ELMER LOPEZ, Petitioner, vs. KEPPEL BANK PHILIPPINES, INC., MANUEL BOSANO III and STEFAN TONG WAI MUN, Respondents. D E C I S I O N BRION, J .: We resolve the present petition for review on certiorari 1 seeking the nullification of the decision 2 and the resolution 3 of the Court of Appeals (CA), dated December 19, 2006 and February 7, 2007, respectively, rendered in CA-G.R. CEB-SP. No. 01754. The Antecedents The facts, as set out in the assailed CA decision, are summarized below. Petitioner Elmer Lopez was the Branch Manager of the respondent Keppel Bank Philippines, Inc. (bank) in Iloilo City. Allegedly, through his efforts, Hertz Exclusive Cars, Inc. (Hertz) became a client of the bank. By notice dated August 12, 2003, 4 the bank asked Lopez to explain in writing why he should not be disciplined for issuing, without authority, two purchase orders (POs) for the Hertz account amounting to a total of P6,493,000.00, representing the purchase price of 13 Suzuki Bravo and two Nissan Exalta vehicles. Lopez submitted his written explanation on the same day, 5 but the bank refused to give it credit. Through respondents Manuel Bosano III (Vice-President and Head of Retail Banking Division/Consumer Banking Division) and Stefan Tong Wai Mun (Vice-President/Comptroller), the bank terminated Lopezs employment effective immediately. 6
Lopez asked the bank for reconsideration. 7 In response, the bank, through the respondent officers, met with Lopez at its headquarters in Cubao, Quezon City on September 25, 2003. Lopez came with his lawyer (Atty. Edmundo V. Buensuceso) and a military man (one Col. Flordeliza). After the meeting, the bank found no reason to reconsider and reiterated its decision to dismiss Lopez. 8
Lopez filed a complaint for illegal dismissal and money claims against the bank, Bosano and Tong. The Compulsory Arbitration Proceedings Lopez alleged before the labor arbiter that he issued the POs as part of his strategy to enhance the banks business, in line with his duty as branch manager to promote the growth of the bank. He claimed that the bank honored the first PO for P1.8M from which the bank derived an income of P142,000.00. He added that the second PO did not materialize because Mr. James Puyat Concepcion, a Hertz incorporator and director who opened the Hertz account, stopped depositing with the bank because of the negative credit rating he received from the banks credit committee. Allegedly, the committee discovered that James Puyat Concepcion had several pending court cases. For its part, the bank denied approving the first PO, arguing that Lopez did not have the authority to issue the POs for the Hertz account as there was a standing advice that no Hertz loan application was to be approved. It stressed that Lopez committed a serious violation of company rules when he issued the POs. In a decision dated April 28, 2004, 9 Labor Arbiter Cesar D. Sideo ruled that Lopez was illegally dismissed. Accordingly, the labor arbiter ordered Lopezs immediate reinstatement, and awarded him backwages of P392,000.00, moral and exemplary damages of P8M, and P550,000.00 the purchase price of a Toyota Revo which Lopez allegedly brought over from his stint with Global Bank (now Metrobank). The labor arbiter found that contrary to the banks claim, the evidence showed that Lopez had been issuing POs which the bank had paid, including the first of the two POs that led to his dismissal. 10
On appeal by the bank, the National Labor Relations Commission (NLRC) rendered a decision on October 11, 2005 11 reversing the labor arbiters ruling. It dismissed the complaint for lack of merit. The NLRC found merit in the banks submission that by issuing the questioned POs without authority and against the banks express orders, Lopez thereby committed a willful disobedience against his superiors a sufficient basis for the bank to lose its trust and confidence in him as branch manager. It thus found that Lopez had been dismissed for cause after the observance of due process. Lopez moved for reconsideration, but the NLRC denied the motion in its resolution of January 25, 2006. 12 Lopez sought relief from the CA through a petition for certiorari, charging the NLRC with grave abuse of discretion for setting aside the labor arbiters decision. The CA Decision On December 19, 2006, the CA rendered its now assailed decision, 13 denying the petition and affirming the October 11, 2005 decision of the NLRC. It fully agreed with the NLRC finding that Lopez had not been illegally dismissed. Lopez moved for, but failed to obtain, a reconsideration of the CA decision. The CA denied the motion on February 7, 2007. 14
The Case for Lopez Through the present petition, 15 the reply to the banks comment dated February 11, 2008, 16 and the memorandum dated September 22, 2008, 17 Lopez entreats the Court to nullify the CA decision, contending that the CA erred in: (1) not ruling that the banks appeal with the NLRC should have been dismissed on the ground of non-perfection; and (2) affirming the decision of the NLRC that he was dismissed for a just cause (loss of trust and confidence) and that he was afforded due process. Lopez argues, with respect to the first assignment of error, that the bank failed to comply with Sections 4 and 6, Rule VI, of the 2002 Rules of Procedure of the NLRC. 18 He points out that the bank did not file a notice of appeal together with its memorandum of appeal, which in turn was not supported by a certificate of non- forum shopping; and neither did the bank furnish him, as appellee, a certified copy of the appeal bond. On the substantive aspect of the case, Lopez posits that the bank failed to justify his dismissal on the ground of loss of trust and confidence. He insists that, as branch manager, he had the authority to issue POs as in fact he issued several of them in the past, which POs were honored and paid by the bank. The labor arbiter properly relied on the past transactions in his decision. These included, he reiterates, the first PO for the Hertz account which was paid by the bank on July 18, 2003, a transaction where the bank even earned a substantial income (P142,000.00). He maintains that the bank failed to substantiate its position that he was not authorized to issue the POs. He adds that the banks claim that his issuance of the POs exposed the bank to financial loss is a lame excuse to justify the termination of his employment. Lopez argues that his dismissal was a mere afterthought on the part of the bank management, particularly Bosano, to cover up its embarrassment when he (Lopez) made inquiries and discovered that Hertzs James Puyat Concepcion had no pending court cases and was therefore credit worthy. He adds that assuming that he did not have the authority to issue POs, still, he cannot be held guilty of willful disobedience; even if he had been guilty, dismissal was a very harsh penalty. Finally, Lopez submits that the bank failed to accord him due process because the bank did not give him the opportunity to prepare for his defense. He points out that his written explanation (dated August 12, 2003) 19 preceded the banks letter (of the same date) 20 that required him to explain why he issued the POs in question. Lopez contends in this regard that on August 12, 2003, he went to Bosanos office in Quezon City all the way from Iloilo City and there, he was cornered by Bosano who verbally instructed him to immediately write down his explanation even before he was served with the banks August 12, 2003 letter. He maintains that Bosanos preemptive move deprived him of the opportunity to secure the services of a counsel. While Lopez believes his dismissal to be illegal, he does not seek reinstatement due to the antagonism that has developed between him, and the bank and its officers, due to the present case. He only asks for separation pay of one month pay for every year of service, full backwages, allowances and other benefits. Additionally, he prays for moral and exemplary damages, as well as attorneys fees, to compensate him for a dismissal that was attended by bad faith and effected in a wanton, oppressive and malevolent manner. The Case for the Bank and its Officers Through its comment to the petition 21 and memorandum, 22 the bank submits that the CA committed no reversible error in denying Lopezs petition for certiorari, and in affirming the ruling of the NLRC that Lopez was dismissed for a just cause and after due process. 2
The bank is puzzled why Lopez is standing firm on his position that he did nothing wrong when he issued the questioned POs despite the express directive not to proceed with the Hertz loan application unless its adverse credit investigation report is explained to the banks credit committee. It posits that no bank would gamble to maintain as branch manager a person who dares to supplant a major decision of the banks top leadership with his personal decision. It argues that in this situation, the law (Labor Code) provides protection to the employer through its management prerogative rights and the right to dismiss employees on just and valid grounds. The bank refutes Lopezs contention that there was no willful disobedience that warranted his dismissal. It points out that there was an order for him not to proceed with the Hertz loan application. The order was very reasonable as it is the standard policy of every bank to conduct an investigation on the credit worthiness of any loan applicant. Since it appeared from the investigation of its credit committee that James Puyat Concepcion of Hertz had various court cases, it was only proper for the bank to put on hold the loan application of Hertz until the adverse finding could be cleared. It insists that Lopez willfully and knowingly disobeyed this order. Further, the bank questions Lopezs submission, through a supplemental addendum to his position paper, of evidence that it honored and paid POs issued by Lopez in the past. It maintains that it was not furnished a copy of this submission; hence, it was unable to controvert this evidence. On the procedural due process issue, the bank denies Lopezs allegation that he was not given the opportunity to defend himself. It points out that both the NLRC and the CA confirmed that Lopez was not deprived the opportunity to be heard; the opportunity commenced with: (1) the notice for him to explain his side regarding his unauthorized issuance of POs; (2) the notice of his termination from employment; and (3) the hearing called in response to his motion for reconsideration where he was assisted by his lawyer and his soldier friend. The Courts Ruling The procedural issue Lopez faults the CA for not ruling that the banks appeal to the NLRC should have been dismissed for non-perfection. He argues that no notice of appeal accompanied the memorandum of appeal; neither was there a certificate of non-forum shopping nor any copy furnished to him of the certified true copy of the appeal bond. The procedural question is a non-issue.1wphi1 Lopez did not raise it before the CA; in fact, he challenged the NLRC decision of October 11, 2005 23 on its merits and not on its form. We, therefore, see no need to further discuss this argument. The merits of the case On the substantive aspect of the case, we note that Lopez was dismissed from the service by reason of loss of trust and confidence, a just cause for an employees dismissal under the law. 24 Lopez insists though that the act which triggered the dismissal action does not justify his separation from the service. Is Lopez liable for loss of trust and confidence for issuing the two disputed POs? The right of an employer to freely select or discharge his employee is a recognized prerogative of management; an employer cannot be compelled to continue employing one who has been guilty of acts inimical to its interests. When this happens, the employer can dismiss the employee for loss of confidence. 25
At the same time, loss of confidence as a just cause of dismissal was never intended to provide employers with a blank check for terminating employment. Loss of confidence should ideally apply only (1) to cases involving employees occupying positions of trust and confidence, or (2) to situations where the employee is routinely charged with the care and custody of the employers money or property. To the first class belong managerial employees, i.e., those vested with the powers and prerogatives to lay down management polices and/or to hire, transfer, suspend, lay- off, recall, discharge, assign or discipline employees, or effectively recommend such managerial actions. To the second class belong cashiers, auditors, property custodians, or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. 26
As branch manager, Lopez clearly occupies a "position of trust." His hold on his position and his stay in the service depend on the employers trust and confidence in him and on his managerial services. 27 According to the bank, Lopez betrayed this trust and confidence when he issued the subject POs without authority and despite the express directive to put the clients application on hold. In response, Lopez insists that he had sufficient authority to act as he did, as this authority is inherent in his position as bank manager. He points to his record in the past when he issued POs which were honored and paid by the bank and which constituted the arbiters "overwhelming evidence" 28 in support of the finding that "complainants dismissal from work was without just cause, hence, illegal." 29
We disagree with Lopezs contention. Despite evidence of his past exercise of authority (as found by the labor arbiter), we cannot disregard evidence showing that in August 2003, the bank specifically instructed Lopez not to proceed with the Hertz loan application because of the negative credit rating issued by the banks credit committee. We find it undisputed that Lopez processed the loan despite the adverse credit rating. In fact, he admitted that he overlooked the "control aspects" of the transaction as far as the bank was concerned because of his eagerness to get a bigger share of the market. 30
Lopezs good intentions, assuming them to be true, are beside the point for, ultimately, what comes out is his defiance of a direct order of the bank on a matter of business judgment. He went over the heads of the bank officers, including the credit committee, when, based on inquiries he made on his own regarding the credit worthiness of James Puyat Concepcion, he simply proceeded to act on the basis of his own judgment. Evident in his written explanation 31 was his failure to inform the credit committee of his own efforts to check on the committees adverse findings against Hertz and his independent action based solely on his own authority. As a bank official, the petitioner must have been aware that it is basic in every sound management that people under ones supervision and direction are bound to follow instructions or to inform their superior of what is going on in their respective areas of concern, especially regarding matters of vital interest to the enterprise. Under these facts, we find it undisputed that Lopez disobeyed the banks directive to put the Hertz loan application on hold, and did not wait until its negative credit rating was cleared before proceeding to act. That he might have been proven right is immaterial. Neither does the submission that the bank honored and paid the first PO and even realized a profit from the transaction, mitigate the gravity of Lopezs defiance of the directive of higher authority on a business judgment. What appears clear is that the bank cannot in the future trust the petitioner as a manager who would follow directives from higher authorities on business policy and directions. The bank can be placed at risk if this kind of managerial attitude will be repeated, especially if it becomes an accepted rule among lower managers. In Nokom v. NLRC, 32 we reiterated the guidelines for the application of loss of confidence as follows: (1) loss of confidence, should not be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) it must be genuine, not a mere afterthought to justify an earlier action taken in bad faith.1avvphil Under the circumstances of this case, we are convinced that the bank was justified in terminating Lopezs employment by reason of loss of trust and confidence. He admitted issuing the two POs, claiming merely that he had the requisite authority. He could not present any proof in this regard, however, except to say that it was part of his inherent duty as bank manager. He also claimed that the bank acquiesced to the issuance of the POs as it paid the first PO and the POs he issued in the past. This submission flies in the face of the banks directive for him not to proceed unless matters are cleared with the banks credit committee. The bank had a genuine concern over the issue as it found through its credit committee that Hertz was a credit risk. Whether the credit committee was correct or not is immaterial as the banks direct order left Lopez without any authority to clear the loan application on his own. After this defiance, we cannot blame the bank for losing its confidence in Lopez and in separating him from the service. The due process issue As the NLRC and the CA did, we find Lopez to have been afforded due process when he was dismissed. He was given the required notices. More importantly, he was actually given the opportunity to be heard; when he moved for reconsideration of the banks decision to terminate his employment, it scheduled a hearing where he appeared together with his lawyer and a military man. This was an opportunity to be heard that the law recognizes. In fine, we find no merit in the petition. WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs against petitioner Elmer Lopez. G.R. No. 169260 March 23, 2011 3
SANDEN AIRCON PHILIPPINES and ANTONIO ANG, Petitioners, vs. LORESSA P. ROSALES, Respondent. D E C I S I O N DEL CASTILLO, J .: An employer has the discretion to dismiss an employee for loss of trust and confidence but the former may not use the same to cloak an illegal dismissal. This Petition for Review on Certiorari 1 assails the Decision 2 dated May 24, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 85698, which granted the petition for certiorari and reversed and set aside the Resolution 3 dated November 28, 2003 of the National Labor Relations Commission (NLRC) in NLRC CASE No. RAB-IV-9- 9330-97-L (NLRC NCR CA No. 016826-98) and reinstated the Resolution 4 dated November 29, 2000 of the NLRC. Also assailed is the Resolution 5 dated August 1, 2005 denying the Motion for Reconsideration Factual Antecedents Sanden Aircon Philippines (Sanden) is a corporation engaged in the business of manufacturing, assembling, and fabricating automotive air-conditioning systems. In August 1992, Sanden employed Loressa P. Rosales (Loressa) as Management Information System (MIS) Department Secretary. On December 26, 1996, she was promoted as Data Custodian and Coordinator. As such, Loressa had access to all computer programs and marketing computer data, including the Delivery Receipt Transaction files of Sanden. The Finance Department based its billing and collection activities on the marketing delivery receipt transactions. Loressas functions and authority include opening, editing and copying files in Sandens computers. She was also charged with the duty of creating back-up copies of all files under her custody. For this purpose, she can request all computer users at a particular time to log out or exit from the system. On May 16, 1997, Sanden discovered that the marketing delivery receipt transactions computer files were missing. The Internal Auditing Department, through its Audit Officer, Ernesto M. Bayubay (Ernesto), immediately sent a memorandum 6
dated May 17, 1997 to Garrick L. Ang (Garrick), the MIS Manager, requesting that a technical investigation be conducted. On May 19, 1997, Garrick issued a memorandum 7 enumerating the findings of the MIS Department, the pertinent portions of which read: This is in response on [sic] your request for a technical investigation regarding the missing Marketing Delivery Receipt (DR) transactions filed inside our computer system. The incident happened at [sic] the 16 of May 1997 12:35 noon in which we discovered a data corruption in the Marketing DR transactions file wherein all the data were missing. We immediately conducted an investigation of the incident and found out the following: 1. Before the incident, [the] Marketing Staff are still using the said file until 12:00 noon [when they] were instructed by the Data Custodian (Ms. Loressa Rosales) to log out from the system because a back-up was to be conducted. The back-up activities never took place for [unknown reasons]; 2. We dont have an updated back up on the mentioned file which was the responsibility of the Data Custodian, the last back up of the file was [conducted] on 10 of May 1997. 3. The incident can only happen when only one user [was] using the file and after the incident we immediately look[ed] into the Server Manager, a security auditing tool of the system, and found out that Ms. Loressa Rosales was the only one log[ged] in on the system at 12:05 noon to 12:21 noon with 16 minutes of usage time as witnesse[d] by many MIS personnel including one audit officer. 4. The Data Custodian [has] all the rights of Add, Edit, Delete on all the files found in the system. 5. So based on the facts that we have gathered it is highly probable that Ms. Loressa Rosales was the culprit in the said incident. On June 26, 1997, Atty. Reynaldo B. Destura (Atty. Reynaldo), the Personnel and Administrative Services Manager sent a letter 8 to Loressa charging her with data sabotage and absences without leave (AWOL). She was given 24 hours to explain her side. On July 2, 1997, Loressa submitted her letter 9 to Atty. Reynaldo where she vehemently denied the allegations of data sabotage. According to her, only a computer programmer equipped with the necessary expertise and not a mere data custodian like her would be capable of such an act. As to the charge of incurring absences without leave, she challenged Sanden to specify the dates and circumstances of her alleged AWOL. In a memorandum 10 dated July 3, 1997, Atty. Reynaldo scheduled the administrative investigation on the charge of "data sabotage" in the afternoon of the next day. The investigation pushed through as scheduled. On July 17, 1997, the husband of Loressa received a Notice 11 of Disciplinary Action from Sanden notifying Loressa that management is terminating Loressas employment effective upon receipt of the said communication. The reason cited by Sanden was the loss of trust on her capability to continue as its Coordinator and Data Custodian. Sanden indicated in the said letter that based on all the documents and written testimonies gathered during the investigation, Loressa caused the deliberate sabotage of the marketing data involving the Delivery Receipts. On September 9, 1997, Loressa filed a complaint 12 for illegal dismissal with a prayer for the payment of 13th month pay, attorneys fees and other benefits. In her position paper, 13 Loressa alleged that no evidence was presented during the investigation conducted by Sanden to prove that she indeed committed "data sabotage." She claimed that she was singled out as the culprit based on mere suspicion unsupported by any testimonial or documentary evidence. The Delivery Receipts, which Sanden claims to have been deleted, were not presented during the investigation process. Moreover, there were no witnesses presented who pointed to Loressa as the one who actually committed the "data sabotage." On the other hand, in Sandens position paper, 14 it alleged that at around noon of May 16, 1997, Loressa requested the Marketing Staff to log out or exit from the computer system because she would create a backup of the Marketing Delivery Receipt Transaction files. At that time, some members of the Marketing Staff were still using and encoding additional data but as requested, all of them logged out from the network. The Server Manager showed that from 12:05 p.m. to 12:21 p.m., the only computer logged in was that of Loressa. This is precisely the period when the deletion of the Marketing Delivery Receipt Transaction files occurred. Ruling of the Labor Arbiter On May 28, 1998, Labor Arbiter Nieves De Castro rendered a Decision 15 finding that Sanden is guilty of illegal dismissal. She ruled that there exists no justifiable basis for Sandens act of terminating the services of Loressa. Nowhere in the records can be found evidence, documentary or otherwise (i) that will directly point to Loressas having committed "data sabotage" or (ii) that she absented herself without leave. The Labor Arbiter also ruled that since animosity between Sanden and Loressa already exists, the award of separation pay in lieu of reinstatement is in order and in accord with industrial peace and harmony. The dispositive portion of the Labor Arbiters Decision reads: WHEREFORE, premises considered, judgment is hereby rendered, declaring the dismissal of the complainant illegal and respondent Sanden Aircon Philippines, Inc. is ordered: 1. To pay complainant backwages from the time of [her] dismissal up to the date of promulgation of this decision[;] 2. To pay complainant separation pay of one (1) month for every year of service [from] the date of employment up to the date of promulgation of this decision[;] 3. To pay attorneys fees of 10% of the total award[; and] 4. [To have its] financial analyst x x x compute the monetary award[s which form] part of this decision. 4
All other claims are dismissed for lack of merit. SO ORDERED. 16
Ruling of the National Labor Relations Commission Sanden sought recourse to the NLRC by submitting its Notice 17 of Appeal and Memorandum on Appeal on September 28, 1998. On November 29, 2000, the NLRC issued a Resolution 18 affirming the May 28, 1998 Decision of the Labor Arbiter with the modification that the computation of the amount of separation pay to be awarded be reckoned from December 26, 1996 which was the date when Loressa was hired by Sanden as Data Custodian and Coordinator. The NLRC found that Loressa was paid separation pay corresponding to the period beginning August 1992 (the date she was hired) up to December 26, 1996. Sanden filed a Motion for Reconsideration 19 of the NLRC Resolution. On November 28, 2003, the NLRC issued another Resolution 20 which reversed its November 29, 2000 Resolution and dismissed the complaint for lack of merit. Ruling of the Court of Appeals Aggrieved, Loressa filed with the CA a petition for certiorari. 21 The CA through a Resolution 22 dated August 19, 2004, directed her to submit within five days from receipt of said resolution copies of Sandens appeal memorandum and motion for reconsideration of the November 29, 2000 resolution which were mentioned in her petition but were not attached thereto. On September 8, 2004, Loressa submitted the documents as directed by the CA. 23 On September 27, 2004, the CA issued its Resolution 24 noting the compliance of Loressa and also directing Sanden to file its comment. On October 18, 2004, Sanden filed a Motion for Extension of Time to File Comment. 25 This was granted by the CA through its Resolution 26 dated November 3, 2004. On November 5, 2004, Sanden filed its comment. 27
On May 24, 2005, the CA granted the petition and reversed and set aside the November 28, 2003 Resolution of the NLRC and reinstated the latters November 29, 2000 Resolution. Petitioners moved for reconsideration, 28 but to no avail. Hence, this appeal anchored on the following grounds: Issues THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER SANDEN FAILED TO SUBSTANTIATE RESPONDENT ROSALESS DISMISSAL, CONSIDERING THAT: A. THE ASSERTION MADE BY THE COURT OF APPEALS AS TO THE POSSIBLE EXISTENCE OF A PARALLEL SET OF DOCUMENTS CORRESPONDING TO THE DELETED FILES, AS WELL AS THE POSSIBILITY OF A GLITCH IN THE COMPUTER SYSTEM WHICH CAUSED THE DELETION OF THE SUBJECT FILES, ARE HIGHLY SPECULATIVE AND CANNOT STAND AGAINST THE EVIDENCE ON RECORD. B. SIMILARLY, THE CLAIM THAT THE DELETION OF THE SUBJECT FILES COULD HAVE OCCURRED AT ANY POINT IN TIME IS PURELY SPECULATIVE AND CANNOT STAND AGAINST THE EVIDENCE ON RECORD. C. LIKEWISE, THE CLAIM THAT ANOTHER PERSON COULD HAVE CAUSED THE DELETION OF THE SUBJECT FILES CONSIDERING THAT RESPONDENT ROSALES COULD NOT POSSIBLY HAVE BEEN THE SOLE PERSON WITH ACCESS THERETO IS PURELY SPECULATIVE AND CANNOT STAND AGAINST THE EVIDENCE ON RECORD. D. HENCE, THERE IS MORE THAN SUFFICIENT SUBSTANTIAL EVIDENCE WARRANTING THE VALID DISMISSAL OF RESPONDENT ROSALES. 29
These matters boil down to a single issue of whether Sanden legally terminated Loressas employment on the ground of willful breach of trust and confidence as Coordinator and Data Custodian. Petitioners Arguments Petitioners contend that Loressa was vested with the delicate position of safekeeping the records of Sanden. She was charged with the duty of creating back up files so that Sanden may be fully protected in any eventuality. Loressas act, therefore, of maliciously deleting the Marketing Delivery Receipt Transaction files is a valid ground to dismiss her from her employment on the ground of loss of trust. It is betrayal of the highest order when the very custodian of the records deleted the same. According to petitioners, it was clearly shown by evidence that before the deletion of said files, the Marketing Staff were still using the files until noon when they were instructed by Loressa to log out from the system because a back up was to be conducted. The back up activities never took place and worse the data were deleted from the system. Petitioners emphasized that as Data Custodian, Loressa has capability to add, edit, or delete all the files in the system of Sanden. Petitioners also aver that from the time the data sabotage occurred on May 16, 1997 to May 30, 1997, Loressa went on AWOL for at least five times. Respondents Arguments Loressa insists that Sanden failed to provide sufficient evidence which would clearly point to her as the one who erased the files. For loss of trust and confidence to be a valid ground for dismissal of an employee, it must be founded on clearly established facts. In this case, the fact that Loressas computer was the only one logged on during the period that the alleged deletion of data occurred does not mean that she was the one who deleted the missing files. Loressa maintains that Sanden failed to substantially prove her direct involvement in the alleged deletion of the files except for a mere suspicion that it was she who deleted the data in question. As to the charge of her absences without leave, Loressa claims that they were not substantiated by any documentary evidence or testimony of a witness. As such, her dismissal from employment is without any legal ground. Our Ruling The petition is bereft of merit. Article 282 of the Labor Code states: ART. 282. TERMINATION BY EMPLOYER. An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing. Article 282(c) of the Labor Code prescribes two separate and distinct grounds for termination of employment, namely: (1) fraud or (2) willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. Settled is the rule that under Article 282(c), the breach of trust must be willful. Ordinary breach will not suffice. "A breach is willful if it is done intentionally and 5
knowingly without any justifiable excuse, as distinguished from an act done carelessly, thoughtlessly or inadvertently." 30
"As firmly entrenched in our jurisprudence, loss of trust and confidence as a just cause for termination of employment is premised on the fact that an employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected." 31 "The betrayal of this trust is the essence of the offense for which an employee is penalized." 32
Sanden has the burden of proof to prove its allegations. "Unlike in other cases where the complainant has the burden of proof to [prove] its allegations, the burden of establishing facts as bases for an employers loss of confidence in an employee facts which reasonably generate belief by the employer that the employee was connected with some misconduct and the nature of his participation therein is such as to render him unworthy of trust and confidence demanded of his position is on the employer." 33
While it is true that loss of trust and confidence is one of the just causes for termination, such loss of trust and confidence must, however, have some basis. Proof beyond reasonable doubt is not required. It is sufficient that there must only be some basis for such loss of confidence or that there is reasonable ground to believe if not to entertain the moral conviction that the concerned employee is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of trust and confidence demanded by his position. 34
Sanden failed to discharge the burden of proof that the dismissal of Loressa is for a just cause. The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be holding a position of trust and confidence. In this case, we agree that Loressa, who had immediate access to Sandens confidential files, papers and documents, held a position of trust and confidence as Coordinator and Data Custodian of the MIS Department. "The second requisite is that there must be an act that would justify the loss of trust and confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not necessary." 35
Sandens evidence against Loressa fails to meet this standard. Worth noting are the pertinent portions of the Resolution of the NLRC dated November 29, 2000 before it reversed itself, to wit: As correctly found by the Labor Arbiter, nowhere in the records can be found evidence that directly point to complainant as having committed acts of sabotage. Also, during the administrative investigation, the guilt of complainant-appellee was based on mere allegations not supported by documentary evidence nor any factual basis. Even appellants cannot directly pinpoint appellee as the culprit. They were only thinking of her as the one probably responsible thereto, considering that when she used the computer, she told the other users to log out and thereafter, used the computer for 16 minutes, with only 1 minute as usage time. But these allegations would not suffice (sic) termination of employment of appellee. Note that security of tenure is protected by constitutional mandate. The same holds true with AWOL. Appellant failed to prove that complainant- appellee went on absence without official leave. The appellant should have at least presented the daily time record of appellee to prove that the latter was absent. Mere allegations again would not suffice. 36
During the Administrative Investigation conducted by Sanden, there was no evidence presented to prove that Loressa indeed committed "data sabotage." The Minutes 37 of the Discussion with respect to the May 16, 1997 data only made mention that "Bobots theory is that it was zapped, meaning permanently deleted." It is therefore a mere theory with no apparent factual basis, testimonial or documentary evidence, that would establish the guilt of Loressa for the charges of "data sabotage." On the other hand, Loressa was able to provide documentary evidence to show that Sandens computer system was experiencing some problems even before May 16, 1997. The March 22, 1996 Report 38 of the System Administrator, stated, viz: Marketing could not use their system due to error encountered such as an abnormal program termination (problem in pairing). Warehouse A is affected by this. o.e. in updating marketing inventory qty. (DR Transaction) 39
x x x x Furthermore, in the entry dated March 27, 1996, it was indicated: Restored Marketing Data from March 23 back-up. Files restored: 1. DR HEAD 2. DR ITEM Reindexed both. *lacking data shall be reentered 3/25/95 & 3/26/95 transactions 40
The following entries as reported by the System Administrator clearly show that the problem of missing data already existed as early as 1995, when Loressa was still an MIS Secretary and was not yet tasked to back up the Marketing Delivery Receipt Transaction files.1awphil We also fully agree with the CA when it ruled that: On the contrary, we find the records bereft of any substantial evidence to show that the petitioner was indeed directly responsible for the deletion of the subject files or the alleged data sabotage. It is not difficult to see that the imputed guilt of the petitioner was based on mere allegations and theories held by private respondents as possible causes for the deletion of the subject files. In the first place, if the subject delivery receipt files were as crucial to the operations of the company as what the private respondents claimed them to be, then sound business judgment would dictate that it keep a record or paper trail of all its delivery transactions which could still be made available to the Finance Department for its billing and collection activities. It is common knowledge that no computer system is absolutely crash proof" or "bug-free" and that a total obliteration of a particular computer file could be attributed to so many other causes other than the deliberate deletion of the same. In the second place, the deletion of the subject files could have occurred at any one point or time and not necessarily during the time at which the petitioner was the only registered user in the system. In this case, the private respondents failed to determine with absolute certainty and to show proof of the exact date or time when it occurred. Third and last, while it may be true that the petitioner had access to the subject files as well as the code to delete the same, it is hardly believable that she would be the sole person in the company who could access the same. It is noted that the petitioner worked under the supervision of an MIS Manager as well as other company officers, who in all probability also had access to the same files and codes available to the petitioner. x x x 41
Having shown that Sanden failed in discharging the burden of proof that the dismissal of Loressa is for a just cause, we have no other recourse but to declare that she was illegally dismissed based on the ground of loss of trust and confidence. This is in consonance with the constitutional guarantee of security of tenure. WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 85698 dated May 24, 2005 and its Resolution dated August 1, 2005 are AFFIRMED. G.R. No. 164662 February 18, 2013 MARIA LOURDES C. DE JESUS, Petitioner, vs. HON. RAUL T. AQUINO, PRESIDING COMMISSIONER, NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, QUEZON CITY, and SUPERSONIC SERVICES, INC., Respondents. x - - - - - - - - - - - - - - - - - - - - - - - x G.R. No. 165787 6
SUPERSONIC SERVICES, INC., Petitioner vs. MARIA LOURDES C. DE JESUS, Respondent. D E C I S I O N BERSAMIN, J .: The dismissal of an employee for a just or authorized cause is valid despite the employer's non-observance of the due process of law the Labor Code has guaranteed to the employee. The dismissal is effective against the employee subject to the payment by the employer of an indemnity. Under review on certiorariis the July 23, 2004 Decision promulgated in C.A.-G.R. SP No. 81798 entitled Maria Lourdes C. De Jesus v. Hon. Raul T. Aquino, Presiding Commissioner, NLRC, Second Division, Quezon City, and Supersonic Services, Inc., 1 whereby the Court of Appeals (CA) affirmed the validity of the dismissal from her employment of Maria Lourdes C. De Jesus(petitionerin G.R. No. 164622), but directedher employer, Supersonic Services, Inc. (Supersonic), to pay her full backwages from the time her employment was terminated until the finality of the decision because of the failure of Supersonic to comply with the two-written notice rule, citing the rulinginSerrano v. National Labor Relations Commission. 2
Antecedents The antecedent facts, as summarized by the CA, follow: On February 20, 2002, petitioner Ma. Lourdes De Jesus (De Jesus for brevity) filed with the Labor Arbiter a complaint for illegal dismissal against private respondents Supersonic Services Inc., (Supersonic for brevity), Pakistan Airlines, Gil Puyat, Jr. and Divina Abad Santos praying for the payment of separation pay, full backwages, moral and exemplary damages, etc. De Jesus alleged that: she was employed by Supersonic since February 1976 until her illegal dismissal of March 15, 2001; from 1976 to 1992, she held the position of eservation staff, and from 1992 until her illegal dismissal on March 15, 2001, she held the position of Sales Promotion Officer where she solicited clients for Supersonic and sold plane tickets to various travel agencies on credit; on March 12, 2001, she had an emergency hysterectomy operation preceded by continuous bleeding; she stayed at the Makati Medical Center for three (3) days and applied for a sixty-(60) day leave in the meantime; on June 1, 2001, she went to Supersonic and found the drawers of her desk opened and her personal belongings packed, without her knowledge and consent; while there, Divina Abad Santos (Santos for brevity), the companys general manager, asked her to sign a promissory note and directed her secretary, Cora Malubay (Malubay for brevity) not to allow her to leave unless she execute a promissory note; she was later forced to execute a promissory note which she merely copied from the draft prepared by Santos and Malubay; she was also forced to indorse to Supersonic her SSS check in the amount of P25,000.00 which represents her benefits from the hysterectomy operation; there was no notice and hearing nor any opportunity given her to explain her side prior to the termination of her employment; Supersonic even filed a case for Estafa against her for her alleged failure to remit collections despite the fact that she had completely remitted all her collections; and the termination was done in bad faith and in violation of due process. Supersonic countered that: as Sales Promotion Officer, De Jesus was fully authorized to solicit clients and receive payments for and in its behalf, and as such, she occupied a highly confidential and financially sensitive position in the company; De Jesus was able to solicit several ticket purchases for Pakistan International Airlines (PIA) routed from Manila to various destinations abroad and received all payments for the PIA tickets in its behalf; for the period starting May 30, 2000 until September 28, 2000, De Jesus issued PIA tickets to Monaliza Placement Agency, a client under her special solicitation and account, in the amount of U.S.$15,085.00; on January 24, 2001, the companys general manager sent a memorandum to De Jesus informing her of the official endorsement of collectibles from clients under her account; in March 2001, another memorandum was issued to De Jesus reminding her to collect payments of accounts guaranteed by her and which had been past due since the year 2000; based on the company records, an outstanding balance of U.S.$36,168.39 accumulated under the account of De Jesus; after verifications with its clients, it discovered that the amount of U.S.$36, 168.39 were already paid to De Jesus but this was not turned over and duly accounted for by her; hence, another memorandum was issued to De Jesus directing her to explain in writing why she should not be dismissed for cause for failure to account for the total amount of U.S.$36, 168.39; De Jesus was informed that her failure to explain in writing shall be construed that she misappropriated said amount for her own use and benefit to the damage of the company; De Jesus was likewise verbally notified of the companys intention to dismiss her for cause; after due investigation and confrontation, De Jesus admitted that she received the U.S.$36,168.39 from their clients and even executed a promissory note in her own handwriting acknowledging her obligation; she was fully aware of her dismissal and even obligated herself to offset her obligation with any amount she would receive from her retirement; when De Jesus failed to comply with her promise to settle her obligation, a demand letter was sent to her; because of her persistent failure to settle the unremitted collections, it was constrained to suspend her as a precautionary measure and to protect its interests; despite demands, De Jesus failed to fulfill her promise, hence, a criminal case for estafa was filed against her; and in retaliation to the criminal case filed against her, she filed this illegal dismissal case. 3
After due proceedings, on October 30, 2002, the Labor Arbiterruled against De Jesus, 4 declaring her dismissal to be for just cause and finding that she had been accorded due process of law. Aggrieved, De Jesusappealed to the National Labor Relations Commission (NLRC), insisting that she had not been afforded the opportunity to explain her side. On July 31, 2003, however, the NLRC rendered its Resolution, 5 affirming the Labor Arbiters Decision and dismissing De Jesus appeal for its lack of merit, stating: Records show that pursuant to a Memorandum dated May 12, 2001, complainant was required to explain in writing why she should not be dismissed from employment for her failure to account for the cash collections in her custody (Records, p. 37). In a letter dated June 1, 2001, complainant acknowledged her failure to effect a turn-over of the amount of US$36,168.39 to the respondent (Records, p. 40). More than this, she offered no explanation for her failure to immediately account for her collections. Further, her allegation of duress may not be accorded credence, there being no evidence as to the circumstances under which her consent was allegedly vitiated. Having been given the opportunity to explain her side, complainant may not successfully claim that she was denied due process. Further, her admission and other related evidence, particularly the finding of a prima facie case for estafa against her, and corroborative statements from respondents client, sufficiently controvert complainants assertion that no just cause existed for the dismissal. WHEREFORE, premises considered, the decision under review is AFFIRMED, and complainants appeal, DISMISSED, for lack of merit. SO ORDERED. The NLRC denied the Motion for Reconsideration filed by De Jesus on October 30, 2003. 6
De Jesusbrought a petition for certiorari to the CA, charging the NLRC with committing grave abuse of discretion amounting to lack or excess of jurisdiction in finding that she had not been denied due process; and in finding that her dismissal had been for just cause. On July 23, 2004, the CA promulgated its assailed decision, 7 relevantly stating as follows: The petition is partly meritorious. In termination of employment based on just cause , it is not enough that the employee is guilty of misfeasance towards his employer, or that his continuance in service is patently inimical to the employers interest. The law requires the employer to furnish the employee concerned with two written notices one, specifying the ground or grounds for termination and giving said employee reasonable opportunity within which to explain his side, and another, indicating that upon due consideration of all the circumstances, rounds have been established to justify his termination. In addition to this, a hearing or conference is also required, whereby the employee may present evidence to rebut the accusations against him. There appears to be no dispute upon the fact that De Jesus failed to remit and account for some of her collections. This she admitted and explained in her letters dated April 5, 2001 and May 15, 2001 to Santos, the companys general manager. Without totally disregarding her allegations of duress in executing the promissory note, the facts disclose therein also coincide with the fact that De Jesus was somehow remiss in her duties. Considering that she occupied a confidential and sensitive position in the company, the circumstances presented fairly justified her termination from employment based on just cause. De Jesus failure to fully account her collections is sufficient justification for the company to lose its trust and confidence in her. Loss of trust and confidence as a ground for dismissing an employee does not require proof beyond reasonable doubt. It is sufficient if there is "some basis" for such loss of confidence, or if the employer has reasonable grounds to believe that the employee concerned is responsible for the misconduct, as to be unworthy of the trust and confidence demanded by his position. 7
Nonetheless, while this Court is inclined to rule that De Jesus dismissal was for just cause, the manner by which the same was effected does not comply with the procedure outlined under the Labor Code and as enunciated in the landmark case of Serrano vs. NLRC. The evidence on record is bereft of any indicia that the two written notices were furnished to De Jesus prior to her dismissal. The various memoranda given her were not the same notices required by law, as they were mere internal correspondence intended to remind De Jesus of her outstanding accountabilities to the company. Assuming for the sake of argument that the memoranda furnished to De Jesus may have satisfied the minimum requirements of due process, still, the same did not satisfy the notice requirement under the Labor Code because the intention to sever the employees services must be made clear in the notice. Such was not apparent from the memoranda. As the Supreme Court held in Serrano, the violation of the notice requirement is not strictly a denial of due process. This is because such notice is precisely intended to enable the employee not only to prepare himself for the legal battle to protect his tenure of employment, but also to find other means of employment and ease the impact of the loss of his job and, necessarily, his income. Conformably with the doctrine laid down in Serrano vs. NLRC, the dismissal of De Jesus should therefore be struck as ineffectual. WHEREFORE, premises considered, the Resolutions dated July 31, 2003 and October 30, 2003 of the NLRC, Second Division in NLRC NCR 30-02-01058-02 (CA NO. 033714-02) are herebyMODIFIED, in that while the dismissal is hereby held to be valid, the same must declaredineffectual. As a consequence thereof, Supersonic is hereby required to pay petitioner Maria Lourdes De Jesus full backwages from the time her employment was terminated up to the finality of this decision. SO ORDERED. De Jesusappealed by petition for review on certiorari to the Court (G.R. No. 164662), while Supersonic first sought the reconsideration of the Decision in the CA.Upon the denial of its motion for reconsideration on October 21, 2004, Supersonic likewise appealed to the Court by petition for review on certiorari(G.R. No. 165787).Theappeals were consolidated on October 5, 2005. 8
In G.R. No. 164662, De Jesus avers that: I. The Honorable Court of Appeals erred in finding that respondent Supersonic is liable only on the backwages and not for the damages prayed for. II. The Honorable Court of Appeals erred in finding that the dismissal was valid and at the same time, declaring it ineffectual. 9
In G.R. No. 165787,Supersonic ascribes the following errors to the CA, to wit: I. Respondent Court of Appeals committed serious errors which are not in accordance with law and applicable decisions of the Honorable Supreme Court when it concluded that the two-notice requirement has not been complied with when respondent De Jesus was terminated from service. II. Respondent Court of Appeals committed serious errors by concluding that the Serrano Doctrine applies squarely to the facts and legal issues of the present case which are contrary to the law and jurisprudence. III. Serrano Doctrine has already been abandoned in the case of Agabon v. NLRC, which is prevailing and landmark doctrine applicable in the resolution of the present case. IV. Respondent Court of Appeals committed serious errors by disregarding the law and jurisprudence when it awarded damages to private respondent which is excessive and unduly penalized petitioner SSI. 10
Based on the foregoing, thedecisive issues to be passed upon are: (1) Whether or not Supersonic was justified in terminating De Jesus employment; (2) Whether or not Supersonic complied with the two-written notice rule; and (3) Whether or not De Jesus was entitled to full backwages and damages. Ruling We partially grant the petition for review of Supersonic in G.R. No. 165787. Anent the first issue, Supersonic substantially proved that De Jesus had failed to remit and had misappropriated the amounts she had collected in behalf of Supersonic. In that regard, the factual findings of the Labor Arbiter and NLRC on the presence of the just cause for terminating her employment, being already affirmed by the CA, are binding if not conclusive upon this Court. There being no cogent reason to disturb such findings, the dismissal of De Jesus was valid. Article 282 of the Labor Code enumerates the causes by which the employer may validly terminate the employment of the employee, viz: Article 282.Termination by employer. - An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and (e) Other causes analogous to the foregoing. The CA observed that De Jesus had not disputed her failure to remit and account for some of her collections, for, in fact, she herself had expressly admitted her failure to do so through her letters dated April 5, 2001 and May 15, 2001 sent to Supersonics general manager. Thereby, the CA concluded, she defrauded her employer or willfully violated the trust reposed in her by Supersonic. In that regard, the CA rightly observed that proof beyond reasonable doubt of her violation of the trust was not required, for it was sufficient that the employer had "reasonable grounds to believe that the employee concerned is responsible for the misconduct as to be unworthy of the trust and confidence demanded by [her] position." 11
Concerning the second issue, the NLRC and the CA differed from each other, with the CA concluding, unlike the NLRC, that Supersonic did not comply with the two- written notice rule. In the exercise of its equity jurisdiction, then, this Court should now re-evaluate and re-examine the relevant findings. 12
A careful consideration of the records persuades us to affirm the decision of the CA holding that Supersonic had not complied with the twowritten notice rule. It ought to be without dispute that the betrayal of the trust the employer reposed in De Jesus was the essence of the offense for which she was to be validly penalized with the supreme penalty of dismissal. 13 Nevertheless, she was still entitled to due processin order to effectivelysafeguard her security of tenure. The law affording to her due process as an employee imposed on Supersonic as the employer the obligation to send to her two written notices before finally dismissing her. This requirement of two written notices is enunciated in Article 277of the Labor Code, as amended, which relevantly states: Article 277.Miscellaneous provisions.xxx x x x x (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminateda written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. The Secretary of the Department of Labor and Employment may suspend the effects of the termination pending 8
resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off. 14
x x x x and in Section 2 15 and Section7, 16 Rule I, Book VI of the Implementing Rules of the Labor Code. The firstwritten notice would inform her of the particular acts or omissions for which her dismissal was being sought. The second written notice would notify her of the employers decision to dismiss her. But the second written notice must not be made until after she was given a reasonable period after receiving the first written notice within which to answer the charge, and after she was given the ample opportunity to be heard and to defend herself with the assistance of her representative, if she so desired. 17 The requirement was mandatory. 18
Did Supersonic observe due process before dismissing De Jesus? Supersonic contends that it gave the two written notices to De Jesus in the form of the memoranda dated March 26, 2001 and May 12, 2001, to wit: Memorandum dated March 26, 2001 26 March 2001 MEMORANDUM TO : MA LOURDES DE JESUS SALES PROMOTION OFFICER FROM : DIVINA S. ABAD SANTOS SUBJECT : PAST DUE ACCOUNTS We have repeatedly reminded you to collect payment of accounts guaranteed by you and which have been past due since last year. You have assured us that these will be settled by the end of February 2001. Our books show, that as of today, March 26, 2001, the following accounts have outstanding balances: Wafa $6,585 Monaliza/Ragab 4,326.39 Salah 1,950 Jerico 1,300 Rafat 4,730 Mahmood/Alhirsh 3,205 Amina 2,000 MMML 1,653 RDRI 361 HMD 2,100 Amru 1,388 Iyad Ali 97 Ali 740 Maher 675 Sharikat 350 Imad 905 Rubies 2,678 Adel 1,125
$36,168.39 Please give us an updated report on your collection efforts and the status of each of the above accounts to enable us to take necessary actions. This would be submitted on or before April 2, 2001 (SGD) DIVINA ABAD SANTOS General Manager 19
Memorandum dated May 12, 2001 12 May 2001 MEMORANDUM TO : MA. LOURDES DE JESUS SALES PROMOTION OFFICER FROM : DIVINA S. ABAD SANTOS GENERAL MANAGER SUBJECT : PAST DUE ACCOUNTS You are asked to refer to my memorandum dated 26 March 2001. We were informed that the following accounts have been paid to you but not accounted/turned over to the office: NAME AMOUNTS Wafa $6,585 Monaliza/Ragab 4,326.39 Salah 1,950 Jerico 1,300 Rafat 4,730 Mahmood/Alhirsh 3,205 Amina 2,000 MMML 1,653 RDRI 361 HMD 2,100 Amru 1,388 Iyad Ali 97 Ali 740 Maher 675 Sharikat 350 Imad 905 Rubies 2,678 Adel 1,125
$36,168.39 You are hereby directed to explain in writing within 72 hours from receipt of this memorandum, why you should not be dismissed for cause for failure to account for above amounts. 9
By your failure to explain in writing the above accountabilities, within the set deadline, we shall assume that you have misappropriated the same for your own use and benefit to the damage of the office. (SGD.)DIVINA S. ABAD SANTOS General Manager 20
Contrary to Supersonics contention, however, the aforequotedmemoranda did not satisfy the requirement for the two written notices under the law. The March 26, 2001 memorandum did not specify the grounds for which her dismissal would be sought, and for that reasonwas at best a mere reminder to De Jesus to submit her report on the status of her accounts. The May 12, 2001 memorandumdid not provide the notice of dismissal under the law because itonly directed her to explain why she should not be dismissed for cause. The latter memorandum was apparently only the first written noticeunder the requirement.The insufficiency of the two memoranda as compliance with the two-written notices requirement of due process was, indeed, indubitable enough to impelthe CA to hold: The evidence on record is bereft of any indicia that the two written notices were furnished to De Jesus prior to her dismissal. The various memoranda given her were not the same notices required by law, as they were mere internal correspondences intended to remind De Jesus of her outstanding accountabilities to the company. Assuming for the sake of argument that the memoranda furnished to De Jesus may have satisfied the minimum requirements of due process, still, the same did not satisfy the notice requirement under the Labor Code because the intention to sever the employees services must be made clear in the notice. Such was not apparent from the memoranda. As the Supreme Court held in Serrano, the violation of the notice requirement is not strictly a denial of due process. This is because such notice is precisely intended to enable the employee not only to prepare himself for the legal battle to protect his tenure of employment, but also to find other means of employment and ease the impact of the loss of his job and, necessarily, his income. Conformably with the doctrine laid down in Serrano vs. NLRC, the dismissal of De Jesus should therefore be struck (down) as ineffectual. 21
On the third issue, Supersonicposits that the CA gravely erred in declaring the dismissal of De Jesus ineffectual pursuant to the ruling inSerrano v. National Labor Relations Commission;andinsiststhat the CA should have instead applied the ruling in Agabonv. National Labor Relations Commission, 22 which meanwhile abandoned Serrano. InSerrano, the Court pronounced as follows: x xx, with respect to dismissals for cause under Art. 282, if it is shown that the employee was dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should not be reinstated. However, he must be paid backwages from the time his employment was terminated until it is determined that the termination of employment is for a just cause because the failure to hear him before he is dismissed renders the termination of his employment without legal effect. WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations Commission is MODIFIED by ordering private respondent Isetann Department Store, Inc. to pay petitioner separation pay equivalent to one (1) month pay for every year of service, his unpaid salary, and his proportionate 13th month pay and, in addition, full backwages from the time his employment was terminated on October 11, 1991 up to the time the decision herein becomes final. For this purpose, this case is REMANDED to the Labor Arbiter for computation of the separation pay, backwages, and other monetary awards to petitioner. SO ORDERED. 23
The CA did not err. Relying on Serrano,the CA precisely ruled that the violation by Supersonic of the two-written notice requirement renderedineffectual the dismissal of De Jesus for just cause under Article 282 of the Labor Code, and entitled her to be paid full backwages from the time of her dismissal until the finality of its decision.The Court cannot ignore thatthe applicable case law when the CA promulgated its decision on July 23, 2004, and when it denied Supersonics motion for reconsideration on October 21, 2004 was still Serrano. Considering that the Court determines in this appeal by petition for review on certiorarionly whether or not the CA committed an error of law in promulgating its assailed decision of July 23, 2004,the CA cannot be declared to have erred on the basis of Serrano being meanwhile abandoned through Agabonif all thatthe CA did was to fully apply the law and jurisprudence applicable at the time of its rendition of the judgment.As a rule, a judicial interpretation becomes a part of the law as of the date that the law was originally passed, subject only to the qualification that when a doctrine of the Court is overruled and the Court adoptsa different view, and more so when there is a reversal ofthe doctrine, the new doctrine should be applied prospectively and should not apply to parties who relied on the old doctrine and acted in good faith. 24 To hold otherwise would be to deprive the law of its quality of fairness and justice, for, then, there is no recognition of what had transpired prior to such adjudication. 25
Although Agabon,being promulgatedonly on November 17, 2004, ought to be prospective, not retroactive, in its operation because its language did not expressly state that it would also operate retroactively, 26 the Court has already deemed it to be the wise judicial course to let its abandonment of Serranobe retroactive as its means of giving effect to its recognition of the unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process. 27 Under Agabon, the new doctrine is that the failure of the employer to observe the requirements of due process in favor of the dismissed employee (that is, the two-written notices rule) should not invalidate or render ineffectual the dismissal for just or authorized cause. The Agabon Court plainly saw the likelihood of Serrano producing unfair butfar-reaching consequences, such as, but not limited to, encouraging frivolous suits where even the most notorious violators of company policies would be rewarded by invoking due process; to having the constitutional policy of providing protection to labor be used as a sword to oppress the employers; and to compelling the employers to continue employing persons who were admittedly guilty of misfeasance or malfeasance and whose continued employment would be patently inimical to the interest of employers. 28
Even so, the Agabon Court still deplored the employer's violation of the employee's right to statutory due process by directing the payment of indemnity in the form of nominal damages, the amount of which would be addressed to the sound discretion of the labor tribunal upon taking into account the relevant circumstances. Thus, the Agabon Court designed such form of damages as a deterrent to employers from committing in the future violations of the statutory due process rights of employees, and, at the same time, as at the very least a vindication or recognition of the fundamental right granted to the employees under the Labor Code and its implementing rules. 29 Accordingly, consistent with precedent 30 the amount of P50,000.00 as nominal damages is hereby fixed for the purpose of indemnifying De Jesus for the violation of her right to due process.1wphi1 WHEREFORE, the Court DENIES the petition for review on certiorari in G.R. No. 164662 entitled Maria Lourdes C. De Jesus v. Han. Raul T Aquino, Presiding Commissioner, NLRC, Second Division, Quezon City, and Supersonic Services, Inc.; PARTIALLY GRANTS the petition for review on certiorari in G.R. No. 165787 entitled Supersonic Services, Inc. v. Maria Lourdes C. De Jesus and, accordingly, DECLARES the dismissal of Maria Lourdes C. De Jesus for just or authorized cause as valid and effectual; and ORDERS Supersonic Services, Inc. to pay to Maria Lourdes C. De Jesus P50,000.00 as nominal damages to indemnify her for the violation of her right to due process. No pronouncements on costs of suit. G.R. No. 187232 April 17, 2013 ZENAIDA D. MENDOZA, Petitioner, vs. HMS CREDIT CORPORATION and/or FELIPE R. DIEGO, MA. LUISA B. DIEGO, HONDA MOTOR SPORTS CORPORATION and/or FELIPE R. DIEGO, MA. LUISA B. DIEGO, BETA MOTOR TRADING INCORPORATED and/or FELIPE DIEGO, MA. LUISA B. DIEGO, JIANSHE CYCLE WORLD IN CORPORATED and/or JOSE B. DIEGO, Respondents. D E C I S I O N SERENO, CJ .: Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision dated 14 November 2008 1 issued by the Court of Appeals (CA) in CA G.R. SP No. 82653. Petitioner Zenaida D. Mendoza (Mendoza) was the Chief Accountant of respondent HMS Credit Corporation (HMS Credit) beginning 1 August 1999. 2 During her employment, she simultaneously serviced three other respondent companies, all part of the Honda Motor Sports Group (HMS Group), 3 namely, Honda Motor Sports Corporation (Honda Motors), Beta Motor Trading Incorporated (Beta Motor) and Jianshe Cycle World (Jianshe). 4 Respondent Luisa B. Diego (Luisa) was the Managing Director of HMS Credit, while respondent Felipe R. Diego (Felipe) was the company officer to whom Mendoza directly reported. 5
Mendoza avers that on 11 April 2002, after she submitted to Luisa the audited financial statements of Honda Motors, Beta Motor, and Jianshe, Felipe summoned Mendoza to advise her of her termination from service. 6
10
She claims that she was even told to leave the premises without being given the opportunity to collect her personal belongings. 7
Mendoza also contends that when she went back to the office building on 13 April 2012, the stationed security guard stopped her and notified her of the instruction of Felipe and Luisa to prohibit her from entering the premises. 8 Later that month, she returned to the office to pick up her personal mail and to settle her food bills at the canteen, but the guard on duty told her that respondents had issued a memorandum barring her from entering the building. 9
On the other hand, respondents maintain that Mendoza was hired on the basis of her qualification as a Certified Public Accountant (CPA), 10 which turned out to be a misrepresentation. 11 They likewise contend that not only did she fail to disclose knowledge of the resignations of two HMS Group officers, Art Labasan (Labasan) and Jojit de la Cruz (de la Cruz), and their subsequent transfer to a competitor company, but she also had a hand in pirating them. Thus, on 12 April 2002, they supposedly confronted her about these matters. In turn, she allegedly told them that if they had lost their trust in her, it would be best for them to part ways. 12
Accordingly, they purportedly asked her to propose an amount representing her entitlement to separation benefits. Before she left that night, they allegedly handed her P30,000 as payment for the external auditor she had contracted to examine the books of the HMS Group. 13
On 30 April 2002, Mendoza filed with the National Labor Relations Commission (NLRC) a Complaint for Illegal Dismissal and Non-payment of Salaries/Wages, 13th Month Pay and Mid-Year Bonus. 14 The case was docketed as NLRC-NCR North Sector Case No. 00-04-02576-2002. 15
On 28 January 2003, the Labor Arbiter rendered a Decision ruling that Mendoza had been illegally dismissed, and that the dismissal had been effected in violation of due process requirements. 16 Thus, the Labor Arbiter held respondents jointly and severally liable for the payment of separation pay, backwages, moral and exemplary damages, and attorneys fees in the total amount of P1,025,081.82. 17
Respondents filed an Appeal dated 14 March 2003 18 and a Motion to Reduce Appeal Bond dated 21 March 2003 with the National Labor Relations Commission (NLRC), tendering the amount of only P650,000 on the ground of purported business losses. 19 In its Order dated 30 May 2003, the NLRC denied the request for the reduction of the appeal bond, and directed respondents to put up the additional amount of P122,801.66 representing the differential between the judgment award not including the moral and exemplary damages and attorneys fees and the sum previously tendered by them. 20 Respondents complied with the Order. 21
On 30 September 2008, the NLRC rendered a Decision reversing the ruling of the Labor Arbiter. 22 In declaring that Mendoza had not been summarily dismissed, the NLRC held as follows: (a) her claim that she was terminated was incompatible with respondents act of entrusting the amount of P30,000 to her as payment for the external auditor; (b) the same act demonstrated that the parties parted amicably, and that she had the intention to resign; and (c) her admission that respondents allowed her to take a leave of absence subsequent to their confrontation also belied her claim that she was dismissed. 23 Further, it also ruled that her misrepresentation as to her qualifications, her concealment of her meeting with a rival motorcycle dealership, and her non-disclosure of her meeting with the officers and mechanics of HMS Group amounted to a breach of trust, which constituted a just cause for termination, especially of managerial employees like her. 24 Nevertheless, it ordered respondents to pay her separation pay equivalent to one month for every year of service. 25
The NLRC denied the Motion for Reconsideration filed by Mendoza, 26 prompting her to file a Petition for Certiorari with the CA, which rendered a Decision affirming that of the lower tribunal. 27 The CA ruled that that there was no dismissal, as the parties had entered into a compromise agreement whereby respondents offered to pay Mendoza separation benefits in exchange for her voluntary resignation. 28 It further explained: On the merits, this case involves neither dismissal on the part of the employer nor abandonment on the part of the employee. On the evening of April 11, 2002, respondents and petitioner had already agreed on an amicable settlement with petitioner voluntarily resigning her employment and respondents paying her separation benefits. This is evident from the amiable manner with which the parties ended their meeting, with respondents entrusting to petitioner the P30,000.00 payment for the external auditor and the petitioner considering her absence the following day as a previously approved leave from work. It appears, however, that respondents had a sudden change of heart while petitioner was away on leave on April 12, 2002 because when the latter returned on April 13, 2002 she was already prevented from entering the office premises per strict instructions from respondents. Clearly, this was an attempt on the part of respondents to effectively renege on its commitment to pay separation benefits to petitioner. While, generally, an employee who voluntarily resigns from employment is not entitled to separation pay, an arrangement whereby the employee would receive separation pay despite having resigned voluntarily constitutes a contract which is freely entered into and which must be performed in good faith. Thus, the NLRC correctly sustained the prior commitment of respondents to pay separation benefits to petitioner. For although loss of trust and confidence could have been a valid ground available to respondents, they did not institute the appropriate dismissal procedures against petitioner. Instead, they opted to enter into a compromise agreement with an offer to pay separation benefits in exchange for the latters voluntary resignation. It is an accepted practice for parties to adjust their difficulties by mutual consent and, through the execution of a compromise agreement, prevent or to put an end to a lawsuit. And, since there was no dismissal, valid or otherwise, involved in this case, the non-observance of the notice requirements is of no relevance. 29
Mendoza consequently filed the present Petition for Review, raising the following grounds: a. The CA erred in concluding that respondents had timely filed their appeal with the NLRC. b. The CA erred in ruling that there was no illegal dismissal. 30
Thus, in disposing of the instant case, the following issues must be discussed: (a) whether the appeal of respondents to the NLRC was timely filed, and (b) whether Mendoza was illegally dismissed. First issue: Timely filing of the appeal before the NLRC The relevant portion of Article 223 of the Labor Code on appeals of decisions, awards or orders of the Labor Arbiter as follows: Art. 223. x x x In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. In Pasig Cylinder v. Rollo, 31 this Court explained that the required posting of a bond equivalent to the monetary award in the appealed judgment may be liberally interpreted as follows: x x x. True, Article 223 of the Labor Code requires the filing of appeal bond "in the amount equivalent to the monetary award in the judgment appealed from." However, both the Labor Code and this Courts jurisprudence abhor rigid application of procedural rules at the expense of delivering just settlement of labor cases. Petitioners reasons for their filing of the reduced appeal bond the downscaling of their operations coupled with the amount of the monetary award appealed are not unreasonable. Thus, the recourse petitioners adopted constitutes substantial compliance with Article 223 consistent with our ruling in Rosewood Processing, Inc. v. NLRC, where we allowed the appellant to file a reduced bond of P50,000 (accompanied by the corresponding motion) in its appeal of an arbiters ruling in an illegal termination case awarding P789,154.39 to the private respondents. 32
In the case at bar, respondents filed a Motion to Reduce Appeal Bond, tendering the sum of P650,000 instead of the P1,025,081.82 award stated in the Decision of the Labor Arbiter because it was allegedly what respondents could afford, given the business losses they had suffered at that time. 33 Upon the denial by the NLRC of this Motion, respondents promptly complied with its directive to post the differential in the amount of P122,801.66, which had been computed without including the award of moral and exemplary damages and attorneys fees. 34 Following the pronouncement in Pasig Cylinder, the CA was correct in holding that the appeal was timely filed on account of respondents substantial compliance with the requirement under Article 223. Second issue: Illegal dismissal of Mendoza The Labor Code provides for instances when employment may be legally terminated by either the employer or the employee, to wit: Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes: 11
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; b. Gross and habitual neglect by the employee of his duties; c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; d. Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and e. Other causes analogous to the foregoing. x x x x x x x x x Art. 285. Termination by employee. a. An employee may terminate without just cause the employee- employer relationship by serving a written notice on the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the employee liable for damages. b. An employee may put an end to the relationship without serving any notice on the employer for any of the following just causes: 1. Serious insult by the employer or his representative on the honor and person of the employee; 2. Inhuman and unbearable treatment accorded the employee by the employer or his representative; 3. Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family; and 4. Other causes analogous to any of the foregoing. In instances in which the termination of employment by the employer is based on breach of trust, a distinction must be made between rank-and-file employees and managerial employees, thus: The degree of proof required in labor cases is not as stringent as in other types of cases. It must be noted, however, that recent decisions of this Court have distinguished the treatment of managerial employees from that of rank-and-file personnel, insofar as the application of the doctrine of loss of trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position. 35 (Emphasis supplied) Further, in the case of termination by the employer, it is not enough that there exists a just cause therefor, as procedural due process dictates compliance with the two- notice rule in effecting a dismissal: (a) the employer must inform the employee of the specific acts or omissions for which the dismissal is sought, and (b) the employer must inform the employee of the decision to terminate employment after affording the latter the opportunity to be heard. 36
On the other hand, if the termination of employment is by the employee, the resignation must show the concurrence of the intent to relinquish and the overt act of relinquishment, as held in San Miguel Properties v. Gucaban: 37
Resignation the formal pronouncement or relinquishment of a position or office is the voluntary act of an employee who is in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and he has then no other choice but to disassociate himself from employment. The intent to relinquish must concur with the overt act of relinquishment; hence, the acts of the employee before and after the alleged resignation must be considered in determining whether he in fact intended to terminate his employment. In illegal dismissal cases, fundamental is the rule that when an employer interposes the defense of resignation, on him necessarily rests the burden to prove that the employee indeed voluntarily resigned. 38 (Emphases supplied) In this case, the NLRC and the CA were in agreement that although Mendoza committed acts that amounted to breach of trust, the termination of her employment was not on that basis. 39 Instead, both tribunals held that the parties parted amicably, with Mendoza evincing her voluntary intention to resign and respondents proposed settlement to pay her separation benefits. 40 This Court does not agree with these findings in their entirety. Whether Mendoza was a Chief Accountant of HMS Credit, as stated in her appointment letter, 41 or a Finance Officer of all the corporations under the HMS Group, as claimed by respondents, 42 what is certain is that she was a managerial employee. In securing this position, she fraudulently misrepresented her professional qualifications by stating in her Personal Information Sheet that she was a CPA. Based on the records, she never controverted this imputation of dishonesty or, at the very least, provided any explanation therefor. Thus, this deceitful action alone was sufficient basis for respondents loss of confidence in her as a managerial employee. In addition, this Court finds no reason to deviate from the factual findings of the NLRC and the CA as regards the existence of other circumstances that demonstrated Mendozas breach of trust. The NLRC held in this wise: In sum, the commission finds that Mendoza was not illegally dismissed.1wphi1 Respondents could have validly dismissed her for just cause because she had forfeited her employment by having incurred breach of trust that they had reposed in her. She had concealed from them the fact that she was going to visit a rival motorcycle dealership in Tarlac, called Honda Mar, on the afternoon of April 5, 2002, in the company of its owner; the notice she had given was that, on the morning of that date, she would get her childs report card from her school. She also failed to disclose to them the fact that she saw in that store Labasan and De la Cruz, and respondents mechanics, Gatus and Mejis, who cleaned and painted the same. And she gave the appearance of giving aid and support to respondents competitor, to the prejudice of their business standing and goodwill. These were acts of disloyalty for which [they] would have been justified in terminating her service on the ground of loss of confidence. 43
However, despite the existence of a just cause for termination, Mendoza was nevertheless dismissed from service in violation of procedural due process, as respondents failed to observe the two-notice requirement. Instead, respondents insisted that she voluntarily resigned, which argument the NLRC and the CA sustained. This Court is not persuaded. Respondents were unable to discharge their burden to prove the contemporaneous existence of an intention on the part of Mendoza to resign and an overt act of resignation. Aside from their self-serving allegation that she had offered to resign after they had expressed their loss of trust in her, there is nothing in the records to show that she voluntarily resigned from her position in their company. In this regard, it is worthy to underscore the established rule that the filing of a complaint for illegal dismissal is inconsistent with resignation or abandonment. 44
Moreover, the conclusion of the NLRC and the CA that Mendoza voluntarily resigned in consideration of respondents supposed payment of a settlement is bereft of any basis. The lower tribunals merely surmised that the parties forged a compromise agreement despite respondents own admission that they never decided thereon. 45 In fact, the records are clear that none of the parties claimed the existence of any settlement in exchange for her resignation. From the foregoing discussion, it is evident that although there was a just cause for terminating the services of Mendoza, respondents were amiss in complying with the two-notice requirement. Following the prevailing jurisprudence on the matter, if the dismissal is based on a just cause, then the non-compliance with procedural due process should not render the termination from employment illegal or ineffectual. 46
Instead, the employer must indemnify the employee in the form of nominal damages. 47 Therefore, the dismissal of Mendoza should be upheld, and respondents cannot be held liable for the payment of either backwages or separation pay. Considering all the circumstances surrounding this case, this Courts finds the award of nominal damages in the amount of P30,000 48 to be in order. WHEREFORE, the Petition for Review is DENIED. The Decision dated 14 November 2008 of the CA in CA G.R. SP No. 82653 is AFFIRMED WITH 12
MODIFICATION: the award of separation pay is deleted and in lieu thereof, nominal damages in the amount of P30,000 is awarded in favor of petitioner. G.R. No. 184520 March 13, 2013 ROLANDO DS.TORRES, Petitioner, vs. RURAL BANK OF SAN JUAN, INC., ANDRES CANO CHUA, JOBEL GO CHUA, JESUS CANO CHUA, MEINRADO DALISAY, JOSE MANALANSAN III, OFELIA GINA BE and NATY ASTRERO, Respondents. D E C I S I O N REYES, J .: This Petition for Review on Certiorari, 1 under Rule 45 of the Rules of Court, seeks to reverse and set aside the Decision 2 dated February 21, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 94690 dismissing the complaint for illegal dismissal filed by petitioner Rolando OS. Torres (petitioner) against respondent Rural Bank of San Juan, Inc. (RBSJT) and its officers who are the herein individual respondents, namely: Andres Cano Chua (Andres), Jobel Go Chua (Jobel), Jesus Cano Chua (Jesus), Meinrado Dalisay, Jose Manalansan III (Jose), Ofelia Ginabe (Ofelia) and Naty Astrero (collectively referred to as respondents). 3
Likewise assailed is the CA Resolution 4 dated June 3, 2008 which denied reconsideration. The antecedents Culled from the rulings of the labor tribunals and the appellate court are the ensuing factual milieu: 5
The petitioner was initially hired by RBSJI as Personnel and Marketing Manager in 1991. After a six-month probationary period and finding his performance to be satisfactory, RBSJI renewed his employment for the same post to a permanent/regular status. In June 1996, the petitioner was offered the position of Vice-President for RBSJIs newly created department, Allied Business Ventures. He accepted the offer and concomitantly relinquished his post. The vacancy created was filled by respondent Jobel who temporarily held the position concurrently as a Corporate Planning and Human Resources Development Head. On September 24, 1996, the petitioner was temporarily assigned as the manager of RBSJIs N. Domingo branch in view of the resignation of Jacinto Figueroa (Jacinto). On September 27, 1996, Jacinto requested the petitioner to sign a standard employment clearance pertaining to his accountabilities with RBSJI. When the petitioner declined his request, Jacinto threw a fit and shouted foul invectives. To pacify him, the petitioner bargained to issue a clearance but only for Jacintos paid cash advances and salary loan. About seven months later or on April 17, 1997, respondent Jesus issued a memorandum to the petitioner requiring him to explain why no administrative action should be imposed on him for his unauthorized issuance of a clearance to Jacinto whose accountabilities were yet to be audited. Jacinto was later found to have unliquidated cash advances and was responsible for a questionable transaction involving P11 million for which RBSJI is being sued by a certain Actives Builders Manufacturing Corporation. The memorandum stressed that the clearance petitioner issued effectively barred RBSJI from running after Jacinto. 6
The petitioner submitted his explanation on the same day clarifying that the clearance was limited only to Jacintos paid cash advances and salary loan based on the receipts presented by Lily Aguilar (Lily), the cashier of N. Domingo branch. He emphasized that he had no foreknowledge nor was he forewarned of Jacintos unliquidated cash advances and questionable transactions and that the clearance did not extend to those matters. 7
After conducting an investigation, RBSJIs Human Resources Department recommended the petitioners termination from employment for the following reasons, to wit: 1. The issuance of clearance to Mr. Jacinto Figueroa by the petitioner have been prejudicial to the Bank considering that damages [sic] found caused by Mr. Figueroa during his stay with the bank; 2. The petitioner is not in any authority to issue said clearance which is a violation of the Company Code of Conduct and Discipline under Category B Grave Offense No. 1 (falsifying or misrepresenting persons or other company records, documents or papers) equivalent to termination; and 3. The nature of his participation in the issuance of the said clearance could be a reasonable ground for the Management to believe that he is unworthy of the trust and confidence demanded by his position which is also a ground for termination under Article 282 of the Labor Code. 8
On May 19, 1997, RBSJIs Board of Directors adopted the above recommendation and issued Resolution No. 97-102 terminating the petitioner from employment, the import of which was communicated to him in a Memorandum dated May 30, 1997. 9
Feeling aggrieved, the petitioner filed the herein complaint for illegal dismissal, illegal deduction, non-payment of service incentive, leave pay and retirement benefits. 10 The petitioner averred that the supposed loss of trust and confidence on him was a sham as it is in fact the calculated result of the respondents dubious plot to conveniently oust him from RBSJI. He claimed that he was deceived to accept a Vice-President position, which turned out to be a mere clerical and menial work, so the respondents can install Jobel, the son of a major stockholder of RBSJI, as Personnel and Marketing Manager. The plot to oust the petitioner allegedly began in 1996 when Jobel annexed the Personnel and Marketing Departments to the Business Development and Corporate Planning Department thus usurping the functions of and displacing the petitioner, who was put on a floating status and stripped of managerial privileges and allowances. The petitioner further alleged that he was cunningly assigned at N. Domingo branch so he can be implicated in the anomalous transaction perpetrated by Jacinto. He narrated that on September 27, 1996, the officers of RBSJI, namely: Jobel, Andres, Jose and Ofelia, were actually at the N. Domingo branch but they all suspiciously left him to face the predicament caused by Jacinto. He recounted that the next day he was assigned back at the Tarlac extension office and thereafter repeatedly harassed and forced to resign. He tolerated such treatment and pleaded that he be allowed to at least reach his retirement age. On March 7, 1996, he wrote a letter to George Cano Chua (George) expressing his detestation of how the "new guys" are dominating the operations of the company by destroying the image of pioneer employees, like him, who have worked hard for the good image and market acceptability of RBSJI. The petitioner requested for his transfer to the operations or marketing department. His request was, however, not acted upon. The petitioner claimed that on March 19, 1997, respondent Jesus verbally terminated him from employment but he later on retracted the same and instead asked the petitioner to tender a resignation letter. The petitioner refused. A month thereafter, the petitioner received the memorandum asking him to explain why he cleared Jacinto of financial accountabilities and thereafter another memorandum terminating him from employment. For their part, the respondents maintained that the petitioner was validly dismissed for loss of trust and confidence precipitated by his unauthorized issuance of a financial accountability clearance sans audit to a resigned employee. They averred that a copy of the clearance mysteriously disappeared from RBSJIs records hence, the petitioners claim that it pertained only to Jacintos paid cash advances and salary loan cannot stand for being uncorroborated. Attempts at an amicable settlement were made but the same proved futile hence, the Labor Arbiter 11 (LA) proceeded to rule on the complaint. Ruling of LA In its Decision 12 dated November 27, 1998, the LA sustained the claims of the petitioner as against the factually unsubstantiated allegation of loss of trust and confidence propounded by the respondents. The LA observed that the petitioners selfless dedication to his job and efforts to achieve RBSJIs stability, which the respondents failed to dispute, negate any finding of bad faith on his part when he issued a clearance of accountabilities in favor of Jacinto. As such, the said act cannot serve as a valid and justifiable ground for the respondents to lose trust and confidence in him. The LA further held that the failure of both parties to present a copy of the subject clearance amidst the petitioners explanation that it did not absolutely release 13
Jacinto from liability, should work against the respondents since it is the proof that will provide basis for their supposed loss of trust and confidence. The LA upheld the petitioners contention that the loss of trust and confidence in him was indeed a mere afterthought to justify the respondents premeditated plan to ease him out of RBSJI. The LAs conclusion was premised on the convergence of the following circumstances: (1) the petitioners stint from 1991-1996 was not marred with any controversy or complaint regarding his performance; (2) when Jobel joined RBSJI in the latter part of 1996, he took over the department led by the petitioner thus placing the latter in a floating status; and (3) the petitioners temporary transfer to the N. Domingo branch was designed to deliberately put him in a bind and blame him on whatever course of action he may take to resolve the same. Accordingly, the petitioner was found to have been illegally dismissed and thus accorded the following reliefs in the decretal portion of the LA Decision, viz: WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Bank and individual respondents, to reinstate [the petitioner to his previous or equivalent position, without loss of seniority rights and other benefits and privileges appurtaining [sic] to him, and to pay the petitioner the following: 1. The petitioners partial backwages and other emoluments in the form of allowances, as gasoline, maintenance, representation, uniform and membership allowances, from the time of his dismissal up to his actual date of reinstatement, which as of this date amount to: Backwages (Partial) P244,800.00 Gasoline Allowances .. 63,000.00 Maintenance Allowance . 45,000.00 Representation Allowance .. 54,000.00 Membership Allowance .. 12,000.00 Uniform Allowance 8,000.00 Total P426,800.00 2. The petitioners 13th month pay from the time of his dismissal up to actual date of reinstatement, which as of this date amounts to Twenty- Seven Thousand Two Hundred (P27,200.00) Pesos; 3. Moral and exemplary damages in the amount of Fifty Thousand ([P]50,000.00) Pesos each, respectively; and 4. Attorneys fees amounting to ten percent (10%) of the total award, specifically amounting to Fifty-Five Thousand Nine Hundred Twenty- Three Pesos and Eight ([P]55,923.08) Centavos. All other claims are hereby Dismissed for lack of merit. SO ORDERED. 13
Ruling of the National Labor Relations Commission (NLRC) In its Resolution 14 dated April 14, 2000, the NLRC disagreed with the LAs conclusion and opined that it was anchored on irrelevant matters such as the petitioners performance and the preferential treatment given to relatives of RBSJIs stockholders. The NLRC held that the legality of the petitioners dismissal must be based on an appreciation of the facts and the proof directly related to the offense charged, which NLRC found to have weighed heavily in favor of the respondents. The NLRC remarked that the petitioner was indisputably not authorized to issue the clearance. Also, the tantrums and furious attitude exhibited by Jacinto are not valid reasons to submit to his demands. The fact that the N. Domingo branch had been sued civilly on February 25, 1997 for a tax scam while under Jacintos leadership, should have alerted the petitioner into issuing him a clearance. The action taken by the petitioner lacked the prudence expected from a man of his stature thus prejudicing the interests of RBSJI. Accordingly, the dispositive portion of the decision reads: WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE. Let a new one [sic] entered DISMISSING the instant case for lack of merit. However, respondent should pay the petitioner his proportionate 13th month pay for 1997 as he was dismissed on May 30, 1997. SO ORDERED. 15
The petitioner sought reconsideration 16 which was admitted by the NLRC in an Order dated September 30, 2005. From such Order, the respondents filed a motion for reconsideration on the ground that the petitioner failed to present a copy of his purported motion bearing the requisite proof of filing. 17
Traversing both motions, the NLRC issued its Decision 18 dated March 3, 2006: (1) granting the petitioners plea for the reconsideration of its Resolution dated April 14, 2000 thus effectively reversing and nullifying the same; and (2) denying the respondents motion for reconsideration of the Order dated September 30, 2005. Anent the first disposition, the NLRC accorded weight to the explanations proffered by the petitioner that the clearance issued to Jacinto was limited only to his paid cash advances and salary loan. The NLRC further held that the offense imputed to the petitioner is not covered by Category B, Grave Offense No. 1 of RBSJIs Code of Conduct and Discipline as it does not appear that he falsified or misrepresented personal or other company records, documents or papers. 19
Taking an entirely opposite stance, the NLRC declared that the clearance issued by the petitioner did not prejudice RBSJIs interest as it was limited in scope and did not entirely clear Jacinto from all his financial accountabilities. Also, the petitioner was only "a day old" at the N. Domingo branch and thus he cannot be reasonably expected to be aware of the misdeeds purportedly committed by Jacinto. 20
For the foregoing reasons, the NLRC reversed its earlier ruling and reinstated the LAs Decision dated November 27, 1998, thus: WHEREFORE, the Arbiters decision of 27 November 1998 is hereby AFFIRMED and REINSTATED. Accordingly, the Resolution of 14 April 2000 is REVERSED and SET ASIDE. Finally, the respondents Motion for Reconsideration dated 2 November 2005 is DENIED for lack of merit. SO ORDERED. 21
Ruling of the CA The respondents sought recourse with the CA, 22 which in its Decision 23 dated February 21, 2008 reversed and set aside the NLRC Decision dated March 3, 2006 and ruled that the petitioner was dismissed for a just cause. The appellate court articulated that as the Acting Manager of RBSJIs N. Domingo branch, the petitioner held a highly sensitive and critical position which entailed the conscientious observance of company procedures. Not only was he unauthorized to issue the clearance, he also failed to exercise prudence in clearing Jacinto of his accountabilities given the fact that the same were yet to be audited. Such omission financially prejudiced RBSJI and it amounted to gross negligence and incompetence sufficient to sow in his employer the seed of mistrust and loss of confidence. 24 The decretal portion of the CA Decision thus reads: IN VIEW OF ALL THE FOREGOING, the petition is GRANTED. The March 03, 2006 Decision of the National Labor Relations Commission is REVERSED and SET ASIDE. The April 14, 2000 Decision of the National Labor Relations Commission is hereby REINSTATED. No costs. SO ORDERED. 25
The petitioner moved for reconsideration 26 but the motion was denied in the CA Resolution 27 dated June 3, 2008. Hence, the present appeal. Arguments of the parties 14
The petitioner avers that the respondents claim of loss of trust and confidence is not worthy of credence since they failed to present a copy of the clearance purportedly showing that he cleared Jacinto of all his financial accountabilities and not merely as to his paid cash advances and salary loan. He points out that RBSJI must be in custody thereof considering that it is a vital official record. The petitioner insists that the alleged loss of trust and confidence in him is a mere subterfuge to cover the respondents ploy to oust him out of RBSJI. He asserts that the seven-month gap between the date when he issued the subject clearance and the date when he was sent a memorandum for the said act shows that the respondents supposed loss of trust and confidence was a mere afterthought. 28
On the other hand, the respondents invoke the ratiocinations of the CA that they were justified in losing the trust and confidence reposed on the petitioner since he failed to exercise the degree of care expected of his managerial position. They reiterate the petitioners admission that no audit was yet conducted as to the accountabilities of Jacinto when he issued the clearance. The respondents further assert that as a former Personnel Manager, the petitioner is well-aware of RBSJIs policy that before a resigned employee can be cleared of accountabilities, he must be first examined or audited. However, the petitioner opted to violate this policy and yield to Jacintos tantrums. 29
The above arguments yield the focal issue of whether or not the petitioner was validly dismissed from employment. The Courts Ruling The petition is impressed with merit. Settled is the rule that when supported by substantial evidence, the findings of fact of the CA are conclusive and binding on the parties and are not reviewable by this Court. 30 As such, only errors of law are reviewed by the Court in petitions for review of CA decisions. By way of exception, however, the Court will exercise its equity jurisdiction and re-evaluate, review and re-examine the factual findings of the CA when, as in this case, the same are contradicting 31 with the findings of the labor tribunals. The respondents failed to prove that the petitioner was dismissed for a just cause. As provided in Article 282 32 of the Labor Code and as firmly entrenched in jurisprudence, 33 an employer has the right to dismiss an employee by reason of willful breach of the trust and confidence reposed in him. To temper the exercise of such prerogative and to reconcile the same with the employees Constitutional guarantee of security of tenure, the law imposes the burden of proof upon the employer to show that the dismissal of the employee is for just cause failing which would mean that the dismissal is not justified. Proof beyond reasonable doubt is not necessary but the factual basis for the dismissal must be clearly and convincingly established. 34
Further, the law mandates that before validity can be accorded to a dismissal premised on loss of trust and confidence, two requisites must concur, viz: (1) the employee concerned must be holding a position of trust; and (2) the loss of trust must be based on willful breach of trust founded on clearly established facts. 35
There is no arguing that the petitioner was part of the upper echelons of RBSJIs management from whom greater fidelity to trust is expected. At the time when he committed the act which allegedly led to the loss of RBSJIs trust and confidence in him, he was the Acting Manager of N. Domingo branch. It was part of the petitioners responsibilities to effect a smooth turn-over of pending transactions and to sign and approve instructions within the limits assigned to the position under existing regulations. 36 Prior thereto and ever since he was employed, he has occupied positions that entail the power or prerogative to dictate management policies as Personnel and Marketing Manager and thereafter as Vice-President. The presence of the first requisite is thus certain. Anent the second requisite, the Court finds that the respondents failed to meet their burden of proving that the petitioners dismissal was for a just cause. The act alleged to have caused the loss of trust and confidence of the respondents in the petitioner was his issuance, without prior authority and audit, of a clearance to Jacinto who turned out to be still liable for unpaid cash advances and for an P11- million fraudulent transaction that exposed RBSJI to suit. According to the respondents, the clearance barred RBSJI from running after Jacinto. The records are, however, barren of any evidence in support of these claims. As correctly argued by the petitioner and as above set forth, the onus of submitting a copy of the clearance allegedly exonerating Jacinto from all his accountabilities fell on the respondents. It was the single and absolute evidence of the petitioners act that purportedly kindled the respondents loss of trust. Without it, the respondents allegation of loss of trust and confidence has no leg to stand on and must thus be rejected. Moreover, one can reasonably expect that a copy of the clearance, an essential personnel document, is with the respondents. Their failure to present it and the lack of explanation for such failure or the documents unavailability props up the presumption that its contents are unfavorable to the respondents assertions. At any rate, the absence of the clearance upon which the contradicting claims of the parties could ideally be resolved, should work against the respondents. With only sworn pleadings as proof of their opposite claims on the true contents of the clearance, the Court is bound to apply the principle that the scales of justice should be tilted in favor of labor in case of doubt in the evidence presented. 37
RBSJI also failed to substantiate its claim that the petitioners act estopped them from pursuing Jacinto for his standing obligations. There is no proof that RBSJI attempted or at least considered to demand from Jacinto the payment of his unpaid cash advances. Neither was RBSJI able to show that it filed a civil or criminal suit against Jacinto to make him responsible for the alleged fraud. There is thus no factual basis for RBSJIs allegation that it incurred damages or was financially prejudiced by the clearance issued by the petitioner. More importantly, the complained act of the petitioner did not evince intentional breach of the respondents trust and confidence. Neither was the petitioner grossly negligent or unjustified in pursuing the course of action he took. It must be pointed out that the petitioner was caught in the quandary of signing on the spot a standard employment clearance for the furious Jacinto sans any information on his outstanding accountabilities, and refusing to so sign but risk alarming or scandalizing RBSJI, its employees and clients. Contrary to the respondents allegation, the petitioner did not concede to Jacintos demands. He was, in fact, able to equalize two equally undesirable options by bargaining to instead clear Jacinto only of his settled financial obligations after proper verification with branch cashier Lily. It was only after Lily confirmed Jacintos recorded payments that the petitioner signed the clearance. The absence of an audit was precisely what impelled the petitioner to decline signing a standard employment clearance to Jacinto and instead issue a different one pertaining only to his paid accountabilities. Under these circumstances, it cannot be concluded that the petitioner was in any way prompted by malicious motive in issuing the clearance. He was also able to ensure that RBSJIs interests are protected and that Jacinto is pacified. He did what any person placed in a similar situation can prudently do. He was able to competently evaluate and control Jacintos demands and thus prevent compromising RBSJIs image, employees and clients to an alarming scene. The Court has repeatedly emphasized that the act that breached the trust must be willful such that it was done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. 38 The conditions under which the clearance was issued exclude any finding of deliberate or conscious effort on the part of the petitioner to prejudice his employer. Also, the petitioner did not commit an irregular or prohibited act. He did not falsify or misrepresent any company record as it was officially confirmed by Lily that the items covered by the clearance were truly settled by Jacinto. Hence, the respondents had no factual basis in declaring that the petitioner violated Category B Grave Offense No. 1 of the Company Code of Conduct and Discipline. The respondents cannot capitalize on the petitioners lack of authority to issue a clearance to resigned employees. First, it remains but an unsubstantiated allegation despite the several opportunities for them in the proceedings below to show, through bank documents, that the petitioner is not among those officers so authorized. Second, it is the Courts considered view that by virtue of the petitioners stature in respondent bank, it was well-within his discretion to sign or certify the truthfulness of facts as they appear in RBSJIs records. Here, the records of RBSJI cashier Lily clearly showed that Jacinto paid the cash advances and salary loan covered by the clearance issued by the petitioner. Lastly, the seven-month gap between the clearance incident and the April 17, 1997 memorandum asking the petitioner to explain his action is too lengthy to be ignored. It likewise remains uncontroverted that during such period, respondent Jesus 15
verbally terminated the petitioner only to recall the same and instead ask the latter to tender a resignation letter. When the petitioner refused, he was sent the memorandum questioning his issuance of a clearance to Jacinto seven months earlier. The confluence of these undisputed circumstances supports the inference that the clearance incident was a mere afterthought used to gain ground for the petitioners dismissal. Loss of trust and confidence as a ground for dismissal has never been intended to afford an occasion for abuse because of its subjective nature. It should not be used as a subterfuge for causes which are illegal, improper and unjustified. It must be genuine, not a mere afterthought intended to justify an earlier action taken in bad faith. 39
All told, the unsubstantiated claims of the respondents fall short of the standard proof required for valid termination of employment. They failed to clearly and convincingly establish that the petitioners act of issuing a clearance to Jacinto rendered him unfit to continue working for RBSJI. The petitioner was illegally dismissed from employment and is entitled to back wages, to be computed from the date he was illegally dismissed until the finality of this decision. 40
The disposition of the case made by the LA in its Decision dated November 27, 1998, as affirmed by the NLRC in its Decision dated March 6, 2006, is most in accord with the above disquisitions hence, must be reinstated. However, the monetary awards therein should be clarified. The petitioner is entitled to separation pay in lieu of reinstatement and his back wages shall earn legal interest. In accordance with current jurisprudence, the award of back wages shall earn legal interest at the rate of six percent (6%) per annum from the date of the petitioners illegal dismissal until the finality of this decision. 41 Thereafter, it shall earn 12% legal interest until fully paid 42 in accordance with the guidelines in Eastern Shipping Lines, Inc., v. Court of Appeals. 43
In addition to his back wages, the petitioner is also entitled to separation pay. It cannot be gainsaid that animosity and antagonism have been brewing between the parties since the petitioner was gradually eased out of key positions in RBSJI and to reinstate him will only intensify their hostile working atmosphere. 44 Thus, based on strained relations, separation pay equivalent to one (1) month salary for every year of service, with a fraction of a year of at least six (6) months to be considered as one (1) whole year, should be awarded in lieu of reinstatement, to be computed from date of his engagement by RBSJI up to the finality of this decision. 45
The award of separation pay in case of strained relations is more beneficial to both parties in that it liberates the employee from what could be a highly oppressive work environment in as much as it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. 46
The award of moral and exemplary damages is not warranted. In M+W Zander Philippines, Inc. v. Enriquez, 47 the Court decreed that illegal dismissal, by itself alone, does not entitle the dismissed employee to moral damages; additional facts must be pleaded and proven to warrant the grant of moral damages, thus: Moral damages are recoverable only where the dismissal of the employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. Such an award cannot be justified solely upon the premise that the employer fired his employee without just cause or due process. Additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, i.e., that the act of dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy; and, of course, that social humiliation, wounded feelings, grave anxiety, and similar injury resulted therefrom. 48 (Citations omitted) Bad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud. 49
Here, the petitioner failed to prove that his dismissal was attended by explicit oppressive, humiliating or demeaning acts. The following events merely sketch the struggle for power within the upper management of RBSJI between the "old guys" and the "new guys"; they do not convincingly prove that the respondents schemed to gradually ease the petitioner out, viz: (1) his promotion as Vice-President; (2) his replacement by Jobel as Personnel and Marketing Manager; (2) his designation as Acting Manager of N. Domingo branch and the recall thereof on the very next day; (3) the presence of Andres, Jose and Ofelia at the N. Domingo branch in the morning of September 27, 1996; and (4) Georges inaction on the petitioners request to be transferred to the operations or marketing department. As disagreeable as they may seem, these acts cannot be equated with bad faith that can justify an award of damages. Since no moral damages can be granted under the facts of the case, exemplary damages cannot also be awarded. 50
The solidary liability of individual respondents as corporate officers must be recalled. In the same vein, the individual respondents cannot be made solidarily liable with RBSJI for the illegal dismissal. Time and again, the Court has held that a corporation has its own legal personality separate and distinct from those of its stockholders, directors or officers. Hence, absent any evidence that they have exceeded their authority, corporate officers are not personally liable for their official acts. Corporate directors and officers may be held solidarily liable with the corporation for the termination of employment only if done with malice or in bad faith. 51 As discussed above, the acts imputed to the respondents do not support a finding of bad faith. In addition, the lack of a valid cause for the dismissal of an employee does not ipso facto mean that the corporate officers acted with malice or bad faith. There must be an independent proof of malice or bad faith, 52 which is absent in the case at bar. The award of 13th month pay is ncorrect. Being a managerial employee, the petitioner is not entitled to 13th month pay.1wphi1 Pursuant to Memorandum Order No. 28, as implemented by the Revised Guidelines on the Implementation of the 13th Month Pay Law dated November 16, 1987, managerial employees are exempt from receiving such benefit without prejudice to the granting of other bonuses, in lieu of the 13th month pay, to managerial employees upon the employers discretion. 53
The award of attorneys fees is proper. It is settled that where an employee was forced to litigate and, thus, incur expenses to protect his rights and interest, the award of attorneys fees is legally and morally justifiable. 54 Pursuant to Article 111 of the Labor Code, ten percent (10%) of the total award is the reasonable amount of attorneys fees that can be awarded. WHEREFORE, the petition is GRANTED. The Decision dated February 21, 2008 and Resolution dated June 3, 2008 of the Court of Appeals in CA-G.R. SP No. 94690 are REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated November 27, 1998 is REINSTATED with the following MODIFICATIONS/CLARIFICATIONS: Petitioner Rolando DS. Torres is entitled to the payment of: (a) back wages reckoned from May 30, 1997 up to the finality of this Decision, with interest at six percent (6%) per annum, and 12% legal interest thereafter until fully paid; and (b) in lieu of reinstatement, separation pay equivalent to one (1) month salary for every year of service, with a fraction of at least six (6) months to be considered as one (1) whole year, to be computed from the date of his employment up to the finality of this decision. The amounts awarded as moral damages, exemplary damages and 13th month pay are DELETED. Only respondent Rural Bank of San Juan, Inc. is liable for the illegal dismissal and the consequential monetary awards arising therefrom. The other portions of and monetary awards in the Labor Arbiter's Decision dated November 27, 1998 are AFFIRMED. G.R. No. 191459 January 17, 2011 BERNADETH LONDONIO AND JOAN CORCORO, Petitioners, vs. BIO RESEARCH, INC. AND WILSON Y. ANG, Respondents. D E C I S I O N CARPIO MORALES, J.: 16
Petitioners Bernadeth E. Londonio (Bernadeth) and Joan T. Corcoro (Joan) were hired by respondent Bio Research Inc. (Bio Research) as graphic/visual artists on February 12 and October 19, 2004, respectively. In a Memorandum dated April 30, 2005 which petitioners received on May 7, 2005, 1
Bio Research informed its employees including petitioners that pursuant to its plan to reduce the workforce in order to prevent losses, it would be severing their employment with the company. On May 9, 2005, Bio Research filed an Establishment Termination Report 2 with the Department of Labor and Employment (DOLE) stating that it was retrenching 18 of its employees including petitioners due to redundancy and to prevent losses. Bernadeth and Joan were in fact retrenched on May 26 and May 18, 2005, respectively. Joan accepted her retrenchment pay in the sum of P9,990.14 and executed a Quitclaim and Waiver 3 reading: FOR AND IN CONSIDERATION OF THE SUM OF NINE THOUSAND NINE HUNDRED NINETY PESOS & 14/100 (P9,990.14), as financial assistance, receipt whereof in settlement of my claims, I x x x do hereby release/discharge xxx with principal office at x x x and/or its officers, from any or all claims/liabilities by way of unpaid wages, overtime pay, separation pay, retirement benefits, 13th month, or otherwise as may be due me incident to my past employment with the said x x x. I hereby state further that I have no more claim or cause of action of whatsoever nature whether past, present or contingent, including my alleged right for continued employment with xxx, and/or any of its officers. This QUITCLAIM AND WAIVER may be used to secure dismissal of any complaint or action already filed or may be subsequently filed either by myself, my heirs and successors in interests. I have executed this QUITCLAIM AND WAIVER voluntarily and of my own freewill and I understand the legal and factual consequences. <="" p=""> Petitioners later filed a complaint for illegal dismissal, moral and exemplary damages and attorneys fees against respondent Bio Research and its co- respondent President/CEO Wilson Y. Ang (Ang). Petitioners claimed that their dismissal was done in bad faith and tainted with malice, being retaliatory in nature, following the filing by Bernadeth of a complaint against Jose Ang, Jr. (Jose), one of Bio Researchs managers, for a sexual harassment incident that occurred in his office on February 19, 2005. In support of their claim that their dismissal was retaliatory in nature, petitioners alleged that soon after the filing by Bernadeth of the sexual harassment complaint, 4
several members of the management approached Joan, to whom Bernadeth had poured her heart out after the incident, urging her to convince her friend Bernadeth to drop the complaint, to which she (Joan) paid no heed as she expressed support for Bernadeths cause. Petitioners added that an administrative investigation 5 of the sexual harassment complaint was in fact conducted by Bio Research but before it could be resolved, Jose resigned on April 15, 2005. 6
To refute Bio Researchs claim that it had been incurring business losses, Joan cited the recommendation for her regularization on April 12, 2005, 18 days before she received a copy of the Memorandum of April 30, 2005. Bio Research, disclaiming that the sexual harassment case had anything to do with its decision to terminate the services of petitioners, maintained that financial reverses prompted it to take such drastic action. It went on to stress that as Joan had already received her separation pay and had in fact signed a waiver and quitclaim in its favor, she is estopped from challenging the validity of her dismissal. By Decision of March 31, 2006, 7 the Labor Arbiter (LA) ruled in favor of petitioners, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is entered finding that complainants were illegally dismissed by respondents in bad faith, ORDERING respondents BIO RESEARCH CORP. and/or WILSON ANG (President/Manager), to reinstate complainants to their former positions, without loss of seniority rights and benefits, and pay them full backwages from date of illegal dismissal/illegal retrenchments of complainants, Bernadette Londonio on 05/26/2005, Joan Corcoro is 05/18/2005, until actually reinstated, and to pay them moral and exemplary damages in the combined amount of P125,000.00 each, plus to pay them 10% of the total award as attorneys fees. Complainants full backwages, as of date of this decision is shown hereunder: Bernadette Londonio 1wphi1 1) Basic P95,000.00 (05/26/2005-03/31/2006 10 months x P9,500) 2) 13th month pay P7,307.69 (1/12 P95,000.00) 3) 5 days SILP P1,314.16 (P9,500.00/30=P316.66 x 5 x .83 year) 4) COLA P15,208.33 (P50.00 X 365/12 P1,520.00 X 10months) Total FB P118,830.18 Joan Corcoro 1) Basic P93,600.00 (05/18/2005 03/31/2006 10.4 months x P9,000) 2) 13th month pay P7,800.00 (1/12 P93,600.00) 3) 5 days SILP P1,290.00 (P9,000.00/30 = P300.00 X 5 X .86 YEAR) 4) COLA P15,816.66 (P50.00 X 365/12+p1,520.00 X 10.4 Months) Total FB P118,506.66 In finding against Bio Research, the LA held that it failed to prove financial losses to justify its call for the retrenchment of petitioners, and to use fair and reasonable criteria to ascertain who to dismiss or retain; and that Bio Research failed to comply with the requirements of Article 283 of the Labor Code that notice should be given to the DOLE and employees concerned at least a month before the intended retrenchment. Finally, the LA held that since Joans receipt of her salary for the period April 11, 2005 April 18, 2005, the amount which was lumped with her retrenchment pay, was conditioned on her signing the quitclaim, the execution thereof was done through force, hence, not valid. On appeal by respondents, the National Labor Relations Commission (NLRC), by Resolution of February 18, 2008, 8 affirmed the LAs decision. And it denied respondents reconsideration of its decision by Resolution of May 30, 2008. The Court of Appeals to which respondents assailed the NLRC resolutions by certiorari, sustained the ratio decidendi behind the NLRC decision in favor of petitioners, by Decision of May 27, 2009. 9 Specifically with respect to Joan, however, it pronounced that she could no longer question the legality of her dismissal in light of her execution of the quitclaim and waiver. Further, the appellate court departed from the NLRC ruling holding respondent Ang solidarily liable with Bio Research for the money claims of petitioners, the latter having failed to show that Ang was impelled by malice and bad faith in dismissing them. Thus the appellate court held: Settled is the rule in this jurisdiction that a corporation is invested by law with a legal personality separate and distinct from those acting for and in behalf and, in general, from the people comprising it. Thus, obligations incurred by corporate officers acting as corporate agents are not theirs but the direct accountabilities of the corporation they represent. True, solidary liabilities may at times be incurred by corporate officers, but only when exceptional circumstances so warrant. For instance, in labor cases, corporate directors and officers may be held solidarily liable with the corporation for the termination of employment if done with malice or in bad faith. 10
Finally, the appellate court deleted the award of moral and exemplary damages. 11
The appellate court thus disposed: WHEREFORE, the instant petition for certiorari is PARTIALLY GRANTED. The assailed Resolutions of the public respondent National Labor Relations Commission, in NLRC NCR-06-05472(05) CA No. 050702-06, are AFFIRMED with the following MODIFICATIONS: (1) petitioner Wilson Y. Ang is ABSOLVED from any liability adjudged against co-petitioner Bio Research, Inc.; (2) the awards of 17
moral and exemplary damages in favor of the private respondents Bernadeth E. Londonio and Joan Corcoro are DELETED; and (3) the complaint for illegal dismissal insofar as private respondent Joan Corcoro is concerned is DISMISSED. SO ORDERED. 12 (underscoring supplied) Petitioners Motion for Reconsideration of the appellate courts decision having been denied, 13 they filed the present petition for review on certiorari, contending that . . . petitioner [Joan] is not barred to question the validity of her dismissal notwithstanding the execution of a waiver and quitclaim; . . . they are entitled to the award of damages; and . . . Wilson Y. Ang is solidarily liable with Bio Research. Absent any showing that the appellate court ignored, misconstrued and misapplied facts and circumstances of substance, its affirmance of the NLRC decision holding that petitioners were illegally dismissed stands. It is settled that where the Labor Arbiter, the NLRC and the Court of Appeals all concur in their factual findings and it does not appear that they acted with grave abuse of discretion or otherwise acted without jurisdiction or in excess of the same, this Court is bound by the said findings. 14 The Labor Arbiter and the NLRC, being the most equipped and having acquired expertise in the specific matters entrusted to their jurisdiction, their findings of fact are accorded not only respect but even finality if they are supported by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. 15
Verily, in determining that petitioners were illegally retrenched, the appellate court pointed out that not only did Bio Research fail to "submit in evidence its audited financial statements to show its financial condition prior to and at the time it enforced its retrenchment program"; it also failed to show that it adopted fair and reasonable standards in ascertaining who would be retained or dismissed among it employees. 16
It is, however, with respect to the appellate courts ruling that Joan is, on account of her execution of the waiver and quitclaim, estopped from questioning her dismissal that this Court takes exception. An employees execution of a final settlement and receipt of amounts agreed upon do not foreclose his right to pursue a claim for illegal dismissal. 17 For, as reflected above, Joan was illegally retrenched. She is thus entitled to reinstatement without loss of seniority rights and privileges, as well as to payment of full backwages from the time of her separation until actual reinstatement, less the amount of P9,990.14 which she received as retrenchment pay. Respecting the appellate courts freeing Ang from liability, the same is in order.1wphi1 Corporate officers, absent any evidence that they have exceeded their authority, are not personally liable for their official acts. For a corporation has, by legal fiction a personality separate and distinct from its officers, stockholders and members. In cases of illegal dismissal, this fictional veil may be pierced and its directors and officers held solidarily liable with it, where the dismissals of its employees are done with malice or in bad faith, which was not proven to be the case here. 18
As for the deletion by the appellate court of the award of moral and exemplary damages, the same is in order too, petitioners having failed to substantiate their claim that their dismissal was made in bad faith. WHEREFORE, the challenged Decision and Resolution of the Court of Appeals are AFFIRMED with the MODIFICATION in that petitioner Joan Corcoro is ordered reinstated to her former position, without loss of seniority rights and with full backwages from the time of the termination of her employment until reinstated less the amount of P9,990.14, or if reinstatement is not possible, the payment of separation pay equivalent to one half month salary for every year of service. The Decision is, in all other respects, including the reinstatement of Bernadeth Londonio, AFFIRMED. G.R. No. 183390 February 16, 2011 PLASTIMER INDUSTRIAL CORPORATION and TEO KEE BIN, Petitioners, vs. NATALIA C. GOPO, KLEENIA R. VELEZ, FILEDELFA T. AMPARADO, MIGNON H. JOSEPH, AMELIA L. CANDA, MARISSA D. LABUNOS, MELANIE T. CAYABYAB, MA. CORAZON DELA CRUZ, and LUZVIMINDA CABASA, Respondents. D E C I S I O N CARPIO, J .: The Case Before the Court is a petition for review 1 assailing the 13 August 2007 Decision 2 and 5 June 2008 Resolution 3 of the Court of Appeals in CA-G.R. SP No. 97271. The Antecedent Facts On 7 May 2004, the Personnel and Administration Manager of Plastimer Industrial Corporation (Plastimer) issued a Memorandum informing all its employees of the decision of the Board of Directors to downsize and reorganize its business operations due to withdrawal of investments and shares of stocks which resulted in the change of its corporate structure. On 14 May 2004, the employees of Plastimer, including Natalia C. Gopo, Kleenia R. Velez, Filedelfa T. Amparado, Mignon H. Joseph, Amelia L. Canda, Marissa D. Labunos, Melanie T. Cayabyab, Ma. Corazon dela Cruz and Luzviminda Cabasa (respondents) were served written notices of their termination effective 13 June 2004. On 24 May 2004, Plastimer and Plastimer Industrial Corporation Christian Brotherhood (PICCB), the incumbent sole and exclusive collective bargaining representative of all rank and file employees, entered into a Memorandum of Agreement (MOA) relative to the terms and conditions that would govern the retrenchment of the affected employees. On 26 May 2004, Plastimer submitted to the Department of Labor and Employment (DOLE) an Establishment Termination Report containing the list of the employees affected by the reorganization and downsizing. On 28 May 2004, the affected employees, including respondents, signed individual "Release Waiver and Quitclaim." Thereafter, respondents filed a complaint against Plastimer and its President Teo Kee Bin (petitioners) before the Labor Arbiter for illegal dismissal with prayer for reinstatement and full backwages, underpayment of separation pay, moral and exemplary damages and attorneys fees. Respondents alleged that they did not voluntarily relinquish their jobs and that they were required to sign the waivers and quitclaims without giving them an opportunity to read them and without explaining their contents. Respondents further alleged that Plastimer failed to establish the causes/valid reasons for the retrenchment and to comply with the one-month notice to the DOLE as well as the standard prescribed under the Collective Bargaining Agreement between Plastimer and the employees. Petitioners countered that the retrenchment was a management prerogative and that respondents got their retrenchment or separation pay even before the effective date of their separation from service. The Decisions of the Labor Arbiter and the NLRC In its 22 August 2005 Decision, 4 the Labor Arbiter ruled that petitioners were able to prove that there was a substantial withdrawal of stocks that led to the downsizing of the workforce. The Labor Arbiter ruled that notice to the affected employees were given on 14 May 2004, 30 days before its effective date on 14 June 2004. It was only the notice to the DOLE that was filed short of the 30-day period. The Labor Arbiter further ruled that respondents claimed their separation pay in accordance with the MOA. The Labor Arbiter further ruled that respondents could not claim ignorance of the contents of the waivers and quitclaims because they were assisted by the union President and their counsel in signing them. Respondents appealed the Labor Arbiters decision before the National Labor Relations Commission (NLRC). In its 29 December 2005 Resolution, 5 the NLRC affirmed the Labor Arbiters decision. The NLRC noted that respondents did not signify any protest to the MOA entered into between Plastimer and PICCB. The NLRC held that there was no proof that respondents were intimidated or coerced into signing the waivers and quitclaims because they were assisted by the union President and their counsel. The NLRC ruled that the filing of the complaint was just an afterthought on the part of respondents. Respondents filed a motion for reconsideration. In its 25 October 2006 Resolution, 6 the NLRC denied the motion. Respondents filed a petition for certiorari before the Court of Appeals. 18
The Decision of the Court of Appeals In its 13 August 2007 Decision, the Court of Appeals reversed the NLRC decision. The Court of Appeals ruled that there was no valid cause for retrenchment. The Court of Appeals noted that the change of management and majority stock ownership was brought about by execution of deeds of assignment by several stockholders in favor of other stockholders. Further, the Court of Appeals noted that while Plastimer claimed financial losses from 2001 to 2004, records showed an improvement of its finances in 2003. The Court of Appeals further ruled that Plastimer failed to use a reasonable and fair standard or criteria in ascertaining who would be dismissed and who would be retained among its employees. The Court of Appeals ruled that the MOA between Plastimer and PICCB only recognized the need for partial retrenchment and the computation of retrenchment pay without disclosing the criteria in the selection of the employees to be retrenched. Finally, the Court of Appeals ruled that the union President and the PICCBs counsel were not present when the retrenched employees were made to sign the waivers and quitclaims. The dispositive portion of the Court of Appeals decision reads: WHEREFORE, the instant petition is GRANTED. The assailed Resolutions of the NLRC in NLRC-NCR CA No. 046013-05 are hereby REVERSED AND SET ASIDE and a new judgment is entered finding petitioners to have been illegally dismissed. Plastimer Industrial Corporation is hereby ordered to reinstate petitioners to their former positions, without loss of seniority rights and other privileges, and to pay them their backwages from June 14, 2004 up to the time of actual reinstatement less the amounts they respectively received as separation pay. SO ORDERED. 7
Petitioners filed a motion for reconsideration. In its 5 June 2008 Resolution, the Court of Appeals denied the motion. Hence, the petition before this Court. The Issue The only issue in this case is whether respondents were illegally retrenched by petitioners. The Ruling of this Court The petition has merit. Petitioners assail the Court of Appeals in substituting its own findings of facts to the findings of the Labor Arbiter and the NLRC. Petitioners argue that the findings of fact of the Labor Arbiter and the NLRC are accorded with respect if not finality. Petitioners allege that the Court of Appeals did not find any arbitrariness or grave abuse of discretion on the part of the NLRC and thus, it had no basis in reversing the NLRC resolutions which affirmed the Labor Arbiters decision. In a special civil action for certiorari, the Court of Appeals has ample authority to make its own factual determination. 8 Thus, the Court of Appeals can grant a petition for certiorari when it finds that the NLRC committed grave abuse of discretion by disregarding evidence material to the controversy. 9 To make this finding, the Court of Appeals necessarily has to look at the evidence and make its own factual determination. 10 In the same manner, this Court is not precluded from reviewing the factual issues when there are conflicting findings by the Labor Arbiter, the NLRC and the Court of Appeals. 11 In this case, we find that the findings of the Labor Arbiter and the NLRC are more in accord with the evidence on record. One-Month Notice of Termination of Employment Article 283 of the Labor Code provides: ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor- saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. In this case, Plastimer submitted the notice of termination of employment to the DOLE on 26 May 2004. However, notice to the affected employees were given to them on 14 May 2004 or 30 days before the effectivity of their termination from employment on 13 June 2004. While notice to the DOLE was short of the one- month notice requirement, the affected employees were sufficiently informed of their retrenchment 30 days before its effectivity. Petitioners failure to comply with the one-month notice to the DOLE is only a procedural infirmity and does not render the retrenchment illegal. In Agabon v. NLRC, 12 we ruled that when the dismissal is for a just cause, the absence of proper notice should not nullify the dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for the violation of his statutory rights. 13 Here, the failure to fully comply with the one-month notice of termination of employment did not render the retrenchment illegal but it entitles respondents to nominal damages. Validity of Retrenchment The Court of Appeals ruled that there was no valid cause for retrenchment.1avvphil The Court of Appeals noted that while Plastimer claimed financial losses from 2001 to 2004, records showed an improvement of its finances in 2003. We do not agree. The Court of Appeals acknowledged that an independent auditor confirmed petitioners losses for the years 2001 and 2002. 14 The fact that there was a net income in 2003 does not justify the Court of Appeals ruling that there was no valid reason for the retrenchment. Records showed that the net income of P6,185,707.05 for 2003 was not even enough for petitioners to recover from the P52,904,297.88 loss in 2002. 15 Article 283 of the Labor Code recognizes retrenchment to prevent losses as a right of the management to meet clear and continuing economic threats or during periods of economic recession to prevent losses. 16 There is no need for the employer to wait for substantial losses to materialize before exercising ultimate and drastic option to prevent such losses. 17
Validity of Waivers and Quitclaims The Court has ruled that a waiver or quitclaim is a valid and binding agreement between the parties, provided that it constitutes a credible and reasonable settlement, and that the one accomplishing it has done so voluntarily and with a full understanding of its import. 18
We agree with the Labor Arbiter and the NLRC that respondents were sufficiently apprised of their rights under the waivers and quitclaims that they signed. Each document contained the signatures of Edward Marcaida (Marcaida), PICCB President, and Atty. Bayani Diwa, the counsel for the union, which proved that respondents were duly assisted when they signed the waivers and quitclaims. Further, Marcaidas letter to Teo Kee Bin, dated 28 May 2004, proved that proper assistance was extended upon respondents, thus: Nais po naming iparating sa inyo na ginagampanan ng pamamahala ng unyon ang kanilang tungkulin lalo na sa pag "assist" ng mga miyembrong kasali sa retrenchment program at tumanggap ng kanilang separation pay sa ilalim ng napagkasunduang "Memorandum of Agreement." Naipaliwanag po sa bawat miyembro ang epekto ng kanilang pagtanggap ng kanilang mga separation pay. Wala kaming natanggap na masamang reaksiyon nang sila ay aming makausap at kanilang naiintindihan ang sitwasyon ng kumpanya. 19
Hence, we rule that the waivers and quitclaims that respondents signed were valid. WHEREFORE, we SET ASIDE the 13 August 2007 Decision and 5 June 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 97271. We REINSTATE the 22 August 2005 Decision of the Labor Arbiter and the 29 December 2005 19
Resolution of the NLRC upholding the validity of respondents retrenchment with MODIFICATION that petitioners pay each of the respondents the amount of P30,000 as nominal damages for non-compliance with statutory due process. G.R. No. 190001 March 23, 2011 GENUINO ICE COMPANY, INC., HECTOR S. GENUINO and EDGAR A. CARRIAGA, Petitioners, vs. ERIC Y. LAVA and EDDIE BOY SODELA, Respondents. R E S O L U T I O N BRION, J .: Before us is the petition for review on certiorari filed by petitioners Genuino Ice Company, Inc. (GICI), Hector S. Genuino and Edgar A. Carriaga (collectively, petitioners) to challenge the Court of Appeals (CA) Decision 1 and Resolution 2 in CA- G.R. No. SP 109429. These CA dispositions, in turn, affirmed the decision 3 and resolution 4 of the National Labor Relations Commission (NLRC ) in NLRC CA No. 049477-06. THE FACTUAL ANTECEDENTS Petitioner GICI hired the respondents Eric Y. Lava and Eddie Boy Sodela (respondents) as ice plant machine operators. Sometime in March 2005, 5 due to the continuous decline of demand for ice products, the company was forced to shut down a part of its plant facilities and operations, and to implement a work rotation or reduction of workdays program affecting its seven (7) workers (including the present respondents). On September 30, 2005, GICI, through its personal manager, issued a memorandum ordering the deletion of the respondents names from the work schedule. The memorandum had the effect of banning the respondents from entering the company premises. The respondents reacted to this move by filing a complaint for illegal dismissal with the Labor Arbiter (LA). The petitioners alleged that the respondents were contractual employees who were under the control of VICAR General Contractor & Management Services (VICAR), and L.C. Moreno General Contractor & Management Services (MORENO). They argue that there is no employer-employee relationship between GICI and the respondents so that the latter have no cause of action against the petitioners. Also, the petitioners reason that due to the partial shut-down of the company, GICI was excused from complying with the 30-day notice or clearance requirement under the law. The LA rejected the petitioners argument and declared that the respondents adduced convincing evidence that they were the employees of GICI. The LA went on to say that VICAR was engaged in "management services" and merely supplied or processed workers for GICI, in a manner akin to the services of a labor-only contractor. 6 In this sense, the LA believed that GICIs liability in the illegal dismissal is solidary with that of VICAR and MORENO. Notwithstanding the observation that an arrangement akin to labor-only contracting existed, the LA ruled that the respondents were validly retrenched. The LA reasoned out that due to the continuous decline in the sales output of the ice plant, the temporary shut down had become permanent and GICI had no alternative but to trim-down its manpower requirements. 7 However, the LA also found that GICI failed to comply with the procedural requirements for a valid retrenchment. Hence, he awarded the respondents their separation pay equivalent to one-half (1/2) month salary for every year of service in accordance with Art. 283 of the Labor Code. On appeal, the NLRC reversed the LAs decision and found that the respondents were illegally dismissed from service. The petitioners responded to the NLRCs adverse decision through a petition for certiorari 8 under Rule 65 before the CA. The CA saw no grave abuse of discretion in the NLRCs decision, observing that the petitioners failed to prove that GICI incurred or was about to incur financial losses leading to the retrenchment it undertook; no documentary evidence was in fact presented to support the retrenchment claim. 9
The CA also found no malice or bad faith on the part of Hector S. Genuino, president of Genuino Ice Company, Inc., to hold him solidarily liable with the corporation for illegal dismissal. After the denial of their motion for reconsideration, the petitioners came to this Court through the present petition on the sole issue of whether there had been a valid retrenchment (and hence, a valid termination of the respondents service). THE COURTS RULING We dismiss the petition for lack of merit. Under Article 283 of the Labor Code, there are three (3) basic requisites for a valid retrenchment, namely: (a) proof that the retrenchment is necessary to prevent losses or impending losses; (b) service of written notices to the employees and to the DOLE at least one (1) month prior to the intended date of retrenchment; and (c) payment of separation pay equivalent to one (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher. We see no reason to reverse the NLRC and CA findings that no documentary evidence exists in the records to substantiate the claimed business losses; in fact, the petitioners also failed to show its financial conditions prior to and at the time GICI enforced its retrenchment program. In the absence of any attendant grave abuse of discretion, these findings are entitled not only to respect but to our final recognition in this appellate review. The CA was also correct in affirming the NLRCs award of full backwages and separation pay in lieu of reinstatement. In FF Marine Corporation v. NLRC, 10 we ruled that an illegally dismissed employee is entitled to reinstatement without loss of seniority rights and to other established employment privileges, and to his full backwages. In the event, reinstatement is no longer feasible, the employer must pay him his separation pay. In the present case, the respondents were illegally dismissed as the employer failed to prove that their dismissal was for a duly authorized cause. The CA was thus correct in awarding them full backwages and separation pay in lieu of reinstatement since the positions the respondents formerly held no longer exist.1awphi1 We must however modify the CA decision to reflect the correct monetary award due to the respondents. The dispositive portion of the CA decision is incomplete as it failed to specify the separation pay to be awarded to the respondents as well as the reckoning point for the computation of the backwages. FF Marine Corporation 11 tells us that the separation pay shall be computed at one (1) month pay (for those with one year or less of service), or one-half (1/2) month pay for every year of service (for those with more than a year of service), whichever is higher, a fraction of at least six (6) months being considered one whole year. 12 The backwages shall be computed from the date of termination of service (September 30, 2005) until the finality of this Courts decision. WHEREFORE, we hereby DISMISS the petition for lack of merit. The August 24, 2009 Decision and the October 22, 2009 Resolution of the Court of Appeals in CA- G.R. No. SP 109429 affirming the ruling of the NLRC in NLRC CA No. 049477-06 are hereby AFFIRMED, with MODIFICATION that Eric Lava shall be awarded full backwages from September 30, 2005 until the finality of this Courts Decision. Separation pay in lieu of reinstatement shall be computed at 1 month pay for every year of service, with years of service reckoned from the respondents first day of employment up to the finality of this Decision. Costs against the petitioners. G.R. No. 164016 March 15, 2010 RENO FOODS, INC., and/or VICENTE KHU, Petitioners, vs. Nagkakaisang Lakas ng Manggagawa (NLM) - KATIPUNAN on behalf of its member, NENITA CAPOR, Respondent. D E C I S I O N DEL CASTILLO, J .: There is no legal or equitable justification for awarding financial assistance to an employee who was dismissed for stealing company property. Social justice and equity are not magical formulas to erase the unjust acts committed by the employee against his employer. While compassion for the poor is desirable, it is not meant to coddle those who are unworthy of such consideration. This Petition for Review on Certiorari 1 assails the June 3, 2004 Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 76789 which denied the petition for certiorari filed by the petitioners and affirmed the award of financial assistance to respondent Nenita Capor. 20
Factual Antecedents Petitioner Reno Foods, Inc. (Reno Foods) is a manufacturer of canned meat products of which Vicente Khu is the president and is being sued in that capacity. Respondent Nenita Capor (Capor) was an employee of Reno Foods until her dismissal on October 27, 1998. It is a standard operating procedure of petitioner-company to subject all its employees to reasonable search of their belongings upon leaving the company premises. On October 19, 1998, the guard on duty found six Reno canned goods wrapped in nylon leggings inside Capors fabric clutch bag. The only other contents of the bag were money bills and a small plastic medicine container. Petitioners accorded Capor several opportunities to explain her side, often with the assistance of the union officers of Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan. In fact, after petitioners sent a Notice of Termination to Capor, she was given yet another opportunity for reconsideration through a labor-management grievance conference held on November 17, 1999. Unfortunately, petitioners did not find reason to change its earlier decision to terminate Capors employment with the company. On December 8, 1998, petitioners filed a complaint-affidavit against Capor for qualified theft in the Office of the City Prosecutor, Malabon-Navotas Substation. On April 5, 1999, a Resolution 3 was issued finding probable cause for the crime charged. Consequently, an Information was filed against Capor docketed as Criminal Case No. 207-58-MN. Meanwhile, the Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan filed on behalf of Capor a complaint 4 for illegal dismissal and money claims against petitioners with the Head Arbitration Office of the National Labor Relations Commission (NLRC) for the National Capital Region. The complaint prayed that Capor be paid her full backwages as well as moral and exemplary damages. The complaint was docketed as NLRC NCR Case No. 00-01-00183-99. Ruling of the Labor Arbiter In the proceedings before the Labor Arbiter, Capor alleged that she was unaware that her clutch bag contained the pilfered canned products. She claimed that petitioners might have planted the evidence against her so it could avoid payment of her retirement benefits, as she was set to retire in about a years time. After the submission of the parties respective position papers, the Labor Arbiter rendered his Decision 5 dated November 16, 1999 finding Capor guilty of serious misconduct which is a just cause for termination. The Labor Arbiter noted that Capor was caught trying to sneak out six cans of Reno products without authority from the company. Under Article 232 of the Labor Code, an employer may terminate the services of an employee for just cause, such as serious misconduct. In this case, the Labor Arbiter found that theft of company property is tantamount to serious misconduct; as such, Capor is not entitled to reinstatement and backwages, as well as moral and exemplary damages. Moreover, the Labor Arbiter ruled that consistent with prevailing jurisprudence, an employee who commits theft of company property may be validly terminated and consequently, the said employee is not entitled to separation pay. 6
Ruling of the National Labor Relations Commission On appeal, the NLRC affirmed the factual findings and monetary awards of the Labor Arbiter but added an award of financial assistance. The decretal portion of the September 20, 2002 Decision 7 reads: WHEREFORE, premises considered, the decision under review is hereby MODIFIED by granting an award of financial assistance in the form of separation pay equivalent to one-half month pay for every year of service. In all other respects the decision stands affirmed. All other claims of the complainant are dismissed for lack of merit. 8
Both parties moved for a reconsideration of the NLRC Decision. Petitioners asked that the award of financial assistance be deleted, while Capor asked for a finding of illegal dismissal and for reinstatement with full backwages. 9
On February 28, 2003, the NLRC issued its Resolution 10 denying both motions for reconsideration for lack of merit. Ruling of the Court of Appeals Aggrieved, petitioners filed a Petition for Certiorari 11 before the CA imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the NLRC for awarding financial assistance to Capor. Citing Philippine Long Distance Telephone Company v. National Labor Relations Commission, 12 petitioners argued that theft of company property is a form of serious misconduct under Article 282(a) of the Labor Code for which no financial assistance in the form of separation pay should be allowed. Unimpressed, the appellate court affirmed the NLRCs award of financial assistance to Capor. It stressed that the laborers welfare should be the primordial and paramount consideration when carrying out and interpreting provisions of the Labor Code. It explained that the mandate laid down in Philippine Long Distance Telephone Company v. National Labor Relations Commission 13 was not absolute, but merely directory. Hence, this petition. Issue The issue before us is whether the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in granting financial assistance to an employee who was validly dismissed for theft of company property. Our Ruling We grant the petition. Conviction in a criminal case is not necessary to find just cause for termination of employment. On the date that the appellate court issued its Decision, Capor filed a Manifestation 14 informing the CA of her acquittal in the charge of qualified theft. The dispositive portion of said Decision reads: WHEREFORE, premises considered, judgment is hereby rendered acquitting Nenita Capor of the crime charged against her in this case on the ground of reasonable doubt with costs de oficio. Capor thus claims that her acquittal in the criminal case proves that petitioners failed to present substantial evidence to justify her termination from the company. She therefore asks for a finding of illegal dismissal and an award of separation pay equivalent to one month pay for every year of service. On the other hand, petitioners argue that the dismissal of a criminal action should not carry a corresponding dismissal of the labor action since a criminal conviction is unnecessary in warranting a valid dismissal for employment. Petitioners further maintain that the ruling in Philippine Long Distance Telephone Company v. National Labor Relations Commission 15 regarding the disallowance of separation pay for those dismissed due to serious misconduct or moral turpitude is mandatory. Petitioners likewise argue that in Zenco Sales, Inc. v. National Labor Relations Commission, 16 the Supreme Court found grave abuse of discretion on the part of the NLRC when it ignored the principles laid down in the Philippine Long Distance Telephone Company v. National Labor Relations Commission. Thus, petitioners pray for the reversal of the CA Decision and reinstatement of the Labor Arbiters Decision dated November 16, 1999. Capor was acquitted in Criminal Case No. 207-58-MN based on reasonable doubt. In his Decision, the trial judge entertained doubts regarding the guilt of Capor because of two circumstances: (1) an ensuing labor dispute (though it omitted to state the parties involved), and (2) the upcoming retirement of Capor. The trial judge made room for the possibility that these circumstances could have motivated petitioners to plant evidence against Capor so as to avoid paying her retirement benefits. The trial court did not categorically rule that the acts imputed to Capor did not occur. It did not find petitioners version of the event as fabricated, baseless, or unreliable. It merely acknowledged that seeds of doubt have been planted in the jurors mind which, in a criminal case, is enough to acquit an accused based on reasonable doubt. The pertinent portion of the trial courts Decision reads: During the cross examination of the accused, she was confronted with a document that must be related to a labor dispute. x x x The Court noted very clearly from the 21
transcript of stenographic notes that it must have been submitted to the NLRC. This is indicative of a labor dispute which, although not claimed directly by the accused, could be one of the reasons why she insinuated that evidence was planted against her in order to deprive her of the substantial benefits she will be receiving when she retires from the company. Incidentally, this document was never included in the written offer of evidence of the prosecution. Doubt has, therefore, crept into the mind of the Court concerning the guilt of accused Nenita Capor which in this jurisdiction is mandated to be resolved in favor of her innocence. Pertinent to the foregoing doubt being entertained by this Court, the Court of Appeals citing People v. Bacus, G.R. No. 60388, November 21, 1991: "the phrase beyond reasonable doubt means not a single iota of doubt remains present in the mind of a reasonable and unprejudiced man that a person is guilty of a crime. Where doubt exists, even if only a shred, the Court must and should set the accused free." (People v. Felix, CA-G.R. No. 10871, November 24, 1992) WHEREFORE, premises considered, judgment is hereby rendered acquitting accused Nenita Capor of the crime charged against her in this case on the ground of reasonable doubt, with costs de oficio. SO ORDERED. 17
In Nicolas v. National Labor Relations Commission, 18 we held that a criminal conviction is not necessary to find just cause for employment termination. Otherwise stated, an employees acquittal in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not preclude a determination in a labor case that he is guilty of acts inimical to the employers interests. 19
Criminal cases require proof beyond reasonable doubt while labor disputes require only substantial evidence, which means such relevant evidence as a reasonable mind might accept as adequate to justify a conclusion. 20 The evidence in this case was reviewed by the appellate court and two labor tribunals endowed with expertise on the matter the Labor Arbiter and the NLRC. They all found substantial evidence to conclude that Capor had been validly dismissed for dishonesty or serious misconduct. It is settled that factual findings of quasi-judicial agencies are generally accorded respect and finality so long as these are supported by substantial evidence. In the instant case, we find no compelling reason to doubt the common findings of the three reviewing bodies. The award of separation pay is not warranted under the law and jurisprudence. We find no justification for the award of separation pay to Capor. This award is a deviation from established law and jurisprudence. 21
The law is clear. Separation pay is only warranted when the cause for termination is not attributable to the employees fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. 22 It is not allowed when an employee is dismissed for just cause, 23 such as serious misconduct. Jurisprudence has classified theft of company property as a serious misconduct and denied the award of separation pay to the erring employee. 24 We see no reason why the same should not be similarly applied in the case of Capor. She attempted to steal the property of her long-time employer. For committing such misconduct, she is definitely not entitled to an award of separation pay. It is true that there have been instances when the Court awarded financial assistance to employees who were terminated for just causes, on grounds of equity and social justice. The same, however, has been curbed and rationalized in Philippine Long Distance Telephone Company v. National Labor Relations Commission. 25 In that case, we recognized the harsh realities faced by employees that forced them, despite their good intentions, to violate company policies, for which the employer can rightfully terminate their employment. For these instances, the award of financial assistance was allowed. But, in clear and unmistakable language, we also held that the award of financial assistance shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character. When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult to all the laborers who, despite their economic difficulties, strive to maintain good values and moral conduct. In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association (TMPCWA) v. National Labor Relations Commission, 26 we ruled that separation pay shall not be granted to all employees who are dismissed on any of the four grounds provided in Article 282 of the Labor Code. Such ruling was reiterated and further explained in Central Philippines Bandag Retreaders, Inc. v. Diasnes: 27
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation pay based on social justice when an employees dismissal is based on serious misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the person of the employer or his immediate family grounds under Art. 282 of the Labor Code that sanction dismissals of employees. They must be most judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers. The commitment of the Court to the cause of labor should not embarrass us from sustaining the employers when they are right, as here. In fine, we should be more cautious in awarding financial assistance to the undeserving and those who are unworthy of the liberality of the law.1avvphi1 We are not persuaded by Capors argument that despite the finding of theft, she should still be granted separation pay in light of her long years of service with petitioners. We held in Central Pangasinan Electric Cooperative, Inc. v. National Labor Relations Commission 28 that: Although long years of service might generally be considered for the award of separation benefits or some form of financial assistance to mitigate the effects of termination, this case is not the appropriate instance for generosity x x x. The fact that private respondent served petitioner for more than twenty years with no negative record prior to his dismissal, in our view of this case, does not call for such award of benefits, since his violation reflects a regrettable lack of loyalty and worse, betrayal of the company. If an employees length of service is to be regarded as justification for moderating the penalty of dismissal, such gesture will actually become a prize for disloyalty, distorting the meaning of social justice and undermining the efforts of labor to clean its ranks of undesirables. Indeed, length of service and a previously clean employment record cannot simply erase the gravity of the betrayal exhibited by a malfeasant employee. 29 Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer had treated his employee well, has accorded him fairness and adequate compensation as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and odious for a fair employer. As stated in another case: x x x The fact that [the employer] did not suffer pecuniary damage will not obliterate respondents betrayal of trust and confidence reposed by petitioner. Neither would his length of service justify his dishonesty or mitigate his liability. His length of service even aggravates his offense. He should have been more loyal to petitioner company from which he derived his family bread and butter for seventeen years. 30
While we sympathize with Capors plight, being of retirement age and having served petitioners for 39 years, we cannot award any financial assistance in her favor because it is not only against the law but also a retrogressive public policy. We have already explained the folly of granting financial assistance in the guise of compassion in the following pronouncements: x x x Certainly, a dishonest employee cannot be rewarded with separation pay or any financial benefit after his culpability is established in two decisions by competent labor tribunals, which decisions appear to be well-supported by evidence. To hold otherwise, even in the name of compassion, would be to send a wrong signal not only that "crime pays" but also that one can enrich himself at the expense of another in the name of social justice. And courts as well as quasi-judicial entities will be overrun by petitioners mouthing dubious pleas for misplaced social justice. Indeed, before there can be an occasion for compassion and mercy, there must first be justice for all. Otherwise, employees will be encouraged to steal and misappropriate in the expectation that eventually, in the name of social justice and compassion, they will not be penalized but instead financially rewarded. Verily, a contrary holding will merely encourage lawlessness, dishonesty, and duplicity. These are not the values that society cherishes; these are the habits that it abhors. 31
WHEREFORE, the petition is GRANTED. The assailed June 3, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 76789 affirming the September 20, 2002 Decision of the National Labor Relations Commission is ANNULLED and SET ASIDE. The November 16, 1999 Decision of the Labor Arbiter is REINSTATED and AFFIRMED. 22
G.R. No. 169191 June 1, 2011 ROMEO VILLARUEL, Petitioner, vs. YEO HAN GUAN, doing business under the name and style YUHANS ENTERPRISES, Respondent. D E C I S I O N PERALTA, J .: Assailed in the present petition are the Decision 1 and Resolution 2 of the Court of Appeals (CA) dated February 16, 2005 and August 2, 2005, respectively, in CA- G.R. SP No. 79105. The CA Decision modified the March 31, 2003 Decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA 028050-01, while the CA Resolution denied petitioner's Motion for Reconsideration. The antecedents of the case are as follows: On February 15, 1999, herein petitioner filed with the NLRC, National Capital Region, Quezon City a Complaint 3 for payment of separation pay against Yuhans Enterprises. Subsequently, in his Amended Complaint and Position Paper 4 dated December 6, 1999, petitioner alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing Company, an enterprise engaged in the business of manufacturing and selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan. Over a period of almost twenty (20) years, the company changed its name four times. Starting in 1993 up to the time of the filing of petitioner's complaint in 1999, the company was operating under the name of Yuhans Enterprises. Despite the changes in the company's name, petitioner remained in the employ of respondent. Petitioner further alleged that on October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he reported for work but was no longer permitted to go back because of his illness; he asked that respondent allow him to continue working but be assigned a lighter kind of work but his request was denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the said amount corresponds only to the period between 1993 and 1999; petitioner prayed that he be granted separation pay computed from his first day of employment in June 1963, but respondent refused. Aside from separation pay, petitioner prayed for the payment of service incentive leave for three years as well as attorney's fees. On the other hand, respondent averred in his Position Paper 5 that petitioner was hired as machine operator from March 1, 1993 until he stopped working sometime in February 1999 on the ground that he was suffering from illness; after his recovery, petitioner was directed to report for work, but he never showed up. Respondent was later caught by surprise when petitioner filed the instant case for recovery of separation pay. Respondent claimed that he never terminated the services of petitioner and that during their mandatory conference, he even told the latter that he could go back to work anytime but petitioner clearly manifested that he was no longer interested in returning to work and instead asked for separation pay. On November 27, 2000, the Labor Arbiter handling the case rendered judgment in favor of petitioner. The dispositive portion of the Labor Arbiter's Decision reads, thus: WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant and against herein respondent, as follows: 1. Ordering the respondents to pay separation benefits equivalent to one-half () month salary per year of service, a fraction of six months equivalent to one year to herein complainant based on the complainant's length of service reckoned from June 1963 up to October 1998 as provided under Article 284 of the Labor Code, the same computed by the Computation and Examination Unit which we hereby adopt and approved (sic) as our own in the amount of NINETY-ONE THOUSAND FOUR HUNDRED FORTY-FIVE PESOS (P91,445.00); 2. Ordering the respondents to pay service incentive leave equivalent to fifteen days salary in the amount of THREE THOUSAND FIFTEEN PESOS (P3,015.00). All other claims are dismissed for lack of merit. SO ORDERED. 6
Aggrieved, respondent filed an appeal with the NLRC. On March 31, 2003, the Third Division of the NLRC rendered its Decision 7
dismissing respondent's appeal and affirming the Labor Arbiter's Decision. Respondent filed a Motion for Reconsideration, 8 but the same was denied by the NLRC in a Resolution 9 dated May 30, 2003. Respondent then filed with the CA a petition for certiorari under Rule 65 of the Rules of Court. On February 16, 2005, the CA promulgated its presently assailed Decision disposing as follows: WHEREFORE, premises considered, the petition is partially GRANTED. The award of separation pay is hereby DELETED, but the Decision insofar as it awards private respondent [herein petitioner] service incentive leave pay of three thousand and fifteen pesos (P3,015.00) stands. The NLRC is permanently ENJOINED from partially executing its Decision dated November 27, 2000 insofar as the award of separation pay is concerned; or if it has already effected execution, it should order the private respondent to forthwith restitute the same. SO ORDERED. 10
Herein petitioner filed his Motion for Reconsideration 11 of the CA Decision, but it was denied by the CA via a Resolution 12 dated August 2, 2005. Hence, the instant petition based on the following assignment of errors: I THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FAILURE TO APPRECIATE THE ADMISSION BY [PETITIONER] OF THE FACT AND VALIDITY OF HIS TERMINATION BY THE [RESPONDENT]. II [THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED] IN DENYING [PETITIONER'S] ENTITLEMENT TO SEPARATION PAY UNDER ARTICLE 284 OF THE LABOR CODE AND UNDER THE OMNIBUS RULES IMPLEMENTING THE LABOR CODE. III THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE BURDEN OF PROOF THAT AN EMPLOYEE IS SUFFERING FROM DISEASE THAT HAS TO BE TERMINATED REST[S] UPON THE EMPLOYER IN ORDER FOR THE EMPLOYEE TO BE ENTITLED TO SEPARATION PAY. IV THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE DELETION OF THE AWARD OF SEPARATION PAY TO THE [PETITIONER]. 13
The Court finds the petition without merit. The assigned errors in the instant petition essentially boil down to the question of whether petitioner is entitled to separation pay under the provisions of the Labor Code, particularly Article 284 thereof, which reads as follows: An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one- half () month salary for every year of service whichever is greater, a fraction of at least six months being considered as one (1) whole year. A plain reading of the abovequoted provision clearly presupposes that it is the employer who terminates the services of the employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial 23
to his health as well as to the health of his co-employees. It does not contemplate a situation where it is the employee who severs his or her employment ties. This is precisely the reason why Section 8, 14 Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the services of the employee unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. Hence, the pivotal question that should be settled in the present case is whether respondent, in fact, dismissed petitioner from his employment. A perusal of the Decisions of the Labor Arbiter and the NLRC would show, however, that there was no discussion with respect to the abovementioned issue. Both lower tribunals merely concluded that petitioner is entitled to separation pay under Article 284 of the Labor Code without any explanation. The Court finds no convincing justification, in the Decision of the Labor Arbiter on why petitioner is entitled to such pay. In the same manner, the NLRC Decision did not give any rationalization as the gist thereof simply consisted of a quoted portion of the appealed Decision of the Labor Arbiter. On the other hand, the Court agrees with the CA in its observation of the following circumstances as proof that respondent did not terminate petitioner's employment: first, the only cause of action in petitioner's original complaint is that he was "offered a very low separation pay"; second, there was no allegation of illegal dismissal, both in petitioner's original and amended complaints and position paper; and, third, there was no prayer for reinstatement. In consonance with the above findings, the Court finds that petitioner was the one who initiated the severance of his employment relations with respondent. It is evident from the various pleadings filed by petitioner that he never intended to return to his employment with respondent on the ground that his health is failing. Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's offer for him to return to work. This is tantamount to resignation. Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment. 15
It may not be amiss to point out at this juncture that aside from Article 284 of the Labor Code, the award of separation pay is also authorized in the situations dealt with in Article 283 16 of the same Code and under Section 4 (b), Rule I, Book VI of the Implementing Rules and Regulations of the said Code 17 where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, this Court has allowed grants of separation pay to stand as "a measure of social justice" where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. 18 However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by established employer practice or policy. 19 In the present case, neither the abovementioned provisions of the Labor Code and its implementing rules and regulations nor the exceptions apply because petitioner was not dismissed from his employment and there is no evidence to show that payment of separation pay is stipulated in his employment contract or sanctioned by established practice or policy of herein respondent, his employer. Since petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom, he is not entitled to separation pay under the provisions of the Labor Code. The foregoing notwithstanding, this Court, in a number of cases, has granted financial assistance to separated employees as a measure of social and compassionate justice and as an equitable concession. Taking into consideration the factual circumstances obtaining in the present case, the Court finds that petitioner is entitled to this kind of assistance. Citing Eastern Shipping Lines, Inc. v. Sedan, 20 this Court, in the more recent case of Eastern Shipping Lines v. Antonio, 21 held: But we must stress that this Court did allow, in several instances, the grant of financial assistance. In the words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be allowed as a measure of social justice and exceptional circumstances, and as an equitable concession. The instant case equally calls for balancing the interests of the employer with those of the worker, if only to approximate what Justice Laurel calls justice in its secular sense. In this instance, our attention has been called to the following circumstances: that private respondent joined the company when he was a young man of 25 years and stayed on until he was 48 years old; that he had given to the company the best years of his youth, working on board ship for almost 24 years; that in those years there was not a single report of him transgressing any of the company rules and regulations; that he applied for optional retirement under the company's non- contributory plan when his daughter died and for his own health reasons; and that it would appear that he had served the company well, since even the company said that the reason it refused his application for optional retirement was that it still needed his services; that he denies receiving the telegram asking him to report back to work; but that considering his age and health, he preferred to stay home rather than risk further working in a ship at sea. In our view, with these special circumstances, we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. These circumstances indubitably merit equitable concessions, via the principle of "compassionate justice" for the working class. x x x In the present case, respondent had been employed with the petitioner for almost twelve (12) years.lawwphil On February 13, 1996, he suffered from a "fractured left transverse process of fourth lumbar vertebra," while their vessel was at the port of Yokohama, Japan. After consulting a doctor, he was required to rest for a month. When he was repatriated to Manila and examined by a company doctor, he was declared fit to continue his work. When he reported for work, petitioner refused to employ him despite the assurance of its personnel manager. Respondent patiently waited for more than one year to embark on the vessel as 2nd Engineer, but the position was not given to him, as it was occupied by another person known to one of the stockholders. Consequently, for having been deprived of continued employment with petitioner's vessel, respondent opted to apply for optional retirement. In addition, records show that respondent's seaman's book, as duly noted and signed by the captain of the vessel was marked "Very Good," and "recommended for hire." Moreover, respondent had no derogatory record on file over his long years of service with the petitioner.1avvphi1 Considering all of the foregoing and in line with Eastern, the ends of social and compassionate justice would be served best if respondent will be given some equitable relief. Thus, the award of P100,000.00 to respondent as financial assistance is deemed equitable under the circumstances. 22
While the abovecited cases authorized the grant of financial assistance in lieu of retirement benefits, the Court finds no cogent reason not to employ the same guiding principle of compassionate justice applied by the Court, taking into consideration the factual circumstances obtaining in the present case. In this regard, the Court finds credence in petitioner's contention that he is in the employ of respondent for more than 35 years. In the absence of a substantial refutation on the part of respondent, the Court agrees with the findings of the Labor Arbiter and the NLRC that respondent company is not distinct from its predecessors but, in fact, merely continued the operation of the latter under the same owners and the same business venture. The Court further notes that there is no evidence on record to show that petitioner has any derogatory record during his long years of service with respondent and that his employment was severed not by reason of any infraction on his part but because of his failing physical condition. Add to this the willingness of respondent to give him financial assistance. Hence, based on the foregoing, the Court finds that the award of P50,000.00 to petitioner as financial assistance is deemed equitable under the circumstances. WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED with MODIFICATION by awarding petitioner with financial assistance in the amount of P50,000.00. G.R. No. 165381 February 9, 2011 NELSON A. CULILI, Petitioner, vs. EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON (President and Chief Executive Officer), EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA (Vice President) and STELLA GARCIA (Assistant Vice President), Respondents. D E C I S I O N LEONARDO-DE CASTRO, J .: Before Us is a petition for review on certiorari 1 of the February 5, 2004 Decision 2
and September 13, 2004 Resolution 3 of the Court of Appeals in CA-G.R. SP No. 75001, wherein the Court of Appeals set aside the March 1, 2002 Decision 4 and September 24, 2002 Resolution 5 of the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiters Decision 6 dated April 30, 2001. 24
Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a telecommunications company engaged mainly in the business of establishing commercial telecommunications systems and leasing of international datalines or circuits that pass through the international gateway facility (IGF). 7 The other respondents are ETPIs officers: Salvador Hizon, President and Chief Executive Officer; Emiliano Jurado, Chairman of the Board; Virgilio Garcia, Vice President; and Stella Garcia, Assistant Vice President. Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician in its Field Operations Department on January 27, 1981. On December 12, 1996, Culili was promoted to Senior Technician in the Customer Premises Equipment Management Unit of the Service Quality Department and his basic salary was increased. 8
As a telecommunications company and an authorized IGF operator, ETPI was required, under Republic Act. No. 7925 and Executive Order No. 109, to establish landlines in Metro Manila and certain provinces. 9 However, due to interconnection problems with the Philippine Long Distance Telephone Company (PLDT), poor subscription and cancellation of subscriptions, and other business difficulties, ETPI was forced to halt its roll out of one hundred twenty-nine thousand (129,000) landlines already allocated to a number of its employees. 10
In 1998, due to business troubles and losses, ETPI was compelled to implement a Right-Sizing Program which consisted of two phases: the first phase involved the reduction of ETPIs workforce to only those employees that were necessary and which ETPI could sustain; the second phase entailed a company-wide reorganization which would result in the transfer, merger, absorption or abolition of certain departments of ETPI. 11
As part of the first phase, ETPI, on December 10, 1998, offered to its employees who had rendered at least fifteen years of service, the Special Retirement Program, which consisted of the option to voluntarily retire at an earlier age and a retirement package equivalent to two and a half (2) months salary for every year of service. 12
This offer was initially rejected by the Eastern Telecommunications Employees Union (ETEU), ETPIs duly recognized bargaining agent, which threatened to stage a strike. ETPI explained to ETEU the exact details of the Right-Sizing Program and the Special Retirement Program and after consultations with ETEUs members, ETEU agreed to the implementation of both programs. 13 Thus, on February 8, 1999, ETPI re-offered the Special Retirement Program and the corresponding retirement package to the one hundred two (102) employees who qualified for the program. 14
Of all the employees who qualified to avail of the program, only Culili rejected the offer. 15
After the successful implementation of the first phase of the Right-Sizing Program, ETPI, on March 1, 1999 proceeded with the second phase which necessitated the abolition, transfer and merger of a number of ETPIs departments. 16
Among the departments abolished was the Service Quality Department. The functions of the Customer Premises Equipment Management Unit, Culilis unit, were absorbed by the Business and Consumer Accounts Department. The abolition of the Service Quality Department rendered the specialized functions of a Senior Technician unnecessary. As a result, Culilis position was abolished due to redundancy and his functions were absorbed by Andre Andrada, another employee already with the Business and Consumer Accounts Department. 17
On March 5, 1999, Culili discovered that his name was omitted in ETPIs New Table of Organization. Culili, along with three of his co-employees who were similarly situated, wrote their union president to protest such omission. 18
In a letter dated March 8, 1999, ETPI, through its Assistant Vice President Stella Garcia, informed Culili of his termination from employment effective April 8, 1999. The letter reads: March 8, 1999 To: N. Culili Thru: S. Dobbin/G. Ebue From: AVP-HRD ------------------------------------------------------------------------------------------ As you are aware, the current economic crisis has adversely affected our operations and undermined our earlier plans to put in place major work programs and activities. Because of this, we have to implement a Rightsizing Program in order to cut administrative/operating costs and to avoid losses. In line with this program, your employment with the company shall terminate effective at the close of business hours on April 08, 1999. However, to give you ample time to look for other employment, provided you have amply turned over your pending work and settled your accountabilities, you are no longer required to report to work starting tomorrow. You will be considered on paid leave until April 08, 1999. You will likewise be paid separation pay in compliance with legal requirements (see attached), as well as other benefits accruing to you under the law, and the CBA. We take this opportunity to thank you for your services and wish you well in your future endeavors. (Signed) Stella J. Garcia 19
This letter was similar to the memo shown to Culili by the union president weeks before Culili was dismissed. The memo was dated December 7, 1998, and was advising him of his dismissal effective January 4, 1999 due to the Right-Sizing Program ETPI was going to implement to cut costs and avoid losses. 20
Culili alleged that neither he nor the Department of Labor and Employment (DOLE) were formally notified of his termination. Culili claimed that he only found out about it sometime in March 1999 when Vice President Virgilio Garcia handed him a copy of the March 8, 1999 letter, after he was barred from entering ETPIs premises by its armed security personnel when he tried to report for work. 21 Culili believed that ETPI had already decided to dismiss him even prior to the March 8, 1999 letter as evidenced by the December 7, 1998 version of that letter. Moreover, Culili asserted that ETPI had contracted out the services he used to perform to a labor-only contractor which not only proved that his functions had not become unnecessary, but which also violated their Collective Bargaining Agreement (CBA) and the Labor Code. Aside from these, Culili also alleged that he was discriminated against when ETPI offered some of his co-employees an additional benefit in the form of motorcycles to induce them to avail of the Special Retirement Program, while he was not. 22
ETPI denied singling Culili out for termination. ETPI claimed that while it is true that they offered the Special Retirement Package to reduce their workforce to a sustainable level, this was only the first phase of the Right-Sizing Program to which ETEU agreed. The second phase intended to simplify and streamline the functions of the departments and employees of ETPI. The abolition of Culilis department - the Service Quality Department - and the absorption of its functions by the Business and Consumer Accounts Department were in line with the programs goals as the Business and Consumer Accounts Department was more economical and versatile and it was flexible enough to handle the limited functions of the Service Quality Department. ETPI averred that since Culili did not avail of the Special Retirement Program and his position was subsequently declared redundant, it had no choice but to terminate Culili. 23 Culili, however, continued to report for work. ETPI said that because there was no more work for Culili, it was constrained to serve a final notice of termination 24 to Culili, which Culili ignored. ETPI alleged that Culili informed his superiors that he would agree to his termination if ETPI would give him certain special work tools in addition to the benefits he was already offered. ETPI claimed that Culilis counter-offer was unacceptable as the work tools Culili wanted were worth almost a million pesos. Thus, on March 26, 1999, ETPI tendered to Culili his final pay check of Eight Hundred Fifty-Nine Thousand Thirty-Three and 99/100 Pesos (P859,033.99) consisting of his basic salary, leaves, 13th month pay and separation pay. 25 ETPI claimed that Culili refused to accept his termination and continued to report for work. 26 ETPI denied hiring outside contractors to perform Culilis work and denied offering added incentives to its employees to induce them to retire early. ETPI also explained that the December 7, 1998 letter was never given to Culili in an official capacity. ETPI claimed that it really needed to reduce its workforce at that time and that it had to prepare several letters in advance in the event that none of the employees avail of the Special Retirement Program. However, ETPI decided to wait for a favorable response from its employees regarding the Special Retirement Program instead of terminating them. 27
On February 8, 2000, Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor practice, and money claims before the Labor Arbiter. On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI guilty of illegal dismissal and unfair labor practice, to wit: WHEREFORE, decision is hereby rendered declaring the dismissal of complainant Nelson A. Culili illegal for having been made through an arbitrary and malicious declaration of redundancy of his position and for having been done without due process for failure of the respondent to give complainant and the DOLE written notice of such termination prior to the effectivity thereof. In view of the foregoing, respondents Eastern Telecommunications Philippines and the individual respondents are hereby found guilty of unfair labor 25
practice/discrimination and illegal dismissal and ordered to pay complainant backwages and such other benefits due him if he were not illegally dismissed, including moral and exemplary damages and 10% attorneys fees. Complainant likewise is to be reinstated to his former position or to a substantially equivalent position in accordance with the pertinent provisions of the Labor Code as interpreted in the case of Pioneer texturing [Pioneer Texturizing Corp. v. National Labor Relations Commission], G.R. No. 11865[1], 16 October 1997. Hence, Complainant must be paid the total amount of TWO MILLION SEVEN HUNDRED FORTY[-]FOUR THOUSAND THREE [HUNDRED] SEVENTY[-] NINE and 41/100 (P2,744,379.41), computed as follows: I. Backwages (from 16 March 1999 to 16 March 2001)
a. Basic Salary (P29,030 x 24 mos.) P696,720.96 b. 13th Month Pay (P692,720.96/12) 58,060.88 c. Leave Benefits
1. Vacation Leave (30 days/annum) P1,116.54 x 60 days 66,992.40 2. Sick Leave (30 days/annum) P1,116.54 x 60 days 66,992.40 3. Birthday Leave (1 day/annum) P1,116.54 x 2 days 2,233.08 d. Rice and Meal Subsidy 16 March 31 July 1999 (P1,750 x 4.5 mos. = P7,875.00) 01 August 1991 31 July 2000 (P1,850 x 12 mos = P22,200.00) 01 August 2000 16 March 2001 (P1,950 x 7.5 mos. = P14,625.00) 44,700.00 e. Uniform Allowance P7,000/annum x 2 years 14,000.00
P949,699.72 II. Damages
a. Moral P500,000.00 b. Exemplary P250,000.00 III. Attorneys Fees (10% of award) 94,969.97 GRAND TOTAL:
P2,744,379.41 28
The Labor Arbiter believed Culilis claim that ETPI intended to dismiss him even before his position was declared redundant. He found the December 7, 1998 letter to be a telling sign of this intention. The Labor Arbiter held that a reading of the termination letter shows that the ground ETPI was actually invoking was retrenchment and not redundancy, but ETPI stuck to redundancy because it was easier to prove than retrenchment. He also did not believe that Culilis functions were as limited as ETPI made it appear to be, and held that ETPI failed to present any reasonable criteria to justify the declaration of Culilis position as redundant. On the issue of unfair labor practice, the Labor Arbiter agreed that the contracting out of Culilis functions to non-union members violated Culilis rights as a union member. Moreover, the Labor Arbiter said that ETPI was not able to dispute Culilis claims of discrimination and subcontracting, hence, ETPI was guilty of unfair labor practice. On appeal, the NLRC affirmed the Labor Arbiters decision but modified the amount of moral and exemplary damages awarded, viz: WHEREFORE, the Decision appealed from is AFFIRMED granting complainant the money claims prayed for including full backwages, allowances and other benefits or their monetary equivalent computed from the time of his illegal dismissal on 16 March 1999 up to his actual reinstatement except the award of moral and exemplary damages which is modified to P200,000.00 for moral and P100,000.00 for exemplary damages. For this purpose, this case is REMANDED to the Labor Arbiter for computation of backwages and other monetary awards to complainant. 29
ETPI filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure before the Court of Appeals on the ground of grave abuse of discretion. ETPI prayed that a Temporary Restraining Order be issued against the NLRC from implementing its decision and that the NLRC decision and resolution be set aside. The Court of Appeals, on February 5, 2004, partially granted ETPIs petition. The dispositive portion of the decision reads as follows: WHEREFORE, all the foregoing considered, the petition is PARTIALLY GRANTED. The assailed Decision of public respondent National Labor Relations Commission is MODIFIED in that petitioner Eastern Telecommunications Philippines Inc. (ETPI) is hereby ORDERED to pay respondent Nelson Culili full backwages from the time his salaries were not paid until the finality of this Decision plus separation pay in an amount equivalent to one (1) month salary for every year of service. The awards for moral and exemplary damages are DELETED. The Writ of Execution issued by the Labor Arbiter dated September 8, 2003 is DISSOLVED. 30
The Court of Appeals found that Culilis position was validly abolished due to redundancy. The Court of Appeals said that ETPI had been very candid with its employees in implementing its Right-Sizing Program, and that it was highly unlikely that ETPI would effect a company-wide reorganization simply for the purpose of getting rid of Culili. The Court of Appeals also held that ETPI cannot be held guilty of unfair labor practice as mere contracting out of services being performed by union members does not per se amount to unfair labor practice unless it interferes with the employees right to self-organization. The Court of Appeals further held that ETPIs officers cannot be held liable absent a showing of bad faith or malice. However, the Court of Appeals found that ETPI failed to observe the standards of due process as required by our laws when it failed to properly notify both Culili and the DOLE of Culilis termination. The Court of Appeals maintained its position in its September 13, 2004 Resolution when it denied Culilis Motion for Reconsideration and Urgent Motion to Reinstate the Writ of Execution issued by the Labor Arbiter, and ETPIs Motion for Partial Reconsideration. Culili is now before this Court praying for the reversal of the Court of Appeals decision and the reinstatement of the NLRCs decision based on the following grounds: I THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH THE APPLICABLE LAW AND JURISPRUDENCE WHEN IT REVERSED THE DECISIONS OF THE NLRC AND THE LABOR ARBITER HOLDING THE DISMISSAL OF PETITIONER ILLEGAL IN THAT: A. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS, RESPONDENTS CHARACTERIZATION OF PETITIONERS POSITION AS REDUNDANT WAS TAINTED BY BAD FAITH. B. THERE WAS NO ADEQUATE JUSTIFICATION TO DECLARE PETITIONERS POSITION AS REDUNDANT. II THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN FINDING THAT NO UNFAIR LABOR PRACTICE ACTS WERE COMMITTED AGAINST THE PETITIONER. III THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN DELETING THE AWARD OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEYS FEES IN FAVOR OF PETITIONER AND IN DISSOLVING THE WRIT OF EXECUTION DATED 8 SEPTEMBER 2003 ISSUED BY THE LABOR ARBITER. IV THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN ABSOLVING THE INDIVIDUAL RESPONDENTS OF PERSONAL LIABILITY. V 26
CONTRARY TO APPLICABLE LAW AND JURISPRUDENCE, THE COURT OF APPEALS, IN A CERTIORARI PROCEEDING, REVIEWED THE FACTUAL FINDINGS OF THE NLRC WHICH AFFIRMED THAT OF THE LABOR ARBITER AND, THEREAFTER, ISSUED A WRIT OF CERTIORARI REVERSING THE DECISIONS OF THE NLRC AND THE LABOR ARBITER EVEN IN THE ABSENCE OF GRAVE ABUSE OF DISCRETION. 31
Procedural Issue: Court of Appeals' Power to Review Facts in a Petition For Certiorari under Rule 65 Culili argued that the Court of Appeals acted in contravention of applicable law and jurisprudence when it reexamined the facts in this case and reversed the factual findings of the Labor Arbiter and the NLRC in a special civil action for certiorari. This Court has already confirmed the power of the Court of Appeals, even on a Petition for Certiorari under Rule 65, 32 to review the evidence on record, when necessary, to resolve factual issues: The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission. This Court held that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts. Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to the exercise of its original jurisdiction over Petitions for Certiorari is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues. 33
While it is true that factual findings made by quasi-judicial and administrative tribunals, if supported by substantial evidence, are accorded great respect and even finality by the courts, this general rule admits of exceptions. When there is a showing that a palpable and demonstrable mistake that needs rectification has been committed 34 or when the factual findings were arrived at arbitrarily or in disregard of the evidence on record, these findings may be examined by the courts. 35
In the case at bench, the Court of Appeals found itself unable to completely sustain the findings of the NLRC thus, it was compelled to review the facts and evidence and not limit itself to the issue of grave abuse of discretion. With the conflicting findings of facts by the tribunals below now before us, it behooves this Court to make an independent evaluation of the facts in this case. Main Issue: Legality of Dismissal Culili asserted that he was illegally dismissed because there was no valid cause to terminate his employment. He claimed that ETPI failed to prove that his position had become redundant and that ETPI was indeed incurring losses. Culili further alleged that his functions as a Senior Technician could not be considered a superfluity because his tasks were crucial and critical to ETPIs business. Under our laws, an employee may be terminated for reasons involving measures taken by the employer due to business necessities. Article 283 of the Labor Code provides: Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. There is redundancy when the service capability of the workforce is greater than what is reasonably required to meet the demands of the business enterprise. A position becomes redundant when it is rendered superfluous by any number of factors such as over-hiring of workers, decrease in volume of business, or dropping a particular product line or service activity previously manufactured or undertaken by the enterprise. 36
This Court has been consistent in holding that the determination of whether or not an employees services are still needed or sustainable properly belongs to the employer. Provided there is no violation of law or a showing that the employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise of business judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC. 37
However, an employer cannot simply declare that it has become overmanned and dismiss its employees without producing adequate proof to sustain its claim of redundancy. 38 Among the requisites of a valid redundancy program are: (1) the good faith of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what positions are to be declared redundant, 39
such as but not limited to: preferred status, efficiency, and seniority. 40
This Court also held that the following evidence may be proffered to substantiate redundancy: the new staffing pattern, feasibility studies/ proposal on the viability of the newly created positions, job description and the approval by the management of the restructuring. 41
In the case at bar, ETPI was upfront with its employees about its plan to implement a Right-Sizing Program. Even in the face of initial opposition from and rejection of the said program by ETEU, ETPI patiently negotiated with ETEUs officers to make them understand ETPIs business dilemma and its need to reduce its workforce and streamline its organization. This evidently rules out bad faith on the part of ETPI. In deciding which positions to retain and which to abolish, ETPI chose on the basis of efficiency, economy, versatility and flexibility. It needed to reduce its workforce to a sustainable level while maintaining functions necessary to keep it operating. The records show that ETPI had sufficiently established not only its need to reduce its workforce and streamline its organization, but also the existence of redundancy in the position of a Senior Technician. ETPI explained how it failed to meet its business targets and the factors that caused this, and how this necessitated it to reduce its workforce and streamline its organization. ETPI also submitted its old and new tables of organization and sufficiently described how limited the functions of the abolished position of a Senior Technician were and how it decided on whom to absorb these functions. In his affidavit dated April 10, 2000, 42 Mr. Arnel D. Reyel, the Head of both the Business Services Department and the Finance Department of ETPI, described how ETPI went about in reorganizing its departments. Mr. Reyel said that in the course of ETPIs reorganization, new departments were created, some were transferred, and two were abolished. Among the departments abolished was the Service Quality Department. Mr. Reyel said that ETPI felt that the functions of the Service Quality Department, which catered to both corporate and small and medium-sized clients, overlapped and were too large for a single department, thus, the functions of this department were split and simplified into two smaller but more focused and efficient departments. In arriving at the decision to abolish the position of Senior Technician, Mr. Reyel explained: 11.3. Thus, in accordance with the reorganization of the different departments of ETPI, the Service Quality Department was abolished and its functions were absorbed by the Business and Consumer Accounts Department and the Corporate and Major Accounts Department. 11.4. With the abolition and resulting simplification of the Service Quality Department, one of the units thereunder, the Customer Premises Equipment Maintenance ("CPEM") unit was transferred to the Business and Consumer Accounts Department. Since the Business and Consumer Accounts Department had to remain economical and focused yet versatile enough to meet all the needs of its small and medium sized clients, it was decided that, in the judgment of ETPI management, the specialized functions of a Senior Technician in the CPEM unit whose sole function was essentially the repair and servicing of ETPIs telecommunications equipment was no longer needed since the Business and Consumer [Accounts] Department had to remain economical and focused yet versatile enough to meet all the multifarious needs of its small and medium sized clients. 11.5. The business reason for the abolition of the position of Senior Technician was because in ETPIs judgment, what was needed in the Business and Consumer Accounts Department was a versatile, yet economical position with functions which were not limited to the mere repair and servicing of telecommunications equipment. It was determined that what was called for was a position that could also perform 27
varying functions such as the actual installation of telecommunications products for medium and small scale clients, handle telecommunications equipment inventory monitoring, evaluation of telecommunications equipment purchased and the preparation of reports on the daily and monthly activation of telecommunications equipment by these small and medium scale clients. 11.6. Thus, for the foregoing reasons, ETPI decided that the position of Senior Technician was to be abolished due to redundancy. The functions of a Senior Technician was to be abolished due to redundancy. The functions of a Senior Technician would then be absorbed by an employee assigned to the Business and Consumer Accounts Department who was already performing the functions of actual installation of telecommunications products in the field and handling telecommunications equipment inventory monitoring, evaluation of telecommunications equipment purchased and the preparation of reports on the daily and monthly activation of telecommunications equipment. This employee would then simply add to his many other functions the duty of repairing and servicing telecommunications equipment which had been previously performed by a Senior Technician. 43
In the new table of organization that the management approved, one hundred twelve (112) employees were redeployed and nine (9) positions were declared redundant. 44 It is inconceivable that ETPI would effect a company-wide reorganization of this scale for the mere purpose of singling out Culili and terminating him. If Culilis position were indeed indispensable to ETPI, then it would be absurd for ETPI, which was then trying to save its operations, to abolish that one position which it needed the most. Contrary to Culilis assertions that ETPI could not do away with his functions as long as it is in the telecommunications industry, ETPI did not abolish the functions performed by Culili as a Senior Technician. What ETPI did was to abolish the position itself for being too specialized and limited. The functions of that position were then added to another employee whose functions were broad enough to absorb the tasks of a Senior Technician. Culili maintains that ETPI had already decided to dismiss him even before the second phase of the Right-Sizing Program was implemented as evidenced by the December 7, 1998 letter. The December 7, 1998 termination letter signed by ETPIs AVP Stella Garcia hardly suffices to prove bad faith on the part of the company. The fact remains that the said letter was never officially transmitted and Culili was not terminated at the end of the first phase of ETPIs Right-Sizing Program. ETPI had given an adequate explanation for the existence of the letter and considering that it had been transparent with its employees, through their union ETEU, so much so that ETPI even gave ETEU this unofficial letter, there is no reason to speculate and attach malice to such act. That Culili would be subsequently terminated during the second phase of the Right-Sizing Program is not evidence of undue discrimination or "singling out" since not only Culilis position, but his entire unit was abolished and absorbed by another department. Unfair Labor Practice Culili also alleged that ETPI is guilty of unfair labor practice for violating Article 248(c) and (e) of the Labor Code, to wit: Art. 248. Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the following unfair labor practice: x x x x c. To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization; x x x x e. To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective agreement: Provided, that the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent. Culili asserted that ETPI is guilty of unfair labor practice because his functions were sourced out to labor-only contractors and he was discriminated against when his co- employees were treated differently when they were each offered an additional motorcycle to induce them to avail of the Special Retirement Program. ETPI denied hiring outside contractors and averred that the motorcycles were not given to his co- employees but were purchased by them pursuant to their Collective Bargaining Agreement, which allowed a retiring employee to purchase the motorcycle he was assigned during his employment. The concept of unfair labor practice is provided in Article 247 of the Labor Code which states: Article 247. Concept of unfair labor practice and procedure for prosecution thereof. - - Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interest of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. In the past, we have ruled that "unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are related to the workers' right to self-organization and to the observance of a CBA." 45 We have likewise declared that "there should be no dispute that all the prohibited acts constituting unfair labor practice in essence relate to the workers' right to self-organization." 46 Thus, an employer may only be held liable for unfair labor practice if it can be shown that his acts affect in whatever manner the right of his employees to self-organize. 47
There is no showing that ETPI, in implementing its Right-Sizing Program, was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees right to self-organize. In fact, ETPI negotiated and consulted with ETEU before implementing its Right-Sizing Program. Both the Labor Arbiter and the NLRC found ETPI guilty of unfair labor practice because of its failure to dispute Culilis allegations. According to jurisprudence, "basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same." 48 By imputing bad faith to the actuations of ETPI, Culili has the burden of proof to present substantial evidence to support the allegation of unfair labor practice. Culili failed to discharge this burden and his bare allegations deserve no credit. Observance of Procedural Due Process Although the Court finds Culilis dismissal was for a lawful cause and not an act of unfair labor practice, ETPI, however, was remiss in its duty to observe procedural due process in effecting the termination of Culili. We have previously held that "there are two aspects which characterize the concept of due process under the Labor Code: one is substantive whether the termination of employment was based on the provision of the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural the manner in which the dismissal was effected." 49
Section 2(d), Rule I, Book VI of the Rules Implementing the Labor Code provides: (d) In all cases of termination of employment, the following standards of due process shall be substantially observed: x x x x For termination of employment as defined in Article 283 of the Labor Code, the requirement of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department of Labor and Employment at least thirty days before effectivity of the termination, specifying the ground or grounds for termination. In Mayon Hotel & Restaurant v. Adana, 50 we observed: The requirement of law mandating the giving of notices was intended not only to enable the employees to look for another employment and therefore ease the impact of the loss of their jobs and the corresponding income, but more importantly, to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination. 51
28
ETPI does not deny its failure to provide DOLE with a written notice regarding Culilis termination. It, however, insists that it has complied with the requirement to serve a written notice to Culili as evidenced by his admission of having received it and forwarding it to his union president. In Serrano v. National Labor Relations Commission, 52 we noted that "a job is more than the salary that it carries." There is a psychological effect or a stigma in immediately finding ones self laid off from work. 53 This is exactly why our labor laws have provided for mandating procedural due process clauses. Our laws, while recognizing the right of employers to terminate employees it cannot sustain, also recognize the employees right to be properly informed of the impending severance of his ties with the company he is working for. In the case at bar, ETPI, in effecting Culilis termination, simply asked one of its guards to serve the required written notice on Culili. Culili, on one hand, claims in his petition that this was handed to him by ETPIs vice president, but previously testified before the Labor Arbiter that this was left on his table. 54 Regardless of how this notice was served on Culili, this Court believes that ETPI failed to properly notify Culili about his termination. Aside from the manner the written notice was served, a reading of that notice shows that ETPI failed to properly inform Culili of the grounds for his termination. The Court of Appeals, in finding that Culili was not afforded procedural due process, held that Culilis dismissal was ineffectual, and required ETPI to pay Culili full backwages in accordance with our decision in Serrano v. National Labor Relations Commission. 55 Over the years, this Court has had the opportunity to reexamine the sanctions imposed upon employers who fail to comply with the procedural due process requirements in terminating its employees. In Agabon v. National Labor Relations Commission, 56 this Court reverted back to the doctrine in Wenphil Corporation v. National Labor Relations Commission 57 and held that where the dismissal is due to a just or authorized cause, but without observance of the due process requirements, the dismissal may be upheld but the employer must pay an indemnity to the employee. The sanctions to be imposed however, must be stiffer than those imposed in Wenphil to achieve a result fair to both the employers and the employees. 58
In Jaka Food Processing Corporation v. Pacot, 59 this Court, taking a cue from Agabon, held that since there is a clear-cut distinction between a dismissal due to a just cause and a dismissal due to an authorized cause, the legal implications for employers who fail to comply with the notice requirements must also be treated differently: Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer's exercise of his management prerogative. 60
Hence, since it has been established that Culilis termination was due to an authorized cause and cannot be considered unfair labor practice on the part of ETPI, his dismissal is valid. However, in view of ETPIs failure to comply with the notice requirements under the Labor Code, Culili is entitled to nominal damages in addition to his separation pay.1avvphi1 Personal Liability of ETPIs Officers And Award of Damages Culili asserts that the individual respondents, Salvador Hizon, Emiliano Jurado, Virgilio Garcia, and Stella Garcia, as ETPIs officers, should be held personally liable for the acts of ETPI which were tainted with bad faith and arbitrariness. Furthermore, Culili insists that he is entitled to damages because of the sufferings he had to endure and the malicious manner he was terminated. As a general rule, a corporate officer cannot be held liable for acts done in his official capacity because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders, and members. To pierce this fictional veil, it must be shown that the corporate personality was used to perpetuate fraud or an illegal act, or to evade an existing obligation, or to confuse a legitimate issue. In illegal dismissal cases, corporate officers may be held solidarily liable with the corporation if the termination was done with malice or bad faith. 61
In illegal dismissal cases, moral damages are awarded only where the dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. 62 Exemplary damages may avail if the dismissal was effected in a wanton, oppressive or malevolent manner to warrant an award for exemplary damages. 63
It is our considered view that Culili has failed to prove that his dismissal was orchestrated by the individual respondents herein for the mere purpose of getting rid of him. In fact, most of them have not even dealt with Culili personally. Moreover, it has been established that his termination was for an authorized cause, and that there was no bad faith on the part of ETPI in implementing its Right-Sizing Program, which involved abolishing certain positions and departments for redundancy. It is not enough that ETPI failed to comply with the due process requirements to warrant an award of damages, there being no showing that the companys and its officers acts were attended with bad faith or were done oppressively. WHEREFORE, the instant petition is DENIED and the assailed February 5, 2004 Decision and September 13, 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 75001 are AFFIRMED with the MODIFICATION that petitioner Nelson A. Culilis dismissal is declared valid but respondent Eastern Telecommunications Philippines, Inc. is ordered to pay petitioner Nelson A. Culili the amount of Fifty Thousand Pesos (P50,000.00) representing nominal damages for non-compliance with statutory due process, in addition to the mandatory separation pay required under Article 283 of the Labor Code. G.R. No. 181738 January 30, 2013 GENERAL MILLING CORPORATION, Petitioner, vs. VIOLETA L. VIAJAR, Respondent. D E C I S I O N REYES, J .: This is a Petition 1 for Review on Certiorari under Rule 45 of the Rules of Court filed by petitioner General Milling Corporation (GMC), asking the Court to set aside the Decision 2 dated September 21, 2007 and the Resolution 3 dated January 30, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 01734; and to reinstate the Decision 4
dated October 28, 2005 and Resolution 5 dated January 31, 2006 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000416-05. The antecedent facts are as follows: GMC is a domestic corporation with principal office in Makati City and a manufacturing plant in Lapu-Lapu City. In October 2003, GMC terminated the services of thirteen (13) employees for redundancy, including herein respondent, Violeta Viajar (Viajar). GMC alleged that it has been gradually downsizing its Vismin (Visayas-Mindanao) Operations in Cebu where a sizeable number of positions became redundant over a period of time. 6
On December 2, 2003, Viajar filed a Complaint 7 for Illegal Dismissal with damages against GMC, its Human Resource Department (HRD) Manager, Johnny T. Almocera (Almocera), and Purchasing Manager, Joel Paulino before the Regional Arbitration Branch (RAB) No. VII, NLRC, Cebu City. In her Position Paper, 8 Viajar alleged that she was employed by GMC on August 6, 1979 as Invoicing Clerk. Through the years, the respondent held various positions in the company until she became Purchasing Staff. On October 30, 2003, Viajar received a Letter-Memorandum dated October 27, 2003 from GMC, through Almocera, informing her that her services were no longer needed, effective November 30, 2003 because her position as Purchasing Staff at the Purchasing Group, Cebu Operations was deemed redundant. Immediately thereafter, the respondent consulted her immediate superior at that time, Thaddeus Oyas, who told her that he too was shocked upon learning about it. 9
When Viajar reported for work on October 31, 2003, almost a month before the effectivity of her severance from the company, the guard on duty barred her from entering GMCs premises. She was also denied access to her office computer and was restricted from punching her daily time record in the bundy clock. 10
On November 7, 2003, Viajar was invited to the HRD Cebu Office where she was asked to sign certain documents, which turned out to be an "Application for Retirement and Benefits." The respondent refused to sign and sought clarification because she did not apply for retirement and instead asserted that her services were terminated for alleged redundancy. Almocera told her that her signature on the Application for Retirement and Benefits was needed to process her separation pay. The respondent also claimed that between the period of July 4, 2003 and October 13, 2003, GMC hired fifteen (15) new employees which aroused her suspicion that 29
her dismissal was not necessary. 11 At the time of her termination, the respondent was receiving the salary rate of P19,651.41 per month. 12
For its part, the petitioner insisted that Viajars dismissal was due to the redundancy of her position. GMC reasoned out that it was forced to terminate the services of the respondent because of the economic setbacks the company was suffering which affected the companys profitability, and the continuing rise of its operating and interest expenditures. Redundancy was part of the petitioners concrete and actual cost reduction measures. GMC also presented the required "Establishment Termination Report" which it filed before the Department of Labor and Employment (DOLE) on October 28, 2003, involving thirteen (13) of its employees, including Viajar. Subsequently, GMC issued to the respondent two (2) checks respectively amounting to P440,253.02 and P21,211.35 as her separation pay. 13
On April 18, 2005, the Labor Arbiter (LA) of the NLRC RAB No. VII, Cebu City, rendered a Decision, the decretal portion of which reads: WHEREFORE, foregoing considered, judgment is hereby rendered declaring that respondents acted in good faith in terminating the complainant from the service due to redundancy of works, thus, complainants refusal to accept the payment of her allowed separation pay and other benefits under the law is NOT JUSTIFIED both in fact and law, and so, therefore complainants case for illegal dismissal against the herein respondents and so are complainants monetary claims are hereby ordered DISMISSED for lack of merit. SO ORDERED. 14
The LA found that the respondent was properly notified on October 30, 2003 through a Letter-Memorandum dated October 27, 2003, signed by GMCs HRD Manager Almocera, that her position as Purchasing Staff had been declared redundant. It also found that the petitioner submitted to the DOLE on October 28, 2003 the "Establishment Termination Report." The LA even faulted the respondent for not questioning the companys action before the DOLE Regional Office, Region VII, Cebu City so as to compel the petitioner to prove that Viajars position was indeed redundant. It ruled that the petitioner complied with the requirements under Article 283 of the Labor Code, considering that the nation was then experiencing an economic downturn and that GMC must adopt measures for its survival. 15
Viajar appealed the aforesaid decision to the NLRC. On October 28, 2005, the NLRC promulgated its decision, the dispositive portion of which reads: WHEREFORE, premises considered, the Decision of the Labor Arbiter declaring the validity of complainants termination due to redundancy is hereby AFFIRMED. Respondent General Milling Corporation is hereby ordered to pay complainants separation pay in the amount of P461,464.37. SO ORDERED. 16
The NLRC, however, stated that it did not agree with the LA that Viajar should be faulted for failing to question the petitioners declaration of redundancy before the DOLE Regional Office, Region VII, Cebu City. It was not imperative for Viajar to challenge the validity of her termination due to redundancy. 17 Notwithstanding, the NLRC affirmed the findings of the LA that Viajars dismissal was legal considering that GMC complied with the requirements provided for under Article 283 of the Labor Code and existing jurisprudence, particularly citing Asian Alcohol Corporation v. NLRC. 18 The NLRC further stated that Viajar was aware of GMCs "reduction mode," as shown in the GMC Vismin Manpower Complement, as follows: Year Manpower Profile No. of Employees Terminated (Redundancy) 2000 795
2001 782
2002 736 41 2003 721 24 2004 697 16 2005 696 (As of June 2005) 06 19
The NLRC stated that the characterization of positions as redundant is an exercise of the employers business judgment and prerogative. It also ruled that the petitioner did not exercise this prerogative in bad faith and that the payment of separation pay in the amount of P461,464.37 was in compliance with Article 283 of the Labor Code. 20
Respondent Viajar filed a Motion for Reconsideration which was denied by the NLRC in its Resolution dated January 31, 2006. Undaunted, Viajar filed a petition for certiorari before the CA. In the now assailed Decision dated September 21, 2007, the CA granted the petition, reversing the decision of the NLRC in the following manner: WHEREFORE, premises considered, this Petition for Certiorari is GRANTED. The Decision, dated 28 October 2005, and Resolution, dated 31 January 2006 respectively, of public respondent National Labor Relations Commission-Fourth Division, Cebu City, in NLRC Case No. V-000416-05 (RAB VII-12-2495-03) are SET ASIDE. A new judgment is entered DECLARING the dismissal ILLEGAL and ordering respondent to reinstate petitioner without loss of seniority rights and other privileges with full backwages inclusive of allowances and other benefits computed from the time she was dismissed on 30 November 2003 up to the date of actual reinstatement. Further, moral and exemplary damages, in the amount of Fifty Thousand Pesos ([P]50,000.00) each; and attorneys fees equivalent to ten percent (10%) of the total monetary award, are awarded. Costs against respondent. SO ORDERED. 21
Aggrieved by the reversal of the NLRC decision, GMC filed a motion for reconsideration. However, in its Resolution dated January 30, 2008, the CA denied the same; hence, this petition. The petitioner raises the following issues, to wit: I. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY 30, 2008 OF THE COURT OF APPEALS ARE CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE. II. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY 30, 2008 OF THE COURT OF APPEALS VIOLATE THE LAW AND ESTABLISHED JURISPRUDENCE ON THE OBSERVANCE OF RESPECT AND FINALITY TO FACTUAL FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION. III. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ITS DECISION OF SEPTEMBER 21, 2007 AND RESOLUTION OF JANUARY 30, 2008 AS THE SAME ARE CONTRARY TO THE EVIDENCE ON RECORD. 22
The petition is denied. The petitioner argues that the factual findings of the NLRC, affirming that of the LA must be accorded respect and finality as it is supported by evidence on record. Both the LA and the NLRC found the petitioners evidence sufficient to terminate the employment of respondent on the ground of redundancy. The evidence also shows that GMC has complied with the procedural and substantive requirements for a valid termination. There was, therefore, no reason for the CA to disturb the factual findings of the NLRC. 23
The rule is that factual findings of quasi-judicial agencies such as the NLRC are generally accorded not only respect, but at times, even finality because of the special knowledge and expertise gained by these agencies from handling matters falling under their specialized jurisdiction. 24 It is also settled that this Court is not a trier of facts and does not normally embark in the evaluation of evidence adduced during trial. 25 This rule, however, allows for exceptions. One of these exceptions covers instances when the findings of fact of the trial court, or of the quasi-judicial agencies concerned, are conflicting or contradictory with those of the CA. When there is a variance in the factual findings, it is incumbent upon the Court to re- examine the facts once again. 26
Furthermore, another exception to the general rule is when the said findings are not supported by substantial evidence or if on the basis of the available facts, the inference or conclusion arrived at is manifestly erroneous. 27 Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness. 28 In the instant case, the Court agrees with the CA that the conclusions arrived at by the LA and the NLRC are manifestly erroneous. 30
GMC claims that Viajar was validly dismissed on the ground of redundancy which is one of the authorized causes for termination of employment. The petitioner asserts that it has observed the procedure provided by law and that the same was done in good faith. To justify the respondents dismissal, the petitioner presented: (i) the notification Letter-Memorandum dated October 27, 2003 addressed to the respondent which was received on October 30, 2003; 29 (ii) the "Establishment Termination Report" as prescribed by the DOLE; 30 (iii) the two (2) checks issued in the respondents name amounting to P440,253.02 and P21,211.35 as separation pay; 31 and (iv) the list of dismissed employees as of June 6, 2006 to show that GMC was in a "reduction mode." 32 Both the LA and the NLRC found these sufficient to prove that the dismissal on the ground of redundancy was done in good faith. The Court does not agree. Article 283 of the Labor Code provides that redundancy is one of the authorized causes for dismissal. It reads: Article 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installment of labor- saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis supplied) From the above provision, it is imperative that the employer must comply with the requirements for a valid implementation of the companys redundancy program, to wit: (a) the employer must serve a written notice to the affected employees and the DOLE at least one (1) month before the intended date of retrenchment; (b) the employer must pay the employees a separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (c) the employer must abolish the redundant positions in good faith; and (d) the employer must set fair and reasonable criteria in ascertaining which positions are redundant and may be abolished. 33
In Smart Communications, Inc., v. Astorga, 34 the Court held that: The nature of redundancy as an authorized cause for dismissal is explained in the leading case of Wiltshire File Co., Inc. v. National Labor Relations Commission, viz: "x x x redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent held prior to termination of his services does not show that his position had not become redundant. Indeed, in any well organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise." The characterization of an employees services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the employer. The wisdom and soundness of such characterization or decision is not subject to discretionary review provided, of course, that a violation of law or arbitrary or malicious action is not shown. 35 (Emphasis supplied and citations omitted) While it is true that the "characterization of an employees services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the employer," 36 the exercise of such judgment, however, must not be in violation of the law, and must not be arbitrary or malicious. The Court has always stressed that a company cannot simply declare redundancy without basis. To exhibit its good faith and that there was a fair and reasonable criteria in ascertaining redundant positions, a company claiming to be over manned must produce adequate proof of the same. We reiterate what was held in Caltex (Phils.), Inc. v. NLRC: 37
In Asufrin, Jr. v. San Miguel Corporation, we ruled that it is not enough for a company to merely declare that it has become overmanned (sic). It must produce adequate proof of such redundancy to justify the dismissal of the affected employees. In Panlilio v. National Labor Relations Commission, we held that evidence must be presented to substantiate redundancy such as but not limited to the new staffing pattern, feasibility studies/proposal, on the viability of the newly created positions, job description and the approval by the management of the restructuring. 38
(Emphasis supplied and citations omitted) In the instant case, the Court agrees with the CA when it held that the petitioner failed to present substantial proof to support GMCs general allegations of redundancy. As shown from the records, the petitioner simply presented as its evidence of good faith and compliance with the law the notification letter to respondent Viajar; 39 the "Establishment Termination Report" it submitted to the DOLE Office; 40 the two (2) checks issued in the respondents name amounting to P440,253.02 and P21,211.35; 41 and the list of terminated employees as of June 6, 2006. 42 We agree with the CA that these are not enough proof for the valid termination of Viajars employment on the ground of redundancy. The letter-memorandum which contains general allegations is not enough to convince this Court that Viajars termination of employment due to redundancy was warranted under the circumstances. There is no showing that GMC made an evaluation of the existing positions and their effect to the company. Neither did GMC exert efforts to present tangible proof that it was experiencing business slow down or over hiring. The "Establishment Termination Report" it submitted to the DOLE Office did not account for anything to justify declaring the positions redundant. The Court notes that the list of terminated employees presented by GMC was a list taken as of June 6, 2006 or almost three years after the respondent was illegally dismissed and almost a year after the LA promulgated its decision. While the petitioner had been harping that it was on a "reduction mode" of its employees, it has not presented any evidence (such as new staffing pattern, feasibility studies or proposal, viability of newly created positions, job description and the approval of the management of the restructuring, 43 audited financial documents like balance sheets, annual income tax returns and others) 44 which could readily show that the companys declaration of redundant positions was justified. Such proofs, if presented, would suffice to show the good faith on the part of the employer or that this business prerogative was not whimsically exercised in terminating respondents employment on the ground of redundancy. Unfortunately, these are wanting in the instant case. The petitioner only advanced a self-serving general claim that it was experiencing business reverses and that there was a need to reduce its manpower complement. On the other hand, the respondent presented proof that the petitioner had been hiring new employees while it was firing the old ones, 45 negating the claim of redundancy. It must, however, be pointed out that in termination cases, like the one before us, the burden of proving that the dismissal of the employees was for a valid and authorized cause rests on the employer. It was incumbent upon the petitioner to show by substantial evidence that the termination of the employment of the respondent was validly made and failure to discharge that duty would mean that the dismissal is not justified and therefore illegal. 46
Furthermore, the Court cannot overlook the fact that Viajar was prohibited from entering the company premises even before the effectivity date of termination; and was compelled to sign an "Application for Retirement and Benefits." These acts exhibit the petitioners bad faith since it cannot be denied that the respondent was still entitled to report for work until November 30, 2003. The demand for her to sign the "Application for Retirement and Benefits" also contravenes the fact that she was terminated due to redundancy. Indeed, there is a difference between voluntary retirement of an employee and forced termination due to authorized causes. In Quevedo v. Benguet Electric Cooperative, Incorporated, 47 this Court explained the difference between retirement and termination due to redundancy, to wit: While termination of employment and retirement from service are common modes of ending employment, they are mutually exclusive, with varying juridical bases and resulting benefits. Retirement from service is contractual (i.e. based on the bilateral agreement of the employer and employee), while termination of employment is statutory (i.e. governed by the Labor Code and other related laws as to its grounds, benefits and procedure). The benefits resulting from termination vary, depending on the cause. For retirement, Article 287 of the Labor Code gives leeway to the parties to stipulate above a floor of benefits. x x x x The line between voluntary and involuntary retirement is thin but it is one which this Court has drawn. Voluntary retirement cuts employment ties leaving no residual employer liability; involuntary retirement amounts to a discharge, rendering the 31
employer liable for termination without cause. The employees intent is the focal point of analysis. In determining such intent, the fairness of the process governing the retirement decision, the payment of stipulated benefits, and the absence of badges of intimidation or coercion are relevant parameters. 48 (Emphasis supplied and citations omitted) Clearly, the instant case is not about retirement since the term has its peculiar meaning and is governed by Article 287 of the Labor Code. Rather, this is a case of termination due to redundancy under Article 283 of the Labor Code. Thus, the demand of GMC for the respondent to sign an "Application for Retirement and Benefits" is really suspect. Finally, the Court agrees with the CA that the award of moral and exemplary damages is proper.1wphi1 The Court has awarded moral damages in termination cases when bad faith, malice or fraud attend the employees dismissal or where the act oppresses labor, or where it was done in a manner contrary to morals, good customs or public policy. 49 We quote with favor the findings of the CA: We also award moral and exemplary damages to petitioner. While it is true that good faith is presumed, the circumstances surrounding the dismissal of petitioner negate its existence. Moral damages may be recovered only 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. To reiterate, immediately after receipt of her termination letter which was effective on 30 November 2003, petitioner was no longer treated as an employee of respondent as early as the 31st of October 2003; she was already barred from entering the company premises; she was deprived access to her office computer; and she was excluded from the bandy [sic] clock. She was also made to sign documents, including an "APPLICATION FOR RETIREMENT AND BENEFITS" in the guise of payment of her separation pay. When petitioner confronted her immediate superior regarding her termination, the latters shock aggravated her confusion and suffering. She also learned about the employment of a number of new employees, several of whom were even employed in her former department. Petitioner likewise suffered mental torture brought about by her termination even though its cause was not clear and substantiated. 50 (Citations omitted) WHEREFORE, the petition is DENIED. The Decision dated September 21, 2007 of the Court of Appeals, as well as its Resolution dated January 30, 2008 in CA-G.R. SP No. 01734, are hereby AFFIRMED. G.R. No. 161787 April 27, 2011 MASING AND SONS DEVELOPMENT CORPORATION and CRISPIN CHAN, Petitioners, vs. GREGORIO P. ROGELIO, Respondent. D E C I S I O N BERSAMIN, J .: In any controversy between a laborer and his master, doubts reasonably arising from the evidence are resolved in favor of the laborer. We re-affirm this principle, as we uphold the decision of the Court of Appeals (CA) that reversed the uniform finding that there existed no employment relationship between the petitioners, as employers, and the respondent, as employee, made by the National Labor Relations Commission (NLRC) and the Labor Arbiter (LA). Petitioners Masing and Sons Development Corporation (MSDC) and Crispin Chan assail the October 24, 2003 decision, 1 whereby the CA reversed the decision dated January 28, 2000 of the NLRC that affirmed the decision of the LA (dismissing the claim of the respondent for retirement benefits on the ground that he had not been employed by the petitioners but by another employer). Antecedents On May 19, 1997, respondent Gregorio P. Rogelio (Rogelio) brought against Chan a complaint for retirement pay pursuant to Republic Act No. 7641, 2 in relation to Article 287 of the Labor Code, holiday and rest days premium pay, service incentive leave, 13th month pay, cost of living allowances (COLA), underpayment of wages, and attorneys fees. On January 20, 1998, Rogelio amended his complaint to include MSDC as a co-respondent. His version follows. Rogelio was first employed in 1949 by Pan Phil. Copra Dealer, MSDCs predecessor, which engaged in the buying and selling of copra in Ibajay, Aklan, with its main office being in Kalibo, Aklan. Masing Chan owned and managed Pan Phil. Copra Dealer, and the Branch Manager in Ibajay was a certain So Na. In 1965, Masing Chan changed the business name of Pan Phil. Copra Dealer to Yao Mun Tek, and appointed Jose Conanan Yap Branch Manager in Ibajay. In the 1970s, the business name of Yao Mun Tek was changed to Aklan Lumber and General Merchandise, and Leon Chan became the Branch Manager in Ibajay. Finally, in 1984, Masing Chan adopted the business name of Masing and Sons Development Corporation (MSDC), appointing Wynne or Wayne Lim (Lim) as the Branch Manager in Ibajay. Crispin Chan replaced his father, Masing Chan, in 1990 as the manager of the entire business. In all that time, Rogelio worked as a laborer in the Ibajay Branch, along with twelve other employees. In January 1974, Rogelio was reported for Social Security System (SSS) coverage. After paying contributions to the SSS for more than 10 years, he became entitled to receive retirement benefits from the SSS. Thus, in 1991, he availed himself of the SSS retirement benefits, and in order to facilitate the grant of such benefits, he entered into an internal arrangement with Chan and MSDC to the effect that MSDC would issue a certification of his separation from employment notwithstanding that he would continue working as a laborer in the Ibajay Branch. The certification reads as follows: 3
CRISPIN AMIGO CHAN COPRA DEALER IBAJAY, AKLAN August 10, 1991 CERTIFICATION OF SEPARATION FROM EMPLOYMENT To whom it may concern: This is to certify that my employee, GREGORIO P. ROGELIO bearing SSS ID No. 07-0495213-7 who was first covered effective January, 1974 up to June 30, 1989 inclusive, is now officially separated from my employ effective the 1st of July, 1989. Please be guided accordingly. (SGD.) CRISPIN AMIGO CHAN Proprietor SSS ID No. 07-0595800-4 On March 17, 1997, Rogelio was paid his last salary. Lim, then the Ibajay Branch Manager, informed Rogelio that he was deemed retired as of that date. Chan confirmed to Rogelio that he had already reached the compulsory retirement age when he went to the main office in Kalibo to verify his status. Rogelio was then 67 years old. Considering that Rogelio was supposedly receiving a daily salary of P70.00 until 1997, but did not receive any 13th month pay, service incentive leave, premium pay for holidays and rest days and COLA, and even any retirement benefit from MSDC upon his retirement in March 1997, he commenced his claim for such pay and benefits. In substantiation, Rogelio submitted the January 19, 1998 affidavits of his co- workers, namely: Domingo Guevarra, 4 Juanito Palomata, 5 and Ambrosio Seeres, 6
whereby they each declared under oath that Rogelio had already been working at the Ibajay Branch by the time that MSDCs predecessor had hired them in the 1950s to work in that branch; and that MSDC and Chan had continuously employed them until their own retirements, that is, Guevarra in 1994, and Palomata and Seeres in 1997. They thereby corroborated the history of MSDC and the names of the various Branch Managers as narrated by Rogelio, and confirmed that like Rogelio, they did not receive any retirement benefits from Chan and MSDC upon their retirement. In their defense, MSDC and Chan denied having engaged in copra buying in Ibajay, insisting that they did not ever register in such business in any government agency. They asserted that Lim had not been their agent or employee, because he had been an independent copra buyer. They averred, however, that Rogelio was their former employee, hired on January 3, 1977 and retired on June 30, 1989; 7 and that Rogelio was thereafter employed by Lim starting from July 1, 1989 until the filing of the complaint. 32
MSDC and Chan submitted the affidavit of Lim, whereby Lim stated that Rogelio was one of his employees from 1989 until the termination of his services. 8 They also submitted SSS Form R-1A, Lims SSS Report of Employee-Members (showing that Rogelio and Palomata were reported as Lims employees); 9 Lims application for registration as copra buyer; 10 Chans affidavit; 11 and the affidavit of Guevarra 12 and Seeres, 13 whereby said affiants denied having executed or signed the January 19, 1998 affidavits submitted by Rogelio. In his affidavit, Guevarra recanted the statement attributed to him that he had been employed by Chan and MSDC, and declared that he had been an employee of Lim. Likewise, Guevarras daughter executed an affidavit, 14 averring that his father had been an employee of Lim and that his father had not signed the affidavit dated January 19, 1998. On April 5, 1999, the LA dismissed the complaint against Chan and MSDC, ruling thus: From said evidence, it is our considered view that there exists no employer- employee relationship between the parties effective July 1, 1989 up to the date of the filing of the instant complaint complainant was an employee of Wynne O. Lim. Hence, his claim for retirement should have been filed against the latter for he admitted that he was the employer of herein complainant in his sworn statement dated June 9, 1998. Complainants claim for retirement benefits against herein respondents under RA No. 7641 has been barred by prescription considering the fact that it partakes of the nature of a money claim which prescribed after the lapse of three years after its accrual. The rest of the claims are also dismissed for the same accrued during complainants employment with Wynne O. Lim. WHEREFORE, PREMISES CONSIDERED, this case is hereby DISMISSED for lack of merit. SO ORDERED. 15
Rogelio appealed, but the NLRC affirmed the decision of the LA on January 28, 2000, observing that there could be no double retirement in the private sector; that with the double retirement, Rogelio would be thereby enriching himself at the expense of the Government; and that having retired in 1991, Rogelio could not avail himself of the benefits under Republic Act No. 7641 entitled An Act Amending Article 287 of Presidential Decree No. 442, As Amended, Otherwise Known as The Labor Code Of The Philippines, By Providing for Retirement Pay to Qualified Private Sector Employees in the Absence Of Any Retirement Plan in the Establishment, which took effect only on January 7, 1993. 16
The NLRC denied Rogelios motion for reconsideration. Ruling of the CA Rogelio commenced a special civil action for certiorari in the CA, charging the NLRC with grave abuse of discretion in denying to him the benefits under Republic Act No. 7641, and in rejecting his money claims on the ground of prescription. On October 24, 2003, the CA promulgated its decision, 17 holding that Rogelio had substantially established that he had been an employee of Chan and MSDC, and that the benefits under Republic Act No. 7641 were apart from the retirement benefits that a qualified employee could claim under the Social Security Law, conformably with the ruling in Oro Enterprises, Inc. v. NLRC (G.R. No. 110861, November 14, 1994, 238 SCRA 105). The CA decreed: WHEREFORE, premises considered, the Decision of the public respondent NLRC is hereby VACATED and SET ASIDE. This case is remanded to the Labor Arbiter for the proper computation of the retirement benefits of the petitioner based on Article 287 of the Labor Code, as amended, to be pegged at the minimum wage prevailing in Ibajay, Aklan as of March 17, 1997, and attorneys fees based on the same. Without costs. SO ORDERED. Chan and MSDCs motion for reconsideration was denied by the CA. Issues In this appeal, Chan and MSDC contend that the CA erred: (a) in taking cognizance of Rogelios petition for certiorari despite the decision of the NLRC having become final and executory almost two months before the petition was filed; (b) in concluding that Rogelio had remained their employee from July 6, 1989 up to March 17, 1997; and (c) in awarding retirement benefits and attorneys fees to Rogelio. Ruling The petition for review is barren of merit. I Certiorari was timely commenced in the CA Anent the first error, the Court finds that the CA did not err in taking cognizance of the petition for certiorari of Rogelio. Based on the records, Rogelio received the NLRCs denial of his motion for reconsideration on January 16, 2003. He then had 60 days from January 16, 2003, or until March 17, 2003, within which to file his petition for certiorari. It is without doubt, therefore, that his filing was timely considering that the CA received his petition for certiorari at 2:44 oclock in the afternoon of March 17, 2003. The petitioners insistence, that the issuance of the entry of judgment with respect to the NLRCs decision precluded Rogelio from filing a petition for certiorari, was unwarranted. It ought to be without debate that the finality of the NLRCs decision was of no consequence in the consideration of whether or not he could bring a special civil action for certiorari within the period of 60 days for doing so under Section 4, Rule 65, Rules of Court, simply because the question being thereby raised was jurisdictional. II Respondent remained the petitioners employee despite his supposed separation Did Rogelio remain the employee of the petitioners from July 6, 1989 up to March 17, 1997? The issue of whether or not an employer-employee relationship existed between the petitioners and the respondent in that period was essentially a question of fact. 18 In dealing with such question, substantial evidence that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion 19 is sufficient. Although no particular form of evidence is required to prove the existence of the relationship, and any competent and relevant evidence to prove the relationship may be admitted, 20 a finding that the relationship exists must nonetheless rest on substantial evidence. Generally, the Court does not review errors that raise factual questions, primarily because the Court is not a trier of facts. However, where, like now, there is a conflict between the factual findings of the Labor Arbiter and the NLRC, on the one hand, and those of the CA, on the other hand, 21 it is proper, in the exercise of our equity jurisdiction, to review and re-evaluate the factual issues and to look into the records of the case and re-examine the questioned findings. The CA delved on and resolved the issue of the existence of an employer-employee relationship between the petitioners and the respondent thusly: As to the factual issue, the petitioners evidence consists of his own statements and those of his alleged co-worker from 1950 until 1997, Juanito Palomata, who unlike his former co-workers Domingo Guevarra and Ambrosio Seeres, did not disown the "Sinumpaang Salaysay" he executed, in corroboration of petitioners allegations; and the Certification dated August 10, 1991 stating that petitioner was first placed under coverage of the SSS in January 1974 to June 30, 1989 and was separated from service effective July 1, 1989, a certification executed by respondent Crispin Amigo Chan which, petitioner maintains, was only intended for his application for retirement benefits with the SSS. Private respondents evidence, on the other hand, consisted of respondent Crispin Amigo Chans counter statements as well as documentary evidence consisting of (1) Wayne Lims Affidavit which petitioner acknowledged in his Reply dated July 11, 1998, par. 8, admitting to being the employer of petitioner from July 1, 1989 until the 33
filing of the complaint; (2) Certification dated October 22, 1991 showing petitioners employment with respondents to have been between January 3, 1977 until July 1, 1989; (3) Affidavits of Guevarra and Seeres disowning their signatures in the affidavits submitted in evidence by the petitioner; (4) SSS report executed by Wayne Lim of his initial list of employees as of July 1, 1989 which includes the petitioner. On appeal, the respondents further submitted documentary evidence showing that Wayne Lim registered his business name on July 11, 1989 and apparently went into business buying copra. At this point, we should note the following factual discrepancies in the evidence on hand: First, the respondents issued certificates stating the commencement of petitioners employment on different dates, i.e. January 1974 and January 1977, although the earlier date referred only to the period when petitioner was first placed under the coverage of the SSS, which need not necessarily refer to the commencement of his employment. Secondly, while respondent Crispin Amigo Chan denied having ever engaged in copra buying in Ibajay, the certificates he issued both dated in 1991 state otherwise, for he declared himself as a "copra dealer" with address in Ibajay. Then there is the statement of the petitioner that Wayne Lim was the respondents manager in their branch office in Ibajay since 1984, a statement that respondents failed to disavow. Instead, respondents insisted on their non sequitur argument that they had never engaged in copra buying activities in Ibajay, and that Wayne Lim was in business all by himself in regard to such activity. The denial on respondents part of their copra buying activities in Ibajay begs the obvious question: What were petitioner and his witness Juanito Palomata then doing for respondents as laborers in Ibajay prior to July 1, 1989? Indeed, what did petitioner do for the respondents as the latters laborer prior to July 1, 1989, which was different from what he did after said date? The records showed that he continued doing the same job, i.e. as laborer and trusted employee tasked with the responsibility of getting money from the Kalibo office of respondents which was used to buy copra and pay the employees salaries. He did not only continue doing the same thing but he apparently did the same at or from the same place, i.e. the bodega in Ibajay, which his co-worker Palomata believed to belong to the respondent Masing & Sons. Since respondents admitted to employing petitioner from 1977 to 1989, we have to conclude that, indeed, the bodega in Ibajay was owned by respondents at least prior to July 1, 1989 since petitioner had consistently stated that he worked for the respondents continuously in their branch office in Ibajay under different managers and nowhere else. We believe that the respondents strongest evidence in regard to the alleged separation of petitioner from service effective July 1, 1989 would be the affidavit of Wayne Lim, owning to being the employer of petitioner since July 1, 1989 and the SSS report that he executed listing petitioner as one of his employees since said date. But in light of the incontrovertible physical reality that petitioner and his co- workers did go to work day in and day out for such a long period of time, doing the same thing and in the same place, without apparent discontinuity, except on paper, these documents cannot be taken at their face value. We note that Wayne Lim apparently inherited, at least on paper, ten (10) employees of respondent Crispin Amigo Chan, including petitioner, all on the same day, i.e. on July 1, 1989. We note, too, that while there exists an initial report of employees to the SSS by Wayne Lim, no other document apart from his affidavit and business registration was offered by respondents to bolster their contention, irrespective of the fact that Wayne Lim was not a party respondent. What were the circumstances underlying such alleged mass transfer of employment? Unfortunately, the evidence for the respondents does not provide us with ready answers. We could conclude that respondents sold their business in Ibajay and assets to Wayne Lim on July 1, 1989; however, as pointed out above, respondent Crispin Amigo Chan himself said that he was a "copra dealer" from Ibajay in August and October of 1991. Whether or not he was registered as a copra buyer is immaterial, given that he declared himself a "copra dealer" and had apparently engaged in the activity of buying copra, as shown precisely by the employment of petitioner and Palomata. If Wayne Lim, from being the respondents manager in Ibajay became an independent businessman and took over the respondents business in Ibajay along with all their employees, why did not the respondents simply state that fact for the record? More importantly, why did the petitioner and Palomata continue believing that Wayne Lim was only the respondents manager? Given the long employment of petitioner with the respondents, was it possible for him and his witness to make such mistake? We do not think so. In case of doubt, the doubt is resolved in favor of labor, in favor of the safety and decent living for the laborer as mandated by Article 1702 of the Civil Code. The reality of the petitioners toil speaks louder than words. xxx 22
We agree with the CAs factual findings, because they were based on the evidence and records of the case submitted before the LA. The CA essentially complied with the guidepost that the substantiality of evidence depends on both its quantitative and its qualitative aspects. 23 Indeed, the records substantially established that Chan and MSDC had employed Rogelio until 1997. In contrast, Chan and MSDC failed to adduce credible substantiation of their averment that Rogelio had been Lims employee from July 1989 until 1997. Credible proof that could outweigh the showing by Rogelio to the contrary was demanded of Chan and MSDC to establish the veracity of their allegation, for their mere allegation of Rogelios employment under Lim did not constitute evidence, 24 but they did not submit such proof, sadly failing to discharge their burden of proving their own affirmative allegation. 25 In this regard, as we pointed out at the start, the doubts reasonably arising from the evidence are resolved in favor of the laborer in any controversy between a laborer and his master. III Respondent entitled to retirement benefits from the petitioners Article 287 of the Labor Code, as amended by Republic Act No. 7641, provides: Article 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements; Provided, however, That an employees retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code. Was Rogelio entitled to the retirement benefits under Article 287 of the Labor Code, as amended by Republic Act No. 7641? The CA held so in its decision, to wit: Having reached the conclusion that petitioner was an employee of the respondents from 1950 to March 17, 1997, and considering his uncontroverted allegation that in the Ibajay branch office where he was assigned, respondents employed no less than 12 workers at said later date, thus affording private respondents no relief from the duty of providing retirement benefits to their employees, we see no reason why petitioner should not be entitled to the retirement benefits as provided for under Article 287 of the Labor Code, as amended. The beneficent provisions of said law, as applied in Oro Enterprises Inc. v. NLRC, is apart from the retirement benefits that can be claimed by a qualified employee under the social security law. Attorneys fees are also granted to the petitioner. But the monetary benefits claimed by petitioner cannot be granted on the basis of the evidence at hand. 26
We concur with the CAs holding. The third paragraph of the aforequoted provision of the Labor Code entitled Rogelio to retirement benefits as a necessary consequence of the finding that Rogelio was an employee of MSDC and Chan. Indeed, there should be little, if any, doubt that the benefits under Republic Act No. 7641, which was enacted as a labor protection measure and as a curative statute to respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor, can be extended not only from the date of its enactment but retroactively to the time the employment contracts started. 27
WHEREFORE, the Court denies the petition for review on certiorari, and affirms the decision promulgated on October 24, 2003 in CA-G.R. SP No.75983.Costs of suit to be paid by the petitioners. G.R. No. 167678 June 22, 2010 34
SOUTHEASTERN SHIPPING, SOUTHEASTERN SHIPPING GROUP, LTD., Petitioners, vs. FEDERICO U. NAVARRA, JR., Respondent. D E C I S I O N DEL CASTILLO, J .: Money claims arising from employer-employee relations, including those specified in the Standard Employment Contract for Seafarers, prescribe within three years from the time the cause of action accrues. 1 However, for death benefit claims to prosper, the seafarers death must have occurred during the effectivity of said contract. This Petition for Review assails the January 31, 2005 Decision 2 and the April 4, 2005 Resolution 3 of the Court of Appeals (CA) in CA-G.R. SP. No. 85584. The CA dismissed the petition for certiorari filed before it assailing the May 7, 2003 Decision 4 of the National Labor Relations Commission (NLRC) ordering petitioners to pay to Evelyn J. Navarra (Evelyn), the surviving spouse of deceased Federico U. Navarra, Jr. (Federico), death compensation, allowances of the three minor children, burial expenses plus 10% of the total monetary awards as and for attorney's fees. Factual Antecedents Petitioner Southeastern Shipping, on behalf of its foreign principal, petitioner Southeastern Shipping Group, Ltd., hired Federico to work on board the vessel "George McLeod." Federico signed 10 successive separate employment contracts of varying durations covering the period from October 5, 1995 to March 30, 1998. His latest contract was approved by the Philippine Overseas Employment Administration (POEA) on January 21, 1998 for 56 days extendible for another 56 days. He worked as roustabout during the first contract and as a motorman during the succeeding contracts. On March 6, 1998, Federico, while on board the vessel, complained of having a sore throat and on and off fever with chills. He also developed a soft mass on the left side of his neck. He was given medication. On March 30, 1998, Federico arrived back in the Philippines. On April 21, 1998 the specimen excised from his neck lymph node was found negative for malignancy. 5
On June 4, 1998, he was diagnosed at the Philippine General Hospital to be suffering from a form of cancer called Hodgkin's Lymphoma, Nodular Sclerosing Type (also known as Hodgkin's Disease). This diagnosis was confirmed in another test conducted at the Medical Center Manila on June 8, 1998. On September 6, 1999, Federico filed a complaint against petitioners with the arbitration branch of the NLRC claiming entitlement to disability benefits, loss of earning capacity, moral and exemplary damages, and attorney's fees. During the pendency of the case, on April 29, 2000, Federico died. His widow, Evelyn, substituted him as party complainant on her own behalf and in behalf of their three children. The claim for disability benefits was then converted into a claim for death benefits. Ruling of the Labor Arbiter On May 10, 2000, Labor Arbiter Ermita T. Abrasaldo-Cuyuca rendered a Decision dismissing the complaint on the ground that "Hodgkin's Lymphoma is not one of the occupational or compensable diseases or the exact cause is not known," the dispositive portion of which states: WHEREFORE, premises considered judgment is hereby rendered dismissing the complaint for lack of merit. SO ORDERED. 6
Evelyn appealed the Decision to the NLRC. Ruling of the NLRC On May 7, 2003, the NLRC rendered a Decision reversing that of the Labor Arbiter, the dispositive portion of which provides: WHEREFORE, the appealed decision is REVERSED and SET ASIDE. Judgment is hereby rendered ordering the respondents Southeastern Shipping/Southeastern Shipping Group Ltd. jointly and severally, to pay complainant Evelyn J. Navarra the following: Death compensation - US$ 50,000.00 Minor child allowance (3 x US$ 7,000) - 21,000.00 Burial expense - 1,000.00
Total US$ 72,000.00 Plus 10% of the total monetary awards as and for attorney's fees. SO ORDERED. 7
Petitioners filed a Motion for Reconsideration which was denied by the NLRC. They, thus, filed a petition for certiorari with the CA. Ruling of the Court of Appeals The CA found that the claim for benefits had not yet prescribed despite the complaint being filed more than one year after Federico's return to the Philippines. It also found that although Federico died 17 months after his contract had expired, his heirs could still claim death benefits because the cause of his death was the same illness for which he was repatriated. The dispositive portion of the CA Decision states: WHEREFORE, premises considered, petition is hereby DISMISSED for lack of merit and the May 7, 2003 Decision of the National Labor Relations Commission is hereby AFFIRMED en toto.1avvphi1 SO ORDERED. 8
After the denial by the CA of their motion for reconsideration, petitioners filed the present petition for review. Issues Petitioners raise the following issues: I THE HON. COURT OF APPEALS ERRED IN RULING THAT PRESCRIPTION DOES NOT APPLY DESPITE THE LATE FILING OF THE COMPLAINT OF THE RESPONDENT FEDERICO U. NAVARRA, JR. II THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT HODGKIN'S DISEASE IS A COMPENSABLE ILLNESS. III THE HON. COURT OF APPEALS ERRED IN ITS CONCLUSION THAT PETITIONERS ARE LIABLE FOR THE DEATH OF THE RESPONDENT AS SUCH DEATH WAS DURING THE TERM OF HIS EMPLOYMENT CONTRACT. 9
Petitioners' Arguments Petitioners contend that the factual findings of the CA were not supported by sufficient evidence. They argue that as can be seen from the medical report of Dr. Salim Marangat Paul, Federico suffered from and was treated for Acute Respiratory Tract Infection, not Hodgkin's Disease, during his employment in March 1998. They further contend that Federico returned to the Philippines on March 30, 1998 35
because he had already finished his contract, not because he had to undergo further medical treatment. They also insist that the complaint has already prescribed. Despite having been diagnosed on June 4, 1998 of Hodgkin's Disease, the complaint was filed only on September 6, 1999, one year and five months after Federico arrived in Manila from Qatar. They also posit that respondents are not entitled to the benefits claimed because Federico did not die during the term of his contract and the cause of his death was not contracted by him during the term of his contract. Respondents' Arguments Respondents on the other hand contend that the complaint has not prescribed and that the prescriptive period for filing seafarer claims is three years from the time the cause of action accrued. They claim that in case of conflict between the law and the POEA Contract, it is the law that prevails. Respondents also submit that Federico contracted on board the vessel the illness which later caused his death, hence it is compensable. Our Ruling The petition is partly meritorious. Prescription The employment contract signed by Federico stated that "the same shall be deemed an integral part of the Standard Employment Contract for Seafarers," Section 28 of which states: SECTION 28. JURISDICTION The Philippine Overseas Employment Administration (POEA) or the National Labor Relations Commission (NLRC) shall have original and exclusive jurisdiction over any and all disputes or controversies arising out of or by virtue of this Contract. Recognizing the peculiar nature of overseas shipboard employment, the employer and the seafarer agree that all claims arising from this contract shall be made within one (1) year from the date of the seafarer's return to the point of hire. On the other hand, the Labor Code states: Art. 291. Money claims.-All money claims arising from employer-employee relations during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall forever be barred. The Constitution affirms labor as a primary social economic force. 10 Along this vein, the State vowed to afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. 11
"The employment of seafarers, including claims for death benefits, is governed by the contracts they sign every time they are hired or rehired; and as long as the stipulations therein are not contrary to law, morals, public order or public policy, they have the force of law between the parties." 12
In Cadalin v. POEA's Administrator, 13 we held that Article 291 of the Labor Code covers all money claims from employer-employee relationship. "It is not limited to money claims recoverable under the Labor Code, but applies also to claims of overseas contract workers". 14
Based on the foregoing, it is therefore clear that Article 291 is the law governing the prescription of money claims of seafarers, a class of overseas contract workers. This law prevails over Section 28 of the Standard Employment Contract for Seafarers which provides for claims to be brought only within one year from the date of the seafarers return to the point of hire. Thus, for the guidance of all, Section 28 of the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive period within which the seafarers may file their money claims, is hereby declared null and void. The applicable provision is Article 291 of the Labor Code, it being more favorable to the seafarers and more in accord with the States declared policy to afford full protection to labor. The prescriptive period in the present case is thus three years from the time the cause of action accrues.1avvphi1 In the present case, there is no exact showing of when the cause of action accrued. Nevertheless, it could not have accrued earlier than January 21, 1998 which is the date of his last contract. Hence, the claim has not yet prescribed, since the complaint was filed with the arbitration branch of the NLRC on September 6, 1999. Compensability and Liability In petitions for review on certiorari, only questions of law may be raised, the only exceptions being when the factual findings of the appellate court are erroneous, absurd, speculative, conjectural, conflicting, or contrary to the findings culled by the court of origin. Considering the conflicting findings of the NLRC, the CA and the Labor Arbiter, we are impelled to resolve the factual issues in this case along with the legal ones. 15
Section 20 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels states: A. COMPENSATION AND BENEFITS FOR DEATH 1. In case of death of the seafarer during the term of his contact, the employer shall pay his beneficiaries the Philippine currency equivalent to the amount of Fifty Thousand US Dollars (US$50,000) and an additional amount of Seven Thousand US Dollars (US$7,000) to each child under the age of twenty-one (21) but not exceeding four children, at the exchange rate prevailing during the time of payment. (Emphasis supplied) Thus, as we declared in Gau Sheng Phils., Inc. v. Joaquin, Hermogenes v. Oseo Shipping Services, Inc., Prudential Shipping and Management Corporation v. Sta. Rita, Klaveness Maritime Agency, Inc. v. Beneficiaries of Allas, in order to avail of death benefits, the death of the employee should occur during the effectivity of the employment contract. 16 For emphasis, we reiterate that the death of a seaman during the term of employment makes the employer liable to his heirs for death compensation benefits, but if the seaman dies after the termination of his contract of employment, his beneficiaries are not entitled to the death benefits. 17 Federico did not die while he was under the employ of petitioners. His contract of employment ceased when he arrived in the Philippines on March 30, 1998, whereas he died on April 29, 2000. Thus, his beneficiaries are not entitled to the death benefits under the Standard Employment Contract for Seafarers. Moreover, there is no showing that the cancer was brought about by Federico's stint on board petitioners' vessel. The records show that he got sick a month after he boarded M/V George Mcleod. He was then brought to a doctor who diagnosed him to have acute respiratory tract infection. It was only on June 6, 1998, more than two months after his contract with petitioners had expired, that he was diagnosed to have Hodgkin's Disease. There is no proof and we are not convinced that his exposure to the motor fumes of the vessel, as alleged by Federico, caused or aggravated his Hodgkin's Disease. While the Court adheres to the principle of liberality in favor of the seafarer in construing the Standard Employment Contract, we cannot allow claims for compensation based on surmises. When the evidence presented negates compensability, we have no choice but to deny the claim, lest we cause injustice to the employer. The law in protecting the rights of the employees, authorizes neither oppression nor self-destruction of the employer there may be cases where the circumstances warrant favoring labor over the interests of management but never should the scale be so tilted as to result in an injustice to the employer. 18
WHEREFORE, the petition is PARTLY GRANTED. The January 31, 2005 Decision of the Court of Appeals in CA-G.R. SP No. 85584 holding that the claim for death benefits has not yet prescribed is AFFIRMED with MODIFICATION that petitioners are not liable to pay to respondents death compensation benefits for lack of showing that Federicos disease was brought about by his stint on board petitioners vessels and also considering that his death occurred after the effectivity of his contract.