme Court Associate Justice) Mariano C. del Castillo, and
concurred in by Associate Justices Monina Arevalo-Zenarosa (ret.) and Apolinario D. Bruselas, Jr.; dated February
20, 2009. Rollo, pp. 32-43.
[2]
Dated May 8, 2009; id. at 44-45.
[3]
Penned by Commissioner Mary Ann Z. Fernandez-Mendoza; id. at 250-258.
[4]
CMWD Memorandum No. 31-07 dated June 6, 2007; id. at 60.
[5]
Id. at 72-73.
[6]
Id. at 73.
[7]
Docketed as CA-G.R. SP No. 104704, entitled The City of Malolos Water District v. Civil Service
Commission and Richard G. Cruz. The CA Decision promulgated on June 25, 2010 became final and executory on
July 29, 2010, per Entry of Judgment dated January 10, 2011.
[8]
342 Phil. 586 (1997).
[9]
Rollo, p. 21.
[10]
346 Phil. 656 (1997).
[11]
364 Phil. 786 (1999).
[12]
Rollo, p. 282.
[13]
Hon. Gloria v. CA, 365 Phil. 744 (1999).
[14]
This provision uniformly exists in the 1935, 1973 and 1987 Constitutions.
[15]
Tan v. Gimenez, etc., and Aguilar, etc., 107 Phil. 17 (1960).
[16]
Hon. Gloria v. CA, supra note 13.
[17]
Bangalisan v. CA, supra note 8.
[18]
Reyes v. Hernandez, 71 Phil. 397 (1941).
[19]
Section 260 of the RAC reads:
Payment of salary accruing pending suspension. When the chief of a Bureau or Office
suspends a subordinate officer or employee from duty, the person suspended shall not receive pay
during suspension unless the Department Head shall so order; but upon subsequent reinstatement
of the suspended person or upon his exoneration, if death should render reinstatement impossible,
any salary so withheld shall be paid, but without prejudice to the application of the disciplinary
provisions of section six hundred and ninety-five hereof.
[20]
Reyes v. Hernandez, supra note 18, at 398.
[21]
No. L-21918, January 24, 1967, 19 SCRA 79.
[22]
112 Phil. 160, 166 (1961).
[23]
Gonzales v. Hernandez, ibid., did not specify the cases it relied upon for its pronouncement. A survey of
prior jurisprudence, however, reveals the following as bases: Reyes v. Hernandez, supra note 18; Batungbakal v.
National Development Company, 93 Phil. 182 (1953); National Rice and Corn Corp. v. NARIC Workers Union, 98
Phil. 563 (1956); Tabora v. Montelibano, et al., 98 Phil. 800 (1956); and Tan v. Gimenez, etc., and Aguilar, etc.,
supra note 15.
[24]
120 Phil. 1213 (1964).
[25]
Id. at 1215.
[26]
Id. at 1218-1219.
[27]
Supra note 15.
[28]
121 Phil. 541 (1965).
[29]
Id. at 551-553.
[30]
189 Phil. 658 (1980).
[31]
G.R. No. 110936, February 4, 1994, 229 SCRA 677.
[32]
G.R. No. 101105, March 11, 1994, 231 SCRA 169. The illegality of the dismissal in this case resulted
from the invalidity of the reorganization that authorized the employees dismissal.
[33]
343 Phil. 734 (1997).
[34]
G.R. No. 75025, September 14, 1993, 226 SCRA 356, 362-363.
[35]
Sabello v. Department of Education, Culture and Sports, 259 Phil. 1109, 1114 (1989).
[36]
Section 13 of Republic Act (R.A.) No. 3019 reads:
Suspension and loss of benefits. Any incumbent public officer against whom any
criminal prosecution under a valid information under this Act or under Title 7, Book II of the
Revised Penal Code or for any offense involving fraud upon government or public funds or
property whether as a simple or as a complex offense and in whatever stage of execution and
mode of participation, is pending in court, shall be suspended from office. Should he be convicted
by final judgment, he shall lose all retirement or gratuity benefits under any law, but if he is
acquitted, he shall be entitled to reinstatement and to the salaries and benefits which he failed to
receive during suspension, unless in the meantime administrative proceedings have been filed
against him.
[37]
Supra note 31.
[38]
Section 42 of Presidential Decree (P.D.) No. 807 reads:
Lifting of Preventive Suspension Pending Administrative Investigation. When the
administrative case against the officer of employee under preventive suspension is not finally
decided by the disciplining authority within the period of ninety (90) days after the date of
suspension of the respondent who is not a presidential appointee, the respondent shall be
automatically reinstated in the service: Provided, That when the delay in the disposition of the case
is due to the fault, negligence or petition of the respondent, the period of delay shall not be
counted in computing the period of suspension herein provided.
[39]
R.A. No. 2260 or Civil Service Act of 1959. Section 35 of R.A. No. 2260 reads:
Lifting of Preventive Suspension Pending Administrative Investigation. When the
administrative case against the officer or employee under preventive suspension is not finally
decided by the Commissioner of Civil Service within the period of sixty (60) days after the date of
suspension of the respondent, the respondent shall be reinstated in the service. If the respondent
officer or employee is exonerated, he shall be restored to his position with full pay for the period
of suspension. (italics ours)
[40]
Tan, Jr. v. Office of the President, supra note 31, at 679.
[41]
No. L-23957, March 18, 1967, 19 SCRA 600.
[42]
Under Section 28 of the Civil Service Rules implementing R.A. No. 2260 (Civil Service Act of 1959), the
Commissioner of Civil Service has the discretion to order the immediate execution of his decision in administrative
cases (J. Barredos Dissent in Yarcia v. City of Baguio, etc., 144 Phil. 351 [1970]).
[43]
See Neeland v. Villanueva, Jr., A.M. No. P-99-1316, August 31, 2001, 364 SCRA 204, 217, where the
Court awarded back salaries to a Clerk of Court and Ex-officio Provincial Sheriff, whom the Court ordered
dismissed from the service for gross misconduct. The resolution of dismissal was immediately implemented. On
reconsideration, however, the Court found him guilty of simple neglect of duty and imposed on him only the penalty
of fine. In granting his subsequent request for back salaries from the time of his dismissal until his reinstatement, the
Court considered, among others, the prematurity of the immediate execution of the resolution of dismissal as basis
for the award.
[44]
Supra note 42.
[45]
Citing Villamor, et al. v. Hon. Lacson, et al., supra note 24, which was also cited in Sales v. Mathay, Sr.,
etc., et al., 214 Phil. 153 (1984).
[46]
See Bautista v. Peralta, No. L-21967, September 29, 1966, 18 SCRA 223, where the Court considered
the second suspension mentioned in Abellera v. City of Baguio, et al., supra note 41, as a preventive suspension.
At the time, R.A. No. 2260 allows the payment of back salaries for the entire period of suspension in the event of
exoneration. At present, there is a clear legal distinction between preventive suspension (i.e., suspension pending
investigation) and suspension pending appeal.
[47]
G.R. No. 84613, August 16, 1991, 200 SCRA 657.
[48]
Section 35 of R.A. No. 2260 and Section 42 of P.D. No. 807.
[49]
Miranda v. Commission on Audit, supra note 47, at 662.
[50]
Ibid.
[51]
G.R. No. 80270, February 27, 1990, 182 SCRA 785.
[52]
Id. at 788.
[53]
Ibid.
[54]
The Court also relied on Section 78 of Batas Pambansa Bilang 337 which required that an employee
must be exonerated of the charges in order that he may be paid his back salaries. See also Yarcia v. City of
Baguio, supra note 42, where the Court held that the mere reduction, on appeal, of the penalty imposed (from
dismissal to a fine of six months pay), without however exonerating the employee from the charge (of dishonesty)
against him, does not entitle him to back salaries.
[55]
Supra note 8.
[56]
Id. at 598-599.
[57]
If the proper penalty imposable for the offense actually committed does not exceed one month, then there
would have been no occasion for a suspension pending appeal since a decision imposing the penalty of suspension
for not more than thirty days or fine in an amount not exceeding thirty days salary is final and not subject to appeal.
(See Book V, Section 47, par. 2 of Executive Order No. 292; Section 7, Rule III of Administrative Order No.
7, Rules of Procedure of the Office of the Ombudsman, dated April 10, 1990, as amended by Administrative Order
No. 17 dated September 15, 2003 which took effect on November 19, 2003.)
[58]
Supra note 10.
[59]
Supra note 11.
[60]
Supra note 13.
[61]
De la Cruz v. CA, supra note 11, at 797.
[62]
Book V, Title I, Subtitle A, Section 51 of E.O. No. 292.
[63]
Book V, Title I, Subtitle A, Section 47(4) of E.O. No. 292.
[64]
The Court ruled that the absence of a provision in P.D. No. 807 and later in E.O. No. 292 allowing the
payment of back salaries during the period of preventive suspension, unlike in Act No. 2711 and R.A. No. 2260,
evidences a legislative intent to disallow payment of back salaries for the period of preventive suspension regardless
of the employees exoneration. But the payment of back salaries per se, that is, without regard to the duration of the
payment, has been consistently recognized.
[65]
864. Officer not entitled to Salary during Suspension from Office. - An officer who has been lawfully
suspended from his office is not entitled to compensation for the period during which he was so suspended, even
though it be subsequently determined that the cause for which he was suspended was insufficient. The reason given
is "that salary and perquisites are the reward of express or implied services, and therefore cannot belong to one who
could not lawfully perform such services.
[66]
Hon. Gloria v. CA, supra note 13, at 762.
[67]
The preventive suspension pending the investigation of the charges is not imposed as a penalty but only
to enable the disciplining authority to conduct an unhampered investigation; the preventive suspension in this regard
is a necessary sacrifice, which holding a public office requires.



Today is Sunday, June 01, 2014





Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 81390 August 29, 1989
NATHANIEL OLACAO, ALBERTO AGUILON, AMADO AGUILON, LIBERATO AGUILON, VENANCIO AGUILON, CENON
AGUILON, CESAR ALCANTARA, FRANCISCO ALERIA, FRUCTUOUSO ALERIA, PEDRO ALERIA, IGNACIO ALMAQUIO,
FRANCISCO AMONGAN, MARCELINO AREGLON, HONORIO ARANDIA, TEODORO ASOQUE, SERGIO BAGUIO, TIRSO
BAGUIO, SENANDO BAJA, VELLAJUADO BALENIA, SIMPLICIO BANOC, FELIPE BAROLA, PEDRO BAROLA, EDILBERTO
BARON, PATROCINIO BARON, CONRADO BASTIDA, MACASAWANG BAUTE, CRESENCIO BONGCAHIG, LEONORA
BUSTAMANTE, PABLO BUSTAMANTE, CELEDONIO BUTULAN, LEOPOLDO CAGUTOM, IGMIDIO CAINGLET, GAUDENCIO
CAMELLOTES, LEONARDO CAMELLOTES, FORTUNATO CAPILITAN, FRANCISCO CAPILITAN, RAFAEL CARAMAT,
FRANCISCO CARTEGENA, NAPOLEON CASTRO, FERMIN CASTILLO, ROBERTO CATIPAY, BERNARDO CEBUCO,
ANTONIO CELOSIA, CIRILO CERO, MACARIO CERO, FERNANDO COBALES, GABRIEL COBALES, SERGIO CONCHA,
ROGELIO CONGRESO, FLORENTINO CONSIGNA, EXU-PERIO CUBERO, ROGELIO CUBERO, TIMOTEO DAPLIN, ANTONIO
DOMINGO, EBODIO DONGIS, DELFIN ECO, RICARDO ENDRIGA, BIENVENIDO ESPINOSA, PAULINO ESTALANE, BENITO
ESTREMOS, JUAN ESTREMERA, SAMUEL FALAR, HILARIO FEJI, JR., HENRY FONTILLAS, DOMINGO GIDA, RODOLFO
GUERRA, CESAR IBANEZ, JULIAN IBANEZ, JOVENCIO INOCEDA, HONORATO IROY, DOROTEO JOVITA, ESTELITO
JUANILLO, ALMA LABANDIA, CIPRIANO LABRADOR, FELIX LAGANG, RODRIGO LARODA, LEOPOLDO LAURENTE,
SEGUNDINO LIMBAGA, CRISPIN LIPARANON, NONITO LIPARANON, ROGELIO LOPEZ, WILLIAM LUZARAN, CIPRIANO
MACLAY, GUILLERMO MADJOS, CRISPIN MADULARA, CIPRIANO MAGLANA, LEOPOLDO MAGLANA, MARCOS
MAGLANA, FLO-RENCIO MAGNO, HONESTO MAGNO, HERMINIO MAGNO, SEVERINO MAGONCIA, TRANQUILINO
MAKILING, TRANQUILINO MALAZA, ROGELIO MALINAO, AGUSTIN MANDAWE, ARNULFO MANLIMOS, FLAVIANO
MAPANO, EUNILO MANTE, PEDRO MAPANO JR., VICTORIANO MARSADA, PEDRO MARAGANAS, GERONIMO MARILLA,
LEONARDO MARQUEDA, NICOMEDES MARQUEDA, JOSE MICABALO, TEODORICO MORATA, FLORENTINO MORENO,
PABLO MULAY, FEDERICO MULLET, DIOSDADO MURILLO, MEQUIAS MUSA, FELICIDARIO MUYALDE, SERGIO NAYRE,
EDUARDO OBANE, NAPOLEON OLACAO, CONSTANCIO PALCONE, PATERNO PALCONE, ALEJANDRO PAYOR, ROGELIO
PELICANE, CASIMIRO PEREGRINO, FLORO POL, EUTIQUIO POMALOY, WILLIAM POMALOY, ZOSIMO PORLAS,
CONSTANTINO RAMISES, CARLITO REAMBONANCA, ARCADIO REDUCTO, LORENZO REYES, HERMOGENES RULI,
NESTOR RULIDA, BENITO SALOVERES, FLORENTINO SANICO, GREGORIO DELOS SANTOS, CATALINO SELIM,
TEOGENIES SARVIDA, FRANCISCO SENDO, CATALINO SERNA, CELSO SOLANTE, ROBERTO SOLOMON, MARIA
SUEMITH, MEMORITO TAER, SIMEON TAGBILARAN, GREGORIO TELEN, PASCUAL TELEN, JAIME TIBALLA, CARLITO TIO,
DOMINADOR TIO, JAMBO TIO, SAMSON TIO, MARTIN TIO, CANDIDO TORREJOS, JOSE TORREON, CORCOPIO TORRES,
EMERITO TUMALA, PETRONILO TUMALA, VECIO AGUILON, LEOPOLDO CEBUCO, CRISANTO LABRADOR, DIONISIO
GULFAN, TEODORO LORETO, VICENTE TIO, BERNARDO MALUBAY, REMO CUIZON, PETRONILO LOR, EDGARDO
DOMINGO, TOMAS LINGO, ARMANDO ALTRES AND DANILA SABINO, petitioners
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, EASTCOAST DEVELOPMENT ENTERPRISES, SPOUSES
CONSTANCIO and LEODEGARIA MAGLANA, ANTONIO FLORENDO, MIRIAM MAGLANA SANTAMARIA, MAGLANA AND
SONS MANAGEMENT CORPORATION, EASTCOAST DEVELOPMENT ENTERPRISES, INCORPORATED, AND GEORGE Q.
CHOY, respondents.
Grace Lina A. Fuentes for petitioners.
Pedro S. Castillo for Eastcoast Dev't. Enterprises, Inc.
Ernesto M. Nombrado for respondents.

MELENCIO-HERRERA, J .:
Alleging grave abuse of discretion, amounting to lack of jurisdiction, petitioners numbering 170 in all, assail the Decision of the
National Labor Relations Commission (NLRC) in NLRC Case No. 402-LR- XI-81 LRD Case No. STF-314-78) entitled "Nathaniel
Olacao, et als., vs. Eastcoast Development Enterprises, et al.," promulgated on 18 September 1987, setting aside the Decision of
Labor Arbiter Jose O. Libron awarding separation pay to petitioners, and sustaining, instead, private respondents' appeal on the
ground of res judicata or, bar by prior judgment (Annex "A", Petition).
The following background facts, arranged chronologically, will put the controversy in proper perspective:
1. Petitioners were the former workers of private respondent Eastcoast Development Enterprises, then a single proprietorship,
owned, operated and managed by respondents Spouses Constancio and Leodegaria Maglana, Antonio Florendo and Miriam
Maglana Santamaria ("Eastcoast," for brevity). It operated a logging concession at Kinablangan Baganga, Davao Oriental (p. 233,
Rollo).lwph 1. t
a) On 28 November 1977, petitioners filed with the then Ministry of Labor, Region XI, a complaint for non-payment of wages and
emergency living allowance (LRD Case No. ROXIMC 857-77) entitled Olacao and 189 others vs. Eastcoast Development
Enterprises, Inc." The Complaint was later certified to the Labor Arbitration Branch of the NLRC and docketed as NLRC Case No.
897-MC-XI-78 (hereinafter, the "Unpaid Wages Case").
b) In December, 1977, "Eastcoast" decided to totally and permanently close its business. Thus, on 5 December 1977, Antonio
Florendo, the Executive Vice-president and General Manager, filed an application with the Regional Director of the then Ministry of
Labor to formally close its business on account of business reverses (Annex "C-2," Petition, p. 167, Rollo). This application was
favorably acted upon on 15 December 1977 by the Regional Director of the Ministry of Labor, Regional Office No. XI, Davao City, on
condition that "Eastcoast" should pay all unpaid wages and separation pay of all its employees (Annex "C-3," ibid. p. 168, Rollo).
c) On 5 January 1978 the owners of "Eastcoast" sold all their shareholdings to private respondent, George Q. Choy, and the
company was thereafter known as Eastcoast Development Enterprises, Inc. ("Eastcoast, Inc.," for short).
d) On 21 January 1978, "Eastcoast, Inc.," under a new management, paid its 381 employees including petitioners herein, all their
unpaid wages living allowances, overtime pay and all other benefits due them and termination pay, computed up to 30 November
1977. Upon receiving said payments, petitioners signed sworn individual documents entitled "Receipt and Release" whereby they:
absolutely and forever release and discharge the Eastcoast Development Enterprises, its successors and
assigns, of any and all claims and liabilities whatsoever insofar as my past salaries/wages,termination pay,
overtime pay and other privileges accorded me by law and/or any other claims are concerned. (Annex "C-4",
Petition, p. 169, Rollo).
e) On 30 May 1980, Labor Arbiter Porfirio T. Reyes dismissed the "Unpaid Wages Case" (NLRC Case No. 897-MC- XI-78) for lack of
merit and for being moot and academic in view of the "Receipt and Release" documents executed by the complainant- workers.
f) On 30 September 1982, the appeal interposed by petitioners to the NLRC was dismissed by its First Division, stating in part:
After a careful review of the entire record, we find no justification for disturbing the Labor Arbiter's findings and
conclusions. In our own view, the payment of the amounts stated in the deeds above referred to has rendered
to (sic) this case academic because the receipt by the complainants of the said amounts is an established fact
and there is no showing that their execution of the said documents was tainted by anything that vitiates free
consent. Indeed, it is difficult to believe that more than 300 people could at the same time be forced to
execute the same against their will. (p. 2, Decision, p. 240, Rollo)
2. In the meantime, on 27 November 1978, petitioners filed another Complaint against "Eastcoast, Inc." this time for Illegal
Dismissal LRD Case No. STF-314-78) with the Regional Office No. XI, Davao City, of the then Ministry of Labor. They prayed for
"reinstatement . . . with full backwages from the date of the illegal dismissal." The Complaint was later on certified to the Arbitration
Branch and docketed as NLRC Case No. 402-LR-XI-81 (the "Illegal Dismissal" Case).
a) In its Answer (Annex "C", Petition), "Eastcoast, Inc.," denied that it had dismissed petitioners illegally inasmuch as the total closure
of its establishment was with prior clearance of the Regional Director of Labor, Region XI, Davao City, and that pursuant to the
latter's Order of 15 December 1977, its employees including complainants, were fully compensated "all unpaid wages earned and
separation pay equivalent to 15 days for every year of service." As proof thereof, attached to the Answer was the "Receipt and
Release" sworn to by petitioner Nathaniel Olacao (Annex "C- 4").
b) On 21 April 1980 "Eastcoast, Inc." filed a Manifestation in the "Illegal Dismissal Case" to the effect that the "Unpaid Wages Case"
was still pending, and that "Eastcoast Development Enterprises" and Eastcoast Development Enterprises, Inc., are two different
entities (p. 3, Manifestation, p. 196 Rollo).
c) At that point in time, it appears that the "Unpaid Wages Case" was still on appeal with the NLRC.
d) On 30 July 1981, petitioners filed an Amended Complaint in the "Illegal Dismissal Case," impleading as additional respondents
spouses Constancio and Leodegaria Maglana, Antonio Florendo, Miriam Maglana Santamaria, Maglana and Sons Management
Corporation, Eastcoast Development Enterprises, Inc., and George Q. Choy (Annex "L", p. 203, Rollo). The Amended Complaint
alleged that the impleaded respondents connived with one another in entering into a fictitious contract of transferring the ownership of
"Eastcoast" to George Q. Choy to effect the illegal dismissal of petitioners. Thus, all of them should be considered jointly and
severally liable for the acts complained of.
e) The newly impleaded private respondents all denied liability. In its own Answer, filed on 19 August 1981, "Eastcoast, Inc." denied
any connivance with them in the dismissal of complainants (Annex "O", p. 215, Rollo).lwph 1. t
f) In the interim, the timber license of Eastcoast, Inc., was cancelled and since then up to the present it has completely ceased
operations (Memorandum for Private Respondent, pp. 4 and 8).
g) On 20 May 1986, the NLRC Regional Arbitration Branch, Branch XI, through Labor Arbiter Jose Q. Libron, rendered a Decision in
the "Illegal Dismissal Case," dismissing the charge of illegal dismissal for lack of merit and awarding separation pay. Thus:
CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered:
(1) Dismissing the charge of illegal dismissal for lack of merit, thus denying the prayer for
reinstatement and backwages;
(2) Ordering respondents Eastcoast Development Enterprises, spouses Constancio Maglana
and Leodegaria Maglana Antonio Florendo, Miriam Maglana Santamaria, Maglana and Sons
Management Corporation, Eastcoast Development Enterprises, Inc., and George Q. Choy to
pay jointly and severally the 170 complainants their separation pay equivalent to one month
pay per year of service.
SO ORDERED. (Annex "Q", pp. 228-229, Rollo) (emphasis supplied)
h) On 2 July 1986, private respondents received copy of Labor Arbiter Libron's Decision.
i) On 14 July 1986, private respondents filed their Notice of Appeal and Appeal Memorandum in the "Illegal Dismissal Case"
attaching thereto, admittedly for the first time: (1) Labor Arbiter Reyes' Decision in the "Unpaid Wages Case" LRD Case No. MC 857-
77), dated 30 May 1980, dismissing the case because payments of wages had already been made; and (2) the NLRC Decision on
appeal (NLRC Case No. 897-MC-XI-78), promulgated on 30 September 1982, affirming Labor Arbiter Reyes' Decision.
j) On 18 September 1987, respondent NLRC reversed Labor Arbiter Libron's Decision in the "Illegal Dismissal Case," with the
following findings:
. . . that sometime in November 1977, the present complainants filed a money claim against respondents
before the Labor Arbitration Branch of Regional Office No. XI, Davao City, which was docketed as NLRC
Case No. 897-MC-XI-78 LRD Case No. MC 85777); that one of the issues involved in said case was whether
the documents signed by complainants and denominated as Receipts and Release were legally valid and
binding; that the said documents show that herein complainants received the specified amounts from
respondents representing full and final payment of their salaries, wages, allowances, overtime pay and other
compensation legally due them; together with termination pay and they forever release and discharge the
respondents, its sucessors and assigns of any claims and liabilities whatsoever; that on May 30, 1980, the
Labor Arbiter rendered a decision dismissing the case for lack of merit and being moot and academic; . . . that
complanants in the above-entitled case appealed the said decision of the Labor Arbiter to the National
LaborRElations Commsission which affirmed the decision of the Labor Arbiter, . . . .
Ordinarily, this Commission (NLRC) does not consider evidence and other pertinent documents not submitted
during the proceedings before the Arbitration level and submitted for the first time on appeal.
However, we are constrained to consider the evidence, ANNEXES 'A' and 'B' of the appeal which are the
decision of the Labor Arbiter dated May 30, 1980 and the decision of the First Division of this Commission
promulgated on September 30, 1982 affirming the appealed decision of the Srbiter below.
It appears from the aforesaid decision of Labor Arbiter Porfirio Reyes dated May 30, 1980 which was affirmed
by the First Division of the Commisssion that complainants in the case at bar were already paid their several
maoney claims including termination pay.
We find therefore that this issue of termination pay in the cases under consideration was already resolved and
passed upon in the said Decisions. This is clear case of res judicata or barred (sic) by prior judgement.
(Annex "A", Petition, pp. 151-152, Rollo) (Emphasis supplied).
k) Petitioners' Motion for Reonsideration having been denied, they availed of the present Petition for Cetiorari, filed on 23 January
1988.
On 23 January 1989, we resolved to give due course and required the submittal of memoranda, the last of which was filed on 5 June
1989.
The pivotal issue for resolution is whether or not the NLRC gravely abused its discretion amounting to lack of jurisdiction in reversing
Labor Arbiter Libron's Decision on the principal ground of res judicata.
Petitioners, joined by the SOlicitor General, fault the NLRC with grave abuse of discretion. The NLRC and private respondents, on
the otherhand, negate the charge.
We uphold the NLRC.
In actual fact, the pendency of the "Unpaid Wages Case" (NLRC Case No. 897-MC-XI-78) was not raised for the first time when the
"Illegal Dismissal Case" was appealed to the NLRC. For, on 21 April 1980, before the Decision was rendered in the "Unpaid Wages
Case", "Eastcoast" had filed a Manifestation in the "Illegal Dismissal Case," calling attention to the pendency of the "Unpaid Wages
Case" "filled sometime in the last quarter of 1977" and verified by one of the petitioners herein Nathaniel Olaca (Annex "J", Petition).
Counsel for the complainants therein was the same counsel in the present case (ibid). Too, in "Eastcoast's" Answer (Annex "D", ibid)
in the "Illegal Dismissal Case," it maaade specific reference to the "Receipt and Release" individually executed by petitioners. It
should have been no surprise to complainants, therefore, when that matter was invoked on appeal before the NLRC. Besides, the
NLRC is empowered to take judicial notice of its own pronouncements.
Moreover, at the time said Manifestation was made on 21 April 1980, the Decision in the "Unpaid Wages Case" had not yet been
rendered having been promulgated only on 30 May 1980, which Decision was affrimed by the NLRC, First Divisionn, only on 30
September 1982. When "Eastcoast, Inc." appealed the "Illegal Dismissal Case" on 14 July 1986 therefore, it was only then that it
could rightfully invoke the Decision in the "Unpaid Wages Case" and the affirmance thereof by the First Division of the NLRC in 1982.
It was in no position to raise the same in its Answer, dated 19 August 1981, to the Amended Complaint. But even then, it had
allownaces and other benefits granted by the New Labor Code of the Philippines and other applicable Presidential Decrees."
Thus no grave abuse of discretion can be attributed to the NLRC for concluding that from the said Decisions, the issue of termination
pay had already been passed upon and resolved ; in other words, a clear case of 'res judicata' or bar by former judgement. The
NLRC found that complainants had already been paid (p. 4, NLRC Resolution, September 19, 1987).lwph1.t Parties ought not to be
permitted to ligitate an issue more than once (Eternal Gardens Memorial Parks Corp. vs. Court of Appelas, G.R. No. 73794, 19
September 1988). The Decisions in the separatiion pay of peitioners.
But petitioners claim that the causes of action in the two cases were different in the "Unpaid Wages Case," money claims were
involved; in the "Illegal Dismissal Case," petitioners challenged their termination from employment. The difference, however, appears
only oon the surface. In essence, because petitioners claimed that they had been illegally dismissed, they prayed for "full backwages
from the date of illegal dismissal." In fact, it was separation pay that was awarded to them in Labor Arbiter Libron's Decision in the
"Illegal Dismissal Case," who found that "complainants' termination was effected on a valid ground authorized by law, but considering
that termination and closure was effected without prior clearance . . . complainants should be granted separation pay" (p. 7 Decision).
The charge of illegal dismissal was dismissed for lack of merit and complainant's prayer for reinstatement and bacckwages was
denied (p. 12, ibid).
Peitioners further contend that their acceptance of separation pay does not operate as a waiver of their claims in the "Illegal
Dismissal Case." Indeed, jurisprudence exists to the effect that a deed of release or quitclaim cannot bar an employee from
demanding benefits to which he is legally entitled (Fuentes vs. NLRC, G.R. No. 76835, November 24, 1988); that quitclaims and/or
complete releases executed by the employees do not stop them from pursuing theri claim arising from the unfair labor practice of the
employer (Garcia vs. NLRC, G.R. No. 67825, September 4, 1987, 153 SCRA 639); and that employees who received their received
their dismissal and that the acceptance of those benefits would not amount to estoppel (Mercury Drug Co, Inc. vs. Court of Industrial
Relations, G.R. No. 23357, April 30, 1974, 56 SCRA 694); De Leon vs. NLRC, G.R. No. 52056, October 30, 1980, 100 SCRA 691).
A telling difference from the cited cases, however, is the fact that the issue of the validity of the releases, executed by petitioners
under oath, was squarely raised and resolved in Labor Arbiter Reyes' Decision in the "Unpaid Wages Case," which found
categorically that:
The document relieved absolutely and forever released and discharged the Eastcoast Development
Enterprises, Inc., its sucessors and assigns, of any and all calims and liabilities whatsoever insofar as their
pastt salaries, termination pay, overtime pay and other privileges accorded them by law" (Emphasis supplied)
That the Decision was renderd on 30 May 1980 and was affirmed by the NLRC, First Division, on 30 September 1982, which found
no justification for disturbing those findings, with this additional observation:
More than the above, the record shows that the complainants received, by virtue of the release documents,
amounts which exceeded by leaps and bounds their original claims for unpaid wages and allowances.
The aforesaid Decisions in the "Unpaid Wages Case" had become final and executory.
It may be that private respondents' appeal was filed oin the 12th day contrary too Article 223 of the Labor Code prescribing ten (10)
calendar days as the reglemntary period of appeal. Private respondents claim that the tenth day fell on a Saturday when offices of
the NLRC were allegedly clsed sa that their last day to appeal was Monday, July 14th. That is nort correct. Saturday is still
considered a business day and if the last day to appeal falls on a Saturday, the act is still due on that day (SM Agri and Gen.
Machineries vs. NLRC, etal., G.R. No. 74806, January 9, 1989).lwph 1. t
Nonetheless, as the NLRC had pointed out in its Comment:
True, the appeal to it was filed on the 12th day but public respondent wanted to avoid ruling on the same
issue of separation pay for that matter had been judicially settled in the other case. It merely exercised its
prerogative in relaxing its rule regarding the ten (10) calendar day period for filing appeals (Sec. 1, Rule VIII of
the Revised Rules of the NLRC) from decisions of its Labor Arbiterss, as it haaad done so in similar cases . . .
(p. 6, Comment, p. 333, Rollo)
Indeed, the perfection of an appeal wihtin the reglementary period is considered juridictional. Hoever, ther was legal jusitifcation for
the NLRC to have given due course to the appeal, namely, to obviate a miscarriage of justice. In this proceeding, the issue of
separation pay had been judicially settled, with finality, in another case, also by the NLRC. The NLRC, therefore, had no alternative
except to forestall the grant of separation pay twice. The principle agasint unjust enrichment must be held applicable to labor cases
as well.
WHEREFORE, the challenged Decision of the National Labor Relations Commission in NLRC Case No. 402-LR-XI-81 is hereby
AFFIRMED in toto.
SO OREDERED.
Paras, Padilla, Sarmiento and Regalado, JJ., concur.

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Today is Sunday, June 01, 2014





Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No.170904 November 13, 2013
BANI RURAL BANK INC. ENOC THEATER I AND II and/or RAFAEL DE GUZMAN, Petitioners,
vs.
TERESA DE GUZMAN, EDGAR C. TAN and TERESA G. TAN, Respondents.
D E C I S I O N
BRION, J .:
We pass upon the petition for review on certiorari
1
under Rule 45 of the Rules of Court filed by petitioners Bani Rural Bank, Inc.,
ENOC Theater I and II, and Rafael de Guzman. They assail the decision
2
dated September 1, 2005 and the resolution
3
dated
December 14, 2005 of the Court of Appeals CA) in CA-G.R. SP No. 70085. The assailed CA rulings, in turn, affirmed the
computation of the backwages due respondents Teresa de Guzman and Edgar C. Tan
4
made by the National Labor Relations
Commission (NLRC).
The Facts
The respondents were employees of Bani Rural Bank, Inc. and ENOC Theatre I and II who filed a complaint for illegal dismissal
against the petitioners. The complaint was initially dismissed by Labor Arbiter Roque B. de Guzman on March 15, 1994. On appeal,
the National Labor Relations Commission (NLRC) reversed Labor Arbiter De Guzman's findings, and ruled that the respondents had
been illegally dismissed. In a resolution
5
dated March 17, 1995 the NLRC ordered the petitioners to:
... [R]einstate the two complainants to their former positions, without loss o seniority rights and other benefits and privileges, with
backwages from the time o their dismissal (constructive) until their actual reinstatement, less earnings elsewhere.
6

The parties did not file any motion for reconsideration or appeal. The March 17, 1995 resolution of the NLRC became final and
executory and the computation of the awards was remanded to the labor arbiter for execution purposes.
The first computation of he monetary award under the March ,17 1995 resolution of the NLRC
The computation of the respondents' backwages, under the terms of the March 17 1995 NLRC resolution was remanded to Labor
Arbiter Rolando D. Gambito. First, Labor Arbiter Gambito deducted the earnings derived by the respondents either from Bani Rural
Bank, Inc. or ENOC Theatre I and II. Second, Labor Arbiter Gambito fixed the period of backwages from the respondents' illegal
dismissal until August 25 1995 or the date when the respondents allegedly manifested that they no longer wanted to be reinstated.
7

The respondents appealed Labor Arbiter Gambito's computation with the NLRC. In a
Decision
8
dated July 31, 1998, the NLRC modified the terms of the March 17, 1995 resolution insofar as it clarified the phrase less
earnings elsewhere. The NLRC additionally awarded the payment of separation pay, in lieu of reinstatement, under the following
terms:
The decision of this Commission is hereby MODIFIED to the extent that: (1) the phrase earnings elsewhere in its dispositive portion
shall exclude the complainants' salaries from the Rural Bank of Mangantarem; and (2) in lieu of reinstatement, the respondents are
hereby ordered to pay the complainants separation pay equivalent to one month salary for every year of service computed from the
start of their employment up to the date of the finality of the decision.
9

The NLRC justified the award of separation pay on account of the strained relations between the parties. In doing so, the NLRC
ruled:
Insofar as the second issue is concerned, it should be noted: (1) that in his report dated November 8, 1995, the NLRC Sheriff stated
that on October 5, 1995, he went to the Sub-Arbitration Branch to serve the writ of execution upon the complainants; that they did not
appear, but instead, sent a representative named Samuel de la Cruz who informed him that they were interested, not on being
reinstated, but only in the monetary award; (2) that in a letter dated October 9, 1995, the complainants authorized one Samuel de la
Cruz to get a copy of the writ of execution; and (3) that during the pre-execution conference, the respondents' counsel manifested
that the respondents were requiring the complainants to report for work on Monday and, in turn, the complainants' counsel
manifested that the complainants were asking to be reinstated. The proceedings already protracted as it is-would be delayed further
if this case were to be remanded to the Labor Arbiter for a hearing to ascertain the correctness of the above-mentioned sheriff's
report. Besides, if both parties were really interested in the complainants being reinstated, as their counsels stated during the pre-
execution conference, the said reinstatement should already have been effected. Since neither party has actually done anything to
implement the complainants' reinstatement, it would appear that the relations between them have been strained to such an extent as
to make the resumption of the employer-employee relationship unpalatable to both of them. Under the circumstances, separation pay
may be awarded in lieu of reinstatement.
10

The respondents filed a motion for reconsideration on whether the award of backwages was still included in the judgment. The NLRC
dismissed the motion for having been filed out of time.
On January 29, 1999, the July 31, 1998 decision of the NLRC lapsed to finality and became executory.
The second computation of the monetary awards under the July 31, 998 decision of the NLRC
The recomputation of the monetary awards of the respondents' backwages and separation pay, according to the decision dated July
31, 1998 and the modified terms of the March 17, 1995 resolution of the NLRC, was referred to Labor Arbiter Gambito. In the course
of the recomputation, the petitioners filed before Labor Arbiter Gambito a Motion to Quash Writ of
Execution and Suspend Further Execution they reiterated their position that the respondents backwages should be computed only up
to August 25, 1995, citing the alleged manifestation made by the respondents, through Samuel de la Cruz, as their basis.
In an order
11
dated July 12, 2000, Labor Arbiter Gambito computed the respondents backwages only up to August 25, 1995.
The NLRCs Ruling
The respondents appealed the July 12, 2000 order of Labor Arbiter Gambito to the NLRC, which reversed Labor Arbiter Gambito s
order. In its decision
12
dated September 28, 2001, the NLRC ruled that the computation of the respondents backwages should be
until January 29 1999 which was the date when the July 31, 1998 decision attained finality:
WHEREFORE, the Order of Labor Arbiter Rolando D. Gambito dated July 12, 2000 is SET ASIDE. In lieu thereof, judgment is
hereby rendered by ordering respondents to p y complainants backwages up to January 29, 1999 as above discussed.
13

The NLRC emphasized that the issue relating to the computation of the respondents backwages had been settled in its July 31, 1998
decision. In a resolution dated January 23, 2002, the NLRC denied the motion for reconsideration filed by the petitioners.
The petitioners disagreed with the NLRC s ruling and filed a petition for certiorari with the CA, raising the following issues:
(A) THE COMMISSION ACTED WITHOUT JURISDICTION AND WITH GRAVE . ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION WHEN IT REVERSED AND SET ASIDE THE ORDER OF LABOR
ARBITER ROLANDO D. GAMBITO DATED JULY 12, 2000 AND ORDERED THE COMPUTATION OF PRIVATE
RESPONDENTS BACKWAGES TO COVER THE PERIOD AFTER AUGUST 25, 1995, OR UNTIL JANUARY 29,
1999, THE DATE OF FINALITY OF THE SECOND RESOLUTION OF THE COMMISSION.
(B) THE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION FOR DENYING PETITIONERS MOTION FOR RECONSIDERA TION.
14

The CA Rulings
The CA found the petition to be without merit. It held that certiorari was not the proper remedy since no error of jurisdiction was
raised or no grave abuse of discretion was committed by the NLRC. The CA stated that:
The extraordinary remedy of certiorari is proper if the tribunal, board or officer exercising judicial or quasi-judicial functions acted
without or in grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal or any plain, speedy, and
adequate remedy in law. When a court, tribunal or officer has jurisdiction over the person and the subject matter of dispute, the
decision on all other questions arising in the case is an exercise of that jurisdiction. Consequently, all errors committed in the
exercise of said jurisdiction are merely errors of judgment. Under prevailing procedural rules and jurisprudence, errors of judgment
are not proper subjects of a special civil action for certiorari.
15

Thus, the CA echoed the NLRCs conclusions:
As explained in the assailed Decision, what is controlling for purposes of the backwages is the NLRC s Resolution dated 17 March
1995 which decreed that private respondents are entitled to backwages from the time of their dismissal (constructive) until their
actual reinstatement; and considering that the award of reinstatement was set aside by the NLRC in its final and executory Decision
dated 3 July 1998 which ordered the payment of separation pay in lieu of reinstatement to be computed up to the finality on 29
January 1999 of said Decision dated 3 July 1998, then the computation of the backwages should also end on said date, which is 29
January 1999.
16

Citing the case of Chronicle Securities Corp. v. NLRC,
17
the CA held that backwages are granted to an employee or worker who had
been illegally dismissed from employment. If reinstatement is no longer possible, the backwages shall be computed from the time of
the illegal termination up to the finality of the decision.
The Present Petition
The petitioners argue that the following reversible errors were committed by the CA, namely:
(1) In ruling that no grave abuse of discretion was committed by the NLRC when it issued the September 28, 2001
decision, the January 23, 2002 resolution and the July 31, 1998 decision, which modified the final and executory
resolution dated March 17, 1995 of the NLRC computing the backwages only until the reinstatement of the
respondents;
(2) When it manifestly overlooked or misappreciated relevant facts, i.e. Labor Arbiter Gambito s computation did
conform to the NLRC s March 17, 1995 resolution considering the manifestation of Samuel that the respondents no
longer wanted to be reinstated, in response to the order of execution dated August 25, 1995; and
(3) When it declared that only errors o judgment, and not jurisdiction, were committed by the NLRC.
In their Comment,
18
the respondents contend that the computation of the backwages until January 29, 1999 was consistent with the
tenor of the decision dated July 31, 1998 and the modified March 17, 1995 resolution of the NLRC.
After the petitioners filed their Reply,
19
the Court resolved to give due course to the petition; in compliance with our directive, the
parties submitted their respective memoranda repeating the arguments in the pleadings earlier filed.
20

The Issue
As presented, the issue boils down to whether the respondents backwages had been correctly computed under the decision dated
September 28, 2001 of the NLRC, as confirmed by the CA, in light of the circumstance that there were two final NLRC decisions
affecting the computation of the backwages.
The Court s Ruling
We find the petition unmeritorious.
Preliminary considerations
In Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division),
21
we held that a decision in an illegal dismissal
case consists essentially of two components:
The first is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the finding of the
illegality of the dismissal and the awards of separation pay in lieu of reinstatement, backwages.
The second part is the computation of the awards made.
22

The first part of the decision stems from the March 17, 1995 NLRC resolution finding an illegal dismissal and defining the legal
consequences of this dismissal. The second part involves the computation of the monetary award of backwages and the
respondents' reinstatement. Under the terms of the March 17, 1995 resolution, the respondents' backwages were to be computed
from the time of the illegal dismissal up to their reinstatement.
In the first computation of the backwages, Labor Arbiter Gambito confronted the following circumstances and the Sheriffs Report
dated November 8, 1995:
23
first, how to interpret the phrase less earnings elsewhere as stated in the dispositive portion of the March
17, 1995 resolution of the NLRC; second, the effect of the alleged manifestation (dated October 9, 1995) of Samuel that the
respondents were only interested in the monetary award, not in their reinstatement; and third, the effect of the respondents' counsel's
statement during the pre-execution proceedings that the respondents simply wanted to be reinstated.
The records indicate that the respondents denied Samuel's statement and asked for reinstatement through their counsel.
Nevertheless, Labor Arbiter Gambito relied on Samuel's statement and fixed the computation date of the respondents' backwages to
be up to and until August 25, 1995 or the date the order of execution was issued for the NLRC's March 17, 1995 decision. As stated
in his July 12, 2000 order,
24
Labor Arbiter Gambito found it fair and just that in the execution of the NLRC's decision, the computation
of the respondents' backwages should "stop at that time when it was put on record by them [respondents] that they had no desire to
return to work."
25

The NLRC disregarded Labor Arbiter Gambito's first computation. In the dispositive portion of its July 31, 1998 decision, the NLRC
modified the final March 17, 1995 resolution. The first part of this decision -the original ruling of illegal dismissal -was left untouched
while the second part of the decision -the monetary award and its computation -was altered to conform with the strained relations
between the parties that became manifest during the execution phase of the March 17, 1995 resolution.
The effect of the modification of the March 17, 1995 resolution of the NLRC was two-fold: , the reinstatement aspect of the March 1
7, 1995 resolution was expressly substituted by an order of payment of separation pay; and two the July 31, 1998 decision of the
NLRC now provided for two monetary awards (backwages and separation pay). The July 31, 1998 decision of the NLRC became
final since neither parties appealed.
Immutability of Judgment
That there is already a final and executory March 17, 1995 resolution finding that respondents have been illegally dismissed, and
awarding backwages and reinstatement, is not disputed. That there, too, is the existence of another final and executory July 31, 1998
decision modifying the reinstatement aspect of the March 17, 1995 resolution, by awarding separation pay, is likewise beyond
dispute.
As a rule, "a final judgment may no longer be altered, amended or modified, even if the alteration, amendment or modification is
meant to correct what is perceived to be an erroneous conclusion of fact or law and regardless of what court, be it the highest Court
of the land, rendered it. Any attempt on the part of the x x x entities charged with the execution of a final judgment to insert, change
or add matters not clearly contemplated in the dispositive portion violates the rule on immutability of judgments."
26
An exception to
this rule is the existence of supervening events
27
which refer to facts transpiring after judgment has become final and executory or to
new circumstances that developed after the judgment acquired finality, including matters that the parties were not aware of prior to or
during the trial as they were not yet in existence at that time.
28

Under the circumstances of this case, the existence of the strained relations between the petitioners and the respondents was a
supervening event that justified the NLRC s modification of its final March 17, 1995 resolution. The NLRC, in its July 31, 1998
decision, based its conclusion that strained relations existed on the conduct of the parties during the first execution proceedings
before Labor Arbiter Gambito. The NLRC considered the delay in the respondents reinstatement and the parties conflicting claims on
whether the respondents wanted to be reinstated.
29
The NLRC also observed that during the intervening period from the first
computation (which was done in 1995) to the appeal and resolution of the correctness of the first computation (subject of the NLRC s
July 31, 1998 decision), neither party actually did anything to implement the respondents reinstatement. The NLRC considered
these, actions as indicative of the strained relations between the parties so that neither of them actually wanted to implement the
reinstatement decree in the March 17, 1995 resolution. The NLRC concluded that the award of reinstatement was no longer
possible; thus, it awarded separation pay, in lieu of reinstatement. Unless exceptional reasons are presented, these above findings
and conclusion can no longer be disturbed after they lapsed to finality.
Appeal of labor case under Rule 45
A review of the CA s decision in a labor case, brought to the Court via Rule 45 of the Rules of Court, is limited to a review of errors of
law imputed to the CA. In Montoya v. Transmed Manila Corporation,
30
we laid down the basic approach in reviews of Rule 45
decisions of the CA in labor cases, as follows:
In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that
we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA
decision. In ruling for legal correctness, we have to view the CA decision in the same context that the petition for certiorari it ruled
upon was presented to it; we have to examine the CA decision from the prism of whether it correctly determined the presence or
absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of
the case was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of
the NLRC decision challenged before it. This is the approach that should be basic in a Rule 45 review of a CA ruling in a labor case.
In question form, the question to ask is: Did the C correctly determine whether the NLRC committed grave abuse of discretion in
ruling on the case?
This manner of review was reiterated in Holy Child Catholic School v Hon. Patricia Sta. Tomas, etc., et al.,
31
where the Court limited
its review under Rule 45 of the CA s decision in a labor case to the determination of whether the CA correctly resolved the presence
or absence of grave abuse of discretion in the decision of the Secretary of Labor, and not on the basis of whether the latter's decision
on the merits of the case was strictly correct.
Grave abuse of discretion, amounting to lack or excess of jurisdiction, has been defined as the capricious and whimsical exercise of
judgment amounting to or equivalent to lack of jurisdiction.
32
There is grave abuse of discretion when the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an
evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law."
33

With this standard in mind, we find no reversible error committed by the CA when it found no grave abuse of discretion in the NLRC's
ruling. We find the computation of backwages and separation pay in the September 28, 2001 decision of the NLRC consistent with
the provisions of law and jurisprudence. The computation conforms to the terms of the March 17, 1995 resolution (on illegal dismissal
and payment of backwages) and the July 31, 1998 decision (on the computation of the backwages and the payment of separation
pay).
Article 279 of the Labor Code, as amended,
34
provides backwages and reinstatement as basic awards and consequences of illegal
dismissal:
Article 279. Security of Tenure. -x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
"By jurisprudence derived from this provision, separation pay may [also] be awarded to an illegally dismissed employee in lieu of
reinstatement."
35
Section 4(b), Rule I of the Rules Implementing Book VI of the Labor Code provides the following instances when the
award of separation pay, in lieu of reinstatement to an illegally dismissed employee, is proper: (a) when reinstatement is no longer
possible, in cases where the dismissed employee s position is no longer available; (b) the continued relationship between the
employer and the employee is no longer viable due to the strained relations between them; and (c) when the dismissed employee
opted not to be reinstated, or the payment of se aration benefits would be for the best interest of the parties involved.
36
In these
instances, separation pay is the alternative remedy to reinstatement in addition to the award of backwages.
37
The payment of
separation pay and reinstatement are exclusive remedies. The payment of separation pay replaces the legal consequences of
reinstatement to an employee who was illegally dismissed.
38

For clarity, the bases for computing separation pay and backwages are different. Our ruling in Macasero v. Southern Industrial
Gases Philippines
39
provides us with the manner these awards should be computed:
[U]nder Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed without just cause and
without due process is entitled to backwages and reinstatement or payment of separation pay in lieu thereof:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate
and distinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and the
employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of
backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no
longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an
alternative. The payment of separation pay is in addition to payment of backwages.
40

The computation of separation pay is based on the length of the employee s service; and the computation of backwages is based on
the actual period when the employee was unlawfully prevented from working.
41

The basis of computation of backwages
The computation of backwages depends on the final awards adjudged as a consequence of illegal dismissal, in that:
First, when reinstatement is ordered, the general concept under Article 279 of the Labor Code, as amended, computes the
backwages from the time of dismissal until the employees reinstatement. The computation of backwages (and similar benefits
considered part of the backwages) can even continue beyond the decision of the labor arbiter or NLRC and ends only when the
employee is actually reinstated.
42

Second, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of the case is disputed) or
reinstatement is waived by the employee (in the event that the payment of separation pay, in lieu, is not disputed), backwages is
computed from the time of dismissal until the finality of the decision ordering separation pay.
Third, when separation pay is ordered after the finality of the decision ordering the reinstatement by reason of a supervening event
that makes the award of reinstatement no longer possible (as in the case), backwages is computed from the time of dismissal until
the finality of the decision ordering separation pay.
The above computation of backwages, when separation pay is ordered, has been the Court s consistent ruling. In Session Delights
Ice Cream and Fast Foods v. Court Appeals Sixth Division, we explained that the finality of the decision becomes the reckoning point
because in allowing separation pay, the final decision effectively declares that the employment relationship ended so that separation
pay and backwages are to be computed up to that point.
43

We may also view the proper computation of backwages (whether based on reinstatement or an order of separation pay) in terms of
the life of the employment relationship itself.1wphi1
When reinstatement is ordered, the employment relationship continues. Once the illegally dismissed employee is reinstated, any
compensation and benefits thereafter received stem from the employee s continued employment. In this instance, backwages are
computed only up until the reinstatement of the employee since after the reinstatement, the employee begins to receive
compensation from his resumed employment.
When there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or subsequently
ordered in light of a supervening event making the award of reinstatement no longer possible), the employment relationship is
terminated only upon the finality of the decision ordering the separation pay. The finality of the decision cuts-off the employment
relationship and represents the final settlement of the rights and obligations of the parties against each other. Hence, backwages no
longer accumulate upon the finality of the decision ordering the payment of separation pay since the employee is no longer entitled to
any compensation from the employer by reason of the severance of his employment.
The computation of the respondents backwages
As the records show, the contending parties did not dispute the NLRC s order of separation pay that replaced the award of
reinstatement on the ground of the supervening event arising from the newly-discovered strained relations between the parties. The
parties allowed the NLRC s July 31, 1998 decision to lapse into finality and recognized, by their active participation in the second
computation of the awards, the validity and binding effect on them of the terms of the July 31, 1998 decision.
Under these circumstances, while there was no express modification on the period for computing backwages stated in the dispositive
portion of the July 31, 1998 decision of the NLRC, it is nevertheless clear that the award of reinstatement under the March 17, 1995
resolution (to which the respondents backwages was initially supposed to have been computed) was substituted by an award of
separation pay. As earlier stated, the awards of reinstatement and separation pay are exclusive remedies; the change of awards
(from reinstatement to separation pay) under the NLRC s July 31, 1998 not only modified the awards granted, but also changed the
manner the respondents backwages is to be computed. The respondents backwages can no longer be computed up to the point of
reinstatement as there is no longer any award of reinstatement to speak of.
We also emphasize that the payment of backwages and separation pay cannot be computed from the time the respondents allegedly
expressed their wish to be paid separation pay. In the first place, the records show that the alleged manifestation by the respondents,
through Samuel, was actually a mere expression of interest.
44
More importantly, the alleged manifestation was disregarded in the
NLRC's July 31, 1998 decision where the NLRC declared that the award of separation pay was due to the supervening event arising
from the strained relations (not a waiver of reinstatement) that justified the modification of the NLRC's final March 17, 1995 resolution
on the award of reinstatement. Simply put, insofar as the computation of the respondents' backwages, we are guided by the award,
modified to separation pay, under the NLRC's July 31, 1998 decision.
Thus, the computation of the respondents' backwages must be from the time of the illegal dismissal from employment until the finality
of the decision ordering the payment of separation pay. It is only when the NLRC rendered its July 31, 1998 decision ordering the
payment of separation pay (which both parties no longer questioned and which thereafter became final) that the issue of the
respondents' employment with the petitioners was decided with finality, effectively terminating it. The respondents' backwages,
therefore, must be computed from the time of their illegal dismissal until January 29, 1999, the date of finality of the NLRC's July 31,
1998 Decision. As a final point, the CA s ruling must be modified to include legal interest commencing from the finality of the NLRC's
July 31, 1998 decision. The CA failed to consider that the NLRC's July 31, 1998 decision, once final, becomes a judgment for money
from which another consequence flows -the payment of interest in case of delay.
45
Under the circumstances, the payment of legal
interest of six percent (6) upon the finality of the judgment is proper. It is not barred by the principle of immutability of judgment as it
is compensatory interest arising from the final judgment.
46

WHEREFORE, premises considered, we DENY the petition and thus effectively AFFIRM with MODIFICATION the decision dated
September 1 2005 and the resolution dated December 14, 2005 of the Court of Appeals in CA-G.R. SP No. 70085. The petitioners
Bani Rural Bank, Inc., Enoc Theatre I and II and/or Rafael de Guzman, are ORDERED to PAY respondents Teresa de Guzman,
Edgar C. Tan and Teresa G. Tan the following:
(a) Backwages computed from the date the petitioners illegally dismissed the respondents up to January 29, 1999,
the date of the finality of the decision dated July 31, 1998 of the National Labor Relations Commission in NLRC CN.
SUB-RAB-01-07- 7-0136-93 CA No. L-001403 and NLRC CN. SUB-RAB-01-07-7-0137-93 CA No. L-001405;
(b) Separation pay computed from respondents' first day of employment up to January 29, 1999 at the rate of one (1)
month pay per year of service; and
(c) Legal interest of six percent (6) per annum of the total monetary awards computed from January 29, 1999 until
their full satisfaction.
The labor arbiter is hereby ORDERED to make another recomputation according to the above directives.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
MARIANO C. DEL CASTILLO
Associate Justice
JOSE PORTUGAL PEREZ
Associate Justice
ESTELA M. PERLAS-BERNABE
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson s Attestation, it is hereby certified that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the
Courts Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
1
Rollo, pp. 9-30.
2
Id. at 36-46; penned by Associate Justice Celia C. Librea-Leagogo, and concurred in by Associate Justices Andres
B. Reyes, Jr. and Lucas P. Bersamin.
3
Id. at 33-34.
4
In the consolidated cases of Teresa de Guzman Tan v Bani Rural Bank Inc. And/or Rafael de Guzman docketed as
NLRC CN. SUB-RAB-01-07-7-0136-93 CA No. L-001403, and Edgar C Tan and Teresa G Tan v. ENOC Theatre I
and II and/or Rafael de Guzman docketed as NLRC CN. SUB-RAB-01-07-7-0137-93 CA No. L-001405.
5
Rollo, pp. 71-87; penned by Commissioner Ireneo Bernardo, and concurred in by Presiding Commissioner Lourdes
C. Javier and Commissioner Joaquin A. Tanodra.
6
Id. at 87.
7
Id. at 88-98; order dated December 16, 1997.
8
Id. at 101-112; penned by Presiding Commissioner Lourdes Javier.
9
Id. at 111.
10
Id. at 109-110; emphasis ours, citations omitted.
11
Id. at 119-122.
12
Id. at 123-131
13
Id. at 130.
14
Id. at 57.
15
Id. at 44; italics supplied.
16
Id. at 43.
17
486 Phil. 560, 569-570 (2004).
18
Rollo, pp. 150-157.
19
Id., at 168-174.
20
Id. at 176-177; Court Resolution dated November 22, 2006.
21
G.R. No. 172149, February 8, 2010, 612 SCRA 10.
22
Id. at 21; italics supplied.
23
Rollo, p. 109.
24
Id. at 119-122.
25
Id. at 120.
26
Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division), supra note 21, at 19-20; citation
omitted, italics supplied.
27
Natalia Realty, Inc. v. Court of Appeals, 440 Phil. 1, 23 (2002).
28
Ibid.
29
Rollo, p. 129.
30
G.R. No. 183329, August 27, 2009, 597 SCRA 334, 342-343; emphases supplied, citations omitted.
31
G.R. No. 179146, July 23, 2013.
32
Don Orestes Romualdez Electric Coop., Inc. v. NLRC, 377 Phil. 268, 273 (1999).
33
Ibid.
34
Republic Act No. 6715 or An Act to Extend Protection to Labor, Strengthen the Constitutional Rights of Workers to
Self-Organization, Collective Bargaining and Peaceful Concerted Activities, Foster Industrial Peace and Harmony,
Promote the Preferential Use of Voluntary Modes of Settling Labor Disputes, and Reorganize the National Labor
Relations Commission, Amending for These Purposes Certain Provisions of Presidential Decree No. 442, as
amended, Otherwise Known as the Labor Code of the Philippines, Appropriating Funds Therefore and For Other
Purposes.
35
Session Delights Ice Cream and Fast Foods v. Court Appeals (Sixth Division), supra note 21 at 25 citing Mt Carmel
College v. Resuena, G.R. No. 173076, October 10 2007, 533 SCRA 518, 541.
36
Ibid.
37
Bombase v. NLRC, 315 Phil. 551, 556 (1995).
38
Nissan North EDSA, Balintawak, Quezon City v. Serrano, Jr., G.R. No. 162538, June 4, 2009, 588 SCRA 238, 248.
39
G.R. No. 178524, January 30, 2009, 577 SCRA 500.
40
Id. at 506-507; emphases, italics and underscores ours.
41
Lim v. National Labor Relations Commission, 253 Phil. 318, 328 (1989).
42
Javellana, Jr. v. Belen, G.R. No. 181913, March 5, 2010, 614 SCRA 342, 350-351.
43
Supra note 21 at 26.
44
Rollo, p. 109.
45
Session Delights Ice Cream and Fast Foods v. Court Appeals (Sixth Division), supra note 21, at 23, 26.
46
Gonzales v. Solid Cement Corporation, G.R. No. 198423, October 20, 2012, 684 SCRA 344. See BSP Circular No.
799, Series of 2013.

The Lawphil Project - Arellano Law Foundation




Today is Sunday, June 01, 2014





Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 117195 February 20, 1996
DANNY T. RASONABLE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, JOEY GUEVARRA AND VICTORY LINER, INC., respondents.
D E C I S I O N
PUNO, J .:
On March 19, 1993, petitioner DANNY T. RASONABLE filed a complaint for illegal dismissal with the Regional Arbitration Branch No.
III, San Fernando, Pampanga, against private respondents VICTORY LINER, INC. and JOEY GUEVARRA, praying for
reinstatement, payment of backwages and other benefits, damages and attorney's fees.
1

In a Decision,
2
dated November 8, 1993, Labor Arbiter Ariel C. Santos found private respondents guilty of illegal dismissal. They
were ordered to pay petitioner the total sum of P84,957.47, representing the latter's backwages from March 1, 1993 (when petitioner
was illegally dismissed) up to November 8, 1993 (the date of the Labor Arbiter's Decision), 13th month pay, separation pay
equivalent to one-half month salary for every year of service and ten percent (10%) of the total award as attorney's fees.
Dissatisfied, both parties appealed to the National Labor Relations Commission (NLRC). In his appeal,
3
petitioner prayed that the
Labor Arbiter's Decision be modified by awarding him instead full backwages, separation pay equivalent to one (1) month pay for
every year of service, and other benefits which he would have received had he not been illegally dismissed.
Upon the other hand, private respondents claimed that the Labor Arbiter decided their case when it was not as yet submitted for
decision as the parties were then in the verge of striking an amicable settlement. They prayed that the case be remanded to the
Labor Arbiter for settlement and/or reception of further evidence of both parties.
4

In a Decision,
5
dated March 30, 1994, the NLRC modified the Decision of the Labor Arbiter by increasing the award of separation pay
from one-half (1/2) month pay to one (1) month pay for every year of service and by deleting the award of attorney's fees. Both
parties moved for reconsideration. Both motions were denied.
6

They filed separate petitions for certiorari to this Court. Private respondents' petition, entitled "Victory Liner, Inc. v. NLRC, et al."
(G.R. No. 116848) was filed on September 8, 1994 and they reiterated their position before the NLRC. The THIRD DIVISION of this
Court, in a Minute Resolution, dated September 21, 1994, denied due course to private respondents' petition. Their motion for
reconsideration was denied with finality on November 16, 1994.
7

Upon the other hand, petitioner filed the petition at bar against private respondents and the NLRC on October 6, 1994. His petition
was given due course and the parties were directed to file their respective Memorandum.
In his petition, petitioner charges that public respondent NLRC committed grave abuse of discretion: (a) in deleting the award of
attorney's fees, and; (b) in failing to award other benefits, like holiday pay, service incentive leave pay, 13th month pay, backwages
and separation pay accruing from November 8, 1993 (the date of the labor arbiter's Decision) up to the finality thereof.
At the outset, it bears emphasis that when the Third Division of this Court denied due course to private respondents' petition (G.R.
No. 116848), the Court in effect wrote finis to the issue of illegal dismissal. It is thus settled that petitioner was illegally dismissed
from service. Similarly a non-issue is the labor arbiter's award of separation pay in lieu of reinstatement which was not challenged by
petitioner in his appeal to the NLRC. What then remains is the determination of the monetary awards to be adjudged to petitioner and
the period covered thereby.
We hold that public respondent NLRC committed grave abuse of discretion when it ruled that there is no basis for the award of
attorney's fees in favor of petitioner. It is settled that in actions for recovery of wages or where an employee was forced to litigate and
incur expenses to protect his rights and interests, he is entitled to an award of attorney's fees.
8

We come now to the other monetary benefits being claimed by petitioner. Public respondent denied petitioner's claim for service
incentive pay and holiday pay on the ground that petitioner failed to present substantial evidence to support his claim. In the absence
of a clear showing by petitioner of grave abuse of discretion on the part of the public respondent, its factual finding binds this Court.
Next, petitioner contends that as a result of his illegal dismissal, he is entitled to an award of separation pay, backwages and 13th
month pay not only from the time the complaint was filed up to the November 8, 1993 Decision of the Labor Arbiter but also from the
time the arbiter's decision was rendered up to the finality of said decision. He faults the ruling of the public respondent that under Art.
279 of the Labor Code, as amended by Section 34 of R.A. 6715, an illegally dismissed employee shall be entitled to reinstatement
and to his full backwages and other benefits computed from the time his compensation was withheld from him up to the time of his
actual reinstatement. In the case at bar, instead of ordering petitioner's reinstatement, the Labor Arbiter awarded to petitioner
separation pay. It computed the separation pay on the basis of petitioner's length of service,i.e. from the time of his employment up
to the time of dismissal. Petitioner is thus deemed separated from service as of the date of the arbiter's decision awarding him
separation pay. Hence, public respondent held that petitioner is no longer entitled to an award of 13th month pay and backwages
after the date of the decision of the labor arbiter granting petitioner separation pay, the employer-employee relationship having
ceased.
We find merit in petitioner's contention.
A look back on our law and jurisprudence on illegal dismissal is in order. Originally, an illegally dismissed employee is entitled to the
payment of backwages from the date of dismissal to the date of reinstatement less the amount he may have earned elsewhere
during said period. Should the laborer decide not to return to work, the deduction should be made up to the time the judgment
becomes final.
9
Hence, under the old law, payment of backwages is computed from the time of dismissal up to finality of decision in
case the laborer is not reinstated. To prevent double compensation, the earnings derived by a dismissed employee in other jobs
during the period his case is pending is deducted from the grant of backwages to be awarded to him. Likewise, the award of
backwages would carry with it payment of the benefits to which an employee would have been entitled if he were not dismissed.
Thereafter, in the case of Mercury Drug Co. v. Court of Industrial Relations,
10
the Court simplified the computation of backwages
which was unduly delaying the speedy termination of illegal dismissal cases by limiting its payment to three (3) years without
qualification or deduction. Under the Mercury Drug rule, the worker is to be paid his backwages fixed as of the time of his dismissal
without deduction for their earnings elsewhere during their lay-off and without qualification of their wages as thus fixed, i.e.,
unqualified by any increases or other benefits that may have been received by their co-workers who were not dismissed.
11
Such
award is understood to be inclusive of leave benefits: in making the award, the court necessarily takes into consideration holidays,
vacation leaves; all working days are paid for regardless of whether or not the same fall on holidays or employee's leave days; the
regular allowances that the employee had been receiving should however be included in the salary base.
12

The Mercury Drug rule was changed by Article 279 of the Labor Code, as amended by Section 34 of R.A. 6715.
13
It provides:
Art. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement. (emphasis supplied).
As the law stands now, an employee who has been illegally dismissed after the effectivity of R.A. 6715 shall be entitled to
reinstatement, full backwages and other benefits for the entire period that he was out of work and until actual reinstatement.
However, in lieu of reinstatement, petitioner may instead be awarded separation pay. Separation pay is the amount that an employee
receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the
period that he is looking for another employment.
14
The grant of separation pay does not preclude an award for backwages for the
latter represents the amount of earnings lost by reason of the unjustified dismissal. Additionally, a dismissed employee is entitled to
13th month pay.
15

Public respondent holds that award of separation pay implies termination of employment as of the date of the decision. Hence, from
the date of the decision of the labor arbiter granting separation pay, an illegally dismissed employee is no longer entitled to an award
of backwages and 13th month pay, the employer-employee relationship having been severed.
We are not persuaded. In a number of cases,
16
we ruled that there is no inconsistency in the grant of both backwages and separation
pay to an illegally dismissed employee. In Lim v. NLRC, supra, the Court elucidated the propriety of awarding both separation pay
and backwages in this wise:
We have ordered the payment of both (separation pay and backwages) . . . as otherwise, the employee might be
deprived of benefits justly due him. Thus, if an employee who has worked only one year is sustained by the labor
court after three years from his unjust dismissal, granting him separation pay only would entitle him to only one month
salary. There is no reason why he should not also be paid three years backwages corresponding to the period when
he could not return to his work or could not find employment elsewhere.
A mere order for reinstatement issued by the labor arbiter is totally different from actual restoration of an employee to his previous
position. It is for this reason that Article 279, as amended by R.A. 6715, provides for payment of full backwages and other benefits
from the time of dismissal up to the time of actual reinstatement. Thus, in case reinstatement is adjudged, the award of backwages
and other benefits continues beyond the date of the labor arbiter's decision ordering reinstatement and extends up to the time said
order of reinstatement is actually carried out. Correlatively, an award of separation pay, in lieu of reinstatement, and other benefits
due to the employee, without actual payment thereof, does not have the effect of terminating the employment of an illegally
dismissed employee. The award of the labor arbiter could still be overturned or modified and, in most cases, its execution could be
unreasonably delayed.
17
Thus, until actual receipt of the award of separation pay, the employer-employee relationship subsists,
entitling the illegally dismissed employee to an award of backwages, 13th month pay and other benefits from the time of his dismissal
until finality of the decision of the labor arbiter.
With the enactment of R.A. 6715, we now go back to the policy adopted by this Court prior to the Mercury Drug rule, i.e., payment of
full backwages shall be made from the date of dismissal up to finality of the judgment should reinstatement be not decreed, less the
amount which the dismissed employee may have earned during said period, taking into consideration the increases and other
benefits, including the 13th month pay, received by his co-employees who were not dismissed. Payment of separation pay shall be
computed from the date of the dismissed employee's service until finality of our decision.
18

IN VIEW WHEREOF, the petition is hereby GRANTED. The Decision of public respondent NLRC is MODIFIED. The labor arbiter's
award of attorney's fees is reinstated. Payment of backwages, less earnings elsewhere, and qualified by increases and other benefits
(including the 13th month pay) shall be computed from the date of his dismissal until the finality of our decision. Payment of the
separation pay, on the other hand, shall be computed from the date of petitioner's employment until finality of our decision. No cost.
SO ORDERED.
Regalado, Romero and Mendoza, JJ., concur.

Footnotes
1
Petitioner's Position Paper, Original Records, at 19.
2
Rollo, pp. 28-35.
3
Complainant's Memorandum of Appeal, Original Records, at p. 115.
4
Appeal, Original Records, pp. 200-206.
5
Penned by Commissioner Joaquin A. Tanodra and concurred in by Presiding Commissioner Lourdes C. Javier and
Commissioner Ireneo B. Bernardo; Rollo, pp. 16-23.
6
Resolution, dated July 6, 1994, Rollo, pp. 25-27.
7
See Resolution, Rollo, p. 106.
8
Article 2208 (7), New Civil Code; Sebuguero v. National Labor Relations Commission, G.R. No. 115394, September
27, 1995; Article 2208 (2), New Civil Code; Gaco v. National Labor Relations Commission, G.R. No. 104690,
February 23, 1994, 230 SCRA 260, 266.
9
Itogon-Suyoc Mines, Inc. v. Sangilo-Itogon Workers Union, G.R. No. L-24189, August 30, 1968, 24 SCRA 873.
10
No. L-23357, April 30, 1974, 56 SCRA 694; known as the Mercury Drug Rule.
11
Durabuilt Recapping Plant & Co., et al. v. National Labor Relations Commission, G.R. No. 76748, July 27, 1987.
12
Insular Life Assurance Co. Ltd., et al. v. NLRC, G.R. No. 741911, December 21, 1987; Soriano v. NLRC,G.R. No.
75510, October 27, 1987; Santos v. NLRC, G.R. No. 76721, September 21, 1987.
13
Took effect on March 21, 1989.
14
Guatson International Travel and Tours, Inc. v. NLRC, G.R. No. 100322, March 9, 1994, 230 SCRA 815.
15
Paragraph 6, Revised Guidelines on the Implementation of the 13th Month Pay Law (P.D. 851, as
amended); Paramount v. NLRC, G.R. No. 81200, October 17, 1990, 190 SCRA 525.
16
E.g.: Gaco v. NLRC, G.R. No. 104690, February 23, 1994, 230 SCRA 260; Lim v. NLRC, G.R. No. 79907, March
16, 1989; 171 SCRA 328; City Trust Finance Corporation v. NLRC, No. L-75740, January 15, 1988, 157 SCRA 87.
17
In the case at bar, not a single centavo of the monetary award adjudged to petitioner has been paid by private
respondents despite the earlier dismissal of private respondent's petition before this Court; See Memorandum, Rollo,
at p. 242.
18
Ledesma v. NLRC, G.R. No. 110930, July 13, 1995, citing Gaco v. NLRC, G.R. No. 104690, February 23, 1994,
230 SCRA 260; Durabuilt Recapping Plant & Co., et al., v. NLRC, supra.

The Lawphil Project - Arellano Law Foundation




Republic of the Philippines
Supreme Court
Manila



SECOND DIVISION

TIMOTEO H. SARONA,
Petitioner,



- versus -



NATIONAL LABOR RELATIONS
COMMISSION, ROYALE SECURITY
AGENCY (FORMERLY SCEPTRE
SECURITY AGENCY) and
CESAR S. TAN,
Respondents.
G.R. No. 185280

Present:

CARPIO, J.,
Chairperson,
PEREZ,
SERENO,
REYES, and
BERNABE, JJ.

Promulgated:

January 18, 2012

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

DECISION

REYES, J .:

This is a petition for review under Rule 45 of the Rules of Court from the May
29, 2008 Decision
1
of the Twentieth Division of the Court of Appeals (CA) in CA-
G.R. SP No. 02127 entitled Timoteo H. Sarona v. National Labor Relations
Commission, Royale Security Agency (formerly Sceptre Security Agency) and Cesar S.
Tan (Assailed Decision), which affirmed the National Labor Relations
Commissions (NLRC) November 30, 2005 Decision and January 31, 2006
Resolution, finding the petitioner illegally dismissed but limiting the amount of his
backwages to three (3) monthly salaries. The CA likewise affirmed the NLRCs
finding that the petitioners separation pay should be computed only on the basis of
his length of service with respondent Royale Security Agency (Royale). The CA held
that absent any showing that Royale is a mere alter ego of Sceptre Security Agency
(Sceptre), Royale cannot be compelled to recognize the petitioners tenure with
Sceptre. The dispositive portion of the CAs Assailed Decision states:

WHEREFORE, in view of the foregoing, the instant petition
is PARTLY GRANTED, though piercing of the corporate veil is hereby
denied for lack of merit. Accordingly, the assailed Decision and
Resolution of the NLRC respectively dated November 30, 2005 and
January 31, 2006 are hereby AFFIRMED as to the monetary awards.

SO ORDERED.

2



Factual Antecedents

On June 20, 2003, the petitioner, who was hired by Sceptre as a security guard
sometime in April 1976, was asked by Karen Therese Tan (Karen), Sceptres
Operation Manager, to submit a resignation letter as the same was supposedly
required for applying for a position at Royale. The petitioner was also asked to fill up
Royales employment application form, which was handed to him by Royales
General Manager, respondent Cesar Antonio Tan II (Cesar).
3


After several weeks of being in floating status, Royales Security Officer,
Martin Gono (Martin), assigned the petitioner at Highlight Metal Craft, Inc.
(Highlight Metal) from July 29, 2003 to August 8, 2003. Thereafter, the petitioner was
transferred and assigned to Wide Wide World Express, Inc. (WWWE, Inc.). During
his assignment at Highlight Metal, the petitioner used the patches and agency cloths of
Sceptre and it was only
when he was posted at WWWE, Inc. that he started using those of Royale.
4


On September 17, 2003, the petitioner was informed that his assignment at
WWWE, Inc. had been withdrawn because Royale had allegedly been replaced by
another security agency. The petitioner, however, shortly discovered thereafter that
Royale was never replaced as WWWE, Inc.s security agency. When he placed a call
at WWWE, Inc., he learned that his fellow security guard was not relieved from his
post.
5


On September 21, 2003, the petitioner was once again assigned at Highlight
Metal, albeit for a short period from September 22, 2003 to September 30, 2003.
Subsequently, when the petitioner reported at Royales office on October 1, 2003,
Martin informed him that he would no longer be given any assignment per the
instructions of Aida Sabalones-Tan (Aida), general manager of Sceptre. This
prompted him to file a complaint for illegal dismissal on October 4, 2003.
6


In his May 11, 2005 Decision, Labor Arbiter Jose Gutierrez (LA Gutierrez)
ruled in the petitioners favor and found him illegally dismissed. For being
unsubstantiated, LA Gutierrez denied credence to the respondents claim that the
termination of the petitioners employment relationship with Royale was on his
accord following his alleged employment in another company. That the petitioner was
no longer interested in being an employee of Royale cannot be presumed from his
request for a certificate of employment, a claim which, to begin with, he vehemently
denies. Allegation of the petitioners abandonment is negated by his filing of a
complaint for illegal dismissal three (3) days after he was informed that he would no
longer be given any assignments. LA Gutierrez ruled:

In short, respondent wanted to impress before us that complainant
abandoned his employment. We are not however, convinced.

There is abandonment when there is a clear proof showing that one has
no more interest to return to work. In this instant case, the record has no
proof to such effect. In a long line of decisions, the Supreme Court ruled:

Abandonment of position is a matter of intention
expressed in clearly certain and unequivocal acts,
however, an interim employment does not mean
abandonment. (Jardine Davis, Inc. vs. NLRC, 225 SCRA
757).

I n abandonment, there must be a concurrence of
the intention to abandon and some overt acts from which
an employee may be declared as having no more interest
to work. (C. Alcontin & Sons, Inc. vs. NLRC, 229 SCRA
109).

I t is clear, deliberate and unjustified refusal to
severe employment and not mere absence that is required
to constitute abandonment. x x x (De Ysasi III vs.
NLRC, 231 SCRA 173).

Aside from lack of proof showing that complainant has
abandoned his employment, the record would show that immediate
action was taken in order to protest his dismissal from employment. He
filed a complaint [for] illegal dismissal on October 4, 2004 or three (3)
days after he was dismissed. This act, as declared by the Supreme Court
is inconsistent with abandonment, as held in the case of Pampanga Sugar
Development Co., Inc. vs. NLRC, 272 SCRA 737 where the Supreme
Court ruled:

The immediate filing of a complaint for [i]llegal
[d]ismissal by an employee is inconsistent with
abandonment.
7



The respondents were ordered to pay the petitioner backwages, which LA
Gutierrez computed from the day he was dismissed, or on October 1, 2003, up to the
promulgation of his Decision on May 11, 2005. In lieu of reinstatement, the
respondents were ordered to pay the petitioner separation pay equivalent to his one (1)
month salary in consideration of his tenure with Royale, which lasted for only one (1)
month and three (3) days. In this
regard, LA Gutierrez refused to pierce Royales corporate veil for purposes of
factoring the petitioners length of service with Sceptre in the computation of his
separation pay. LA Gutierrez ruled that Royales corporate personality, which is
separate and distinct from that of Sceptre, a sole proprietorship owned by the late
Roso Sabalones (Roso) and later, Aida, cannot be pierced absent clear and convincing
evidence that Sceptre and Royale share the same stockholders and incorporators and
that Sceptre has complete control and dominion over the finances and business affairs
of Royale. Specifically:

To support its prayer of piercing the veil of corporate entity of
respondent Royale, complainant avers that respondent Royal (sic) was
using the very same office of SCEPTRE in C. Padilla St., Cebu City. In
addition, all officers and staff of SCEPTRE are now the same officers
and staff of ROYALE, that all [the] properties of SCEPTRE are now
being owned by ROYALE and that ROYALE is now occupying the
property of SCEPTRE. We are not however, persuaded.

It should be pointed out at this juncture that SCEPTRE, is a single
proprietorship. Being so, it has no distinct and separate personality. It is
owned by the late Roso T. Sabalones. After the death of the owner, the
property is supposed to be divided by the heirs and any claim against the
sole proprietorship is a claim against Roso T. Sabalones. After his death,
the claims should be instituted against the estate of Roso T. Sabalones.
In short, the estate of the late Roso T. Sabalones should have been
impleaded as respondent of this case.

Complainant wanted to impress upon us that Sceptre was organized into
another entity now called Royale Security Agency. There is however, no
proof to this assertion. Likewise, there is no proof that Roso T.
Sabalones, organized his single proprietorship business into a
corporation, Royale Security Agency. On the contrary, the name of Roso
T. Sabalones does not appear in the Articles of Incorporation. The names
therein as incorporators are:

Bruno M. Kuizon [P]150,000.00
Wilfredo K. Tan 100,000.00
Karen Therese S. Tan 100,000.00
Cesar Antonio S. Tan 100,000.00
Gabeth Maria K. Tan 50,000.00

Complainant claims that two (2) of the incorporators are the
granddaughters of Roso T. Sabalones. This fact even give (sic) us further
reason to conclude that respondent Royal (sic) Security Agency is not an
alter ego or conduit of SCEPTRE. It is obvious that respondent Royal
(sic) Security Agency is not owned by the owner of SCEPTRE.

It may be true that the place where respondent Royale hold (sic)
office is the same office formerly used by SCEPTRE. Likewise, it may
be true that the same officers and staff now employed by respondent
Royale Security Agency were the same officers and staff employed by
SCEPTRE. We find, however, that these facts are not sufficient to
justify to require respondent Royale to answer for the liability of Sceptre,
which was owned solely by the late Roso T. Sabalones. As we have
stated above, the remedy is to address the claim on the estate of Roso T.
Sabalones.
8



The respondents appealed LA Gutierrezs May 11, 2005 Decision to the
NLRC, claiming that the finding of illegal dismissal was attended with grave abuse of
discretion. This appeal was, however, dismissed by the NLRC in its November 30,
2005 Decision,
9
the dispositive portion of which states:

WHEREFORE, premises considered, the Decision of the Labor
Arbiter declaring the illegal dismissal of complainant is
hereby AFFIRMED.

However[,] We modify the monetary award by limiting the grant
of backwages to only three (3) months in view of complainants very
limited service which lasted only for one month and three days.

1. Backwages - [P]15,600.00
2. Separation Pay - 5,200.00
3. 13
th
Month Pay - 583.34
[P]21,383.34 Attorneys Fees- 2,138.33
Total [P]23,521.67

The appeal of respondent Royal (sic) Security Agency is
hereby DISMISSED for lack of merit.

SO ORDERED.
10



The NLRC partially affirmed LA Gutierrezs May 11, 2005 Decision. It
concurred with the latters finding that the petitioner was illegally dismissed and the
manner by which his separation pay was computed, but modified the monetary award
in the petitioners favor by reducing the amount of his backwages from P95,600.00
to P15,600.00. The NLRC determined the petitioners backwages as limited to three
(3) months of his last monthly salary, considering that his employment with Royale
was only for a period for one (1) month and three (3) days, thus:
11


On the other hand, while complainant is entitled to backwages, We are
aware that his stint with respondent Royal (sic) lasted only for one (1)
month and three (3) days such that it is Our considered view that his
backwages should be limited to only three (3) months.

Backwages:

[P]5,200.00 x 3 months = [P]15,600.00
12



The petitioner, on the other hand, did not appeal LA Gutierrezs May 11, 2005
Decision but opted to raise the validity of LA Gutierrezs adverse findings with
respect to piercing Royales corporate personality and computation of his separation
pay in his Reply to the respondents Memorandum of Appeal. As the filing of an
appeal is the prescribed remedy and no aspect of the decision can be overturned by a
mere reply, the NLRC dismissed the petitioners efforts to reverse LA Gutierrezs
disposition of these issues. Effectively, the petitioner had already waived his right to
question LA Gutierrezs Decision when he failed to file an appeal within the
reglementary period. The NLRC held:

On the other hand, in complainants Reply to Respondents Appeal
Memorandum he prayed that the doctrine of piercing the veil of
corporate fiction of respondent be applied so that his services with
Sceptre since 1976 [will not] be deleted. If complainant assails this
particular finding in the Labor Arbiters Decision, complainant should
have filed an appeal and not seek a relief by merely filing a Reply to
Respondents Appeal Memorandum.
13



Consequently, the petitioner elevated the NLRCs November 30, 2005 Decision to the
CA by way of a Petition for Certiorari under Rule 65 of the Rules of Court. On the
other hand, the respondents filed no appeal from the NLRCs finding that the
petitioner was illegally dismissed.

The CA, in consideration of substantial justice and the jurisprudential dictum
that an appealed case is thrown open for the appellate courts review, disagreed with
the NLRC and proceeded to review the evidence on record to determine if Royale is
Sceptres alter ego that would warrant the piercing of its corporate veil.
14
According to
the CA, errors not assigned on appeal may be reviewed as technicalities should not
serve as bar to the full adjudication of cases. Thus:

In Cuyco v. Cuyco, which We find application in the instant case, the
Supreme Court held:

In their Reply, petitioners alleged that their petition only
raised the sole issue of interest on the interest due, thus, by
not filing their own petition for review, respondents waived
their privilege to bring matters for the Courts review that
[does] not deal with the sole issue raised.

Procedurally, the appellate court in deciding the case shall
consider only the assigned errors, however, it is equally
settled that the Court is clothed with ample authority to
review matters not assigned as errors in an appeal, if it
finds that their consideration is necessary to arrive at a just
disposition of the case.

Therefore, for full adjudication of the case, We have to primarily resolve
the issue of whether the doctrine of piercing the corporate veil be justly
applied in order to determine petitioners length of service with private
respondents.
15
(citations omitted)


Nonetheless, the CA ruled against the petitioner and found the evidence he
submitted to support his allegation that Royale and Sceptre are one and the same
juridical entity to be wanting. The CA refused to pierce Royales corporate mask as
one of the probative factors that would justify the application of the doctrine of
piercing the corporate veil is stock ownership by one or common ownership of both
corporations and the petitioner failed to present clear and convincing proof that
Royale and Sceptre are commonly owned or controlled. The relevant portions of the
CAs Decision state:

In the instant case, We find no evidence to show that Royale
Security Agency, Inc. (hereinafter Royale), a corporation duly
registered with the Securities and Exchange Commission (SEC) and
Sceptre Security Agency (hereinafter Sceptre), a single proprietorship,
are one and the same entity.

Petitioner, who has been with Sceptre since 1976 and, as ruled by
both the Labor Arbiter and the NLRC, was illegally dismissed by Royale
on October 1, 2003, alleged that in order to circumvent labor laws,
especially to avoid payment of money claims and the consideration on
the length of service of its employees, Royale was established as an alter
ego or business conduit of Sceptre. To prove his claim, petitioner
declared that Royale is conducting business in the same office of
Sceptre, the latter being owned by the late retired Gen. Roso Sabalones,
and was managed by the latters daughter, Dr. Aida Sabalones-Tan; that
two of Royales incorporators are grandchildren [of] the late Gen. Roso
Sabalones; that all the properties of Sceptre are now owned by Royale,
and that the officers and staff of both business establishments are the
same; that the heirs of Gen. Sabalones should have applied for
dissolution of Sceptre before the SEC before forming a new corporation.

On the other hand, private respondents declared that Royale was
incorporated only on March 10, 2003 as evidenced by the Certificate of
Incorporation issued by the SEC on the same date; that Royales
incorporators are Bruino M. Kuizon, Wilfredo Gracia K. Tan, Karen
Therese S. Tan, Cesar Antonio S. Tan II and [Gabeth] Maria K. Tan.

Settled is the tenet that allegations in the complaint must be duly
proven by competent evidence and the burden of proof is on the party
making the allegation. Further, Section 1 of Rule 131 of the Revised
Rules of Court provides:

SECTION 1. Burden of proof. Burden of proof is
the duty of a party to present evidence on the facts in issue
necessary to establish his claim or defense by the amount of
evidence required by law.

We believe that petitioner did not discharge the required burden of
proof to establish his allegations. As We see it, petitioners claim that
Royale is an alter ego or business conduit of Sceptre is without basis
because aside from the fact that there is no common ownership of both
Royale and Sceptre, no evidence on record would prove that Sceptre,
much less the late retired Gen. Roso Sabalones or his heirs, has control
or complete domination of Royales finances and business transactions.
Absence of this first element, coupled by petitioners failure to present
clear and convincing evidence to substantiate his allegations, would
prevent piercing of the corporate veil. Allegations must be proven by
sufficient evidence. Simply stated, he who alleges a fact has the burden
of proving it; mere allegation is not evidence.
16
(citations omitted)


By way of this Petition, the petitioner would like this Court to revisit the computation
of his backwages, claiming that the same should be computed from the time he was
illegally dismissed until the finality of this decision.
17
The petitioner would likewise
have this Court review and examine anew the factual allegations and the supporting
evidence to determine if the CA erred in its refusal to pierce Royales corporate mask
and rule that it is but a mere continuation or successor of Sceptre. According to the
petitioner, the erroneous computation of his separation pay was due to the CAs
failure, as well as the NLRC and LA Gutierrez, to consider evidence conclusively
demonstrating that Royale and Sceptre are one and the same juridical entity. The
petitioner claims that since Royale is no more than Sceptres alter ego, it should
recognize and credit his length of service with Sceptre.
18


The petitioner claimed that Royale and Sceptre are not separate legal persons
for purposes of computing the amount of his separation pay and other benefits under
the Labor Code. The piercing of Royales corporate personality is justified by several
indicators that Royale was incorporated for the sole purpose of defeating his right to
security of tenure and circumvent payment of his benefits to which he is entitled under
the law: (i) Royale was holding office in the same property used by Sceptre as its
principal place of business;
19
(ii) Sceptre and Royal have the same officers and
employees;
20
(iii) on October 14, 1994, Roso, the sole proprietor of Sceptre, sold to
Aida, and her husband, Wilfredo Gracia K. Tan (Wilfredo),
21
the property used by
Sceptre as its principal place of business;
22
(iv) Wilfredo is one of the incorporators of
Royale;
23
(v) on May 3, 1999, Roso ceded the license to operate Sceptre issued by the
Philippine National Police to Aida;
24
(vi) on July 28, 1999, the business name Sceptre
Security & Detective Agency was registered with the Department of Trade and
Industry (DTI) under the name of Aida;
25
(vii) Aida exercised control over the affairs
of Sceptre and Royale, as she was, in fact, the one who dismissed the petitioner from
employment;
26
(viii) Karen, the daughter of Aida, was Sceptres Operation Manager
and is one of the incorporators of Royale;
27
and (ix) Cesar Tan II, the son of Aida was
one of Sceptres officers and is one of the incorporators of Royale.
28


In their Comment, the respondents claim that the petitioner is barred from
questioning the manner by which his backwages and separation pay were computed.
Earlier, the petitioner moved for the execution of the NLRCs November 30, 2005
Decision
29
and the respondents paid him the full amount of the monetary award
thereunder shortly after the writ of execution was issued.
30
The respondents likewise
maintain that Royales separate and distinct corporate personality should be respected
considering that the evidence presented by the petitioner fell short of establishing that
Royale is a mere alter ego of Sceptre.

The petitioner does not deny that he has received the full amount of backwages
and separation pay as provided under the NLRCs November 30, 2005
Decision.
31
However, he claims that this does not preclude this Court from modifying
a decision that is tainted with grave abuse of discretion or issued without jurisdiction.
32


ISSUES

Considering the conflicting submissions of the parties, a judicious
determination of their respective rights and obligations requires this Court to resolve
the following substantive issues:

a. Whether Royales corporate fiction should be pierced for the
purpose of compelling it to recognize the petitioners length of service
with Sceptre and for holding it liable for the benefits that have accrued to
him arising from his employment with Sceptre; and

b. Whether the petitioners backwages should be limited to his
salary for three (3) months.

OUR RULING

Because his receipt of the proceeds of the
award under the NLRCs November 30,
2005 Decision is qualified and without
prejudice to the CAs resolution of his
petition for certiorari, the petitioner is not
barred from exercising his right to elevate
the decision of the CA to this Court.


Before this Court proceeds to decide this Petition on its merits, it is imperative to
resolve the respondents contention that the full satisfaction of the award under the
NLRCs November 30, 2005 Decision bars the petitioner from questioning the
validity thereof. The respondents submit that they had paid the petitioner the amount
of P21,521.67 as directed by the NLRC and this constitutes a waiver of his right to file
an appeal to this Court.

The respondents fail to convince.

The petitioners receipt of the monetary award adjudicated by the NLRC is not
absolute, unconditional and unqualified. The petitioners May 3, 2007 Motion for
Release contains a reservation, stating in his prayer that: it is respectfully prayed that
the respondents and/or Great Domestic Insurance Co. be ordered to RELEASE/GIVE
the amount of P23,521.67 in favor of the complainant TIMOTEO H. SARONA
without prejudice to the outcome of the petition with the CA.
33


In Leonis Navigation Co., Inc., et al. v. Villamater, et al.,
34
this Court ruled that
the prevailing partys receipt of the full amount of the judgment award pursuant to a
writ of execution issued by the labor arbiter does not
close or terminate the case if such receipt is qualified as without prejudice to the
outcome of the petition for certiorari pending with the CA.

Simply put, the execution of the final and executory decision or
resolution of the NLRC shall proceed despite the pendency of a petition
for certiorari, unless it is restrained by the proper court. In the present
case, petitioners already paid Villamaters widow, Sonia, the amount
of P3,649,800.00, representing the total and permanent disability award
plus attorneys fees, pursuant to the Writ of Execution issued by the
Labor Arbiter. Thereafter, an Order was issued declaring the case as
"closed and terminated". However, although there was no motion for
reconsideration of this last Order, Sonia was, nonetheless, estopped from
claiming that the controversy had already reached its end with the
issuance of the Order closing and terminating the case. This is because
the Acknowledgment Receipt she signed when she received petitioners
payment was without prejudice to the final outcome of the petition
for certiorari pending before the CA.
35



The finality of the NLRCs decision does not preclude the filing of a petition
for certiorari under Rule 65 of the Rules of Court. That the NLRC issues an entry of
judgment after the lapse of ten (10) days from the parties receipt of its decision
36
will
only give rise to the prevailing partys right to move for the execution thereof but will
not prevent the CA from taking cognizance of a petition for certiorari on
jurisdictional and due process considerations.
37
In turn, the decision rendered by the
CA on a petition for certiorari may be appealed to this Court by way of a petition for
review on certiorari under Rule 45 of the Rules of Court. Under Section 5, Article
VIII of the Constitution, this Court has the power to review, revise, reverse, modify,
or affirm on appeal or certiorari as the law or the Rules of Court may provide, final
judgments and orders of lower courts in x x x all cases in which only an error or
question of law is involved. Consistent with this constitutional mandate, Rule 45 of
the Rules of Court provides the remedy of an appeal by certiorari from decisions,
final orders or resolutions of the CA in any case, i.e., regardless of the nature of the
action or proceedings
involved, which would be but a continuation of the appellate process over the original
case.
38
Since an appeal to this Court is not an original and independent action but a
continuation of the proceedings before the CA, the filing of a petition for review
under Rule 45 cannot be barred by the finality of the NLRCs decision in the same
way that a petition for certiorariunder Rule 65 with the CA cannot.

Furthermore, if the NLRCs decision or resolution was reversed and set aside for
being issued with grave abuse of discretion by way of a petition for certiorari to the
CA or to this Court by way of an appeal from the decision of the CA, it is considered
void ab initio and, thus, had never become final and executory.
39


A Rule 45 Petition should be confined to
questions of law. Nevertheless, this Court
has the power to resolve a question of fact,
such as whether a corporation is a mere
alter ego of another entity or whether the
corporate fiction was invoked for
fraudulent or malevolent ends, if the
findings in assailed decision is not
supported by the evidence on record or
based on a misapprehension of facts.


The question of whether one corporation is merely an alter ego of another is
purely one of fact. So is the question of whether a corporation is a paper company, a
sham or subterfuge or whether the petitioner adduced the requisite quantum of
evidence warranting the piercing of the veil of the respondents corporate
personality.
40


As a general rule, this Court is not a trier of facts and a petition for review
on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of
law. Moreover, if factual findings of the NLRC and the LA have been affirmed by the
CA, this Court accords them the respect and finality they deserve. It is well-settled
and oft-repeated that findings of fact of administrative agencies and quasi-judicial
bodies, which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect, but finality when affirmed by the
CA.

41


Nevertheless, this Court will not hesitate to deviate from what are clearly
procedural guidelines and disturb and strike down the findings of the CA and those of
the labor tribunals if there is a showing that they are unsupported by the evidence on
record or there was a patent misappreciation of facts. Indeed, that the impugned
decision of the CA is consistent with the findings of the labor tribunals does not per
se conclusively demonstrate the correctness thereof. By way of exception to the
general rule, this Court will scrutinize the facts if only to rectify the prejudice and
injustice resulting from an incorrect assessment of the evidence presented.

A resolution of an issue that has supposedly
become final and executory as the
petitioner only raised it in his reply to the
respondents appeal may be revisited by
the appellate court if such is necessary for a
just disposition of the case.


As above-stated, the NLRC refused to disturb LA Gutierrezs denial of the
petitioners plea to pierce Royales corporate veil as the petitioner did not appeal any
portion of LA Gutierrezs May 11, 2005 Decision.

In this respect, the NLRC cannot be accused of grave abuse of discretion. Under
Section 4(c), Rule VI of the NLRC Rules,
42
the NLRC shall limit itself to reviewing
and deciding only the issues that were elevated on appeal. The NLRC, while not
totally bound by technical rules of procedure, is not licensed to disregard and violate
the implementing rules it implemented.

43


Nonetheless, technicalities should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties. Technical rules are not
binding in labor cases and are not to be applied strictly if the result would be
detrimental to the working man.
44
This Court may choose not to encumber itself with
technicalities and limitations consequent to procedural rules if such will only serve as
a hindrance to its duty to decide cases judiciously and in a manner that would put an
end with finality to all existing conflicts between the parties.

Royale is a continuation or successor of
Sceptre.


A corporation is an artificial being created by operation of law. It possesses the right
of succession and such powers, attributes, and properties expressly authorized by law
or incident to its existence. It has a personality separate and distinct from the persons
composing it, as well as from any other legal entity to which it may be related. This is
basic.
45


Equally well-settled is the principle that the corporate mask may be removed or
the corporate veil pierced when the corporation is just an alter ego of a person or of
another corporation. For reasons of public policy and in the interest of justice, the
corporate veil will justifiably be impaled only when it becomes a shield for fraud,
illegality or inequity committed against third persons.
46


Hence, any application of the doctrine of piercing the corporate veil should be
done with caution. A court should be mindful of the milieu where it is to be applied. It
must be certain that the corporate fiction was misused to such an extent that injustice,
fraud, or crime was committed against another, in disregard of rights. The wrongdoing
must be clearly and convincingly established; it cannot be presumed. Otherwise, an
injustice that was never unintended may result from an erroneous application.
47


Whether the separate personality of the corporation should be pierced hinges on
obtaining facts appropriately pleaded or proved. However, any piercing of the
corporate veil has to be done with caution, albeit the Court will not hesitate to
disregard the corporate veil when it is misused or when necessary in the interest of
justice. After all, the concept of corporate entity was not meant to promote unfair
objectives.
48


The doctrine of piercing the corporate veil applies only in three (3) basic areas,
namely: 1) defeat of public convenience as when the corporate fiction is used as a
vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporate
entity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter ego cases,
where a corporation is merely a farce since it is a mere alter ego or business conduit of
a person, or where the
corporation is so organized and controlled and its affairs are so conducted as
to make it merely an instrumentality, agency, conduit or adjunct of another
corporation.
49


In this regard, this Court finds cogent reason to reverse the CAs findings.
Evidence abound showing that Royale is a mere continuation or successor of Sceptre
and fraudulent objectives are behind Royales incorporation and the petitioners
subsequent employment therein. These are plainly suggested by events that the
respondents do not dispute and which the CA, the NLRC and LA Gutierrez accept as
fully substantiated but misappreciated as insufficient to warrant the use of the
equitable weapon of piercing.

As correctly pointed out by the petitioner, it was Aida who exercised control
and supervision over the affairs of both Sceptre and Royale. Contrary to the
submissions of the respondents that Roso had been the only one in sole control of
Sceptres finances and business affairs, Aida took over as early as 1999 when Roso
assigned his license to operate Sceptre on May 3, 1999.
50
As further proof of Aidas
acquisition of the rights as Sceptres sole proprietor, she caused the registration of the
business name Sceptre Security & Detective Agency under her name with the DTI a
few months after Roso abdicated his rights to Sceptre in her favor.
51
As far as Royale
is concerned, the respondents do not deny that she has a hand in its management and
operation and possesses control and supervision of its employees, including the
petitioner. As the petitioner correctly pointed out, that Aida was the one who decided
to stop giving any assignments to the petitioner and summarily dismiss him is an
eloquent testament of the power she wields insofar as Royales affairs are concerned.
The presence of actual common control coupled with the misuse of the corporate form
to perpetrate oppressive or manipulative conduct or evade performance of legal
obligations is patent; Royale cannot hide behind its corporate fiction.

Aidas control over Sceptre and Royale does not, by itself, call for a disregard
of the corporate fiction. There must be a showing that a fraudulent intent or illegal
purpose is behind the exercise of such control to warrant the piercing of the corporate
veil.
52
However, the manner by which the petitioner was made to resign from Sceptre
and how he became an employee of Royale suggest the perverted use of the legal
fiction of the separate corporate personality. It is undisputed that the petitioner
tendered his resignation and that he applied at Royale at the instance of Karen and
Cesar and on the impression they created that these were necessary for his continued
employment. They orchestrated the petitioners resignation from Sceptre and
subsequent employment at Royale, taking advantage of their ascendancy over the
petitioner and the latters lack of knowledge of his rights and the consequences of his
actions. Furthermore, that the petitioner was made to resign from Sceptre and apply
with Royale only to be unceremoniously terminated shortly thereafter leads to the
ineluctable conclusion that there was intent to violate the petitioners rights as an
employee, particularly his right to security of tenure. The respondents scheme reeks
of bad faith and fraud and compassionate justice dictates that Royale and Sceptre be
merged as a single entity, compelling Royale to credit and recognize the petitioners
length of service with Sceptre. The respondents cannot use the legal fiction of a
separate corporate personality for ends subversive of the policy and purpose behind its
creation
53
or which could not have been intended by law to which it owed its being.
54


For the piercing doctrine to apply, it is of no consequence if Sceptre is a sole
proprietorship. As ruled in Prince Transport, Inc., et al. v. Garcia, et al.,
55
it is the act
of hiding behind the separate and distinct personalities of juridical entities to
perpetuate fraud, commit illegal acts, evade ones obligations that the equitable
piercing doctrine was formulated to address and prevent:

A settled formulation of the doctrine of piercing the corporate veil is that
when two business enterprises are owned, conducted and controlled by
the same parties, both law and equity will, when necessary to protect the
rights of third parties, disregard the legal fiction that these two entities
are distinct and treat them as identical or as one and the same. In the
present case, it may be true that Lubas is a single proprietorship and not
a corporation. However, petitioners attempt to isolate themselves from
and hide behind the supposed separate and distinct personality of Lubas
so as to evade their liabilities is precisely what the classical doctrine of
piercing the veil of corporate entity seeks to prevent and remedy.
56



Also, Sceptre and Royale have the same principal place of business. As early as
October 14, 1994, Aida and Wilfredo became the owners of the property used by
Sceptre as its principal place of business by virtue of a Deed of Absolute Sale they
executed with Roso.
57
Royale, shortly after its incorporation, started to hold office in
the same property. These, the respondents failed to dispute.

The respondents do not likewise deny that Royale and Sceptre share the same
officers and employees. Karen assumed the dual role of Sceptres Operation Manager
and incorporator of Royale. With respect to the petitioner, even if he has already
resigned from Sceptre and has been employed by Royale, he was still using the
patches and agency cloths of Sceptre during his assignment at Highlight Metal.

Royale also claimed a right to the cash bond which the petitioner posted when
he was still with Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre
should have released the petitioners cash bond when he resigned and Royale would
have required the petitioner to post a new cash bond in its favor.

Taking the foregoing in conjunction with Aidas control over Sceptres and
Royales business affairs, it is patent that Royale was a mere subterfuge for Aida.
Since a sole proprietorship does not have a separate and distinct personality from that
of the owner of the enterprise, the latter is personally liable. This is what she sought to
avoid but cannot prosper.

Effectively, the petitioner cannot be deemed to have changed employers as
Royale and Sceptre are one and the same. His separation pay should, thus, be
computed from the date he was hired by Sceptre in April 1976 until the finality of this
decision. Based on this Courts ruling in Masagana Concrete Products, et al. v.
NLRC, et al.,
58
the intervening period between the day an employee was illegally
dismissed and the day the decision finding him illegally dismissed becomes final and
executory shall be considered in the computation of his separation pay as a period of
imputed or putative service:

Separation pay, equivalent to one month's salary for every year of
service, is awarded as an alternative to reinstatement when the latter is
no longer an option. Separation pay is computed from the
commencement of employment up to the time of termination, including
the imputed service for which the employee is entitled to backwages,
with the salary rate prevailing at the end of the period of putative service
being the basis for computation.
59



It is well-settled, even axiomatic, that if
reinstatement is not possible, the period
covered in the computation of backwages is
from the time the employee was unlawfully
terminated until the finality of the decision
finding illegal dismissal.


With respect to the petitioners backwages, this Court cannot subscribe to the view
that it should be limited to an amount equivalent to three (3) months of his salary.
Backwages is a remedy affording the employee a way to recover what he has lost by
reason of the unlawful dismissal.
60
In awarding backwages, the primordial
consideration is the income that should have accrued to the employee from the time
that he was dismissed up to his reinstatement
61
and the length of service prior to his
dismissal is definitely inconsequential.

As early as 1996, this Court, in Bustamante, et al. v. NLRC, et al.,
62
clarified in
no uncertain terms that if reinstatement is no longer possible, backwages should be
computed from the time the employee was terminated until the finality of the decision,
finding the dismissal unlawful.

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

As to reinstatement of petitioners, this Court has already ruled that
reinstatement is no longer feasible, because the company would be
adjustly prejudiced by the continued employment of petitioners who at
present are overage, a separation pay equal to one-month salary granted
to them in the Labor Arbiter's decision was in order and, therefore,
affirmed on the Court's decision of 15 March 1996.Furthermore, since
reinstatement on this case is no longer feasible, the amount of
backwages shall be computed from the time of their illegal
termination on 25 June 1990 up to the time of finality of this
decision.
63
(emphasis supplied)


A further clarification was made in Javellana, Jr. v. Belen:
64


Article 279 of the Labor Code, as amended by Section 34 of
Republic Act 6715 instructs:

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

Clearly, the law intends the award of backwages and similar benefits to
accumulate past the date of the Labor Arbiter's decision until the
dismissed employee is actually reinstated. But if, as in this case,
reinstatement is no longer possible, this Court has consistently ruled that
backwages shall be computed from the time of illegal dismissal until the
date the decision becomes final.
65
(citation omitted)


In case separation pay is awarded and reinstatement is no longer feasible, backwages
shall be computed from the time of illegal dismissal up to the finality of the decision
should separation pay not be paid in the meantime. It is the employees actual receipt
of the full amount of his separation pay that will effectively terminate the employment
of an illegally dismissed employee.
66
Otherwise, the employer-employee relationship
subsists and the illegally dismissed employee is entitled to backwages, taking into
account the increases and other benefits, including the 13
th
month pay, that were
received by his co-employees who are not dismissed.
67
It is the obligation of the
employer to pay an illegally dismissed employee or worker the whole amount of the
salaries or wages, plus all other benefits and
bonuses and general increases, to which he would have been normally entitled had he
not been dismissed and had not stopped working.
68


In fine, this Court holds Royale liable to pay the petitioner backwages to be
computed from his dismissal on October 1, 2003 until the finality of this decision.
Nonetheless, the amount received by the petitioner from the respondents in
satisfaction of the November 30, 2005 Decision shall be deducted accordingly.

Finally, moral damages and exemplary damages at P25,000.00 each as
indemnity for the petitioners dismissal, which was tainted by bad faith and fraud, are
in order. Moral damages may be recovered where the dismissal of the employee was
tainted by bad faith or fraud, or where it constituted an act oppressive to labor, and
done in a manner contrary to morals, good customs or public policy while exemplary
damages are recoverable only if the dismissal was done in a wanton, oppressive, or
malevolent manner.
69


WHEREFORE, premises considered, the Petition is hereby GRANTED.
We REVERSE and SET ASIDE the CAs May 29, 2008 Decision in C.A.-G.R. SP
No. 02127 and order the respondents to pay the petitioner the following minus the
amount of (P23,521.67) paid to the petitioner in satisfaction of the NLRCs November
30, 2005 Decision in NLRC Case No. V-000355-05:

a) full backwages and other benefits computed from October 1, 2003 (the date
Royale illegally dismissed the petitioner) until the finality of this decision;

b) separation pay computed from April 1976 until the finality of this decision at the
rate of one month pay per year of service;

c) ten percent (10%) attorneys fees based on the total amount of the awards
under (a) and (b) above;

d) moral damages of Twenty-Five Thousand Pesos (P25,000.00); and

5. exemplary damages of Twenty-Five Thousand Pesos (P25,000.00).

This case is REMANDED to the labor arbiter for computation of the separation pay,
backwages, and other monetary awards due the petitioner.

SO ORDERED.




BIENVENIDO L. REYES
Associate Justice





WE CONCUR:




ANTONIO T. CARPIO
Associate Justice




JOSE PORTUGAL PEREZ
Associate Justice
MARIA LOURDES P. A. SERENO
Associate Justice




ESTELA M. PERLAS-BERNABE
Associate Justice



A T T E S T A T I O N

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



ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division



C E R T I F I C A T I O N

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




RENATO C. CORONA
Chief Justice
Additional Member in lieu of Associate Justice Arturo D. Brion per Special Order No. 1174 dated January 9,
2012.
1 Penned by Associate Justice Francisco P. Acosta, with Associate Justices Amy C. Lazaro-Javier and Florito S.
Macalino, concurring; rollo, pp. 19-30.
2 Id. at 29.
3 Id. at 3, 4 and 21.
4Id. at 4-5, 21.
5 Id. at 5-6.
6 Id. at 5-6, 21.
7 Id. at 55.
8 Id. at 53-54.
9 Id. at 58-65.
10 Id. at 64-65.
11 Id. at 64.
12 Id.
13 Id.
14 Id. at 24-25.
15 Id.
16 Id. at 26-27.
17 Id. at 13-15.
18 Id. at 7-13.
19 Id. at 5, 6 and 9.
20 Id. at 8-9.
21 Id. at 74-80.
22 Id. at 82.
23 Id. at 44.
24 Id. at 73-79.
25 Id. at 73-80.
26 Id. at 12.
27 Id. at 8, 44, 73-74.
28 Id.
29 Id. at 58-65.
30 Id. at 49.
31 Id. at 77.
32 Id.
33 Id. at 67.
34 G.R. No. 179169, March 3, 2010, 614 SCRA 182.
35 Id. at 193-194.
36 2011 NLRC Rules of Procedure, Rule VII, Section 14.
37Id.
38Cua, Jr. v. Tan, G.R. No. 181455-56, December 4, 2009, 607 SCRA , 686-687.
39 Leonis Navigation Co., Inc. v. Villamater, supra note 34 at 192.
40 China Banking Corporation v. Dyne-Sem Electronics Corporation, 527 Phil 80 (2006).
41 Reyes v. National Labor Relations Commission, G.R. No. 160233, August 8, 2007, 529 SCRA 499.
42 New Rules of Procedure of the National Labor Relations Commission (as amended by NLRC Resolution No. 01-
02, Series of 2002).
43 Del Monte Philippines, Inc. v. NLRC, G.R. No. 87371, August 6, 1990, 188 SCRA 370.
44 Government Service Insurance System v. NLRC, G.R. No. 180045, November 17, 2010, 635 SCRA 258.
45 General Credit Corporation v. Alsons Development and Investment Corporation, G.R. No. 154975, January 29,
2007, 513 SCRA 237-238.
46 Philippine National Bank v. Andrada Electric Engineering Company, 430 Phil 894 (2002).
47 Id. at 894-895; citations omitted.
48 Supra note 45 at 238.
49 Id. at 238-239.
50 Rollo, p. 79.
51 Id. at 80.
52 NASECO Guards Association-PEMA (NAGA-PEMA) v. National Service Corporation, G.R. No. 165442, August
25, 2010, 629 SCRA 101.
53 Cf. Emiliano Cano Enterprises, Inc. v. CIR, et al., 121 Phil 276 (1965).
54 Land Bank of the Philippines v. Court of Appeals, 416 Phil 774, 783 (2001).
55 G.R. No. 167291, January 12, 2011, 639 SCRA 312.
56 Id. at 328.
57 Rollo, pp. 5, 54, 74 and 82.
58 372 Phil 459 (1999).
59 Id. at 481.
60 De Guzman v. National Labor Relations Commission, 371 Phil 202 (1999).
61 Velasco v. NLRC, et al., 525 Phil 749, 761-762, (2006).
62332 Phil 833 (1996).
63 Id. at 843.
64 G.R. No. 181913, March 5, 2010, 614 SCRA 342.
65 Id. at 350-351.
66 Rasonable v. NLRC, 324 Phil 191, 200 (1996).
67 Id.
68 St. Louis College of Tuguegarao v. NLRC, 257 Phil 1008 (1989), citing East Asiatic Co., Ltd. v. Court of
Industrial Relations, 148-B Phil 401, 429 (1971).
69 Norkis Trading Co., Inc. v. NLRC, 504 Phil 709, 719-720 (2005).




FIRST DIVISION


GOLDEN ACE BUILDERS and
ARNOLD U. AZUL,
Petitioners,



- versus -




G.R. No. 187200


Present:

PUNO, C.J., Chairperson,
CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.

JOSE A. TALDE,
Respondent.



Promulgated:
May 5, 2010


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D E C I S I O N


CARPIO MORALES, J .:
Jose A. Talde (respondent) was hired in 1990 as a carpenter by petitioner
Golden Ace Builders of which its co-petitioner Arnold Azul (Azul) is the owner-
manager. In February 1999, Azul, alleging the unavailability of construction
projects, stopped giving work assignments to respondent, prompting the latter to
file a complaint
[1]
for illegal dismissal.



By Decision
[2]
of January 10, 2001, the Labor Arbiter ruled in favor of
respondent and ordered his immediate reinstatement without loss of seniority rights
and other privileges, and with payment of full backwages, which at that time was
computed at P144,382.23, and the amount of P3,236.37 representing premium pay
for rest days, service incentive leave pay and 13
th
month pay.

Pending their appeal to the National Labor Relations Commission (NLRC)
and in compliance with the Labor Arbiters Decision, petitioners, through counsel,
advised respondent to report for work in the construction site within 10 days from
receipt thereof. Respondent submitted, however, on May 16, 2001 a
manifestation
[3]
to the Labor Arbiter that actual animosities existed between him
and petitioners and there had been threats to his life and his familys safety, hence,
he opted for the payment of separation pay. Petitioners denied the existence of any
such animosity.

Meanwhile, the NLRC dismissed petitioners appeal by Resolution
[4]
of
April 22, 2002, holding that respondent was a regular employee and not a project
employee, and that there was no valid ground for the termination of his
services. Petitioners motion for reconsideration was denied by Resolution
[5]
of
August 6, 2002.

Petitioners appeal to the Court of Appeals was dismissed by Decision
[6]
of
August 12, 2004 which attained finality on September 15, 2004.

As an agreement could not be forged by the parties on the satisfaction of the
judgment, the matter was referred to the Fiscal Examiner of the NLRC who
recomputed atP562,804.69 the amount due respondent, which was approved by the
Labor Arbiter by Order
[7]
of July 5, 2005. A writ of execution
[8]
dated July 8, 2005
was thereupon issued.

Finding the amount exorbitant, petitioners filed a motion for reconsideration
with the NLRC, contending that since respondent refused to report back to work,
he should be considered to have abandoned the same, hence, the recomputation of
the wages and benefits due him should not be beyond May 15, 2001, the date when
he manifested his refusal to be reinstated.

By Resolution
[9]
of March 9, 2006, the NLRC granted petitioners motion
and accordingly vacated the computation. It held that since respondent did not
appeal the Decision of the Labor Arbiter granting him only reinstatement and
backwages, not separation pay in lieu thereof, he may not be afforded affirmative
relief; and since he refused to go back to work, he may recover backwages only up
to May 20, 2001, the day he was supposed to return to the job site. Respondents
motion for reconsideration was denied by the NLRC by Resolution
[10]
of June 30,
2006, hence, he filed a petition for certiorari with the Court of Appeals.

By Decision
[11]
of September 10, 2008, the appellate court set aside the
NLRC Resolutions, holding that respondent is entitled to both
backwages and separation pay, even if separation pay was not granted by the
Labor Arbiter, the latter in view of the strained relations between the parties. The
appellate court disposed:

WHEREFORE, in view of all the foregoing premises, judgment is hereby
rendered by us GRANTING the petition filed in this case. The
assailed RESOLUTIONS dated 30, 2006 and March 9, 2006 of the NLRC are
hereby SET ASIDE.

Thus, the full backwages and separation pay to be awarded to the
petitioner shall be computed as follows:

Full Backwages as of June 30, 2005 = P562,804.69
Separation Pay:
P220.00 x 26 days = P5,720,00
P5,720/month x 8 years = 45,760.00
P608,564.69

We also award an additional 10% of the total monetary award by way of
attorneys fees for the expenses incurred by the petitioner to protect his rights and
interests. Furthermore, when the decision of this Court as to the monetary award
becomes final and executory, the rate of legal interest shall be imposed at 12% per
annum from such finality until its satisfaction, this interim period being deemed to
be by then an equivalent to a forbearance of credit.

SO ORDERED. (emphasis in the original)

Petitioners motion for reconsideration was denied by Resolution
[12]
of
March 12, 2009, hence, the present petition for review on certiorari.

Petitioners assail the appellate courts award of separation pay. They
assailed too as contrary to prevailing jurisprudence the computation of backwages
from the time of dismissal up to actual reinstatement. They contend that, in effect,
the appellate court modified an already final and executory decision.

The petition fails.

The basis for the payment of backwages is different from that for the award
of separation pay. Separation pay is granted where reinstatement is no longer
advisable because of strained relations between the employee and the
employer. Backwages represent compensation that should have been earned but
were not collected because of the unjust dismissal. The basis for computing
backwages is usually the length of the employees service while that for separation
pay is the actual period when the employee was unlawfully prevented from
working.
[13]


As to how both awards should be computed, Macasero v. Southern
Industrial Gases Philippines
[14]
instructs:

[T]he award of separation pay is inconsistent with a finding that there
was no illegal dismissal, for under Article 279 of the Labor Code and as held in a
catena of cases, an employee who is dismissed without just cause and without
due process is entitled to backwages and reinstatement or payment of separation
pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to two
reliefs: backwages and reinstatement. The two reliefs provided
are separate and distinct. In instances where reinstatement is no
longer feasible because of strained relations between the employee
and the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents illegal
dismissal, then, are reinstatement without loss of seniority
rights, and payment of backwages computed from the time
compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an
option, separation pay equivalent to one (1) month salary for
every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of
backwages.

(emphasis, italics and underscoring supplied)









Velasco v. National Labor Relations Commission emphasizes:

The accepted doctrine is that separation pay may avail in
lieu of reinstatement if reinstatement is no longer practical or in the best
interest of the parties. Separation pay in lieu ofreinstatement may likewise be
awarded if the employee decides not to be reinstated. (emphasis in the original;
italics supplied)

Under the doctrine of strained relations, the payment of separation pay is
considered an acceptable alternative to reinstatement when the latter option is no
longer desirable or viable. On one hand, such payment liberates the employee
from what could be a highly oppressive work environment. On the other hand, it
releases the employer from the grossly unpalatable obligation of maintaining in its
employ a worker it could no longer trust.
[15]


Strained relations must be demonstrated as a fact, however, to be adequately
supported by evidence
[16]
substantial evidence to show that the relationship
between the employer and the employee is indeed strained as a necessary
consequence of the judicial controversy.
[17]


In the present case, the Labor Arbiter found that actual animosity existed
between petitioner Azul and respondent as a result of the filing of the illegal
dismissal case. Such finding, especially when affirmed by the appellate court as in
the case at bar, is binding upon the Court, consistent with the prevailing rules that
this Court will not try facts anew and that findings of facts of quasi-judicial bodies
are accorded great respect, even finality.




Clearly then, respondent is entitled to backwages and separation pay as his
reinstatement has been rendered impossible due to strained relations. As correctly
held by the appellate court, the backwages due respondent must be computed from
the time he was unjustly dismissed until his actual reinstatement, or from February
1999 until June 30, 2005 when his reinstatement was rendered impossible without
fault on his part.

The Court, however, does not find the appellate courts computation of
separation pay in order. The appellate court considered respondent to have served
petitioner company for only eight years. Petitioner was hired in 1990, however,
and he must be considered to have been in the service not only until 1999,
when he was unjustly dismissed, but until June 30, 2005, the day he is deemed
to have been actually separated (his reinstatement having been rendered
impossible) from petitioner company or for a total of 15 years.

WHEREFORE, the Court of Appeals Decision dated September 10, 2008
and its Resolution dated March 12, 2009 in C.A. G.R. SP No. 961082
are AFFIRMED with the MODIFICATION that the amount of separation pay
due respondent is, in light of the discussion in the immediately foregoing
paragraph, computed atP85,800.00.

SO ORDERED.



CONCHITA CARPIO MORALES
Associate Justice








WE CONCUR:




REYNATO S. PUNO
Chief Justice
Chairperson





TERESITA J. LEONARDO-DE CASTRO
Associate Justice

LUCAS P. BERSAMIN
Associate Justice





MARTIN S. VILLARAMA, JR.
Associate Justice






CERTIFICATION


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



REYNATO S. PUNO
Chief Justice




[1]
Annex C of Petition; rollo, p. 87.
[2]
Annex D of Petition, id. at 88-100. Penned by Labor Arbiter Joselito Villarosa.
[3]
Annex G of Petition, id. at 109.
[4]
Annex I of Petition, id. at 115-120. Penned by Commissioner (now Associate Justice of the Court of
Appeals) Angelita A. Gacutan and concurred in by Presiding Commissioner Raul T. Aquino
and Commissioner Victoriano R. Calaycay.
[5]
Annex K of Petition, id. at 139-1140. Penned by Commissioner (now Associate Justice of the Court of
Appeals) Angelita A. Gacutan and concurred in by Presiding Commissioner Raul T. Aquino
and Commissioner Victoriano R. Calaycay.
[6]
Annex L of Petition, id. at 142-149. Penned by Associate Justice Fernanda Lampas-Peralta and
concurred in by Associate Justices Conrado M. Vasquez and Josefina Guevara-Salonga.
[7]
Annex M of Petition, id. at. 150-151. Penned by Labor Arbiter Cresencio G. Ramos.
[8]
Annex N of Petition, id. at 152-154. Penned by Labor Arbiter Cresencio G. Ramos.
[9]
Annex P of Petition, id. at 163-170. Penned by Commissioner (now Associate Justice of the Court of
Appeals) Angelita A. Gacutan and concurred in by Presiding Commissioner Raul T. Aquino
and Commissioner Victoriano R. Calaycay.
[10]
Annex R of Petition, id. at 182-183. Penned by Commissioner (now Associate Justice of the Court of
Appeals) Angelita A. Gacutan and concurred in by Presiding Commissioner Raul T. Aquino
and Commissioner Victoriano R. Calaycay.
[11]
Id. at 70-81. Penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Juan
Q. Enriquez, Jr. and Marlene Gonzales-Sison.
[12]
Id. at. 82-86. Penned by Associate Justice Pampio A. Abarintos and concurred in by Associate Justices
Amelita T. Tolentino and Myrna Dimaranan-Vidal.
[13]
Equitable v. Sadac, G.R. No. 164772, June 8, 2006, 490 SCRA 380.
[14]
G.R. No. 178524, January 30, 2009.

[15]
Coca Cola v. Daniel, G.R. No. 156893, June 21, 2005, 460 SCRA 494.
[16]
Paguio Transport Corporation v. National Labor Relations Commission, 356 Phil. 158, 171 (1998).
[17]
Coca-Cola v. Daniel, supra.

Republic of the Philippines
Supreme Court
Manila
SECOND DIVISION


ANTONIO P. SALENGA and
NATIONAL LABOR RELATIONS
COMMISSION,
Petitioners,


- versus -


COURT OF APPEALS and
CLARK DEVELOPMENT
CORPORATION,
Respondents.
G.R. Nos. 174941

Present:

CARPIO, Chairperson,
BRION,
PORTUGAL PEREZ,
SERENO, and
REYES, JJ.

Promulgated:

February 1, 2012
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D E C I S I O N
SERENO, J.:
The present Petition for Certiorari under Rule 65 assails the Decision
[1]
of
the Court of Appeals (CA) promulgated on 13 September 2005, dismissing the
Complaint for illegal dismissal filed by petitioner Antonio F. Salenga against
respondent Clark Development Corporation (CDC). The dispositive portion of the
assailed Decision states:
WHEREFORE, premises considered, the original and supplemental petitions
are GRANTED. The assailed resolutions of the National Labor Relations Commission
dated September 10, 2003 and January 21, 2004 are ANNULLED and SET ASIDE. The
complaint filed by Antonio B. Salenga against Clark Development is DISMISSED.
Consequently, Antonio B. Salenga is ordered to restitute to Clark Development
Corporation the amount of P3,222,400.00, which was received by him as a consequence
of the immediate execution of said resolutions, plus interest thereon at the rate of 6%
per annum from date of


such receipt until finality of this judgment, after which the interest shall be at the rate of
12% per annum until said amount is fully restituted.
SO ORDERED.
[2]

The undisputed facts are as follows:
On 22 September 1998, President/Chief Executive Officer (CEO) Rufo
Colayco issued an Order informing petitioner that, pursuant to the decision of the
board of directors of respondent CDC, the position of head executive assistant
the position held by petitioner was declared redundant. Petitioner received a
copy of the Order on the same day and immediately went to see Colayco. The
latter informed him that the Order had been issued as part of the reorganization
scheme approved by the board of directors. Thus, petitioners employment was
to be terminated thirty (30) days from notice of the Order.
On 17 September 1999, petitioner filed a Complaint for illegal dismissal
with a claim for reinstatement and payment of back wages, benefits, and moral
and exemplary damages against respondent CDC and Colayco. The Complaint was
filed with the National Labor Relations Commission-Regional Arbitration Branch
(NLRC-RAB) III in San Fernando, Pampanga. In defense, respondents, represented
by the Office of the Government Corporate Counsel (OGCC), alleged that the
NLRC had no jurisdiction to entertain the case on the ground that petitioner was a
corporate officer and, thus, his dismissal was an intra-corporate matter falling
properly within the jurisdiction of the Securities and Exchange Commission (SEC).
On 29 February 2000, labor arbiter (LA) Florentino R. Darlucio issued a
Decision
[3]
in favor of petitioner Salenga. First, the LA held that the NLRC had
jurisdiction over the Complaint, considering that petitioner was not a corporate
officer but a managerial employee. He held the position of head executive
assistant, categorized as a Job Level 12 position, not subject to election or
appointment by the board of directors.
Second, the LA pointed out that respondent CDC and Colayco failed to
establish a valid cause for the termination of petitioners employment. The
evidence presented by respondent CDC failed to show that the position of
petitioner was superfluous as to be classified redundant. The LA further pointed
out that respondent corporation had not disputed the argument of petitioner
Salenga that his position was that of a regular employee. Moreover, the LA found
that petitioner had not been accorded the right to due process. Instead, the latter
was dismissed without the benefit of an explanation of the grounds for his
termination, or an opportunity to be heard and to defend himself.
Finally, considering petitioners reputation and contribution as a
government employee for 40 years, the LA awarded moral damages amounting
to P2,000,000 and exemplary damages of P500,000. The dispositive portion of the
LAs Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring
respondent Clark Development Corporation and Rufo Colayco guilty of illegal dismissal
and for which they are ordered, as follows:
1. To reinstate complainant to his former or equivalent position without loss of
seniority rights and privileges;
2. To pay complainant his backwages reckoned from the date of his dismissal
on September 22, 1998 until actual reinstatement or merely reinstatement
in the payroll which as of this date is in the amount of P722,400.00;
3. To pay complainant moral damages in the amount of P2,000,000.00; and,
4. To pay complainant exemplary damages in the amount of P500,000.00.
SO ORDERED.
[4]

At the time the above Decision was rendered, respondent CDC was already
under the leadership of Sergio T. Naguiat. When he received the Decision on 10
March 2000, he subsequently instructed Atty. Monina C. Pineda, manager of the
Corporate and Legal Services Department and concurrent corporate board
secretary, not to appeal the Decision and to so inform the OGCC.
[5]

Despite these instructions, two separate appeals were filed before LA
Darlucio on 20 March 2000. One appeal
[6]
was from the OGCC on behalf of
respondent CDC and Rufo Colayco. The OGCC reiterated its allegation that
petitioner was a corporate officer, and that the termination of his employment
was an intra-corporate matter. The Memorandum of Appeal was verified and
certified by Hilana Timbol-Roman, the executive vice president of respondent
CDC. The Memorandum was accompanied by a UCPB General Insurance Co.,
Inc. supersedeas bond covering the amount due to petitioner as adjudged by LA
Darlucio. Timbol-Roman and OGCC lawyer Roy Christian Mallari also executed on
17 March 2000 a Joint Affidavit of Declaration wherein they swore that they were
the respective authorized representative and counsel of respondent
corporation. However, the Memorandum of Appeal and the Joint Affidavit of
Declaration were not accompanied by a board resolution from respondents
board of directors authorizing either Timbol-Roman or Atty. Mallari, or both, to
pursue the case or to file the appeal on behalf of respondent.
It is noteworthy that Naguiat, who was president/CEO of respondent CDC
from 3 February 2000 to 5 July 2000, executed an Affidavit on 20 March
2002,
[7]
wherein he stated that without his knowledge, consent or approval,
Timbol-Roman and Atty. Mallari filed the above-mentioned appeal. He further
alleged that their statements were false.
The second appeal, meanwhile, was filed by former CDC President/CEO
Rufo Colayco. Colayco alleged that petitioner was dismissed not on 22 September
1998, but twice on 9 March 1999 and 23 March 1999. The dismissal was allegedly
approved by respondents CDC board of directors pursuant to a new
organizational structure. Colayco likewise stated that he had posted
a supersedeas bond the same bond taken out by Timbol-Roman issued by the
UCPB General Insurance Co. dated 17 March 2000 in order to secure the
monetary award, exclusive of moral and exemplary damages.
Petitioner thereafter opposed the two appeals on the grounds that both
appellants, respondent CDC as allegedly represented by Timbol-Roman and
Atty. Mallari and Rufo Colayco had failed to observe Rule VI, Sections 4 to 6 of
the NLRC Rules of Procedure; and that appellants had not been authorized by
respondents board of directors to represent the corporation and, thus, they were
not the employer whom the Rules referred to. Petitioner also alleged that
appellants failed to refute the findings of LA Darlucio in the previous Decision.
In the meantime, while the appeal was pending, on 19 October 2000,
respondents board chairperson and concurrent President/CEO Rogelio L. Singson
ordered the reinstatement of petitioner to the latters former position as head
executive assistant, effective 24 October 2000.
[8]

On 28 May 2001, respondent CDCs new President/CEO Emmanuel Y.
Angeles issued a Memorandum, which offered all managers of respondent
corporation an early separation/redundancy program. Those who wished to avail
themselves of the program were to be given the equivalent of their 1.25-month
basic salary for every year of service and leave credits computed on the basis of
the same 1.25-month equivalent of their basic salary.
[9]

In August 2001, respondent CDC offered another retirement plan granting
higher benefits to the managerial employees. Thus, on 12 September 2001,
petitioner filed an application for the early retirement program, which Angeles
approved on 3 December 2001.
Meanwhile, in the proceedings of the NLRC, petitioner received on 12
September 2001 its 30 July 2001 Decision
[10]
on the appeal filed by Timbol-Roman
and Colayco. It is worthy to note that the said Decision referred to the reports of
reviewer arbiters Cristeta D. Tamayo and Thelma M. Concepcion, who in turn
found that petitioner Salenga was a corporate officer of CDC. Nevertheless, the
First Division of the NLRC upheld LA Darlucios ruling that petitioner Salenga was
indeed a regular employee. It also found that redundancy, as an authorized cause
for dismissal, has not been sufficiently proven, rendering the dismissal illegal.
However, the NLRC held that the award of exemplary and moral damages were
unsubstantiated. Moreover, it also dropped Colayco as a respondent to the case,
since LA Darlucio had failed to provide any ground on which to anchor the
formers solidary liability.
Petitioner Salenga thereafter moved for a partial reconsideration of the
above-mentioned Decision. He sought the reinstatement of the award of
exemplary and moral damages. He likewise insisted that the NLRC should not
have entertained the appeal on the following grounds: (1) respondent CDC did
not file an appeal and did not post the required cash or surety bond; (2) both
Timbol-Roman and Colayco were admittedly not real parties-in-interest; (3) they
were not the employer or the employers authorized representative and, thus,
had no right to appeal; and (4) both appeals had not been perfected for failure to
post the required cash or surety bond. In other words, petitioners theory
revolved on the fact that neither Timbol-Roman nor Colayco was authorized to
represent the corporation, so the corporation itself did not appeal LA Darlucios
Decision. As a result, that Decision should be considered as final and executory.
For its part, the OGCC also filed a Motion for Reconsideration
[11]
of the
NLRCs 30 July 2001 Decision insofar as the finding of illegal dismissal was
concerned. It no longer questioned the commissions finding that petitioner was
a regular employee, but instead insisted that he had been dismissed as a
consequence of his redundant position. The motion, however, was not verified by
the duly authorized representative of respondent CDC.
On 5 December 2002, the NLRC denied petitioner Salengas Motion for
Partial Reconsideration and dismissed the Complaint. The dispositive portion of
the Resolution
[12]
reads as follows:
WHEREFORE, complainants partial motion for reconsideration is denied. As
recommended by Reviewer Arbiters Cristeta D. Tamayo in her August 2, 2000 report
and Thelma M. Concepcion in her November 25, 2002 report, the decision of Labor
Arbiter Florentino R. Darlucio dated 29 February 2000 is set aside.
The complaint below is dismissed for being without merit.
SO ORDERED.
[13]

Meanwhile, pending the Motions for Reconsideration of the NLRCs 30 July
2001 Decision, another issue arose with regard to the computation of the
retirement benefits of petitioner. Respondent CDC did not immediately give his
requested retirement benefits, pending clarification of the computation of these
benefits. He claimed that the computation of his retirement benefits should also
include the forty (40) years he had been in government service in accordance with
Republic Act No. (R.A.) 8291, or the GSIS Act, and should not be limited to the
length of his employment with respondent corporation only, as the latter insisted.
In a letter dated 14 March 2003, petitioner Salengas counsel wrote to the
board of directors of respondent to follow up the payment of the retirement
benefits allegedly due to petitioner.
[14]

Pursuant to the NLRCs dismissal of the Complaint of petitioner Salenga,
Angeles subsequently denied the formers request for his retirement benefits, to
wit:
[15]

Please be informed that we cannot favorably grant your clients claim for
retirement benefits considering that Clark Development Corporation's dismissal of Mr.
Antonio B. Salenga had been upheld by the National Labor Relations Commission
through a Resolution dated December 5, 2002...
xxx xxx xxx
As it is, the said Resolution dismissed the Complaint filed by Mr. Salenga for
being without merit. Consequently, he is not entitled to receive any retirement pay from
the corporation.
Meanwhile, petitioner Salenga filed a second Motion for Reconsideration of
the 5 December 2002 Resolution of the NLRC, reiterating his claim that it should
not have entertained the imperfect appeal, absent a proper verification and
certification against forum-shopping from the duly authorized representative of
respondent CDC. Without that authority, neither could the OGCC act on behalf of
the corporation.
The OGCC, meanwhile, resurrected its old defense that the NLRC had no
jurisdiction over the case, because petitioner Salenga was a corporate officer.
The parties underwent several hearings before the NLRC First Division.
During these times, petitioner Salenga demanded from the OGCC to present a
board resolution authorizing it or any other person to represent the corporation
in the proceedings. This, the OGCC failed to do.
After giving due course to the Motion for Reconsideration filed by
petitioner Salenga, the NLRC issued a Resolution
[16]
on 10 September 2003,
partially granting the motion. This time, the First Division of the NLRC held that,
absent a board resolution authorizing Timbol-Roman to file the appeal on behalf
of respondent CDC, the appeal was not perfected and was thus a mere scrap of
paper. In other words, the NLRC had no jurisdiction over the appeal filed before it.
The NLRC further held that respondent CDC had failed to show that
petitioner Salengas dismissal was pursuant to a valid corporate reorganization or
board resolution. It also deemed respondent estopped from claiming that there
was indeed a redundancy, considering that petitioner Salenga had been
reinstated to his position as head executive assistant. While it granted the award
of moral damages, it nevertheless denied exemplary damages. Thus, the
dispositive portion of its Decision reads:
WHEREFORE, premises considered, the complainants Motion for
Reconsideration is GRANTED and We set aside our Resolution of December 5, 2002. The
Decision of the Labor Arbiter dated February 29, 2000 is REINSTATED with the
MODIFICATION that:
1.) Being a nominal party, respondent Rufo Colayco is declared to be not jointly
and severally liable with respondent Clark Development Corporation;
2.) Respondent Clark Development Corporation is ordered to pay the
complainant his full backwages and other monetary claims to which he is
entitled under the decision of the Labor Arbiter;
3.) Respondent CDC is likewise ordered to pay the complainant moral and
exemplary damages as provided under the Labor Arbiters Decision; and
4.) All other money claims are DENIED for lack of merit.
In the meantime, respondent CDC is ordered to pay the complainant his
retirement benefits without further delay.
SO ORDERED.
[17]

On 3 October 2003, the OGCC filed a Motion for Reconsideration
[18]
despite
the absence of a verification and the certification against forum shopping.
On 21 January 2004, the motion was denied by the NLRC for lack of
merit.
[19]

On 5 February 2004, the executive clerk of the NLRC First Division entered
the judgment on the foregoing case. Thereafter, on 9 February 2004, the NLRC
forwarded the entire records of the case to the NLRC-RAB III Office in San
Fernando, Pampanga for appropriate action.
On 4 March 2004, petitioner Salenga filed a Motion for Issuance of Writ of
Execution before the NLRC-RAB III, Office of LA Henry D. Isorena. The OGCC
opposed the motion on the ground that it had filed with the CA a Petition for
Certiorari seeking the reversal of the NLRC Decision dated 30 July 2001 and the
Resolutions dated 10 September 2003 and 21 January 2004, respectively. It is
noteworthy that, again, there was no board resolution attached to the Petition
authorizing its filing.
Despite the pending Petition with the CA, LA Isorena issued a Writ of
Execution enforcing the 10 September 2003 Resolution of the NLRC. On 1 April
2004, the LA issued an Order
[20]
to the manager of the Philippine National Bank,
Clark Branch, Angeles City, Pampanga, to immediately release in the name of
NLRC-RAB III the amount ofP3,222,400 representing partial satisfaction of the
judgment award, including the execution fee of P31,720.
Respondent CDC filed with the CA in February 2004 a Petition for Certiorari
with a prayer for the issuance of a temporary restraining order and/or a writ of
preliminary injunction. However, the Petition still lacked a board resolution from
the board of directors of respondent corporation authorizing its then President
Angeles to verify and certify the Petition on behalf of the board. It was only on 16
March 2004 that counsel for respondent filed a Manifestation/Motion
[21]
with an
attached Secretarys Certificate containing the boards Resolution No. 86, Series
of 2001. The Resolution authorized Angeles to represent respondent corporation
in prosecuting, maintaining, or compromising any lawsuit in connection with its
business.
Meanwhile, in the proceedings before LA Isorena, both respondent CDCs
legal department and the OGCC on 6 April 2004 filed their respective Motions to
Quash Writ of Execution.
[22]
They both cited the failure to afford to respondent
due process in the issuance of the writ. They claimed that the pre-conference
hearing on the execution of the judgment had not pushed through. They also
reiterated that the Petition for Certiorari dated 11 February 2004 was still
pending with the CA.
Both motions were denied by LA Isorena for lack of factual and legal bases.
On 6 May 2004, respondent filed with LA Isorena another Motion to Quash
Writ of Execution, again reiterating the pending Petition with the CA.
This active exchange of pleadings and motions and the delay in the
payment of his money claims eventually led petitioner Salenga to file an Omnibus
Motion
[23]
before LA Isorena. In his motion, he recomputed the amount due him
representing back wages, other benefits or allowances, legal interests and
attorneys fees. He also prayed for the computation of his retirement benefits
plus interests in accordance with R.A. 8291
[24]
and R.A. 1616.
[25]
He insisted that
since respondent CDC was a government-owned and -controlled corporation
(GOCC), his previous government service totalling 40 years must also be credited
in the computation of his retirement pay. Thus, he demanded the payment of the
total amount of P23,920,772.30, broken down as follows:
A. From the illegal dismissal suit: (In Philippine peso)
a. Recomputed award 3,758,786
b. Legal interest 5,089,342.58
c. Attorneys fees 1,196,052.80
d. Litigation expenses 250,000
B. Retirement pay
a. Retirement gratuity 6,987,944
b. Unused vacation and sick leave 1,440,328
c. Legal interest 4,050,544.96
d. Attorneys fees 1,147,781.90
On 11 May 2004, the CA issued a Resolution
[26]
ordering petitioner Salenga
to comment on the Petition and holding in abeyance the issuance of a temporary
restraining order.
The parties thereafter filed their respective pleadings.
On 19 July 2004, the CA temporarily restrained the NLRC from enforcing the
Decision dated 29 February 2000 for a period of 60 days.
[27]
After the lapse of the
60 days, LA Isorena issued a Notice of Hearing/Conference scheduled for 1
October 2004 on petitioners Omnibus Motion dated 7 May 2004.
Meanwhile, on 24 September 2004, the CA issued another
Resolution,
[28]
this time denying the application for the issuance of a writ of
preliminary injunction, after finding that the requisites for the issuance of the writ
had not been met.
Respondent CDC subsequently filed a Supplemental Petition
[29]
with the CA,
challenging the computation petitioner Salenga made in his Omnibus Motion filed
with the NLRC. Respondent alleged that the examiner had erred in including the
other years of government service in the computation of retirement benefits. It
claimed that, since respondent corporation was created under the Corporation
Code, petitioner Salenga was not covered by civil service laws. Hence, his
retirement benefits should only be limited to the number of years he had been
employed by respondent.
Subsequently, respondent CDC filed an Omnibus Motion
[30]
to admit the
Supplemental Petition and to reconsider the CAs Resolution denying the issuance
of a writ of preliminary injunction. In the motion, respondent alleged that
petitioner Salenga had been more than sufficiently paid the amounts allegedly
due him, including the award made by LA Darlucio. On 12 March 2002,
respondent CDC had issued a check amounting to P852,916.29, representing
petitioners retirement pay and terminal pay. Meanwhile, on 2 April
2004, P3,254,120 representing the initial award was debited from the account of
respondent CDC.
On 7 February 2005, respondent CDC filed a Motion
[31]
once again asking
the CA to issue a writ of preliminary injunction in the light of a scheduled 14
February 2005 conference called by LA Mariano Bactin, who had taken over the
case from LA Isorena.
At the 14 February 2005 hearing, the parties failed to reach an amicable
settlement and were thus required to submit their relevant pleadings and
documents in support of their respective cases.
On 16 February 2005, the CA issued a Resolution
[32]
admitting the
Supplemental Petition filed by respondent, but denying the prayer for the
issuance of an injunctive writ.
Thereafter, on 8 March 2005, LA Bactin issued an Order
[33]
resolving the
Omnibus Motion filed by petitioner Salenga for the recomputation of the
monetary claims due him. In the Order, LA Bactin denied petitioners Motion for
the recomputation of the award of back wages, benefits, allowances and
privileges based on the 29 February 2000 Decision of LA Darlucio. LA Bactin held
that since the Decision had become final and executory, he no longer had
jurisdiction to amend or to alter the judgment.
Anent the second issue of the computation of retirement benefits, LA
Bactin also denied the claim of petitioner Salenga, considering that the latters
retirement benefits had already been paid. The LA, however, did not rule on
whether petitioner was entitled to retirement benefits, either under the
Government Service Insurance System (GSIS) or under the Social Security System
(SSS), and held that this issue was beyond the expertise and jurisdiction of a LA.
Petitioner Salenga thereafter appealed to the NLRC, which granted the
appeal in a Resolution
[34]
dated 22 July 2005. First, it was asked to resolve the
issue of the propriety of having the Laguesma Law Office represent respondent
CDC in the proceedings before the LA. The said law firm entered its appearance as
counsel for respondent during the pre-execution conference/hearing on 1
October 2004. On this issue, the NLRC held that respondent corporations legal
department, which had previously been representing the corporation, was not
validly substituted by the Laguesma Law Office. In addition, the NLRC held that
respondent had failed to comply with Memorandum Circular No. 9, Series of
1998, which strictly prohibits the hiring of lawyers of private law firms by GOCCs
without the prior written conformity and acquiescence of the Office of Solicitor
General, as the case may be, and the prior written concurrence of the
Commission on Audit (COA). Thus, the NLRC held that all actions and submissions
undertaken by the Laguesma Law Office on behalf of respondent were null and
void.
The second issue raised before the NLRC was whether LA Bactin acted
without jurisdiction in annulling and setting aside the formers final and executory
judgment contained in its 10 September 2003 Resolution, wherein it held that the
appeal had not been perfected, absent the necessary board resolution allowing or
authorizing Timbol-Roman and Atty. Mallari to file the appeal. On this issue, the
NLRC stated:
The final and executory judgment in this case is clearly indicated in the
dispositive portion of Our Resolution promulgated on September 10, 2003 GRANTING
complainants motion for reconsideration, SETTING ASIDE Our Resolution of December
5, 2002, and REINSTATING the Decision of the Labor Arbiter dated February 29, 2000
with the following modification[s]: (1) declaring respondent Rufo Colayco not jointly and
severally liable with respondent Clark Development Corporation; (2) ordering
respondent CDC to pay the complainant his full backwages and other monetary claims
to which he is entitled under the decision of the Labor Arbiter; (3) ordering respondent
CDC to pay complainant moral and exemplary damages as provided under the Labor
Arbiters Decision; and (4) ordering respondent CDC to pay the complainant his
retirement benefits without further delay. This was entered in the Book of Entry of
Judgment as final and executory effective as of February 2, 2004.
Implementing this final and executory judgment, Arbiter Isorena issued an
Order dated May 24, 2004, DENYING respondents Motion to Quash the Writ of
Execution dated March 22, 2004,correctly stating thusly:
Let it be stressed that once a decision has become final and
executory, it becomes the ministerial duty of this Office to issue the
corresponding writ of execution. The rationale behind it is based on the
fact that the winning party has suffered enough and it is the time for
him to enjoy the fruits of his labor with dispatch. The very purpose of
the pre-execution conference is to explore the possibility for the parties
to arrive at an amicable settlement to satisfy the judgment award
speedily, not to delay or prolong its implementation.
Thus, when Arbiter Bactin, who took over from Arbiter Isorena upon the latters
filing for leave of absence due to poor health in January 2005, issued the appealed
Order nullifying, instead of implementing, the final and executory judgment of this
Commission, the labor arbiter a quo acted WITHOUT JURISDICTION.
[35]

xxx xxx xxx
WHEREFORE, premises considered, the appeal of herein complainant is hereby
GRANTED, and We declare NULL AND VOID the appealed Order of March 8, 2005 and
SET ASIDE said Order; We direct the immediate issuance of the corresponding Alias Writ
of Execution to enforce the final and executory judgment of this Commission as
contained in Our September 10, 2003 Resolution.
SO ORDERED.
[36]

Unwilling to accept the above Resolution of the NLRC, the Laguesma Law
Office filed a Motion for Reconsideration dated 29 August 2005 with the
NLRC. Again, the motion lacked proper verification and certification against non-
forum shopping.
In the meantime, the OGCC also filed with the CA a Motion for the Issuance
of a Writ of Preliminary Injunction dated 30 August 2005
[37]
against the NLRCs 22
July 2005 Resolution. The OGCC alleged that the issues in the Resolution
addressed monetary claims that were raised by petitioner Salenga only in his
Omnibus Motion dated 7 May 2004 or after the issuance of the 10 September
2003 Decision of LA Darlucio. Thus, the OGCC insisted that the NLRC had no
jurisdiction over the issue, for the matter was still pending with the CA.
The OGCC likewise filed another Motion for Reconsideration
[38]
dated 31
August 2005 with the NLRC. The OGCC maintained that it was only acting in a
collaborative manner with the legal department of respondent CDC, for which the
former remained the lead counsel. The OGCC reiterated that, as the statutory
counsel of GOCCs, it did not need authorization from them to maintain a case,
and thus, LA Bactin had jurisdiction over that case. Finally, it insisted that
petitioner Salenga was not covered by civil service laws on retirement, the CDC
having been created under the Corporation Code.
On 13 September 2005, the CA promulgated the assailed Decision. Relying
heavily on the reports of Reviewer Arbiters Cristeta D. Tamayo and Thelma M.
Concepcion, it held that petitioner Salenga was a corporate officer. Thus, the
issue before the NLRC was an intra-corporate dispute, which should have been
lodged with the Securities and Exchange Commission (SEC), which had jurisdiction
over the case at the time the issue arose. The CA likewise held that the NLRC
committed grave abuse of discretion when it allowed and granted petitioner
Salengas second Motion for Reconsideration, which was a prohibited pleading.
Petitioner subsequently filed a Motion for Reconsideration on 7 October
2005, alleging that the CA committed grave abuse of discretion in reconsidering
the findings of fact, which had already been found to be conclusive against
respondent; and in taking cognizance of the latters Petition which had not been
properly verified.
The CA, finding no merit in petitioners allegations, denied the motion in its
17 August 2006 Resolution.
On 4 September 2006, petitioner Salenga filed a Motion for Extension of
Time to File a Petition for Review on Certiorari under Rule 45, praying for an
extension of fifteen (15) days within which to file the Petition. The motion was
granted through this Courts Resolution dated 13 September 2006. The case was
docketed as G.R. No. 174159.
On 25 September 2006, however, petitioner filed a
Manifestation
[39]
withdrawing the motion. He manifested before us that he would
instead file a Petition for Certiorari under Rule 65, which was eventually docketed
as G.R. No. 174941. On 7 July 2008, this Court, through a Resolution, considered
the Petition for Review in G.R. No. 174159 closed and terminated.
Petitioner raises the following issues for our resolution:
I.
The Court of Appeals acted without jurisdiction in reviving and re-
litigating the factual issues and matters of petitioners illegal
dismissal and retirement benefits.
II.
The Court of Appeals had no jurisdiction to entertain the original
Petition as a remedy for an appeal that had actually not been filed,
absent a board resolution allowing the appeal.
III.
The Court of Appeals acted with grave abuse of discretion when it did
the following:
a. It failed to dismiss the original and supplemental
Petitions despite the lack of a board resolution
authorizing the filing thereof.
b. It failed to dismiss the Petitions despite the absence of
a proper verification and certification against non-
forum shopping.
c. It failed to dismiss the Petitions despite respondents
failure to inform it of the pending proceedings before
the NLRC involving the same issues.
d. It failed to dismiss the Petitions on the ground of
forum shopping.
e. It did not dismiss the Petition when respondent failed
to attach to it certified true copies of the assailed NLRC
30 July 2001 Decision; 10 September 2003 Resolution;
21 January 2004 Resolution; copies of material
portions of the record as are referred to therein; and
copies of pleadings and documents relevant and
pertinent thereto.
f. It did not act on respondents failure to serve on the
Office of the Solicitor General a copy of the pleadings,
motions and manifestations the latter had filed before
the Court of Appeals, as well as copies of pertinent
court resolutions and decisions, despite the NLRC
being a party to the present case.
g. It disregarded the findings of fact and conclusions of
law arrived at by LA Darlucio, subjecting them to a
second analysis and evaluation and supplanting them
with its own findings.
h. It granted the Petition despite respondents failure to
show that the NLRC committed grave abuse of
discretion in rendering the latters 30 July 2001
Decision, 10 September 2003 Resolution and 21
January 2004 Resolution.
i. It dismissed the complaint for illegal dismissal and
ordered the restitution of the P3,222,400 already
awarded to petitioner, plus interest thereon.
In its defense, private respondent insists that the present Petition for
Certiorari under Rule 65 is an improper remedy to question the Decision of the
CA, and thus, the case should be dismissed outright. Nevertheless, it reiterates
that private petitioner was a corporate officer whose employment was
dependent on board action. As such, private petitioners employment was an
intra-corporate controversy cognizable by the SEC, not the NLRC. Private
respondent also asserts that it has persistently sought the reversal of LA
Darlucios Decision by referring to the letters sent to the OGCC, as well as
Verification and Certificate against forum-shopping. However, these documents
were signed only during Angeles time as private respondents president/CEO, and
not of the former presidents. Moreover, private respondent contends that private
petitioner is not covered by civil service laws, thus, his years in government
service are not creditable for the purpose of determining the total amount of
retirement benefits due him. In relation to this, private respondent enumerates
the amounts already paid to private petitioner.
The Courts Ruling
The Petition has merit.
This Court deigns it proper to collapse the issues in this Petition to simplify
the matters raised in what appears to be a convoluted case. First, we need to
determine whether the NLRC and the CA committed grave abuse of discretion
amounting to lack or excess of jurisdiction, when they entertained respondents
so-called appeal of the 29 February 2000 Decision rendered by LA Darlucio.
Second, because of the turn of events, a second issue the computation of
retirement benefits cropped up while the first case for illegal dismissal was still
pending. Although the second issue may be considered as separate and distinct
from the illegal dismissal case, the issue of the proper computation of the
retirement benefits was nevertheless considered by the relevant administrative
bodies, adding more confusion to what should have been a simple case to begin
with.
The NLRC had no jurisdiction
to entertain the appeal filed by
Timbol-Roman and former
CDC CEO Colayco.

To recall, on 29 February 2000, LA Darlucio rendered a Decision in favor of
petitioner, stating as follows:
xxxComplainant cannot be considered as a corporate officer because at the time
of his termination, he was holding the position of Head Executive Assistant which is
categorized as a Job Level 12 position that is not subject to the election or appointment
by the Board of Directors. The approval of Board Resolution Nos. 200 and 214 by the
Board of Directors in its meeting held on February 11, 1998 and March 25, 1998 clearly
refers to the New CDC Salary Structure where the pay adjustment was based and not to
complainants relief as Vice-President, Joint Ventures and Special Projects. While it is
true that his previous positions are classified as Job Level 13 which are subject to board
confirmation, the status of his appointment was permanent in nature. In fact, he had
undergone a six-month probationary period before having acquired the permanency of
his appointment. However, due to the refusal of the board under then Chairman
Victorino Basco to confirm his appointment, he was demoted to the position of Head
Executive Assistant. Thus, complainant correctly postulated that he was not elected to
his position and his tenure is not dependent upon the whim of the boardxxx
xxx xxx xxx
Anent the second issue, this Office finds and so holds that respondents have
miserably failed to show or establish the valid cause in terminating the services of
complainant.
Xxx xxx xxx
In the case at bar, respondents failed to adduce any evidence showing that the
position of Head Executive Assistant is superfluous. In fact, they never disputed the
argument advanced by complainant that the position of Head Executive Assistant was
classified as a regular position in the Position Classification Study which is an essential
component of the Organizational Study that had been approved by the CDC board of
directors in 1995 and still remains intact as of the end of 1998. Likewise, studies made
since 1994 by various management consultancy groups have determined the need for
the said position in the Office of the President/CEO in relation to the vision, mission,
plans, programs and overall corporate goals and objectives of respondent CDC. There is
no evidence on record to show that the position of Head Executive Assistant was
abolished by the Board of Directors in its meeting held in the morning of September 22,
1998. The minutes of the meeting of the board on said date, as well as its other three
meetings held in the month of September 1998 (Annexes B, C, D and E,
Complainants Reply), clearly reveal that no abolition or reorganization plan was
discussed by the board. Hence, the ground of redundancy is merely a device made by
respondent Colayco in order to ease out the complainant from the respondent
corporation.
Moreover, the other ground for complainants dismissal is unclear and unknown
to him as respondent did not specify nor inform the complainant of the alleged recent
developmentsxxx
This Office is also of the view that complainant was not accorded his right to due
process prior to his termination. The law requires that the employer must furnish the
worker sought to be dismissed with two (2) written notices before termination may be
validly effected: first, a notice apprising the employee of the particular acts or omissions
for which his dismissal is sought and, second, a subsequent notice informing the
employee of the decision to dismiss him. In the case at bar, complainant was not
apprised of the grounds of his termination. He was not given the opportunity to be
heard and defend himselfxxx
[40]

The OGCC, representing respondent CDC and former CEO Colayco
separately appealed from the above Decision. Both alleged that they had filed the
proper bond to cover the award granted by LA Darlucio.
It is clear from the NLRC Rules of Procedure that appeals must be verified
and certified against forum-shopping by the parties-in-interest themselves. In the
case at bar, the parties-in-interest are petitioner Salenga, as the employee, and
respondent Clark Development Corporation as the employer.
A corporation can only exercise its powers and transact its business through
its board of directors and through its officers and agents when authorized by a
board resolution or its bylaws. The power of a corporation to sue and be sued is
exercised by the board of directors. The physical acts of the corporation, like the
signing of documents, can be performed only by natural persons duly authorized
for the purpose by corporate bylaws or by a specific act of the board. The purpose
of verification is to secure an assurance that the allegations in the pleading are
true and correct and have been filed in good faith.
[41]

Thus, we agree with petitioner that, absent the requisite board resolution,
neither Timbol-Roman nor Atty. Mallari, who signed the Memorandum of Appeal
and Joint Affidavit of Declaration allegedly on behalf of respondent corporation,
may be considered as the appellant and employer referred to by Rule VI,
Sections 4 to 6 of the NLRC Rules of Procedure, which state:
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. - (a) The Appeal shall be filed within the reglementary
period as provided in Section 1 of this Rule; shall be verified by appellant himself in accordance with Section 4, Rule 7 of
the Rules of Court, with proof of payment of the required appeal fee and the posting of a cash or surety bond as
provided in Section 6 of this Rule; shall be accompanied by memorandum of appeal in three (3) legibly typewritten copies
which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of
the date when the appellant received the appealed decision, resolution or order and a certificate of non-forum shopping
with proof of service on the other party of such appeal. A mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the period for perfecting an appeal.
(b) The appellee may file with the Regional Arbitration Branch or Regional Office
where the appeal was filed, his answer or reply to appellant's memorandum of appeal,
not later than ten (10) calendar days from receipt thereof. Failure on the part of the
appellee who was properly furnished with a copy of the appeal to file his answer or
reply within the said period may be construed as a waiver on his part to file the same.
(c) Subject to the provisions of Article 218, once the appeal is perfected in
accordance with these Rules, the Commission shall limit itself to reviewing and deciding
specific issues that were elevated on appeal.
SECTION 5. APPEAL FEE. -The appellant shall pay an appeal fee of one hundred
fifty pesos (P150.00) to the Regional Arbitration Branch or Regional Office, and the
official receipt of such payment shall be attached to the records of the case.
SECTION 6. BOND. - In case the decision of the Labor Arbiter or the Regional
Director involves a monetary award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond. The appeal bond shall either be in cash or
surety in an amount equivalent to the monetary award, exclusive of damages and
attorneys fees.
In case of surety bond, the same shall be issued by a reputable bonding
company duly accredited by the Commission or the Supreme Court, and shall be
accompanied by:
(a) a joint declaration under oath by the employer, his counsel, and the
bonding company, attesting that the bond posted is genuine, and shall be in
effect until final disposition of the case.
(b) a copy of the indemnity agreement between the employer-appellant
and bonding company; and
(c) a copy of security deposit or collateral securing the bond.
A certified true copy of the bond shall be furnished by the appellant to the
appellee who shall verify the regularity and genuineness thereof and immediately report
to the Commission any irregularity.
Upon verification by the Commission that the bond is irregular or not genuine,
the Commission shall cause the immediate dismissal of the appeal.
No motion to reduce bond shall be entertained except on meritorious grounds
and upon the posting of a bond in a reasonable amount in relation to the monetary
award.
The filing of the motion to reduce bond without compliance with the requisites
in the preceding paragraph shall not stop the running of the period to perfect an appeal.
(Emphasis supplied)

The OGCC failed to produce any valid authorization from the board of
directors despite petitioner Salengas repeated demands. It had been given more
than enough opportunity and time to produce the appropriate board resolution,
and yet it failed to do so. In fact, many of its pleadings, representations, and
submissions lacked board authorization.
We cannot agree with the OGCCs attempt to downplay this procedural
flaw by claiming that, as the statutorily assigned counsel for GOCCs, it does not
need such authorization. In Constantino-David v. Pangandaman-Gania,
[42]
we
exhaustively explained why it was necessary for government agencies or
instrumentalities to execute the verification and the certification against forum-
shopping through their duly authorized representatives. We ruled thereon as
follows:
But the rule is different where the OSG is acting as counsel of record for a
government agency. For in such a case it becomes necessary to determine whether the
petitioning government body has authorized the filing of the petition and is espousing
the same stand propounded by the OSG. Verily, it is not improbable for government
agencies to adopt a stand different from the position of the OSG since they weigh not
just legal considerations but policy repercussions as well. They have their respective
mandates for which they are to be held accountable, and the prerogative to
determine whether further resort to a higher court is desirable and indispensable
under the circumstances.
The verification of a pleading, if signed by the proper officials of the client
agency itself, would fittingly serve the purpose of attesting that the allegations in the
pleading are true and correct and not the product of the imagination or a matter of
speculation, and that the pleading is filed in good faith. Of course, the OSG may opt to
file its own petition as a People's Tribune but the representation would not be for a
client office but for its own perceived best interest of the State.
The case of Commissioner of Internal Revenue v. S.C. Johnson and Son, Inc., is
not also a precedent that may be invoked at all times to allow the OSG to sign the
certificate of non-forum shopping in place of the real party-in-interest. The ruling
therein mentions merely that the certification of non-forum shopping executed by the
OSG constitutes substantial compliance with the rule since the OSG is the only lawyer
for the petitioner, which is a government agency mandated under Section 35, Chapter
12, Title III, Book IV, of the 1987 Administrative Code (Reiterated under Memorandum
Circular No. 152 dated May 17, 1992) to be represented only by the Solicitor General.
By its very nature, substantial compliance is actually inadequate observance
of the requirements of a rule or regulation which are waived under equitable
circumstances to facilitate the administration of justice there being no damage or injury
caused by such flawed compliance. This concept is expressed in the statement the
rigidity of a previous doctrine was thus subjected to an inroad under the concept of
substantial compliance. In every inquiry on whether to accept substantial
compliance, the focus is always on the presence of equitable conditions to administer
justice effectively and efficiently without damage or injury to the spirit of the legal
obligation.
xxx xxx xxx
The fact that the OSG under the 1987 Administrative Code is the only lawyer
for a government agency wanting to file a petition, or complaint for that matter, does
not operate per se to vest the OSG with the authority to execute in its name the
certificate of non-forum shopping for a client office. For, in many instances, client
agencies of the OSG have legal departments which at times inadvertently take legal
matters requiring court representation into their own hands without the intervention
of the OSG. Consequently, the OSG would have no personal knowledge of the history
of a particular case so as to adequately execute the certificate of non-forum shopping;
and even if the OSG does have the relevant information, the courts on the other hand
would have no way of ascertaining the accuracy of the OSG's assertion without precise
references in the record of the case. Thus, unless equitable circumstances which are
manifest from the record of a case prevail, it becomes necessary for the concerned
government agency or its authorized representatives to certify for non-forum
shopping if only to be sure that no other similar case or incident is pending before any
other court.
We recognize the occasions when the OSG has difficulty in securing the
attention and signatures of officials in charge of government offices for the verification
and certificate of non-forum shopping of an initiatory pleading. This predicament is
especially true where the period for filing such pleading is non-extendible or can no
longer be further extended for reasons of public interest such as in applications for the
writ of habeas corpus, in election cases or where sensitive issues are involved. This
quandary is more pronounced where public officials have stations outside Metro
Manila.
But this difficult fact of life within the OSG, equitable as it may seem, does not
excuse it from wantonly executing by itself the verification and certificate of non-forum
shopping. If the OSG is compelled by circumstances to verify and certify the pleading in
behalf of a client agency, the OSG should at least endeavor to inform the courts of its
reasons for doing so, beyond instinctively citing City Warden of the Manila City Jail v.
Estrella and Commissioner of Internal Revenue v. S.C. Johnson and Son, Inc.
Henceforth, to be able to verify and certify an initiatory pleading for non-
forum shopping when acting as counsel of record for a client agency, the OSG must (a)
allege under oath the circumstances that make signatures of the concerned officials
impossible to obtain within the period for filing the initiatory pleading; (b) append to
the petition or complaint such authentic document to prove that the party-petitioner
or complainant authorized the filing of the petition or complaint and understood and
adopted the allegations set forth therein, and an affirmation that no action or claim
involving the same issues has been filed or commenced in any court, tribunal or quasi-
judicial agency; and, (c) undertake to inform the court promptly and reasonably of any
change in the stance of the client agency.
Anent the document that may be annexed to a petition or complaint under
letter (b) hereof, the letter-endorsement of the client agency to the OSG, or other
correspondence to prove that the subject-matter of the initiatory pleading had been
previously discussed between the OSG and its client, is satisfactory evidence of the
facts under letter (b) above. In this exceptional situation where the OSG signs the
verification and certificate of non-forum shopping, the court reserves the authority to
determine the sufficiency of the OSG's action as measured by the equitable
considerations discussed herein. (Emphasis ours, italics provided)
The ruling cited above may have pertained only to the Office of the Solicitor
Generals representation of government agencies and instrumentalities, but we
see no reason why this doctrine cannot be applied to the case at bar insofar as
the OGCC is concerned.
While in previous decisions we have excused transgressions of these rules,
it has always been in the context of upholding justice and fairness under
exceptional circumstances. In this case, though, respondent failed to provide any
iota of rhyme or reason to compel us to relax these requirements. Instead, what is
clear to us is that the so-called appeal was done against the instructions of then
President/CEO Naguiat not to file an appeal. Timbol-Roman, who signed the
Verification and the Certification against forum-shopping, was not even an
authorized representative of the corporation. The OGCC was equally remiss in its
duty. It ought to have advised respondent corporation, the proper procedure for
pursuing an appeal. Instead, it maintained the appeal and failed to present any
valid authorization from respondent corporation even after petitioner had
questioned OGCCs authority all throughout the proceedings. Thus, it is evident
that the appeal was made in bad faith.
The unauthorized and overzealous acts of officials of respondent CDC and
the OGCC have led to a waste of the governments time and resources. More
alarmingly, they have contributed to the injustice done to petitioner Salenga. By
taking matters into their own hands, these officials let the case drag on for years,
depriving him of the enjoyment of property rightfully his. What should have been
a simple case of illegal dismissal became an endless stream of motions and
pleadings.
Time and again, we have said that the perfection of an appeal within the
period prescribed by law is jurisdictional, and the lapse of the appeal period
deprives the courts of jurisdiction to alter the final judgment.
[43]
Thus, there is no
other recourse but to respect the findings and ruling of the labor arbiter. Clearly,
therefore, the CA committed grave abuse of discretion in entertaining the Petition
filed before it after the NLRC had dismissed the case based on lack of
jurisdiction. The assailed CA Decision did not even resolve petitioner Salengas
consistent and persistent claim that the NLRC should not have taken cognizance
of the appeal in the first place, absent a board resolution. Thus, LA Darlucios
Decision with respect to the liability of the corporation still stands.
However, we note from that Decision that Rufo Colayco was made
solidarily liable with respondent corporation. Colayco thereafter filed his separate
appeal. As to him, the NLRC correctly held in its 30 July 2001 Decision that he may
not be held solidarily responsible to petitioner. As a result, it dropped him as
respondent. Notably, in the case at bar, petitioner does not question that ruling.
Based on the foregoing, all other subsequent proceedings regarding the
issue of petitioners dismissal are null and void for having been conducted
without jurisdiction. Thus, it is no longer incumbent upon us to rule on the other
errors assigned in the matter of petitioner Salengas dismissal.


CDC is not under the civil service laws on retirement.
While the case was still persistently being pursued by the OGCC, a new
issue arose when petitioner Salenga reached retirement age: whether his
retirement benefits should be computed according to civil service laws.
To recall, the issue of how to compute the retirement benefits of petitioner
was raised in his Omnibus Motion dated 7 May 2004 filed before the NLRC after it
had reinstated LA Darlucios original Decision. The issue was not covered by
petitioners Complaint for illegal dismissal, but was a different issue altogether
and should have been properly addressed in a separate Complaint. We cannot
fault petitioner, though, for raising the issue while the case was still pending with
the NLRC. If it were not for the appeal undertaken by Timbol-Roman and the
OGCC through Atty. Mallari, the issue would have taken its proper course and
would have been raised in a more appropriate time and manner. Thus, we deem
it proper to resolve the matter at hand to put it to rest after a decade of litigation.
Petitioner Salenga contends that respondent CDC is covered by the GSIS
Law. Thus, he says, the computation of his retirement benefits should include all
the years of actual government service, starting from the original appointment
forty (40) years ago up to his retirement.
Respondent CDC owes its existence to Executive Order No. 80 issued by then
President Fidel V. Ramos. It was meant to be the implementing and operating arm of
the Bases Conversion and Development Authority (BCDA) tasked to manage the
Clark Special Economic Zone (CSEZ). Expressly, respondent was formed in
accordance with Philippine corporation laws and existing rules and regulations
promulgated by the SEC pursuant to Section 16 of Republic Act (R.A.) 7227.
[44]
CDC, a
government-owned or -controlled corporation without an original charter, was
incorporated under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1), the civil
service embraces only those government-owned or -controlled corporations with
original charter. As such, respondent CDC and its employees are covered by
the Labor Code and not by the Civil Service Law, consistent with our ruling
in NASECO v. NLRC,
[45]
in which we established this distinction. Thus,
in Gamogamo v. PNOC Shipping and Transport Corp.,
[46]
we held:
Retirement results from a voluntary agreement between the employer and
the employee whereby the latter after reaching a certain age agrees to sever his
employment with the former.
Since the retirement pay solely comes from Respondent's funds, it is but
natural that Respondent shall disregard petitioner's length of service in another
company for the computation of his retirement benefits.
Petitioner was absorbed by Respondent from LUSTEVECO on 1 August
1979. Ordinarily, his creditable service shall be reckoned from such date.
However, since Respondent took over the shipping business of LUSTEVECO and
agreed to assume without interruption all the service credits of petitioner with
LUSTEVECO, petitioner's creditable service must start from 9 November 1977
when he started working with LUSTEVECO until his day of retirement on 1 April
1995. Thus, petitioner's creditable service is 17.3333 years.
We cannot uphold petitioner's contention that his fourteen years of service
with the DOH should be considered because his last two employers were
government-owned and controlled corporations, and fall under the Civil Service
Law. Article IX(B), Section 2 paragraph 1 of the 1987 Constitution states
Sec. 2. (1)The civil service embraces all branches,
subdivisions, instrumentalities, and agencies of the Government,
including government-owned or controlled corporations with
original charters.
It is not at all disputed that while Respondent and LUSTEVECO are
government-owned and controlled corporations, they have no original
charters; hence they are not under the Civil Service Law. In Philippine
National Oil Company-Energy Development Corporation v. National Labor
Relations Commission, we ruled:
xxx Thus under the present state of the law, the test in
determining whether a government-owned or controlled
corporation is subject to the Civil Service Law are [sic] the manner
of its creation, such that government corporations created by
special charter(s) are subject to its provisions while those
incorporated under the General Corporation Law are not within its
coverage. (Emphasis supplied)
Hence, petitioner Salenga is entitled to receive only his retirement benefits
based only on the number of years he was employed with the corporation under
the conditions provided under its retirement plan, as well as other benefits given
to him by existing laws.
WHEREFORE, in view of the foregoing, the Petition in G.R. No. 174941 is
partially GRANTED. The Decision of LA Darlucio is REINSTATED insofar as
respondent corporations liability is concerned. Considering that petitioner did
not maintain the action against Rufo Colayco, the latter is not solidarily liable with
respondent Clark Development Corporation.
The case is REMANDED to the labor arbiter for the computation of
petitioners retirement benefits in accordance with the Social Security Act of 1997
otherwise known as Republic Act No. 8282, deducting therefrom the sums already
paid by respondent CDC. If any, the remaining amount shall be subject to the legal
interest of 6% per annum from the filing date of petitioners Omnibus Motion on
11 May 2004 up to the time this judgment becomes final and executory.
Henceforth, the rate of legal interest shall be 12% until the satisfaction of
judgment.
SO ORDERED.



MARIA LOURDES P. A. SERENO
Associate Justice



WE CONCUR:



ANTONIO T. CARPIO
Associate Justice
Chairperson








ARTURO D. BRION JOSE PORTUGAL PEREZ
Associate Justice Associate Justice




BIENVENIDO L. REYES
Associate Justice



A T T E S T A T I O N

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


ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

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


RENATO C. CORONA
Chief Justice



[1]
Penned by Associate Justice Edgardo P. Cruz, with Associate Justices Romeo A. Brawner and Jose C. Mendoza
concurring; rollo, pp. 240-254.
[2]
Id. at 253.
[3]
Id. at 577-604.
[4]
Id. at 603-604.
[5]
Id. at 688.
[6]
Id. at 647-658.
[7]
Id. at 606-607.
[8]
Id. at 739.
[9]
Id. at 743.
[10]
Penned by Commissioner Vicente S.E. Veloso, with Commissioners Roy V. Seeres and Alberto R. Quimpo
concurring; id. at 810-830.
[11]
Id. at 1142-1146.
[12]
Id. at 862-875.
[13]
Id. at 874.
[14]
Id. at 955-959.
[15]
Id. at 961.
[16]
Penned by Commissioner Roy V. Seeres, with Commissioners Romeo L. Go and Victoriano R. Calaycay
concurring, id. at 1162-1174.
[17]
Id. at 1173-1174.
[18]
Id. at 1176-1209.
[19]
Id. at 1212.
[20]
Id. at 1467.
[21]
Id. at 1458-1461.
[22]
Id. at 1472.
[23]
Id. at 1504-1530.
[24]
Philippine Government Service Insurance System Act of 1997.
[25]
Amending Commonwealth Act No. 186, or the Government Service Insurance Act.
[26]
Rollo, p. 1498.
[27]
Id. at 1931-1932.
[28]
Id. at 1975-1976.
[29]
Id. at 1983-1991.
[30]
Id. at 1978-1982.
[31]
Id. at 2154-2155.
[32]
Id. at 2206-2207.
[33]
Id. at 2240-2257.
[34]
Id. at 2260-2275.
[35]
Id. at 2264-2265.
[36]
Id. at 2274.
[37]
Id. at 2277-2281
[38]
Id. at 2299-2318.
[39]
Id. at 30-35.
[40]
Id. at 593-598.
[41]
Firme v. Bukal Enterprises and Development Corp., 460 Phil. 321 (2003).
[42]
456 Phil. 273, 294-298 (2003).
[43]
Galima v. Court of Appeals, 166 Phil. 1231(1977).
[44]
E.O. No. 80, Sec. 1.
[45]
250 Phil. 129 (1988).
[46]
431 Phil. 510, 521-522 (2002).


Republic of the Philippines
Supreme Court
Manila



SECOND DIVISION

TIMOTEO H. SARONA,
Petitioner,



- versus -



NATIONAL LABOR RELATIONS
COMMISSION, ROYALE SECURITY
AGENCY (FORMERLY SCEPTRE
G.R. No. 185280

Present:

CARPIO, J.,
Chairperson,
PEREZ,
SERENO,
REYES, and
BERNABE, JJ.

SECURITY AGENCY) and
CESAR S. TAN,
Respondents.
Promulgated:

January 18, 2012

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

DECISION

REYES, J .:

This is a petition for review under Rule 45 of the Rules of Court from the May
29, 2008 Decision
1
of the Twentieth Division of the Court of Appeals (CA) in CA-
G.R. SP No. 02127 entitled Timoteo H. Sarona v. National Labor Relations
Commission, Royale Security Agency (formerly Sceptre Security Agency) and Cesar S.
Tan (Assailed Decision), which affirmed the National Labor Relations
Commissions (NLRC) November 30, 2005 Decision and January 31, 2006
Resolution, finding the petitioner illegally dismissed but limiting the amount of his
backwages to three (3) monthly salaries. The CA likewise affirmed the NLRCs
finding that the petitioners separation pay should be computed only on the basis of
his length of service with respondent Royale Security Agency (Royale). The CA held
that absent any showing that Royale is a mere alter ego of Sceptre Security Agency
(Sceptre), Royale cannot be compelled to recognize the petitioners tenure with
Sceptre. The dispositive portion of the CAs Assailed Decision states:

WHEREFORE, in view of the foregoing, the instant petition
is PARTLY GRANTED, though piercing of the corporate veil is hereby
denied for lack of merit. Accordingly, the assailed Decision and
Resolution of the NLRC respectively dated November 30, 2005 and
January 31, 2006 are hereby AFFIRMED as to the monetary awards.

SO ORDERED.

2



Factual Antecedents

On June 20, 2003, the petitioner, who was hired by Sceptre as a security guard
sometime in April 1976, was asked by Karen Therese Tan (Karen), Sceptres
Operation Manager, to submit a resignation letter as the same was supposedly
required for applying for a position at Royale. The petitioner was also asked to fill up
Royales employment application form, which was handed to him by Royales
General Manager, respondent Cesar Antonio Tan II (Cesar).
3


After several weeks of being in floating status, Royales Security Officer,
Martin Gono (Martin), assigned the petitioner at Highlight Metal Craft, Inc.
(Highlight Metal) from July 29, 2003 to August 8, 2003. Thereafter, the petitioner was
transferred and assigned to Wide Wide World Express, Inc. (WWWE, Inc.). During
his assignment at Highlight Metal, the petitioner used the patches and agency cloths of
Sceptre and it was only
when he was posted at WWWE, Inc. that he started using those of Royale.
4


On September 17, 2003, the petitioner was informed that his assignment at
WWWE, Inc. had been withdrawn because Royale had allegedly been replaced by
another security agency. The petitioner, however, shortly discovered thereafter that
Royale was never replaced as WWWE, Inc.s security agency. When he placed a call
at WWWE, Inc., he learned that his fellow security guard was not relieved from his
post.
5


On September 21, 2003, the petitioner was once again assigned at Highlight
Metal, albeit for a short period from September 22, 2003 to September 30, 2003.
Subsequently, when the petitioner reported at Royales office on October 1, 2003,
Martin informed him that he would no longer be given any assignment per the
instructions of Aida Sabalones-Tan (Aida), general manager of Sceptre. This
prompted him to file a complaint for illegal dismissal on October 4, 2003.
6


In his May 11, 2005 Decision, Labor Arbiter Jose Gutierrez (LA Gutierrez)
ruled in the petitioners favor and found him illegally dismissed. For being
unsubstantiated, LA Gutierrez denied credence to the respondents claim that the
termination of the petitioners employment relationship with Royale was on his
accord following his alleged employment in another company. That the petitioner was
no longer interested in being an employee of Royale cannot be presumed from his
request for a certificate of employment, a claim which, to begin with, he vehemently
denies. Allegation of the petitioners abandonment is negated by his filing of a
complaint for illegal dismissal three (3) days after he was informed that he would no
longer be given any assignments. LA Gutierrez ruled:

In short, respondent wanted to impress before us that complainant
abandoned his employment. We are not however, convinced.

There is abandonment when there is a clear proof showing that one has
no more interest to return to work. In this instant case, the record has no
proof to such effect. In a long line of decisions, the Supreme Court ruled:

Abandonment of position is a matter of intention
expressed in clearly certain and unequivocal acts,
however, an interim employment does not mean
abandonment. (Jardine Davis, Inc. vs. NLRC, 225 SCRA
757).

I n abandonment, there must be a concurrence of
the intention to abandon and some overt acts from which
an employee may be declared as having no more interest
to work. (C. Alcontin & Sons, Inc. vs. NLRC, 229 SCRA
109).

I t is clear, deliberate and unjustified refusal to
severe employment and not mere absence that is required
to constitute abandonment. x x x (De Ysasi III vs.
NLRC, 231 SCRA 173).

Aside from lack of proof showing that complainant has
abandoned his employment, the record would show that immediate
action was taken in order to protest his dismissal from employment. He
filed a complaint [for] illegal dismissal on October 4, 2004 or three (3)
days after he was dismissed. This act, as declared by the Supreme Court
is inconsistent with abandonment, as held in the case of Pampanga Sugar
Development Co., Inc. vs. NLRC, 272 SCRA 737 where the Supreme
Court ruled:

The immediate filing of a complaint for [i]llegal
[d]ismissal by an employee is inconsistent with
abandonment.
7



The respondents were ordered to pay the petitioner backwages, which LA
Gutierrez computed from the day he was dismissed, or on October 1, 2003, up to the
promulgation of his Decision on May 11, 2005. In lieu of reinstatement, the
respondents were ordered to pay the petitioner separation pay equivalent to his one (1)
month salary in consideration of his tenure with Royale, which lasted for only one (1)
month and three (3) days. In this
regard, LA Gutierrez refused to pierce Royales corporate veil for purposes of
factoring the petitioners length of service with Sceptre in the computation of his
separation pay. LA Gutierrez ruled that Royales corporate personality, which is
separate and distinct from that of Sceptre, a sole proprietorship owned by the late
Roso Sabalones (Roso) and later, Aida, cannot be pierced absent clear and convincing
evidence that Sceptre and Royale share the same stockholders and incorporators and
that Sceptre has complete control and dominion over the finances and business affairs
of Royale. Specifically:

To support its prayer of piercing the veil of corporate entity of
respondent Royale, complainant avers that respondent Royal (sic) was
using the very same office of SCEPTRE in C. Padilla St., Cebu City. In
addition, all officers and staff of SCEPTRE are now the same officers
and staff of ROYALE, that all [the] properties of SCEPTRE are now
being owned by ROYALE and that ROYALE is now occupying the
property of SCEPTRE. We are not however, persuaded.

It should be pointed out at this juncture that SCEPTRE, is a single
proprietorship. Being so, it has no distinct and separate personality. It is
owned by the late Roso T. Sabalones. After the death of the owner, the
property is supposed to be divided by the heirs and any claim against the
sole proprietorship is a claim against Roso T. Sabalones. After his death,
the claims should be instituted against the estate of Roso T. Sabalones.
In short, the estate of the late Roso T. Sabalones should have been
impleaded as respondent of this case.

Complainant wanted to impress upon us that Sceptre was organized into
another entity now called Royale Security Agency. There is however, no
proof to this assertion. Likewise, there is no proof that Roso T.
Sabalones, organized his single proprietorship business into a
corporation, Royale Security Agency. On the contrary, the name of Roso
T. Sabalones does not appear in the Articles of Incorporation. The names
therein as incorporators are:

Bruno M. Kuizon [P]150,000.00
Wilfredo K. Tan 100,000.00
Karen Therese S. Tan 100,000.00
Cesar Antonio S. Tan 100,000.00
Gabeth Maria K. Tan 50,000.00

Complainant claims that two (2) of the incorporators are the
granddaughters of Roso T. Sabalones. This fact even give (sic) us further
reason to conclude that respondent Royal (sic) Security Agency is not an
alter ego or conduit of SCEPTRE. It is obvious that respondent Royal
(sic) Security Agency is not owned by the owner of SCEPTRE.

It may be true that the place where respondent Royale hold (sic)
office is the same office formerly used by SCEPTRE. Likewise, it may
be true that the same officers and staff now employed by respondent
Royale Security Agency were the same officers and staff employed by
SCEPTRE. We find, however, that these facts are not sufficient to
justify to require respondent Royale to answer for the liability of Sceptre,
which was owned solely by the late Roso T. Sabalones. As we have
stated above, the remedy is to address the claim on the estate of Roso T.
Sabalones.
8



The respondents appealed LA Gutierrezs May 11, 2005 Decision to the
NLRC, claiming that the finding of illegal dismissal was attended with grave abuse of
discretion. This appeal was, however, dismissed by the NLRC in its November 30,
2005 Decision,
9
the dispositive portion of which states:

WHEREFORE, premises considered, the Decision of the Labor
Arbiter declaring the illegal dismissal of complainant is
hereby AFFIRMED.

However[,] We modify the monetary award by limiting the grant
of backwages to only three (3) months in view of complainants very
limited service which lasted only for one month and three days.

1. Backwages - [P]15,600.00
2. Separation Pay - 5,200.00
3. 13
th
Month Pay - 583.34
[P]21,383.34 Attorneys Fees- 2,138.33
Total [P]23,521.67

The appeal of respondent Royal (sic) Security Agency is
hereby DISMISSED for lack of merit.

SO ORDERED.
10



The NLRC partially affirmed LA Gutierrezs May 11, 2005 Decision. It
concurred with the latters finding that the petitioner was illegally dismissed and the
manner by which his separation pay was computed, but modified the monetary award
in the petitioners favor by reducing the amount of his backwages from P95,600.00
to P15,600.00. The NLRC determined the petitioners backwages as limited to three
(3) months of his last monthly salary, considering that his employment with Royale
was only for a period for one (1) month and three (3) days, thus:
11


On the other hand, while complainant is entitled to backwages, We are
aware that his stint with respondent Royal (sic) lasted only for one (1)
month and three (3) days such that it is Our considered view that his
backwages should be limited to only three (3) months.

Backwages:

[P]5,200.00 x 3 months = [P]15,600.00
12



The petitioner, on the other hand, did not appeal LA Gutierrezs May 11, 2005
Decision but opted to raise the validity of LA Gutierrezs adverse findings with
respect to piercing Royales corporate personality and computation of his separation
pay in his Reply to the respondents Memorandum of Appeal. As the filing of an
appeal is the prescribed remedy and no aspect of the decision can be overturned by a
mere reply, the NLRC dismissed the petitioners efforts to reverse LA Gutierrezs
disposition of these issues. Effectively, the petitioner had already waived his right to
question LA Gutierrezs Decision when he failed to file an appeal within the
reglementary period. The NLRC held:

On the other hand, in complainants Reply to Respondents Appeal
Memorandum he prayed that the doctrine of piercing the veil of
corporate fiction of respondent be applied so that his services with
Sceptre since 1976 [will not] be deleted. If complainant assails this
particular finding in the Labor Arbiters Decision, complainant should
have filed an appeal and not seek a relief by merely filing a Reply to
Respondents Appeal Memorandum.
13



Consequently, the petitioner elevated the NLRCs November 30, 2005 Decision to the
CA by way of a Petition for Certiorari under Rule 65 of the Rules of Court. On the
other hand, the respondents filed no appeal from the NLRCs finding that the
petitioner was illegally dismissed.

The CA, in consideration of substantial justice and the jurisprudential dictum
that an appealed case is thrown open for the appellate courts review, disagreed with
the NLRC and proceeded to review the evidence on record to determine if Royale is
Sceptres alter ego that would warrant the piercing of its corporate veil.
14
According to
the CA, errors not assigned on appeal may be reviewed as technicalities should not
serve as bar to the full adjudication of cases. Thus:

In Cuyco v. Cuyco, which We find application in the instant case, the
Supreme Court held:

In their Reply, petitioners alleged that their petition only
raised the sole issue of interest on the interest due, thus, by
not filing their own petition for review, respondents waived
their privilege to bring matters for the Courts review that
[does] not deal with the sole issue raised.

Procedurally, the appellate court in deciding the case shall
consider only the assigned errors, however, it is equally
settled that the Court is clothed with ample authority to
review matters not assigned as errors in an appeal, if it
finds that their consideration is necessary to arrive at a just
disposition of the case.

Therefore, for full adjudication of the case, We have to primarily resolve
the issue of whether the doctrine of piercing the corporate veil be justly
applied in order to determine petitioners length of service with private
respondents.
15
(citations omitted)


Nonetheless, the CA ruled against the petitioner and found the evidence he
submitted to support his allegation that Royale and Sceptre are one and the same
juridical entity to be wanting. The CA refused to pierce Royales corporate mask as
one of the probative factors that would justify the application of the doctrine of
piercing the corporate veil is stock ownership by one or common ownership of both
corporations and the petitioner failed to present clear and convincing proof that
Royale and Sceptre are commonly owned or controlled. The relevant portions of the
CAs Decision state:

In the instant case, We find no evidence to show that Royale
Security Agency, Inc. (hereinafter Royale), a corporation duly
registered with the Securities and Exchange Commission (SEC) and
Sceptre Security Agency (hereinafter Sceptre), a single proprietorship,
are one and the same entity.

Petitioner, who has been with Sceptre since 1976 and, as ruled by
both the Labor Arbiter and the NLRC, was illegally dismissed by Royale
on October 1, 2003, alleged that in order to circumvent labor laws,
especially to avoid payment of money claims and the consideration on
the length of service of its employees, Royale was established as an alter
ego or business conduit of Sceptre. To prove his claim, petitioner
declared that Royale is conducting business in the same office of
Sceptre, the latter being owned by the late retired Gen. Roso Sabalones,
and was managed by the latters daughter, Dr. Aida Sabalones-Tan; that
two of Royales incorporators are grandchildren [of] the late Gen. Roso
Sabalones; that all the properties of Sceptre are now owned by Royale,
and that the officers and staff of both business establishments are the
same; that the heirs of Gen. Sabalones should have applied for
dissolution of Sceptre before the SEC before forming a new corporation.

On the other hand, private respondents declared that Royale was
incorporated only on March 10, 2003 as evidenced by the Certificate of
Incorporation issued by the SEC on the same date; that Royales
incorporators are Bruino M. Kuizon, Wilfredo Gracia K. Tan, Karen
Therese S. Tan, Cesar Antonio S. Tan II and [Gabeth] Maria K. Tan.

Settled is the tenet that allegations in the complaint must be duly
proven by competent evidence and the burden of proof is on the party
making the allegation. Further, Section 1 of Rule 131 of the Revised
Rules of Court provides:

SECTION 1. Burden of proof. Burden of proof is
the duty of a party to present evidence on the facts in issue
necessary to establish his claim or defense by the amount of
evidence required by law.

We believe that petitioner did not discharge the required burden of
proof to establish his allegations. As We see it, petitioners claim that
Royale is an alter ego or business conduit of Sceptre is without basis
because aside from the fact that there is no common ownership of both
Royale and Sceptre, no evidence on record would prove that Sceptre,
much less the late retired Gen. Roso Sabalones or his heirs, has control
or complete domination of Royales finances and business transactions.
Absence of this first element, coupled by petitioners failure to present
clear and convincing evidence to substantiate his allegations, would
prevent piercing of the corporate veil. Allegations must be proven by
sufficient evidence. Simply stated, he who alleges a fact has the burden
of proving it; mere allegation is not evidence.
16
(citations omitted)


By way of this Petition, the petitioner would like this Court to revisit the computation
of his backwages, claiming that the same should be computed from the time he was
illegally dismissed until the finality of this decision.
17
The petitioner would likewise
have this Court review and examine anew the factual allegations and the supporting
evidence to determine if the CA erred in its refusal to pierce Royales corporate mask
and rule that it is but a mere continuation or successor of Sceptre. According to the
petitioner, the erroneous computation of his separation pay was due to the CAs
failure, as well as the NLRC and LA Gutierrez, to consider evidence conclusively
demonstrating that Royale and Sceptre are one and the same juridical entity. The
petitioner claims that since Royale is no more than Sceptres alter ego, it should
recognize and credit his length of service with Sceptre.
18


The petitioner claimed that Royale and Sceptre are not separate legal persons
for purposes of computing the amount of his separation pay and other benefits under
the Labor Code. The piercing of Royales corporate personality is justified by several
indicators that Royale was incorporated for the sole purpose of defeating his right to
security of tenure and circumvent payment of his benefits to which he is entitled under
the law: (i) Royale was holding office in the same property used by Sceptre as its
principal place of business;
19
(ii) Sceptre and Royal have the same officers and
employees;
20
(iii) on October 14, 1994, Roso, the sole proprietor of Sceptre, sold to
Aida, and her husband, Wilfredo Gracia K. Tan (Wilfredo),
21
the property used by
Sceptre as its principal place of business;
22
(iv) Wilfredo is one of the incorporators of
Royale;
23
(v) on May 3, 1999, Roso ceded the license to operate Sceptre issued by the
Philippine National Police to Aida;
24
(vi) on July 28, 1999, the business name Sceptre
Security & Detective Agency was registered with the Department of Trade and
Industry (DTI) under the name of Aida;
25
(vii) Aida exercised control over the affairs
of Sceptre and Royale, as she was, in fact, the one who dismissed the petitioner from
employment;
26
(viii) Karen, the daughter of Aida, was Sceptres Operation Manager
and is one of the incorporators of Royale;
27
and (ix) Cesar Tan II, the son of Aida was
one of Sceptres officers and is one of the incorporators of Royale.
28


In their Comment, the respondents claim that the petitioner is barred from
questioning the manner by which his backwages and separation pay were computed.
Earlier, the petitioner moved for the execution of the NLRCs November 30, 2005
Decision
29
and the respondents paid him the full amount of the monetary award
thereunder shortly after the writ of execution was issued.
30
The respondents likewise
maintain that Royales separate and distinct corporate personality should be respected
considering that the evidence presented by the petitioner fell short of establishing that
Royale is a mere alter ego of Sceptre.

The petitioner does not deny that he has received the full amount of backwages
and separation pay as provided under the NLRCs November 30, 2005
Decision.
31
However, he claims that this does not preclude this Court from modifying
a decision that is tainted with grave abuse of discretion or issued without jurisdiction.
32


ISSUES

Considering the conflicting submissions of the parties, a judicious
determination of their respective rights and obligations requires this Court to resolve
the following substantive issues:

a. Whether Royales corporate fiction should be pierced for the
purpose of compelling it to recognize the petitioners length of service
with Sceptre and for holding it liable for the benefits that have accrued to
him arising from his employment with Sceptre; and

b. Whether the petitioners backwages should be limited to his
salary for three (3) months.

OUR RULING

Because his receipt of the proceeds of the
award under the NLRCs November 30,
2005 Decision is qualified and without
prejudice to the CAs resolution of his
petition for certiorari, the petitioner is not
barred from exercising his right to elevate
the decision of the CA to this Court.


Before this Court proceeds to decide this Petition on its merits, it is imperative to
resolve the respondents contention that the full satisfaction of the award under the
NLRCs November 30, 2005 Decision bars the petitioner from questioning the
validity thereof. The respondents submit that they had paid the petitioner the amount
of P21,521.67 as directed by the NLRC and this constitutes a waiver of his right to file
an appeal to this Court.

The respondents fail to convince.

The petitioners receipt of the monetary award adjudicated by the NLRC is not
absolute, unconditional and unqualified. The petitioners May 3, 2007 Motion for
Release contains a reservation, stating in his prayer that: it is respectfully prayed that
the respondents and/or Great Domestic Insurance Co. be ordered to RELEASE/GIVE
the amount of P23,521.67 in favor of the complainant TIMOTEO H. SARONA
without prejudice to the outcome of the petition with the CA.
33


In Leonis Navigation Co., Inc., et al. v. Villamater, et al.,
34
this Court ruled that
the prevailing partys receipt of the full amount of the judgment award pursuant to a
writ of execution issued by the labor arbiter does not
close or terminate the case if such receipt is qualified as without prejudice to the
outcome of the petition for certiorari pending with the CA.

Simply put, the execution of the final and executory decision or
resolution of the NLRC shall proceed despite the pendency of a petition
for certiorari, unless it is restrained by the proper court. In the present
case, petitioners already paid Villamaters widow, Sonia, the amount
of P3,649,800.00, representing the total and permanent disability award
plus attorneys fees, pursuant to the Writ of Execution issued by the
Labor Arbiter. Thereafter, an Order was issued declaring the case as
"closed and terminated". However, although there was no motion for
reconsideration of this last Order, Sonia was, nonetheless, estopped from
claiming that the controversy had already reached its end with the
issuance of the Order closing and terminating the case. This is because
the Acknowledgment Receipt she signed when she received petitioners
payment was without prejudice to the final outcome of the petition
for certiorari pending before the CA.
35



The finality of the NLRCs decision does not preclude the filing of a petition
for certiorari under Rule 65 of the Rules of Court. That the NLRC issues an entry of
judgment after the lapse of ten (10) days from the parties receipt of its decision
36
will
only give rise to the prevailing partys right to move for the execution thereof but will
not prevent the CA from taking cognizance of a petition for certiorari on
jurisdictional and due process considerations.
37
In turn, the decision rendered by the
CA on a petition for certiorari may be appealed to this Court by way of a petition for
review on certiorari under Rule 45 of the Rules of Court. Under Section 5, Article
VIII of the Constitution, this Court has the power to review, revise, reverse, modify,
or affirm on appeal or certiorari as the law or the Rules of Court may provide, final
judgments and orders of lower courts in x x x all cases in which only an error or
question of law is involved. Consistent with this constitutional mandate, Rule 45 of
the Rules of Court provides the remedy of an appeal by certiorari from decisions,
final orders or resolutions of the CA in any case, i.e., regardless of the nature of the
action or proceedings
involved, which would be but a continuation of the appellate process over the original
case.
38
Since an appeal to this Court is not an original and independent action but a
continuation of the proceedings before the CA, the filing of a petition for review
under Rule 45 cannot be barred by the finality of the NLRCs decision in the same
way that a petition for certiorariunder Rule 65 with the CA cannot.

Furthermore, if the NLRCs decision or resolution was reversed and set aside for
being issued with grave abuse of discretion by way of a petition for certiorari to the
CA or to this Court by way of an appeal from the decision of the CA, it is considered
void ab initio and, thus, had never become final and executory.
39


A Rule 45 Petition should be confined to
questions of law. Nevertheless, this Court
has the power to resolve a question of fact,
such as whether a corporation is a mere
alter ego of another entity or whether the
corporate fiction was invoked for
fraudulent or malevolent ends, if the
findings in assailed decision is not
supported by the evidence on record or
based on a misapprehension of facts.


The question of whether one corporation is merely an alter ego of another is
purely one of fact. So is the question of whether a corporation is a paper company, a
sham or subterfuge or whether the petitioner adduced the requisite quantum of
evidence warranting the piercing of the veil of the respondents corporate
personality.
40


As a general rule, this Court is not a trier of facts and a petition for review
on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of
law. Moreover, if factual findings of the NLRC and the LA have been affirmed by the
CA, this Court accords them the respect and finality they deserve. It is well-settled
and oft-repeated that findings of fact of administrative agencies and quasi-judicial
bodies, which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect, but finality when affirmed by the
CA.

41


Nevertheless, this Court will not hesitate to deviate from what are clearly
procedural guidelines and disturb and strike down the findings of the CA and those of
the labor tribunals if there is a showing that they are unsupported by the evidence on
record or there was a patent misappreciation of facts. Indeed, that the impugned
decision of the CA is consistent with the findings of the labor tribunals does not per
se conclusively demonstrate the correctness thereof. By way of exception to the
general rule, this Court will scrutinize the facts if only to rectify the prejudice and
injustice resulting from an incorrect assessment of the evidence presented.

A resolution of an issue that has supposedly
become final and executory as the
petitioner only raised it in his reply to the
respondents appeal may be revisited by
the appellate court if such is necessary for a
just disposition of the case.


As above-stated, the NLRC refused to disturb LA Gutierrezs denial of the
petitioners plea to pierce Royales corporate veil as the petitioner did not appeal any
portion of LA Gutierrezs May 11, 2005 Decision.

In this respect, the NLRC cannot be accused of grave abuse of discretion. Under
Section 4(c), Rule VI of the NLRC Rules,
42
the NLRC shall limit itself to reviewing
and deciding only the issues that were elevated on appeal. The NLRC, while not
totally bound by technical rules of procedure, is not licensed to disregard and violate
the implementing rules it implemented.

43


Nonetheless, technicalities should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties. Technical rules are not
binding in labor cases and are not to be applied strictly if the result would be
detrimental to the working man.
44
This Court may choose not to encumber itself with
technicalities and limitations consequent to procedural rules if such will only serve as
a hindrance to its duty to decide cases judiciously and in a manner that would put an
end with finality to all existing conflicts between the parties.

Royale is a continuation or successor of
Sceptre.


A corporation is an artificial being created by operation of law. It possesses the right
of succession and such powers, attributes, and properties expressly authorized by law
or incident to its existence. It has a personality separate and distinct from the persons
composing it, as well as from any other legal entity to which it may be related. This is
basic.
45


Equally well-settled is the principle that the corporate mask may be removed or
the corporate veil pierced when the corporation is just an alter ego of a person or of
another corporation. For reasons of public policy and in the interest of justice, the
corporate veil will justifiably be impaled only when it becomes a shield for fraud,
illegality or inequity committed against third persons.
46


Hence, any application of the doctrine of piercing the corporate veil should be
done with caution. A court should be mindful of the milieu where it is to be applied. It
must be certain that the corporate fiction was misused to such an extent that injustice,
fraud, or crime was committed against another, in disregard of rights. The wrongdoing
must be clearly and convincingly established; it cannot be presumed. Otherwise, an
injustice that was never unintended may result from an erroneous application.
47


Whether the separate personality of the corporation should be pierced hinges on
obtaining facts appropriately pleaded or proved. However, any piercing of the
corporate veil has to be done with caution, albeit the Court will not hesitate to
disregard the corporate veil when it is misused or when necessary in the interest of
justice. After all, the concept of corporate entity was not meant to promote unfair
objectives.
48


The doctrine of piercing the corporate veil applies only in three (3) basic areas,
namely: 1) defeat of public convenience as when the corporate fiction is used as a
vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporate
entity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter ego cases,
where a corporation is merely a farce since it is a mere alter ego or business conduit of
a person, or where the
corporation is so organized and controlled and its affairs are so conducted as
to make it merely an instrumentality, agency, conduit or adjunct of another
corporation.
49


In this regard, this Court finds cogent reason to reverse the CAs findings.
Evidence abound showing that Royale is a mere continuation or successor of Sceptre
and fraudulent objectives are behind Royales incorporation and the petitioners
subsequent employment therein. These are plainly suggested by events that the
respondents do not dispute and which the CA, the NLRC and LA Gutierrez accept as
fully substantiated but misappreciated as insufficient to warrant the use of the
equitable weapon of piercing.

As correctly pointed out by the petitioner, it was Aida who exercised control
and supervision over the affairs of both Sceptre and Royale. Contrary to the
submissions of the respondents that Roso had been the only one in sole control of
Sceptres finances and business affairs, Aida took over as early as 1999 when Roso
assigned his license to operate Sceptre on May 3, 1999.
50
As further proof of Aidas
acquisition of the rights as Sceptres sole proprietor, she caused the registration of the
business name Sceptre Security & Detective Agency under her name with the DTI a
few months after Roso abdicated his rights to Sceptre in her favor.
51
As far as Royale
is concerned, the respondents do not deny that she has a hand in its management and
operation and possesses control and supervision of its employees, including the
petitioner. As the petitioner correctly pointed out, that Aida was the one who decided
to stop giving any assignments to the petitioner and summarily dismiss him is an
eloquent testament of the power she wields insofar as Royales affairs are concerned.
The presence of actual common control coupled with the misuse of the corporate form
to perpetrate oppressive or manipulative conduct or evade performance of legal
obligations is patent; Royale cannot hide behind its corporate fiction.

Aidas control over Sceptre and Royale does not, by itself, call for a disregard
of the corporate fiction. There must be a showing that a fraudulent intent or illegal
purpose is behind the exercise of such control to warrant the piercing of the corporate
veil.
52
However, the manner by which the petitioner was made to resign from Sceptre
and how he became an employee of Royale suggest the perverted use of the legal
fiction of the separate corporate personality. It is undisputed that the petitioner
tendered his resignation and that he applied at Royale at the instance of Karen and
Cesar and on the impression they created that these were necessary for his continued
employment. They orchestrated the petitioners resignation from Sceptre and
subsequent employment at Royale, taking advantage of their ascendancy over the
petitioner and the latters lack of knowledge of his rights and the consequences of his
actions. Furthermore, that the petitioner was made to resign from Sceptre and apply
with Royale only to be unceremoniously terminated shortly thereafter leads to the
ineluctable conclusion that there was intent to violate the petitioners rights as an
employee, particularly his right to security of tenure. The respondents scheme reeks
of bad faith and fraud and compassionate justice dictates that Royale and Sceptre be
merged as a single entity, compelling Royale to credit and recognize the petitioners
length of service with Sceptre. The respondents cannot use the legal fiction of a
separate corporate personality for ends subversive of the policy and purpose behind its
creation
53
or which could not have been intended by law to which it owed its being.
54


For the piercing doctrine to apply, it is of no consequence if Sceptre is a sole
proprietorship. As ruled in Prince Transport, Inc., et al. v. Garcia, et al.,
55
it is the act
of hiding behind the separate and distinct personalities of juridical entities to
perpetuate fraud, commit illegal acts, evade ones obligations that the equitable
piercing doctrine was formulated to address and prevent:

A settled formulation of the doctrine of piercing the corporate veil is that
when two business enterprises are owned, conducted and controlled by
the same parties, both law and equity will, when necessary to protect the
rights of third parties, disregard the legal fiction that these two entities
are distinct and treat them as identical or as one and the same. In the
present case, it may be true that Lubas is a single proprietorship and not
a corporation. However, petitioners attempt to isolate themselves from
and hide behind the supposed separate and distinct personality of Lubas
so as to evade their liabilities is precisely what the classical doctrine of
piercing the veil of corporate entity seeks to prevent and remedy.
56



Also, Sceptre and Royale have the same principal place of business. As early as
October 14, 1994, Aida and Wilfredo became the owners of the property used by
Sceptre as its principal place of business by virtue of a Deed of Absolute Sale they
executed with Roso.
57
Royale, shortly after its incorporation, started to hold office in
the same property. These, the respondents failed to dispute.

The respondents do not likewise deny that Royale and Sceptre share the same
officers and employees. Karen assumed the dual role of Sceptres Operation Manager
and incorporator of Royale. With respect to the petitioner, even if he has already
resigned from Sceptre and has been employed by Royale, he was still using the
patches and agency cloths of Sceptre during his assignment at Highlight Metal.

Royale also claimed a right to the cash bond which the petitioner posted when
he was still with Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre
should have released the petitioners cash bond when he resigned and Royale would
have required the petitioner to post a new cash bond in its favor.

Taking the foregoing in conjunction with Aidas control over Sceptres and
Royales business affairs, it is patent that Royale was a mere subterfuge for Aida.
Since a sole proprietorship does not have a separate and distinct personality from that
of the owner of the enterprise, the latter is personally liable. This is what she sought to
avoid but cannot prosper.

Effectively, the petitioner cannot be deemed to have changed employers as
Royale and Sceptre are one and the same. His separation pay should, thus, be
computed from the date he was hired by Sceptre in April 1976 until the finality of this
decision. Based on this Courts ruling in Masagana Concrete Products, et al. v.
NLRC, et al.,
58
the intervening period between the day an employee was illegally
dismissed and the day the decision finding him illegally dismissed becomes final and
executory shall be considered in the computation of his separation pay as a period of
imputed or putative service:

Separation pay, equivalent to one month's salary for every year of
service, is awarded as an alternative to reinstatement when the latter is
no longer an option. Separation pay is computed from the
commencement of employment up to the time of termination, including
the imputed service for which the employee is entitled to backwages,
with the salary rate prevailing at the end of the period of putative service
being the basis for computation.
59



It is well-settled, even axiomatic, that if
reinstatement is not possible, the period
covered in the computation of backwages is
from the time the employee was unlawfully
terminated until the finality of the decision
finding illegal dismissal.


With respect to the petitioners backwages, this Court cannot subscribe to the view
that it should be limited to an amount equivalent to three (3) months of his salary.
Backwages is a remedy affording the employee a way to recover what he has lost by
reason of the unlawful dismissal.
60
In awarding backwages, the primordial
consideration is the income that should have accrued to the employee from the time
that he was dismissed up to his reinstatement
61
and the length of service prior to his
dismissal is definitely inconsequential.

As early as 1996, this Court, in Bustamante, et al. v. NLRC, et al.,
62
clarified in
no uncertain terms that if reinstatement is no longer possible, backwages should be
computed from the time the employee was terminated until the finality of the decision,
finding the dismissal unlawful.

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

As to reinstatement of petitioners, this Court has already ruled that
reinstatement is no longer feasible, because the company would be
adjustly prejudiced by the continued employment of petitioners who at
present are overage, a separation pay equal to one-month salary granted
to them in the Labor Arbiter's decision was in order and, therefore,
affirmed on the Court's decision of 15 March 1996.Furthermore, since
reinstatement on this case is no longer feasible, the amount of
backwages shall be computed from the time of their illegal
termination on 25 June 1990 up to the time of finality of this
decision.
63
(emphasis supplied)


A further clarification was made in Javellana, Jr. v. Belen:
64


Article 279 of the Labor Code, as amended by Section 34 of
Republic Act 6715 instructs:

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

Clearly, the law intends the award of backwages and similar benefits to
accumulate past the date of the Labor Arbiter's decision until the
dismissed employee is actually reinstated. But if, as in this case,
reinstatement is no longer possible, this Court has consistently ruled that
backwages shall be computed from the time of illegal dismissal until the
date the decision becomes final.
65
(citation omitted)


In case separation pay is awarded and reinstatement is no longer feasible, backwages
shall be computed from the time of illegal dismissal up to the finality of the decision
should separation pay not be paid in the meantime. It is the employees actual receipt
of the full amount of his separation pay that will effectively terminate the employment
of an illegally dismissed employee.
66
Otherwise, the employer-employee relationship
subsists and the illegally dismissed employee is entitled to backwages, taking into
account the increases and other benefits, including the 13
th
month pay, that were
received by his co-employees who are not dismissed.
67
It is the obligation of the
employer to pay an illegally dismissed employee or worker the whole amount of the
salaries or wages, plus all other benefits and
bonuses and general increases, to which he would have been normally entitled had he
not been dismissed and had not stopped working.
68


In fine, this Court holds Royale liable to pay the petitioner backwages to be
computed from his dismissal on October 1, 2003 until the finality of this decision.
Nonetheless, the amount received by the petitioner from the respondents in
satisfaction of the November 30, 2005 Decision shall be deducted accordingly.

Finally, moral damages and exemplary damages at P25,000.00 each as
indemnity for the petitioners dismissal, which was tainted by bad faith and fraud, are
in order. Moral damages may be recovered where the dismissal of the employee was
tainted by bad faith or fraud, or where it constituted an act oppressive to labor, and
done in a manner contrary to morals, good customs or public policy while exemplary
damages are recoverable only if the dismissal was done in a wanton, oppressive, or
malevolent manner.
69


WHEREFORE, premises considered, the Petition is hereby GRANTED.
We REVERSE and SET ASIDE the CAs May 29, 2008 Decision in C.A.-G.R. SP
No. 02127 and order the respondents to pay the petitioner the following minus the
amount of (P23,521.67) paid to the petitioner in satisfaction of the NLRCs November
30, 2005 Decision in NLRC Case No. V-000355-05:

a) full backwages and other benefits computed from October 1, 2003 (the date
Royale illegally dismissed the petitioner) until the finality of this decision;

b) separation pay computed from April 1976 until the finality of this decision at the
rate of one month pay per year of service;

c) ten percent (10%) attorneys fees based on the total amount of the awards
under (a) and (b) above;

d) moral damages of Twenty-Five Thousand Pesos (P25,000.00); and

5. exemplary damages of Twenty-Five Thousand Pesos (P25,000.00).

This case is REMANDED to the labor arbiter for computation of the separation pay,
backwages, and other monetary awards due the petitioner.

SO ORDERED.




BIENVENIDO L. REYES
Associate Justice





WE CONCUR:




ANTONIO T. CARPIO
Associate Justice




JOSE PORTUGAL PEREZ
Associate Justice
MARIA LOURDES P. A. SERENO
Associate Justice




ESTELA M. PERLAS-BERNABE
Associate Justice



A T T E S T A T I O N

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



ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division



C E R T I F I C A T I O N

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




RENATO C. CORONA
Chief Justice
Additional Member in lieu of Associate Justice Arturo D. Brion per Special Order No. 1174 dated January 9,
2012.
1 Penned by Associate Justice Francisco P. Acosta, with Associate Justices Amy C. Lazaro-Javier and Florito S.
Macalino, concurring; rollo, pp. 19-30.
2 Id. at 29.
3 Id. at 3, 4 and 21.
4Id. at 4-5, 21.
5 Id. at 5-6.
6 Id. at 5-6, 21.
7 Id. at 55.
8 Id. at 53-54.
9 Id. at 58-65.
10 Id. at 64-65.
11 Id. at 64.
12 Id.
13 Id.
14 Id. at 24-25.
15 Id.
16 Id. at 26-27.
17 Id. at 13-15.
18 Id. at 7-13.
19 Id. at 5, 6 and 9.
20 Id. at 8-9.
21 Id. at 74-80.
22 Id. at 82.
23 Id. at 44.
24 Id. at 73-79.
25 Id. at 73-80.
26 Id. at 12.
27 Id. at 8, 44, 73-74.
28 Id.
29 Id. at 58-65.
30 Id. at 49.
31 Id. at 77.
32 Id.
33 Id. at 67.
34 G.R. No. 179169, March 3, 2010, 614 SCRA 182.
35 Id. at 193-194.
36 2011 NLRC Rules of Procedure, Rule VII, Section 14.
37Id.
38Cua, Jr. v. Tan, G.R. No. 181455-56, December 4, 2009, 607 SCRA , 686-687.
39 Leonis Navigation Co., Inc. v. Villamater, supra note 34 at 192.
40 China Banking Corporation v. Dyne-Sem Electronics Corporation, 527 Phil 80 (2006).
41 Reyes v. National Labor Relations Commission, G.R. No. 160233, August 8, 2007, 529 SCRA 499.
42 New Rules of Procedure of the National Labor Relations Commission (as amended by NLRC Resolution No. 01-
02, Series of 2002).
43 Del Monte Philippines, Inc. v. NLRC, G.R. No. 87371, August 6, 1990, 188 SCRA 370.
44 Government Service Insurance System v. NLRC, G.R. No. 180045, November 17, 2010, 635 SCRA 258.
45 General Credit Corporation v. Alsons Development and Investment Corporation, G.R. No. 154975, January 29,
2007, 513 SCRA 237-238.
46 Philippine National Bank v. Andrada Electric Engineering Company, 430 Phil 894 (2002).
47 Id. at 894-895; citations omitted.
48 Supra note 45 at 238.
49 Id. at 238-239.
50 Rollo, p. 79.
51 Id. at 80.
52 NASECO Guards Association-PEMA (NAGA-PEMA) v. National Service Corporation, G.R. No. 165442, August
25, 2010, 629 SCRA 101.
53 Cf. Emiliano Cano Enterprises, Inc. v. CIR, et al., 121 Phil 276 (1965).
54 Land Bank of the Philippines v. Court of Appeals, 416 Phil 774, 783 (2001).
55 G.R. No. 167291, January 12, 2011, 639 SCRA 312.
56 Id. at 328.
57 Rollo, pp. 5, 54, 74 and 82.
58 372 Phil 459 (1999).
59 Id. at 481.
60 De Guzman v. National Labor Relations Commission, 371 Phil 202 (1999).
61 Velasco v. NLRC, et al., 525 Phil 749, 761-762, (2006).
62332 Phil 833 (1996).
63 Id. at 843.
64 G.R. No. 181913, March 5, 2010, 614 SCRA 342.
65 Id. at 350-351.
66 Rasonable v. NLRC, 324 Phil 191, 200 (1996).
67 Id.
68 St. Louis College of Tuguegarao v. NLRC, 257 Phil 1008 (1989), citing East Asiatic Co., Ltd. v. Court of
Industrial Relations, 148-B Phil 401, 429 (1971).
69 Norkis Trading Co., Inc. v. NLRC, 504 Phil 709, 719-720 (2005).