FIRST DIVISION

[G.R. No. 159577. May 3, 2006.]

CHARLITO PEARANDA, petitioner, vs. BAGANGA PLYWOOD
CORPORATION and HUDSON CHUA, respondents.

DECISION

PANGANIBAN, C.J :
p

Managerial employees and members of the managerial staff are exempted from the
provisions of the Labor Code on labor standards. Since petitioner belongs to this class of
employees, he is not entitled to overtime pay and premium pay for working on rest days.
The Case
Before us is a. Petition for Review 1 under Rule 45 of the Rules of Court, assailing the
January 27, 2003 2 and July 4, 2003 3 Resolutions of the Court of Appeals (CA) in CAG.R. SP No. 74358. The earlier Resolution disposed as follows:
"WHEREFORE, premises considered, the instant petition is hereby
DISMISSED." 4

The latter Resolution denied reconsideration.

On the other hand, the Decision of the National Labor Relations Commission (NLRC)
challenged in the CA disposed as follows:
"WHEREFORE, premises con considered, the decision of the Labor Arbiter
below awarding overtime pay and premium pay for rest day to complainant is
hereby REVERSED and SET ASIDE, and the complaint in the above-entitled
case, dismissed for lack of merit. 5

The Facts
Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of
Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance
of its steam plant boiler. 6 In May 2001, Pearanda filed a Complaint for illegal dismissal

with money claims against BPC and its general manager, Hudson Chua, before the
NLRC. 7
After the parties failed to settle amicably, the labor arbiter 8 directed the parties to file
their position papers and submit supporting documents. 9 Their respective allegations are
summarized by the labor arbiter as follows:
"[Pearanda] through counsel in his position paper alleges that he was
employed by respondent [Banganga] on March 15, 1999 with a monthly salary
of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally
terminated on December 19, 2000. Further, [he] alleges that his services [were]
terminated without the benefit of due process and valid grounds in accordance
with law. Furthermore, he was not paid his overtime pay, premium pay for
working during holidays/rest days, night shift differentials and finally claimed
for payment of damages and attorney's fees having been forced to litigate the
present complaint.
SITCEA

"Upon the other hand, respondent [BPC] is a domestic corporation duly

organized and existing under Philippine laws and is represented herein by its
General Manager HUDSON CHUA, [the] individual respondent. Respondents
thru counsel allege that complainant's separation from service was done
pursuant to Art. 283 of the Labor Code. The respondent [BPC] was on
temporary closure due to repair and general maintenance and it applied for
clearance with the Department of Labor and Employment, Regional Office No.
XI to shut down and to dismiss employees (par. 2 position paper). And due to
the insistence of herein complainant he was paid his separation benefits
(Annexes C and D, ibid). Consequently, when respondent [BPC] partially
reopened in January 2001, [Pearanda] failed to reapply. Hence, he was, not
terminated from employment much less illegally. He opted to severe
employment when he insisted payment of his separation benefits. Furthermore,
being a managerial employee he is not entitled to overtime pay and if ever he
rendered services beyond the normal hours of work, [there] was no office
order/or authorization for him to do so. Finally, respondents allege that the
claim for damages has no legal and factual basis and that they instant complaint
must necessarily fail for lack of merit.'' 10

The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint
was premature because he was still employed by BPC. 11 The temporary closure of
BPC's plant did not terminate his employment, hence, he need not reapply when the plant
reopened.
According to the labor arbiter, petitioner's money claims for illegal dismissal was also
weakened by his quitclaim and admission during the clarificatory conference that he
accepted separation benefits, sick and vacation leave conversions and thirteenth month
pay. 12

Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium pay for
working on rest days, and attorney's fees in the total amount of P21,257.98. 13
Ruling of the NLRC
Respondents filed an appeal to the NLRC, which deleted the award of overtime pay and
premium pay for working on rest days. According to the Commission, petitioner was not
entitled to these awards because he was a managerial employee. 14
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA dismissed Pearanda's Petition for
Certiorari. The appellate court held that he failed to: 1) attach copies of the pleading
submitted before the labor arbiter and NLRC; and 2) explain why the filing and service of
the Petition was not done by personal service. 15
In its later Resolution dated July 4, 2003, the CA denied reconsideration on the ground
that petitioner still failed to submit the pleadings filed before the NLRC. 16
Hence this Petition. 17
The Issues
Petitioner states the issues in this wise:
"The [NLRC] committed grave abuse of discretion amounting to excess or lack
of jurisdiction when it entertained the APPEAL of the respondent[s] despite the
lapse of the mandatory period of TEN DAYS.
"The [NLRC] committed grave abuse of discretion amounting to an excess or
lack of jurisdiction when it rendered the assailed RESOLUTIONS dated May 8,
2002 and AUGUST 16, 2002 REVERSING AND SETTING ASIDE the
FACTUAL AND LEGAL FINDINGS of the [labor arbiter] with respect to the
following:
"I. The finding of the [labor arbiter] that [Pearanda] is a regular,
common employee entitled to monetary benefits under Art. 82 [of the
Labor Code].
"II. The finding that [Pearanda] is entitled to the payment of
OVERTIME PAY and OTHER MONETARY BENEFITS." 18

The Court's Ruling

The Petition is not meritorious.

Preliminary Issue:
Resolution on the Merits
The CA dismissed Pearanda's Petition on purely technical grounds particularly with
regard to the failure to submit supporting documents.
CHATcE

In Atillo v. Bombay, 19 the Court held that the crucial issue is whether the documents
accompanying the petition before the CA sufficiently supported the allegations therein.
Citing this case, Piglas Kamao v. NLRC 20 stayed the dismissal of an appeal in the
exercise of its equity jurisdiction to order the adjudication on the merits.
The Petition filed with the CA shows a prima facie case. Petitioner attached his evidence
to challenge the finding that he was a managerial employee. 21 IN his Motion for
Reconsideration, petitioner also submitted the pleadings before the labor arbiter in an
attempt to comply with the CA rules. 22 Evidently, the CA could have ruled on the
Petition on the basis of these attachments. Petitioner should be deemed in substantial
compliance with the procedural requirements.
Under these extenuating circumstances, the Court does not hesitate to grant liberality in
favor of petitioner and to tackle his substantive arguments in the present case. Rules of
procedure must be adopted to help promote, not frustrate, substantial justice. 23 The
Court frowns upon the practice of dismissing cases purely on procedural grounds. 24
Considering that there was substantial compliance, 25 a liberal interpretation of
procedural rules in this labor case is more in keeping with the constitutional mandate to
secure social justice. 26
First Issue:
Timeliness of Appeal
Under the Rules of Procedure of the NLRC, an appeal from the decision of the labor
arbiter should he filed within 10 days from receipt thereof. 27
Petitioner's claim that respondents filed their appeal beyond the required period is not
substantiated. In the pleadings before us, petitioner fails to indicate when respondents
received the Decision of the labor arbiter. Neither did the petitioner attach a copy of the
challenged appeal. Thus, this Court has no means to determine from the records when the
10-day period commenced and terminated. Since petitioner utterly failed to support his
claim that respondents' appeal was filed out of time, we need not belabor that point. The
parties alleging have the burden of substantiating their allegations. 28
Second Issue:
Nature of Employment

Petitioner claims that he was not a managerial employee, and therefore, entitled to the
award granted by the labor arbiter.
Article 82 of the Labor Code exempts managerial employees from the coverage of labor
standards. Labor standards provide the working conditions of employees, including
entitlement to overtime pay and premium pay for working on rest days. 29 Under this
provision, managerial employees are "those whose primary duty consists of the
management of the establishment in which they are employed or of a department or
subdivision." 30
The Implementing Rules of the Labor Code state that managerial employees are those
who meet the following conditions:
"(1) Their primary duty consists of the management of the establishment in
which they are employed or of a department or subdivision thereof;
"(2) They customarily and regularly direct the work of two or more employees
therein;
"(3) They have the authority to hire or fire other employees of lower rank; or
their suggestions and recommendations as to the hiring and firing and as to the
promotion or any other change of status of other employees are given particular
weight." 31

The Court disagrees with the NLRC's finding that petitioner was a managerial employee.
However, petitioner was a member of the managerial staff, which also takes him out of
the coverage of labor standards. Like managerial employees, officers and member of the
managerial staff are not entitled to the provisions of law on labor standards. 32 The
Implementing Rules of the Labor Code define members of a managerial staff as those
with the following duties and responsibilities:

"(1) The primary duty consists of the performance of work directly related to
management policies of the employer;
TSacID

"(2) Customarily and regularly exercise discretion and independent judgment;

"(3) (i) Regularly and directly assist a proprietor or a managerial employee
whose primary duty consists of the management of the establishment in which
he is employed or subdivision thereof; or (ii) execute under general supervision
work along specialized or technical lines requiring special training, experience,
or knowledge; or (iii) execute under general supervision special assignments
and tasks; and

"(4) who do not devote more than 20 percent of their hours worked in a
workweek to activities which are not directly and closely related to the
performance of the work described in paragraphs (1), (2), and (3) above." 33
"1. To supply the required and continuous steam to all consuming units at
minimum cost.
"2. To supervise, check and monitor manpower workmanship as well as
operation of boiler and accessories.
"3. To evaluate performance of machinery and manpower.
"4. To follow-up supply of waste and other materials for fuel.
"5. To train new employees for effective and safety white working.
"6. Recommend parts and suppliers purchases.
"7. To recommend personnel actions such as: promotion, or disciplinary action.
"8. To check water from the boiler, feedwater and softener, regenerate softener
if beyond hardness limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from time to time." 34

The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner

was a member of the managerial staff. His duties and responsibilities conform to the
definition of a member of a managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved
overseeing the operation of the machines and the performance of the workers in the
engineering section. This work necessarily required the use of discretion and independent
judgment to ensure the proper functioning of the steam plant boiler. As supervisor,
petitioner is deemed a member of the managerial staff. 35
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he
stated that he was the foreman responsible for the operation of the boiler. 36 The term
foreman implies that he was the representative of management over the workers and the
operation of the department. 37 Petitioner's evidence also showed that he was the
supervisor of the steam plant. 38 His classification as supervisors is further evident from
the manner his salary was paid. He belonged to the 10% of respondent's 354 employees
who were paid on a monthly basis; the others were paid only on a daily basis. 39

On the basis of the foregoing, the Court finds no justification to award overtime pay and
premium pay for rest days to petitioner.
EHSTDA

WHEREFORE, the Petition is DENIED. Costs against petitioner.

SO ORDERED.
Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ., concur.
Chico-Nazario, J., is on official leave.
(Pearanda v. Baganga Plywood Corp., G.R. No. 159577, [May 3, 2006], 522 PHIL
640-653)
|||

FIRST DIVISION
[G.R. No. 169717. March 16, 2011.]
SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL
SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR
EMPOWERMENT AND REFORMS (SMCC-SUPER),
ZACARRIAS JERRY VICTORIO-Union President, petitioner, vs.
CHARTER CHEMICAL AND COATING CORPORATION,
respondent.

DECISION

DEL CASTILLO, J :
p

The right to file a petition for certification election is accorded to a labor

organization provided that it complies with the requirements of law for proper
registration. The inclusion of supervisory employees in a labor organization seeking
to represent the bargaining unit of rank-and-file employees does not divest it of its
status as a legitimate labor organization. We apply these principles to this case.
EaHATD

This Petition for Review on Certiorari seeks to reverse and set aside the Court
of Appeal's March 15, 2005 Decision 1 in CA-G.R. SP No. 58203, which annulled
and set aside the January 13, 2000 Decision 2 of the Department of Labor and
Employment (DOLE) in OS-A-6-53-99 (NCR-OD-M-9902-019) and the September
16, 2005 Resolution 3 denying petitioner union's motion for reconsideration.
Factual Antecedents
On February 19, 1999, Samahang Manggagawa sa Charter Chemical
Solidarity of Unions in the Philippines for Empowerment and Reforms (petitioner
union) filed a petition for certification election among the regular rank-and-file
employees of Charter Chemical and Coating Corporation (respondent company) with
the Mediation Arbitration Unit of the DOLE, National Capital Region.
On April 14, 1999, respondent company filed an Answer with Motion to
Dismiss 4 on the ground that petitioner union is not a legitimate labor organization
because of (1) failure to comply with the documentation requirements set by law, and
(2) the inclusion of supervisory employees within petitioner union. 5
Med-Arbiter's Ruling
On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decision 6
dismissing the petition for certification election. The Med-Arbiter ruled that petitioner

union is not a legitimate labor organization because the Charter Certificate, "Samasamang Pahayag ng Pagsapi at Authorization," and "Listahan ng mga Dumalo sa
Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas"
were not executed under oath and certified by the union secretary and attested to by
the union president as required by Section 235 of the Labor Code 7 in relation to
Section 1, Rule VI of Department Order (D.O.) No. 9, series of 1997. The union
registration was, thus, fatally defective.
The Med-Arbiter further held that the list of membership of petitioner union
consisted of 12 batchman, mill operator and leadman who performed supervisory
functions. Under Article 245 of the Labor Code,said supervisory employees are
prohibited from joining petitioner union which seeks to represent the rank-and-file
employees of respondent company.
As a result, not being a legitimate labor organization, petitioner union has no
right to file a petition for certification election for the purpose of collective
bargaining.
Department of Labor and Employment's Ruling
On July 16, 1999, the DOLE initially issued a Decision 8 in favor of
respondent company dismissing petitioner union's appeal on the ground that the
latter's petition for certification election was filed out of time. Although the DOLE
ruled, contrary to the findings of the Med-Arbiter, that the charter certificate need not
be verified and that there was no independent evidence presented to establish
respondent company's claim that some members of petitioner union were holding
supervisory positions, the DOLE sustained the dismissal of the petition for
certification after it took judicial notice that another union, i.e., Pinag-isang Lakas
Manggagawa sa Charter Chemical and Coating Corporation, previously filed a
petition for certification election on January 16, 1998. The Decision granting the said
petition became final and executory on September 16, 1998 and was remanded for
immediate implementation. Under Section 7, Rule XI of D.O. No. 9, series of 1997, a
motion for intervention involving a certification election in an unorganized
establishment should be filed prior to the finality of the decision calling for a
certification election. Considering that petitioner union filed its petition only on
February 14, 1999, the same was filed out of time.
DaScHC

On motion for reconsideration, however, the DOLE reversed its earlier ruling.
In its January 13, 2000 Decision, the DOLE found that a review of the records
indicates that no certification election was previously conducted in respondent
company. On the contrary, the prior certification election filed by Pinag-isang Lakas
Manggagawa sa Charter Chemical and Coating Corporation was, likewise, denied by
the Med-Arbiter and, on appeal, was dismissed by the DOLE for being filed out of
time. Hence, there was no obstacle to the grant of petitioner union's petition for
certification election, viz.:

WHEREFORE, the motion for reconsideration is hereby GRANTED and the

decision of this Office dated 16 July 1999 is MODIFIED to allow the
certification election among the regular rank-and-file employees of Charter
Chemical and Coating Corporation with the following choices:
1. Samahang Manggagawa sa Charter Chemical-Solidarity of Unions in the
Philippines for Empowerment and Reform (SMCC-SUPER); and
2. No Union.
Let the records of this case be remanded to the Regional Office of origin for the
immediate conduct of a certification election, subject to the usual pre-election
conference.
SO DECIDED. 9

Court of Appeal's Ruling

On March 15, 2005, the CA promulgated the assailed Decision, viz.:
WHEREFORE, the petition is hereby GRANTED. The assailed Decision and
Resolution dated January 13, 2000 and February 17, 2000 are hereby
[ANNULLED] and SET ASIDE.
SO ORDERED. 10

In nullifying the decision of the DOLE, the appellate court gave credence to the
findings of the Med-Arbiter that petitioner union failed to comply with the
documentation requirements under the Labor Code. It, likewise, upheld the MedArbiter's finding that petitioner union consisted of both rank-and-file and supervisory
employees. Moreover, the CA held that the issues as to the legitimacy of petitioner
union may be attacked collaterally in a petition for certification election and the
infirmity in the membership of petitioner union cannot be remedied through the
exclusion-inclusion proceedings in a pre-election conference pursuant to the ruling in
Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union. 11
Thus, considering that petitioner union is not a legitimate labor organization, it has no
legal right to file a petition for certification election.
Issues
I
Whether . . . the Honorable Court of Appeals committed grave abuse of
discretion tantamount to lack of jurisdiction in granting the respondent
[company's] petition for certiorari (CA G.R. No. SP No. 58203) in spite of the

fact that the issues subject of the respondent company['s] petition was already
settled with finality and barred from being re-litigated.
II
Whether . . . the Honorable Court of Appeals committed grave abuse of
discretion tantamount to lack of jurisdiction in holding that the alleged mixture
of rank-and-file and supervisory employee[s] of petitioner [union's] membership
is [a] ground for the cancellation of petitioner [union's] legal personality and
dismissal of [the] petition for certification election.
III
Whether . . . the Honorable Court of Appeals committed grave abuse of
discretion tantamount to lack of jurisdiction in holding that the alleged failure to
certify under oath the local charter certificate issued by its mother federation
and list of the union membership attending the organizational meeting [is a
ground] for the cancellation of petitioner [union's] legal personality as a labor
organization and for the dismissal of the petition for certification election. 12
DSHcTC

Petitioner Union's Arguments

Petitioner union claims that the litigation of the issue as to its legal personality
to file the subject petition for certification election is barred by the July 16, 1999
Decision of the DOLE. In this decision, the DOLE ruled that petitioner union
complied with all the documentation requirements and that there was no independent
evidence presented to prove an illegal mixture of supervisory and rank-and-file
employees in petitioner union. After the promulgation of this Decision, respondent
company did not move for reconsideration, thus, this issue must be deemed settled.
Petitioner union further argues that the lack of verification of its charter
certificate and the alleged illegal composition of its membership are not grounds for
the dismissal of a petition for certification election under Section 11, Rule XI of D.O.
No. 9, series of 1997, as amended, nor are they grounds for the cancellation of a
union's registration under Section 3, Rule VIII of said issuance. It contends that what
is required to be certified under oath by the local union's secretary or treasurer and
attested to by the local union's president are limited to the union's constitution and bylaws, statement of the set of officers, and the books of accounts.
Finally, the legal personality of petitioner union cannot be collaterally attacked
but may be questioned only in an independent petition for cancellation pursuant to
Section 5, Rule V, Book IV of the Rules to Implement the Labor Code and the
doctrine enunciated in Tagaytay Highlands International Golf Club Incorporated v.
Tagaytay Highlands Employees Union-PTGWO. 13
Respondent Company's Arguments

Respondent company asserts that it cannot be precluded from challenging the

July 16, 1999 Decision of the DOLE. The said decision did not attain finality because
the DOLE subsequently reversed its earlier ruling and, from this decision, respondent
company timely filed its motion for reconsideration.
On the issue of lack of verification of the charter certificate, respondent
company notes that Article 235 of the Labor Code and Section 1, Rule VI of the
Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, expressly
requires that the charter certificate be certified under oath.
It also contends that petitioner union is not a legitimate labor organization
because its composition is a mixture of supervisory and rank-and-file employees in
violation of Article 245 of the Labor Code.Respondent company maintains that the
ruling in Toyota Motor Philippines vs. Toyota Motor Philippines Labor Union 14
continues to be good case law. Thus, the illegal composition of petitioner union
nullifies its legal personality to file the subject petition for certification election and
its legal personality may be collaterally attacked in the proceedings for a petition for
certification election as was done here.
CAaSHI

Our Ruling
The petition is meritorious.
The issue as to the legal personality of
petitioner union is not barred by the July
16, 1999 Decision of the DOLE.
A review of the records indicates that the issue as to petitioner union's legal
personality has been timely and consistently raised by respondent company before the
Med-Arbiter, DOLE, CA and now this Court. In its July 16, 1999 Decision, the
DOLE found that petitioner union complied with the documentation requirements of
the Labor Code and that the evidence was insufficient to establish that there was an
illegal mixture of supervisory and rank-and-file employees in its membership.
Nonetheless, the petition for certification election was dismissed on the ground that
another union had previously filed a petition for certification election seeking to
represent the same bargaining unit in respondent company. Upon motion for
reconsideration by petitioner union on January 13, 2000, the DOLE reversed its
previous ruling. It upheld the right of petitioner union to file the subject petition for
certification election because its previous decision was based on a mistaken
appreciation of facts. 15 From this adverse decision, respondent company timely
moved for reconsideration by reiterating its previous arguments before the MedArbiter that petitioner union has no legal personality to file the subject petition for
certification election.
The July 16, 1999 Decision of the DOLE, therefore, never attained finality
because the parties timely moved for reconsideration. The issue then as to the legal

personality of petitioner union to file the certification election was properly raised
before the DOLE, the appellate court and now this Court.
The
charter
certified
under
secretary
or
its president.

certificate
oath
by
treasurer
and

need
not
the
local
attested
to

be
union's
by

Preliminarily, we must note that Congress enacted Republic Act (R.A.) No.
9481 16 which took effect on June 14, 2007. 17 This law introduced substantial
amendments to the Labor Code. However, since the operative facts in this case
occurred in 1999, we shall decide the issues under the pertinent legal provisions then
in force (i.e., R.A. No. 6715, 18 amending Book V of the Labor Code,and the rules
and regulations 19 implementing R.A. No. 6715, as amended by D.O. No. 9, 20 series
of 1997) pursuant to our ruling in Republic v. Kawashima Textile Mfg., Philippines,
Inc. 21
In the main, the CA ruled that petitioner union failed to comply with the
requisite documents for registration under Article 235 of the Labor Code and its
implementing rules. It agreed with the Med-Arbiter that the Charter Certificate, Samasamang Pahayag ng Pagsapi at Authorization, and Listahan ng mga Dumalo sa
Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas were
not executed under oath. Thus, petitioner union cannot be accorded the status of a
legitimate labor organization.
We disagree.
The then prevailing Section 1, Rule VI of the Implementing Rules of Book V,
as amended by D.O. No. 9, series of 1997, provides:
Section 1. Chartering and creation of a local chapter. A duly registered
federation or national union may directly create a local/chapter by submitting to
the Regional Office or to the Bureau two (2) copies of the following:
(a) A charter certificate issued by the federation or national union indicating the
creation or establishment of the local/chapter;
(b) The names of the local/chapter's officers, their addresses, and the principal
office of the local/chapter; and
(c) The local/chapter's constitution and by-laws provided that where the
local/chapter's constitution and by-laws [are] the same as [those] of the
federation or national union, this fact shall be indicated accordingly.
IDTcHa

All the foregoing supporting requirements shall be certified under oath by the
Secretary or the Treasurer of the local/chapter and attested to by its President.

As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan

ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa
Saligang Batas are not among the documents that need to be submitted to the
Regional Office or Bureau of Labor Relations in order to register a labor organization.
As to the charter certificate, the above-quoted rule indicates that it should be executed
under oath. Petitioner union concedes and the records confirm that its charter
certificate was not executed under oath. However, in San Miguel Corporation
(Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San
Miguel Corporation Monthlies Rank-and-File Union-FFW (MPPP-SMPPSMAMRFU-FFW), 22 which was decided under the auspices of D.O. No. 9, Series of
1997, we ruled
In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356
(1996), the Court ruled that it was not necessary for the charter certificate to be
certified and attested by the local/chapter officers. Id. While this ruling was
based on the interpretation of the previous Implementing Rules provisions
which were supplanted by the 1997 amendments, we believe that the same
doctrine obtains in this case. Considering that the charter certificate is
prepared and issued by the national union and not the local/chapter, it does not
make sense to have the local/chapter's officers . . . certify or attest to a
document which they had no hand in the preparation of. 23 (Emphasis
supplied)

In accordance with this ruling, petitioner union's charter certificate need not be
executed under oath. Consequently, it validly acquired the status of a legitimate labor
organization upon submission of (1) its charter certificate, 24 (2) the names of its
officers, their addresses, and its principal office, 25 and (3) its constitution and bylaws 26 the last two requirements having been executed under oath by the proper
union officials as borne out by the records.
The
supervisory
union
personality
organization.

mixture
does
as

of
employees
not
a

rank-and-file
in
nullify
its
legitimate

and
petitioner
legal
labor

The CA found that petitioner union has for its membership both rank-and-file
and supervisory employees. However, petitioner union sought to represent the
bargaining unit consisting of rank-and-file employees. Under Article 245 27 of the
Labor Code,supervisory employees are not eligible for membership in a labor
organization of rank-and-file employees. Thus, the appellate court ruled that petitioner
union cannot be considered a legitimate labor organization pursuant to Toyota Motor
Philippines v. Toyota Motor Philippines Corporation Labor Union 28 (hereinafter
Toyota).

Preliminarily, we note that petitioner union questions the factual findings of the
Med-Arbiter, as upheld by the appellate court, that 12 of its members, consisting of
batchman, mill operator and leadman, are supervisory employees. However, petitioner
union failed to present any rebuttal evidence in the proceedings below after
respondent company submitted in evidence the job descriptions 29 of the aforesaid
employees. The job descriptions indicate that the aforesaid employees exercise
recommendatory managerial actions which are not merely routinary but require the
use of independent judgment, hence, falling within the definition of supervisory
employees under Article 212 (m) 30 of the Labor Code.For this reason, we are
constrained to agree with the Med-Arbiter, as upheld by the appellate court, that
petitioner union consisted of both rank-and-file and supervisory employees.
TDCAHE

Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner

union does not divest it of its status as a legitimate labor organization. The appellate
court's reliance on Toyota is misplaced in view of this Court's subsequent ruling in
Republic v. Kawashima Textile Mfg., Philippines, Inc. 31 (hereinafter Kawashima). In
Kawashima, we explained at length how and why the Toyota doctrine no longer holds
sway under the altered state of the law and rules applicable to this case, viz.:
R.A. No. 6715 omitted specifying the exact effect any violation of the
prohibition [on the co-mingling of supervisory and rank-and-file
employees] would bring about on the legitimacy of a labor organization.
It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended
Omnibus Rules) which supplied the deficiency by introducing the following
amendment to Rule II (Registration of Unions):
"Sec. 1. Who may join unions. . . . Supervisory employees and
security guards shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or
form separate labor organizations of their own; Provided, that those
supervisory employees who are included in an existing rank-and-file
bargaining unit, upon the effectivity of Republic Act No. 6715, shall
remain in that unit . . . ." (Emphasis supplied.)
and Rule V (Representation Cases and Internal-Union Conflicts) of the
Omnibus Rules, viz.:
"Sec. 1. Where to file. A petition for certification election may be
filed with the Regional Office which has jurisdiction over the principal
office of the employer. The petition shall be in writing and under oath.
Sec. 2. Who may file. Any legitimate labor organization or the
employer, when requested to bargain collectively, may file the petition.

The petition, when filed by a legitimate labor organization, shall contain,

among others:
xxx xxx xxx
(c) description of the bargaining unit which shall be the
employer unit unless circumstances otherwise require; and
provided further, that the appropriate bargaining unit of the
rank-and-file employees shall not include supervisory
employees and/or security guards." (Emphasis supplied.)
By that provision, any questioned mingling will prevent an otherwise legitimate
and duly registered labor organization from exercising its right to file a petition
for certification election.
Thus, when the issue of the effect of mingling was brought to the fore in Toyota,
the Court, citing Article 245 of the Labor Code, as amended by R.A. No. 6715,
held:
"Clearly, based on this provision, a labor organization composed of both
rank-and-file and supervisory employees is no labor organization at all.
It cannot, for any guise or purpose, be a legitimate labor organization.
Not being one, an organization which carries a mixture of rank-andfile and supervisory employees cannot possess any of the rights of a
legitimate labor organization, including the right to file a petition
for certification election for the purpose of collective bargaining. It
becomes necessary, therefore, anterior to the granting of an order
allowing a certification election, to inquire into the composition of
any labor organization whenever the status of the labor organization
is challenged on the basis of Article 245 of the Labor Code.
EaIDAT

xxx xxx xxx

In the case at bar, as respondent union's membership list contains the
names of at least twenty-seven (27) supervisory employees in Level Five
positions, the union could not, prior to purging itself of its supervisory
employee members, attain the status of a legitimate labor organization.
Not being one, it cannot possess the requisite personality to file a
petition for certification election." (Emphasis supplied)
In Dunlop, in which the labor organization that filed a petition for certification
election was one for supervisory employees, but in which the membership
included rank-and-file employees, the Court reiterated that such labor
organization had no legal right to file a certification election to represent a
bargaining unit composed of supervisors for as long as it counted rank-and-file
employees among its members.

It should be emphasized that the petitions for certification election involved in

Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995,
respectively; hence, the 1989 Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further
amended by Department Order No. 9, series of 1997 (1997 Amended Omnibus
Rules). Specifically, the requirement under Sec. 2(c) of the 1989 Amended
Omnibus Rules that the petition for certification election indicate that the
bargaining unit of rank-and-file employees has not been mingled with
supervisory employees was removed. Instead, what the 1997 Amended
Omnibus Rules requires is a plain description of the bargaining unit, thus:
Rule XI
Certification Elections
xxx xxx xxx
Sec. 4. Forms and contents of petition. The petition shall be in
writing and under oath and shall contain, among others, the following: . .
. (c) The description of the bargaining unit.
In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the
validity of the 1997 Amended Omnibus Rules, although the specific provision
involved therein was only Sec. 1, Rule VI, to wit:
"Section 1. Chartering and creation of a local/chapter. A duly
registered federation or national union may directly create a
local/chapter by submitting to the Regional Office or to the Bureau two
(2) copies of the following: a) a charter certificate issued by the
federation or national union indicating the creation or establishment of
the local/chapter; (b) the names of the local/chapter's officers, their
addresses, and the principal office of the local/chapter; and (c) the
local/chapter's constitution and by-laws; provided that where the
local/chapter's constitution and by-laws is the same as that of the
federation or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath
by the Secretary or the Treasurer of the local/chapter and attested to by
its President."
which does not require that, for its creation and registration, a local or chapter
submit a list of its members.
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands
Employees Union-PGTWO in which the core issue was whether mingling

affects the legitimacy of a labor organization and its right to file a petition for
certification election. This time, given the altered legal milieu, the Court
abandoned the view in Toyota and Dunlop and reverted to its pronouncement in
Lopez that while there is a prohibition against the mingling of supervisory and
rank-and-file employees in one labor organization, the Labor Code does not
provide for the effects thereof. Thus, the Court held that after a labor
organization has been registered, it may exercise all the rights and privileges of
a legitimate labor organization. Any mingling between supervisory and rankand-file employees in its membership cannot affect its legitimacy for that is not
among the grounds for cancellation of its registration, unless such mingling was
brought about by misrepresentation, false statement or fraud under Article 239
of the Labor Code.
ATcaEH

In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue

Packing Products Plants-San Miguel Packaging Products-San Miguel Corp.
Monthlies Rank-and-File Union-FFW, the Court explained that since the 1997
Amended Omnibus Rules does not require a local or chapter to provide a list of
its members, it would be improper for the DOLE to deny recognition to said
local or chapter on account of any question pertaining to its individual members.
More to the point is Air Philippines Corporation v. Bureau of Labor Relations,
which involved a petition for cancellation of union registration filed by the
employer in 1999 against a rank-and-file labor organization on the ground of
mixed membership: the Court therein reiterated its ruling in Tagaytay
Highlands that the inclusion in a union of disqualified employees is not among
the grounds for cancellation, unless such inclusion is due to misrepresentation,
false statement or fraud under the circumstances enumerated in Sections (a) and
(c) of Article 239 of the Labor Code.
All said, while the latest issuance is R.A. No. 9481, the 1997 Amended
Omnibus Rules, as interpreted by the Court in Tagaytay Highlands, San Miguel
and Air Philippines, had already set the tone for it. Toyota and Dunlop no longer
hold sway in the present altered state of the law and the rules. 32 [Underline
supplied]

The applicable law and rules in the instant case are the same as those in
Kawashima because the present petition for certification election was filed in 1999
when D.O. No. 9, series of 1997, was still in effect. Hence, Kawashima applies with
equal force here. As a result, petitioner union was not divested of its status as a
legitimate labor organization even if some of its members were supervisory
employees; it had the right to file the subject petition for certification election.
The
legal
personality
of
cannot
be
collaterally
respondent
company
in
election proceedings.

petitioner
attacked
the

union
by
certification

Petitioner union correctly argues that its legal personality cannot be collaterally
attacked in the certification election proceedings. As we explained in Kawashima:
Except when it is requested to bargain collectively, an employer is a mere
bystander to any petition for certification election; such proceeding is nonadversarial and merely investigative, for the purpose thereof is to determine
which organization will represent the employees in their collective bargaining
with the employer. The choice of their representative is the exclusive concern of
the employees; the employer cannot have any partisan interest therein; it cannot
interfere with, much less oppose, the process by filing a motion to dismiss or an
appeal from it; not even a mere allegation that some employees participating in
a petition for certification election are actually managerial employees will lend
an employer legal personality to block the certification election. The employer's
only right in the proceeding is to be notified or informed thereof.
The amendments to the Labor Code and its implementing rules have buttressed
that policy even more. 33

WHEREFORE, the petition is GRANTED. The March 15, 2005 Decision

and September 16, 2005 Resolution of the Court of Appeals in CA-G.R. SP No.
58203 are REVERSED and SET ASIDE. The January 13, 2000 Decision of the
Department of Labor and Employment in OS-A-6-53-99 (NCR-OD-M-9902-019) is
REINSTATED.
cTSDAH

No pronouncement as to costs.
SO ORDERED.
Corona, C.J., Velasco, Jr., Leonardo-de Castro and Perez, JJ., concur.
(Samahang Manggagawa sa Charter Chemical-Super v. Charter Chemical and Coating
Corp., G.R. No. 169717, [March 16, 2011], 661 PHIL 175-194)
|||

THIRD DIVISION
[G.R. No. 187887. September 7, 2011.]
PAMELA FLORENTINA P. JUMUAD, petitioner, vs. HI-FLYER
FOOD, INC. and/or JESUS R. MONTEMAYOR, respondents.

DECISION

MENDOZA, J :
p

This is a petition for review on certiorari assailing the April 20, 2009 Decision
1 of the Court of Appeals (CA) in CA-G.R. SP No. 03346, which reversed the August
10, 2006 Decision 2 and the November 29, 2007 Resolution 3 of the National Labor
Relations Commission, 4th Division (NLRC), in NLRC Case No. V-000813-06. The
NLRC Decision and Resolution affirmed in toto the Decision 4 of the Labor Arbiter
Julie C. Ronduque (LA) in RAB Case No. VII-10-2269-05 favoring the petitioner.
The Facts:
On May 22, 1995, petitioner Pamela Florentina P. Jumuad (Jumuad) began her
employment with respondent Hi-Flyer Food, Inc. (Hi-Flyer), as management trainee.
Hi-Flyer is a corporation licensed to operate Kentucky Fried Chicken (KFC)
restaurants in the Philippines. Based on her performance through the years, Jumuad
received several promotions until she became the area manager for the entire VisayasMindanao 1 region, comprising the provinces of Cebu, Bacolod, Iloilo and Bohol. 5
Aside from being responsible in monitoring her subordinates, Jumuad was
tasked to: 1) be highly visible in the restaurants under her jurisdiction; 2) monitor and
support day-to-day operations; and 3) ensure that all the facilities and equipment at
the restaurant were properly maintained and serviced. 6 Among the branches under
her supervision were the KFC branches in Gaisano Mall, Cebu City (KFC-Gaisano);
in Cocomall, Cebu City (KFC-Cocomall); and in Island City Mall, Bohol (KFCBohol).
As area manager, Jumuad was allowed to avail of Hi-Flyer's car loan program,
7 wherein forty (40%) percent of the total loanable amount would be subsidized by
Hi-Flyer and the remaining sixty (60%) percent would be deducted from her salary. It
was also agreed that in the event that she would resign or would be terminated prior to
the payment in full of the said car loan, she could opt to surrender the car to Hi-Flyer
or to pay the full balance of the loan. 8
DAHEaT

In just her first year as Area Manager, Jumuad gained distinction and was
awarded the 3rd top area manager nationwide. She was rewarded with a trip to
Singapore for her excellent performance. 9
On October 4, 2004, Hi-Flyer conducted a food safety, service and sanitation
audit at KFC-Gaisano. The audit, denominated as CHAMPS Excellence Review
(CER), revealed several sanitation violations, such as the presence of rodents and the
use of a defective chiller for the storage of food. 10 When asked to explain, Jumuad
first pointed out that she had already taken steps to prevent the further infestation of
the branch. As to why the branch became infested with rodents, Jumuad faulted
management's decision to terminate the services of the branch's pest control program
and to rely solely on the pest control program of the mall. As for the defective chiller,
she explained that it was under repair at the time of the CER. 11 Soon thereafter, HiFlyer ordered the KFC-Gaisano branch closed.
Then, sometime in June of 2005, Hi-Flyer audited the accounts of KFC-Bohol
amid reports that certain employees were covering up cash shortages. As a result, the
following irregularities were discovered: 1) cash shortage amounting to P62,290.85;
2) delay in the deposits of cash sales by an average of three days; 3) the presence of
two sealed cash-for-deposit envelopes containing paper cut-outs instead of cash; 4)
falsified entries in the deposit logbook; 5) lapses in inventory control; and 6) material
product spoilage. 12 In her report regarding the incident, Jumuad disclaimed any fault
in the incident by pointing out that she was the one responsible for the discovery of
this irregularity. 13
On August 7, 2005, Hi-Flyer conducted another CER, this time at its KFCCocomall branch. Grout and leaks at the branch's kitchen wall, dried up spills from
the marinator, as well as a live rat under postmix, and signs of rodent
gnawing/infestation were found. 14 This time, Jumuad explained to management that
she had been busy conducting management team meetings at the other KFC branches
and that, at the date the CER was conducted, she had no scheduled visit at the KFCCocomall branch. 15
Seeking to hold Jumuad accountable for the irregularities uncovered in the
branches under her supervision, Hi-Flyer sent Jumuad an Irregularities Report 16 and
Notice of Charges 17 which she received on September 5, 2005. On September 7,
2005 Jumuad submitted her written explanation. 18 On September 28, 2005, Hi-Flyer
held an administrative hearing where Jumuad appeared with counsel. Apparently not
satisfied with her explanations, Hi-Flyer served her a Notice of Dismissal 19 dated
October 14, 2005, effecting her termination on October 17, 2005.
TESDcA

This prompted Jumuad to file a complaint against Hi-Flyer and/or Jesus R.

Montemayor (Montemayor) for illegal dismissal before the NLRC on October 17,
2005, praying for reinstatement and payment of separation pay, 13th month pay,
service incentive leave, moral and exemplary damages, and attorney's fees. Jumuad

also sought the reimbursement of the amount equivalent to her forty percent (40%)
contribution to Hi-Flyer's subsidized car loan program.
While the LA found that Jumuad was not completely blameless for the
anomalies discovered, she was of the view that the employer's prerogative to dismiss
or layoff an employee "must be exercised without abuse of discretion" and "should be
tempered with compassion and understanding." 20 Thus, the dismissal was too harsh
considering the circumstances. After finding that no serious cause for termination
existed, the LA ruled that Jumuad was illegally dismissed. The LA disposed:
WHEREFORE, VIEWED FROM THE FOREGOING PREMISES, judgment is
hereby rendered declaring complainant's dismissal as ILLEGAL. Consequently,
reinstatement not being feasible, respondents HI-FLYER FOOD, INC. AND
OR JESUS R. MONTEMAYOR are hereby ordered to pay, jointly and
severally, complainant PAMELA FLORENTINA P. JUMUAD, the total
amount of THREE HUNDRED THIRTY-SIX THOUSAND FOUR
HUNDRED PESOS (P336,400.00), Philippine currency, representing
Separation Pay, within ten (10) days from receipt hereof, through the Cashier of
this Arbitration Branch.
Further, same respondents are ordered to reimburse complainant an amount
equivalent to 40% of the value of her car loaned pursuant to the car loan
entitlement memorandum.
Other claims are DISMISSED for lack of merit. 21

Both Jumuad and Hi-Flyer appealed to the NLRC. Jumuad faulted the LA for
not awarding backwages and damages despite its finding that she was illegally
dismissed. Hi-Flyer and Montemayor, on the other hand, assailed the finding that
Jumuad was illegally dismissed and that they were solidarity liable therefor. They also
questioned the orders of the LA that they pay separation pay and reimburse the forty
percent (40%) of the loan Jumuad paid pursuant to Hi-Flyer's car entitlement
program.
HDTSCc

Echoing the finding of the LA that the dismissal of Jumuad was too harsh, the
NLRC affirmed in toto the LA decision dated August 10, 2006. In addition, the
NLRC noted that even before the Irregularities Report and Notice of Charges were
given to Jumuad on September 5, 2005, two (2) electronic mails (e-mails) between
Montemayor and officers of Hi-Flyer showed that Hi-Flyer was already determined to
terminate Jumuad. The first e-mail 22 read:
From: Jess R. Montemayor
Sent: Tuesday, August 16, 2005 5:59 PM
To: bebe chaves; Maria Judith N. Marcelo; Jennifer Coloma Ravela;

Bernard Joseph A. Velasco

Cc: Odjie Belarmino; Jesse D. Cruz
Subject: RE: 049 KFC Cocomall Food Safety Risk/Product Quality
Violation
I agree if the sanctions are light we should change them. In the case of Pamela
however, the fact that Cebu Colon store had these violations is not the first time
this incident has happened in her area. The Bohol case was also in her area and
maybe these two incidents is enough grounds already for her to be terminated or
maybe asked to resign instead of being terminated.
I know if any Ops person serves expired product this is ground for termination. I
think serving off specs products such as this lumpy gravy in the case of Coco
Mall should be grounds for termination. How many customers have we lost due
to this lumpy clearly out of specs gravy? 20 customers maybe.
Jess.

The second e-mail, 23 sent by one Bebe Chaves of Hi-Flyer to Montemayor

and other officers of Hi-Flyer, reads:
From: bebe chaves
Sent: Sat 9/3/2005 3:45 AM
To: Maria Judith N. Marcelo
CC: Jennifer Coloma Ravela; Goodwin Belarmino; Jess R. Montemayor
Subject: RE: 049 KFC Cocomall Food Safety Risk/Product Quality
Violation
Jojo,
Just an update of our meeting yesterday with Jennifer. After having reviewed
the case and all existing documents, we have decided that there is enough
ground to terminate her services. IR/Jennifer are working hand in hand to
service due notice and close the case.
CHaDIT

According to the NLRC, these e-mails were proof that Jumuad was denied due
process considering that no matter how she would refute the charges hurled against
her, the decision of Hi-Flyer to terminate her would not change. 24
Sustaining the order of the LA to reimburse Jumuad the amount equivalent to
40% of the value of the car loan, the NLRC explained that Jumuad enjoyed this

benefit during her period of employment as Area Manager and could have still
enjoyed the same if not for her illegal dismissal. 25
Finally, the NLRC held that the active participation of Montemayor in the
illegal dismissal of Jumuad justified his solidary liability with Hi-Flyer.
Both Jumuad and Hi-Flyer sought reconsideration of the NLRC Decision but
their respective motions were denied on November 29, 2007. 26
Alleging grave abuse of discretion on the part of the NLRC, Hi-Flyer appealed
the case before the CA in Cebu City.
On April 20, 2009, the CA rendered the subject decision reversing the decision
of the labor tribunal. The appellate court disposed:
WHEREFORE, in view of the foregoing, the Petition is GRANTED. The
Decision of the National Labor Relations Commission (4th Division) dated 28
September 2007 in NLRC Case No. V-000813-06 (RAB Case No. VII-10-226905, as well as the Decision dated to August 2006 of the Honorable Labor
Arbiter Julie C. Ronduque, and the 29 November 2006 Resolution of the NLRC
denying petitioner's Motion for Reconsideration dated 08 November 2007, are
hereby REVERSED and SET ASIDE.
cDAISC

No pronouncement as to costs.
SO ORDERED. 27

Contrary to the findings of the LA and the NLRC, the CA was of the opinion
that the requirements of substantive and procedural due process were complied with
affording Jumuad an opportunity to be heard first, when she submitted her written
explanation and then, when she was informed of the decision and the basis of her
termination. 28 As for the e-mail exchanges between Montemayor and the officers of
Hi-Flyer, the CA opined that they did not equate to a predetermination of Jumuad's
termination. It was of the view that the e-mail exchanges were mere discussions
between Montemayor and other officers of Hi-Flyer on whether grounds for
disciplinary action or termination existed. To the mind of the CA, the e-mails just
showed that Hi-Flyer extensively deliberated the nature and cause of the charges
against Jumuad. 29
On the issue of loss of trust and confidence, the CA considered the deplorable
sanitary conditions and the cash shortages uncovered at three of the seven KFC
branches supervised by Jumuad as enough bases for Hi-Flyer to lose its trust and
confidence in her. 30
With regard to the reimbursement of the 40% of the car loan as awarded by the
labor tribunal, the CA opined that the terms of the car loan program did not provide
for reimbursement in case an employee was terminated for just cause and they, in fact,

required that the employee should stay with the company for at least three (3) years
from the date of the loan to obtain the full 40% subsidy. The CA further stated that the
rights and obligations of the parties should be litigated in a separate civil action before
the regular courts. 31
The CA also exculpated Montemayor from any liability since it considered
Jumuad's dismissal with a just cause and it found no evidence that he acted with
malice and bad faith. 32
aDSTIC

Hence, this petition on the following

GROUNDS:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
UPHOLD[ING] AS VALID THE TERMINATION OF PETITIONER'S
SERVICES BY RESPONDENTS.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN
IT REVERSED THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION 4TH DIVISION OF CEBU CITY WHICH
AFFIRMED THE DECISION OF LABOR ARBITER JULIE
RENDOQUE.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN
IT REVERSED THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION 4TH DIVISION OF CEBU CITY WHEN IT
RULED
THAT
PETITIONER
IS
NOT
ENTITLED
TO
REIMBURSEMENT OF FORTY PERCENT (40%) OF THE CAR
VALUE BENEFITS.

It is a hornbook rule that factual findings of administrative or quasi-judicial

bodies, which are deemed to have acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but even finality, and bind the
Court when supported by substantial evidence. 33 While this rule is strictly adhered to
in labor cases, the same rule, however, admits exceptions. These include: (1) when
there is grave abuse of discretion; (2) when the findings are grounded on speculation;
(3) when the inference made is manifestly mistaken; (4) when the judgment of the
Court of Appeals is based on a misapprehension of facts; (5) when the factual findings
are conflicting; (6) when the Court of Appeals went beyond the issues of the case and
its findings are contrary to the admissions of the parties; (7) when the Court of
Appeals overlooked undisputed facts which, if properly considered, would justify a
different conclusion; (8) when the facts set forth by the petitioner are not disputed by
the respondent; and (9) when the findings of the Court of Appeals are premised on the
absence of evidence and are contradicted by the evidence on record. 34

In the case at bench, the factual findings of the CA differ from that of the LA
and the NLRC. This divergence of positions between the CA and the labor tribunal
below constrains the Court to review and evaluate assiduously the evidence on record.
IcDHaT

The petition is without merit.

On whether Jumuad was illegally dismissed, Article 282 of the Labor Code
provides:
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.

cSTHaE

Jumuad was terminated for neglect of duty and breach of trust and confidence.
Gross negligence connotes want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. Fraud and willful neglect of
duties imply bad faith of the employee in failing to perform his job, to the detriment
of the employer and the latter's business. Habitual neglect, on the other hand, implies
repeated failure to perform one's duties for a period of time, depending upon the
circumstances. It has been said that a single or an isolated act of negligence cannot
constitute as a just cause for the dismissal of an employee. 35 To be a ground for
removal, the neglect of duty must be both gross and habitual. 36
On the other hand, breach of trust and confidence, as a just cause for
termination of employment, is premised on the fact that the employee concerned
holds a position of trust and confidence, where greater trust is placed by management
and from whom greater fidelity to duty is correspondingly expected. The betrayal of
this trust is the essence of the offense for which an employee is penalized. 37
It should be noted, however, that the finding of guilt or innocence in a charge
of gross and habitual neglect of duty does not preclude the finding of guilty or

innocence in a charge of breach of trust and confidence. Each of the charges must be
treated separately, as the law itself has treated them separately. To repeat, to warrant
removal from service for gross and habitual neglect of duty, it must be shown that the
negligence should not merely be gross, but also habitual. In breach of trust and
confidence, so long as it is shown there is some basis for management to lose its trust
and confidence and that the dismissal was not used as an occasion for abuse, as a
subterfuge for causes which are illegal, improper, and unjustified and is genuine, that
is, not a mere afterthought intended to justify an earlier action taken in bad faith, the
free will of management to conduct its own business affairs to achieve its purpose
cannot be denied.
After an assiduous review of the facts as contained in the records, the Court is
convinced that Jumuad cannot be dismissed on the ground of gross and habitual
neglect of duty. The Court notes the apparent neglect of Jumuad of her duty in
ensuring that her subordinates were properly monitored and that she had dutifully
done all that was expected of her to ensure the safety of the consuming public who
continue to patronize the KFC branches under her jurisdiction. Had Jumuad
discharged her duties to be highly visible in the restaurants under her jurisdiction,
monitor and support the day to day operations of the branches and ensure that all the
facilities and equipment at the restaurant were properly maintained and serviced, the
deplorable conditions and irregularities at the various KFC branches under her
jurisdiction would have been prevented.
DacTEH

Considering, however, that over a year had lapsed between the incidences at
KFC-Gaisano and KFC-Bohol, and that the nature of the anomalies uncovered were
each of a different nature, the Court finds that her acts or lack of action in the
performance of her duties is not born of habit.
Despite saying this, it cannot be denied that Jumuad willfully breached her
duties as to be unworthy of the trust and confidence of Hi-Flyer. First, there is no
denying that Jumuad was a managerial employee. As correctly noted by the appellate
court, Jumuad executed management policies and had the power to discipline the
employees of KFC branches in her area. She recommended actions on employees to
the head office. Pertinent is Article 212 (m) of the Labor Code defining a managerial
employee as one who is vested with powers or prerogatives to lay down and execute
management policies and/or hire, transfer, suspend, lay off, recall, discharge, assign
or discipline employees.
Based on established facts, the mere existence of the grounds for the loss of
trust and confidence justifies petitioner's dismissal. Pursuant to the Court's ruling in
Lima Land, Inc. v. Cuevas, 38 as long as 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 of
his position, a managerial employee may be dismissed.

In the present case, the CER's reports of Hi-Flyer show that there were
anomalies committed in the branches managed by Jumuad. On the principle of
respondeat superior or command responsibility alone, Jumuad may be held liable for
negligence in the performance of her managerial duties. She may not have been
directly involved in causing the cash shortages in KFC-Bohol, but her involvement in
not performing her duty monitoring and supporting the day to day operations of the
branches and ensure that all the facilities and equipment at the restaurant were
properly maintained and serviced, could have truly prevented the whole debacle from
ever occurring.
Moreover, it is observed that rather than taking proactive steps to prevent the
anomalies at her branches, Jumuad merely effected remedial measures. In the
restaurant business where the health and well-being of the consuming public is at
stake, this does not suffice. Thus, there is reasonable basis for Hi-Flyer to withdraw
its trust in her and dismissing her from its service.
DTISaH

The disquisition of the appellate court on the matter is also worth mentioning:
In this case, there is ample evidence that private respondent indeed committed
acts justifying loss of trust and confidence of Hi-Flyer, and eventually, which
resulted to her dismissal from service. Private respondent's mismanagement and
negligence in supervising the effective operation of KFC branches in the span of
less than a year, resulting in the closure of KFC-Gaisano due to deplorable
sanitary conditions, cash shortages in KFC-Bohol, in which the said branch, at
the time of discovery, was only several months into operation, and the poor
sanitation at KFC-Cocomall. The glaring fact that three (3) out of the seven (7)
branches under her area were neglected cannot be glossed over by private
respondent's explanation that there was no negligence on her part as the
sanitation problem was structural, that she had been usually busy conducting
management team meetings in several branches of KFC in her area or that she
had no participation whatsoever in the alleged cash shortages.
xxx xxx xxx
It bears stressing that both the Labor Arbiter and the NLRC found that private
respondent was indeed lax in her duties. Thus, said the NLRC: ". . . [i]t is Our
considered view that . . . complainant cannot totally claim that she was not
remiss in her duties . . . . 39

As the employer, Hi-Flyer has the right to regulate, according to its discretion
and best judgment, all aspects of employment, including work assignment, working
methods, processes to be followed, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of workers.
Management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company rules and regulations. 40

So long as they are exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the rights of
the employees under special laws or under valid agreements, the employer's exercise
of its management prerogative must be upheld. 41
In this case, Hi-Flyer exercised in good faith its management prerogative as
there is no dispute that it has lost trust and confidence in her and her managerial
abilities, to its damage and prejudice. Her dismissal, was therefore, justified.
EICSTa

As for Jumuad's claim for the reimbursement of the 40% of the value of the car
loan subsidized by Hi-Flyer under its car loan policy, the same must also be denied.
The rights and obligations of the parties to a car loan agreement is not a proper issue
in a labor dispute but in a civil one. 42 It involves the relationship of debtor and
creditor rather than employee-employer relations. 43 Jurisdiction, therefore, lies with
the regular courts in a separate civil action. 44
The law imposes many obligations on the employer such as providing just
compensation to workers, observance of the procedural requirements of notice and
hearing in the termination of employment. On the other hand, the law also recognizes
the right of the employer to expect from its workers not only good performance,
adequate work and diligence, but also good conduct and loyalty. The employer may
not be compelled to continue to employ such persons whose continuance in the
service will patently be inimical to its interests. 45
WHEREFORE, the petition is DENIED.
SO ORDERED.
Velasco, Jr., Peralta, Abad and Villarama, Jr., * JJ., concur.
(Jumuad v. Hi-Flyer Food, Inc., G.R. No. 187887, [September 7, 2011], 672 PHIL 730747)
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