Code expresses the basic principle that all doubts in the

interpretation and implementation of the Labor Code should

be interpreted in favor of the workingman. This principle
has been extended by jurisprudence to cover doubts in the
evidence presented by the employer and the employee.
Thus we have held that if the evidence presented by the
employer and the employee are in equipoise, the scales of
justice must be tilted in favor of the latter. Accordingly, the
NLRCs finding of illegal dismissal must be upheld.

GR. No. 174631.October 19, 2011. *

JHORIZALDY
UY,
petitioner,
vs.
CENTRO
CERAMICA CORPORATION and/or RAMONITA Y.
SY and MILAGROS U. GARCIA, respondents.
Labor Law; Termination of Employment; Fairness requires
that dismissal, being the ultimate penalty that can be meted
out to an employee, must have a clear basis; Any ambiguity
in the ground for the termination of an employee should be
interpreted against the employer who ordained such ground
in the first place.Given the strained working relationship
with Garcia, or at least a perception of such gap on the part
of petitioner, the latter could not have been properly
informed of the actual ground for his dismissal. But more
importantly, respondents terminated petitioner first and only
belatedly sent him written notices of the charge against him.
Fairness requires that dismissal, being the ultimate penalty
that can be meted out to an employee, must have a clear
basis. Any ambiguity in the ground for the termination of an
employee should be interpreted against the employer, who
ordained such ground in the first place.

Same; Same; Separation Pay; Doctrine of Strained

Relations; Under the doctrine of strained relations, the
payment of separation pay has been considered an
acceptable alternative to reinstatement when the latter
option is no longer desirable or viable.The award of back
wages and separation pay in lieu of reinstatement should be
modified. Under the doctrine of strained relations, the
payment of separation pay has been considered an
acceptable alternative to reinstatement when the latter
option is no longer desirable or viable. Under the facts
established, petitioner is entitled to the payment of full back
wages, inclusive of allowances, and other benefits or their
monetary equivalent, computed from the date of his
dismissal on February 19, 2002 up to the finality of this
decision, and separation pay in lieu of reinstatement
equivalent to one month salary for every year of service,
computed from the time of his engagement by respondents
on March 21, 1999 up to the finality of this decision.

Same; Same; Resignation; Definition of Resignation;

Resignation must be done with the intention of
relinquishing an office, accompanied by the act of
abandonment.Resignation is defined as the voluntary act
of employees who are compelled by personal reasons to
disassociate themselves from their employment. It must be PETITION for review on certiorari of the decision and
done with the intention of relinquishing an office, resolution of the Court of Appeals.
accompanied by the act of abandonment. In this case, the
The facts are stated in the opinion of the Court.
evidence on record suggests that petitioner did not resign;
he was orally dismissed by Sy. It is this lack of clear, valid
Delos Reyes, Martinez, Irog, Braga & Associates for
and legal cause, not to mention due process, that made his petitioner.
dismissal illegal, warranting reinstatement and the award of
Gimenez, Ureta, Gimenez and Associates for respondents.
backwages.
VILLARAMA, JR.,J.:

Same; Same; When there is no showing of a clear, valid and

legal cause for the termination of employment, the law
considers it a case of illegal dismissal; All doubts in the
interpretation and implementation of the Labor Code should
be interpreted in favor of the workingman.When there is
no showing of a clear, valid and legal cause for the
termination of employment, the law considers it a case of
illegal dismissal. Furthermore, Article 4 of the Labor

Before us is a petition for review on certiorari under Rule

45 assailing the Decision1 dated April 21, 2006 and
Resolution2 dated September 7, 2006 of the Court of Appeals (CA) in CA-G.R. SP
No. 88061. The CA annulled and set aside the Decision3
dated July 29, 2004 rendered by the National Labor
Relations Commission (NLRC) in NLRC NCR CA No.
1

035557-03 which reversed the Labor Arbiters ruling that MEMO OF NOTICE OF CHARGES
petitioner was not illegally dismissed.
MEMORANDUM:
Factual Antecedents
TO:
JHORIZALDY B. UY
Petitioner Jhorizaldy Uy was hired by respondent Centro
RAMONITA Y. SY
Ceramica Corporation as full-time sales executive on March FROM:
21, 1999 under probationary employment for six months. RE:
FAILURE TO MEET QUOTA FOR SALES
He became a regular employee on May 1, 2000 with EXEmonthly salary of P7,000.00 and P1,500.00 transportation
allowance, plus commission.
CUTIVE
On March 18, 2002, petitioner filed a complaint for illegal DATE:
February 21, 2002
dismissal against the respondent company, its President
Ramonita Y. Sy (Sy) and Vice-President Milagros Uy- Records show that you have failed to meet the quota for
sales executives, set for the period from 1999 to 2001 in
Garcia (Garcia).
violation of your contract of employment.
Petitioner alleged that his predicament began when former
VP Garcia was rehired by respondent company in the last In view of the foregoing, please explain in writing within
quarter of 2001. Certain incidents involving longtime twenty[-]four (24) hours from receipt hereof, why the
clients led to a strained working relationship between him company should not terminate your contract of
and Garcia. On February 19, 2002 after their weekly sales employment.5
meeting, he was informed by his superior, Sales Supervisor
Richard Agcaoili, that he (petitioner) was to assume a new
position in the marketing department, to which he replied
that he will think it over. His friends had warned him to be
careful saying mainit ka kay Ms. Garcia. That same day,
he was summoned by Sy and Garcia for a closed-door
meeting during which Sy informed him of the termination
of his services due to insubordination and advised him to
turn over his samples and files immediately. Sy even
commented that member ka pa naman ng [S]ingles for
[C]hrist pero napakatigas naman ng ulo mo. On February
21, 2002, he was summoned again by Sy but prior to this he
was already informed by Agcaoili that the spouses Sy will
give him all that is due to him plus goodwill money to settle
everything. However, during his meeting with Sy, he asked
for his termination paper and thereupon Sy told him that If
thats what you want I will give it to you. She added that

He did not receive said memo because it was not written on

the company stationery and besides he had already been
dismissed. As to his alleged low output, he was surprised
considering that last January 2002, he was informed by
Agcaoili that management was satisfied with his
performance and he ranked second to the top performer,
Edwin I. Hirang. By that time, all of the sales people of the
company could not meet the P1.5 Million sales quota, so
respondents are clearly zeroing in on him.
Finally, on March 13, 2002, respondents sent him another
memo, which reads:
MEMO OF NOTICE OF CHARGES
INTER-OFFICE MEMORANDUM NO. 2:
TO:

JHORIZALDY B. UY

pag-isipan mo ang gagawin mo dahil kilala mo naman THRU: RICHARD B. AGCAOILI

kami we are powerful.4
FROM: RAMONITA Y. SY
Petitioner further narrated that on February 22, 2002, he
NOTICE OF CHARGE
turned over company samples, accounts and receivables to RE:
Agcaoili. Thereafter, he did not report for work anymore. WITHOUT
But on March 6, 2002, an employee of respondent company
LEAVE
presented to him at his apartment the following
memorandum:
DATE:
March 13, 2002
2

OF

ABSENCE

Records show that since February 22, 2002, to date, you

have failed to report for work, without informing your
employer of the reason therefor and without securing proper
leave in violation of your contract of employment and
existing company rules and regulations. Further, you have
refused to receive any of your monetary entitlements such
as salary, commission and other amounts due to you despite
notice that the same are available to you for payment.

dismissed as of February 19, 2002 and as regards the low

output he says that all of the sales people could not meet the
quota and why zero in on him.
Then on Mach 13, 2002 you sent him a memorandum to
explain in writing within twenty four (24) hours why he
should not be dismissed for his alleged absence without
leave.

You must have been advised by someone that your

dismissal of Mr. Uy on February 19, 2002 is doubly illegal,
i.e., for lack of due process and sufficient cause and the
March 13, 2002 memorandum is to make up for such lapse
so that if Mr. Uy files a case of illegal dismissal, you can
In view of the foregoing, please explain in writing twenty conveniently say that he violated his contract of
four (24) hours from receipt hereof, why the company employment and that he was on absence without leave.
should not terminate your contract of employment for Nice move, but it may not be nice later on.
serious violations of your employment contract as indicated
x x x x7
above.6
Further, to this date, you have not submitted any
explanation in writing in response to our Memo dated
February 21, 2002, requiring you to explain your failure to
meet your quota as Sales Executive.

He referred the above letter to his counsel who sent the For his illegal termination, petitioner asserted that he is
entitled to his unpaid commission, tax refund, back wages
following letter-reply:
and reinstatement.
MS. RAMONITA Y. SY
On the other hand, respondents denied dismissing
Centro Ceramica Corporation
petitioner. They countered that petitioners poor sales
performance did not improve even after he was regularized.
225 EDSA, East Greenhills
On February 18, 2002, management met with the Sales
Group on a per agent basis to discuss sales performance,
Mandaluyong City
possible salary realignment and revamp of the Sales Group.
We are writing you in behalf of Mr. Jhorizaldy B. Uy who Agcaoili relayed to petitioner the poor assessment of his
sales performance and the possibility that he will be
used to be a Sales Executive of your firm.
transferred to another department although there was yet no
On February 19, 2002, you informed him that from Sales official decision on the matter. Petitioner then told Agcaoili
Executive he was to assume a new position in the marketing that he was aware of the problem and his possible
department. He refused and when he later said that pag- termination, prompting the latter to convince the former to
iisipan ko pa you charged him with insubordination. Your consider voluntarily resigning from the company rather
Ms. Nita Garcia even lamented in this wise single (for than be terminated. The next day, February 19, 2002,
Christ) ka pa naman. Right then you terminated his petitioner talked anew to Agcaoili and informed the latter
services and was directed to turn over everything that he that he will just resign from the company and sought an
had which was company owned and it was on February 22, appointment with Sy. When petitioner inquired how much
2002 that the turn over was made.
he will get if he will resign, Sy advised him that he would
get salaries and commissions to which he is legally entitled;
On or about March 6, 2002 an employee of your company
hence, for items sold and already delivered, he will be
saw him in his apartment giving him a memorandum to
receiving the commission in full, but for those sold but yet
explain his alleged failure to meet the quota as Sales
to be delivered, as per company policy, he will receive the
Executive. He admits with c[a]ndor that he did not receive
commissions only upon delivery of the items. Upon hearing
the said memorandum because it was written not on the
this, petitioner suddenly got mad and said that if that is the
company stationary. Just the same the contents of the said
case, the company president should just terminate him and
letter has bec[o]me irrelevant because he has been already
3

walked out. Petitioner was given a chance, through the two

memos issued to him, to explain his failure to meet the
prescribed sales quota and his failure to report for work
without informing the company of the reason therefor. But
he never submitted his explanations to his violations of the
contract of employment, and abandoned his job which is
another ground for terminating his employment. While it
would appear that petitioner aimed to secure his alleged
money claims from the respondents, this does not justify
abandonment of his work as respondents never had the
intention of terminating his services. Respondents
maintained that petitioner voluntarily left his workplace and
refused to report for work as in fact he indicated to his sales
supervisor that he will just resign; however, he never
submitted a letter of resignation.8

helper) who claimed that he had a fistfight with petitioner

sometime in June 2000 which arose from the latters
insulting remarks regarding his family.9
Labor Arbiters Ruling
In his decision10 dated April 8, 2003, Labor Arbiter Elias
H. Salinas dismissed petitioners complaint on the basis of
his finding that it was petitioner who opted not to report for
work since February 22, 2002, after offering to resign (as
told to his supervisor) because he could not accept his
possible transfer to another department.
NLRCs Ruling
Petitioner appealed to the NLRC which reversed the Labor
Arbiters ruling. The NLRC found that the dismissal of
petitioner was made under questionable circumstances, thus
giving weight to petitioners assertion that he was being
singled out notwithstanding that all sales personnel
similarly could not meet the P1.5 million monthly sales
quota. Such finding is reinforced by the fact that no
sanction was imposed on petitioner or any other employee
for the supposed failure to meet the quota, thereby creating
the impression that the situation was tolerated by the
respondents. The NLRC thus decreed:

Respondents also denied the claims of petitioner regarding

an alleged souring of his relations with Garcia, as in fact it
was petitioner who clearly had a personal grudge against
her and not the other way around. The alleged incidents
with client actually showed it was petitioner who was
discourteous and abusive. There was likewise no reason for
respondent Sy to say they were powerful because petitioner
did not at all threaten to sue or do something to their
prejudice. To refute petitioners unfounded allegations,
respondents presented the affidavits of the following: (1)
co-employee Rommel Azarraga who admitted he was the
person who warned petitioner to be careful and told him
mainit ka kay Mrs. Garcia and explained that he only
made such statement in order to scare petitioner and
convince him to change his attitude; the truth is that Mrs.
Garcia had not spoken to him about harbouring any ill
feelings towards petitioner and neither

WHEREFORE, premises considered, the Decision dated

April 8, 2003 is set aside and reversed. A new one is entered
finding complainant to have been illegally dismissed and
thus entitled to reinstatement with backwages. Respondent
Centro Ceramica Corporation is hereby ordered to pay
complainant his backwages reckoned from the date of his
dismissal on February 19, 2002 up to the date of the
promulgation of this decision. As reinstatement is no longer
feasible, complainant should instead be paid separation pay
equivalent to one half (1/2) month pay for every year of
service. In addition, respondents company should pay
complainant his unpaid commission in the amount of
P16,581.00.

does he know of any incident or circumstance which may

give rise to such ill feeling of Mrs. Garcia towards
petitioner; (2) Richard Agcaoili who corroborated the
respondents claims, denying that petitioner was terminated
due to insubordination; he further denied having told
petitioner that management was satisfied with his
performance, the truth being that while petitioner may have
ranked second to the top performer, there was actually only
two remaining senior sales agents while the rest have more
or less six months experience; considering the number of
years of his service to the company, petitioner should have
improved as against other agents most of whom were
newly-hired and still under probation; and (3) Arnulfo
Merecido, respondent companys employee (warehouse

All other claims are dismissed for lack of merit.

SO ORDERED.11
Court of Appeals Ruling
Respondents elevated the case to the CA which reversed the
NLRC and dismissed petitioners complaint. According to
4

the CA, petitioner by his own account had admitted that it

was he who asked for his dismissal when he narrated that
during his meeting with Sy, he had asked for his termination
paper and she threatened to do so if that was what he
wanted. It also noted the affidavit of Agcaoili who attested
that petitioner was merely informed of the decision to
transfer him to another department, which is not denied by
the petitioner; said witness also said that the turnover of
company documents and files was voluntary on the part of
petitioner who expressed desire to resign from the company.
Another statement considered by the CA is that made by
witness Azarraga who explained that he only mentioned the
name of Ms. Garcia to petitioner when he warned the latter
to be careful, simply because she is a member of the
Couples for Christ who may have an influence over
petitioner who is a member of the Singles for Christ. As to
the memos sent by the company to petitioners residence,
this shows that it has not yet terminated the employment of
petitioner. Thus, the CA held that the evidence on record
supports the Labor Arbiters finding that petitioner
informally severed the employment relationship as
manifested by his voluntary

action of Sy who dismissed petitioner outright. Moreover,

Agcaoili, being under the employ of respondents, would
logically be biased and he would naturally tend to protect
the company by his statements regarding petitioners case.
On the other hand, Azarragas confusing and inconsistent
statements only confirmed that Garcia indeed had a grudge
against petitioner, as he could not give a rational
explanation for warning petitioner to be careful with Garcia.
Petitioner further contends that his act of turning over his
accountabilities to his supervisor cannot be considered
voluntary on his part as it was done by him knowing that he
was already terminated and upon the specific instructions of
Sy and Garcia. The CA therefore erred in relying on the
unbelievable submission of respondents that such transfer
of company documents and samples was indicative of
petitioners desire to resign. It failed to see that petitioners
reaction
to his impending transfer to another department (pagiisipan ko pa) was due to his not coming to terms with
Garcia and aware of the warning earlier given by his
friends. Under this scenario, the animosity between
petitioner and Garcia was evident such that Garcia
eventually prevailed upon Sy to terminate petitioners
services. Unfortunately, it was on the very same day that
petitioner was verbally terminated by Sy on the ground of
insubordination and ordered to immediately turn over his
files and samples. It was on February 21, 2002 that Agcaoili
told petitioner that the company will give him all that is due
him plus goodwill money, and in a meeting with Sy he had
asked for his termination paper because he was in fact
already terminated on February 19, 2002 but she responded
by saying that if that was what he wanted she will give it to
him and even threatened him to think because respondents
are powerful.

transfer of his accountabilities to his supervisor and

thereafter his act of not reporting for work anymore.
Petitioners motion for reconsideration having been denied,
the present petition was filed in this Court.
Issue
The sole issue to be addressed is whether petitioner was
dismissed by the respondents or voluntarily severed his
employment by abandoning his job.
Arguments of the Parties
Petitioner assails the CAs misappreciation of the facts,
completely relying on respondents allegations particularly
on what transpired during the meeting with respondents Sy
and Garcia, of which the appellate court made a twisted
interpretation of their conversation. Hence, instead of
decreeing petitioners illegal termination based on Sys
verbal dismissal without just cause and due process, the CA
proceeded to conclude that petitioner voluntarily and
informally severed his relation with the company. As to the
affidavit of Agcaoili, his statement that he merely informed
petitioner of the decision to transfer him to another
department is of no moment because what matters is the

In their Comment, respondents assert that the CA

committed no reversible error in concluding that petitioner
was not illegally terminated. They stress that the evidence
clearly established that petitioner was not dismissed but
required merely to explain why he failed to report for work
after meeting the company president. As to petitioners act
of turning over his accountabilities, respondents argue that
this cannot be considered proof of his illegal dismissal
because it was done voluntarily in line with his proposed
resignation. Respondent company was about to conduct its
investigation on petitioner who went AWOL since February
5

19, 2002 but then he refused to accept the memos sent to

him, thus confirming categorically that respondents were
investigating his failure to report for work and giving him
all the opportunity to explain his absence.

Contrary to respondents theory that petitioners act of

turning over the company files and samples is proof of his
voluntary informal resignation rather than of the summary
dismissal effected by management, no other plausible
explanation can be made of such immediate turn over
except that petitioner directly confirmed from the

The Courts Ruling

We grant the petition.

company president herself that he was already being

dismissed. The subsequent memos sent to petitioners
residence after he did not anymore report for work only
reinforce the conclusion that the belated written notice of
the charge against himhis alleged failure to meet the
prescribed sales quotawas an afterthought on the part of
respondents who may have realized that they failed to
observe due process in terminating him. That respondents
would still require a written explanation for petitioners
poor sales performance after the latter already complied
with Sys directive to turn over all his accountabilities is
simply inconsistent with their claim that petitioner offered
to resign and voluntarily relinquished possession of
company files and samples when told of his impending
transfer. In other words, petitioner was not given any
opportunity to defend himself from whatever charges hurled
by management against him, such as poor sales
performance as relayed to him by his supervisor, when Sy
unceremoniously terminated him which must have shocked
him considering that his supervisor earlier advised that he
would just be transferred to another department. Under this
scenario, petitioners decision not to report for work
anymore was perfectly understandable, as the sensible
reaction of an employee fired by no less than the company
president. It was indeed a classic case of dismissal without
just cause and due process, which is proscribed under our
labor laws.

As a general rule, only questions of law may be allowed in

a petition for review on certiorari.12 Considering, however,
that the Labor Arbiters findings were reversed by the
NLRC, whose Decision was in turn overturned by the CA,
reinstating the Labor Arbiters Decision,it behooves the
Court to reexamine the records and resolve the conflicting
rulings.13
Scrutinizing the records, we find that the NLRCs finding of
illegal dismissal is supported by the totality of evidence and
more consistent with logic and ordinary human experience
than the common finding of the CA and Labor Arbiter that
petitioner informally severed his employment relationship
with the company. It hardly convinces us that after
declining his supposed transfer to another department as per
the information relayed to him by his supervisor, petitioner
would readily turn over his files and samples unless
something critical indeed took place in his subsequent
closed-door meeting with Sy and Garcia. As correctly
pointed out by petitioner, it is irrelevant whether or not he
had earlier inquired from his supervisor what he will
receive if he offers instead to resign upon being told of his
impending transfer, for what matters is the action of Sy on
his employment status. If ever petitioner momentarily
contemplated resignation and such was the impression he
conveyed in his talk with his supervisor prior to the meeting
with Sy, such is borne by circumstances indicating Garcias
antagonism towards petitioner. In any event, whether such
perception of a strained working relationship with Garcia
was mistaken or not is beside the point. The crucial factor is
the verbal order directly given by Sy, the company
president, for petitioner to immediately turn over his
accountabilities. Notably, Sy got irked when petitioner
asked for his termination paper. Petitioner apparently
wanted to ascertain whether such summary dismissal was
official, and it was well within his right to demand that he
be furnished with a written notice in order to apprise him of
the real ground for his termination.

As to the affidavits submitted by the respondents, these are

at best self-serving having been executed by employees
beholden to their employer and which evidence by
themselves did not refute petitioners main cause of action
the fact of his summary dismissal on February 19, 2002.
Respondents effort to present the case as one of an erring
employee about to be investigated for poor sales
performance must likewise fail. The NLRC duly noted the
discriminatory treatment accorded to petitioner when it
declared that there is no evidence at all that other sales
personnel who failed to meet the prescribed sales quota
were similarly reprimanded or penalized. Incidentally, the
question may be asked if petitioner whose performance was
6

assessed by management as poor yet admittedly ranked

second to the top sales agent of the company, why was it
that no evidence was submitted by respondents to show the
comparative sales performance of all sales agents? Given
the strained working relationship with
617

However, the award of back wages and separation pay in

lieu of reinstatement should be modified. Under the
doctrine of strained relations, the payment of separation pay
has been considered an acceptable alternative to
reinstatement when the latter option is no longer desirable
or viable.20 Under the facts established, petitioner is
entitled to the payment of full back wages, inclusive of
allowances, and other benefits or their monetary equivalent,
computed from the date of his dismissal on February 19,
2002 up to the finality of this decision, and separation pay
in lieu of reinstatement equivalent to one month salary for
every year of service, computed from the time of his
engagement by respondents on March 21, 1999 up to the
finality of this decision.21

Garcia, or at least a perception of such gap on the part of

petitioner, the latter could not have been properly informed
of the actual ground for his dismissal. But more
importantly, respondents terminated petitioner first and only
belatedly sent him written notices of the charge against him.
Fairness requires that dismissal, being the ultimate penalty
that can be meted out to an employee, must have a clear
basis. Any ambiguity in the ground for the termination of an WHEREFORE, the petition for review on certiorari is
employee should be interpreted against the employer, who GRANTED. The Decision dated April 21, 2006 and
ordained such ground in the first place.14
Resolution dated September 7, 2006 of the Court of
Resignation is defined as the voluntary act of employees Appeals in CA-G.R. SP No. 88061 are SET ASIDE. The
who are compelled by personal reasons to disassociate Decision dated July 29, 2004 of the National Labor
themselves from their employment. It must be done with Relations Commission in NLRC NCR CA No. 035557-03
the intention of relinquishing an office, accompanied by the is REINSTATED
act of abandonment.15 In this case, the evidence on record
suggests that petitioner did not resign; he was orally
dismissed by Sy. It is this lack of clear, valid and legal
cause, not to mention due process, that made his dismissal
illegal, warranting reinstatement and the award of
backwages.16 Moreover, the filing of a complaint for illegal
dismissal just three weeks later is difficult to reconcile with
voluntary resignation. Had petitioner intended to
voluntarily relinquish his employment after being
unceremoniously dismissed by no less than the company
president, he would not have sought redress from the NLRC
and vigorously pursued this case against the respondents.17

and AFFIRMED WITH MODIFICATIONS in that in

addition to the unpaid commission of P16,581.00,
respondent Centro Ceramica Corporation is hereby ordered
to pay petitioner Jhorizaldy Uy his full back wages,
inclusive of allowances, and other benefits or their
monetary equivalent, computed from the date of his
dismissal on February 19, 2002 up to the finality of this
decision, and separation pay in lieu of reinstatement
equivalent to one month salary for every year of service,
computed from the time of his engagement by respondent
corporation on March 21, 1999 up to the finality of this
When there is no showing of a clear, valid and legal cause decision.
for the termination of employment, the law considers it a
case of illegal dismissal. Furthermore, Article 4 of the No pronouncement as to costs.
Labor Code expresses the basic principle that all doubts in
the interpretation and implementation of the Labor Code SO ORDERED.
should be interpreted in favor of the workingman. This
principle has been extended by jurisprudence to cover
doubts in the evidence presented by the employer and the
employee.18 Thus we have held that if the evidence
presented by the employer and the employee are in G.R. No. 165153.September 23, 2008.*
equipoise, the scales of justice must be tilted in favor of the
latter.19 Accordingly, the NLRCs finding of illegal
dismissal must be upheld.
7

CARLOS C. DE CASTRO, petitioner, vs. LIBERTY his master, doubts reasonably arising from the evidence, or
BROADCASTING NETWORK, INC. and EDGARDO in the interpretation of agreements and writing should be
QUIOGUE, respondents.
resolved in the formers favor.
Appeals; As a rule, the Supreme Court is not a trier of facts
and can review a Rule 45 petition only on questions of law
but when there are substantial conflicts in the factual
findings of the Court of Appeals and the trial court or
government agency concerned, the Court wades into
questions of facts.As a rule, and as recently held in Rudy
A. Palecpec, Jr. v. Hon. Corazon C. Davis, et al. (a 2007
case), 528 SCRA 720 (2007), this Court is not a trier of
facts and can review a Rule 45 petition only on questions of
law. We wade, however, into questions of facts when there
are substantial conflicts in the factual findings of the CA,
on the one hand, and the trial court or government agency
concerned, on the other. This is precisely the situation that
we have before us since the NLRC and the CA have
diametrically opposed factual findings leading to differing
conclusions. Hence, we are left with no option but to
undertake a review of

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Valentino V. Dionela for petitioner.
Eusebio P. Dulatas, Jr. and Mary Charlene V. Hernandez
BRION,J.:
Before us is the Petition for Review on Certiorari1 filed by
petitioner Carlos C. de Castro (petitioner) to annul, reverse
and/or set aside the Decision2 dated May 25, 2004 and the
Resolution3 dated August 30, 2004 of the Former Special
Third Division of the Court of Appeals (CA) in CA-G.R. SP
No. 79207 entitled Liberty Broadcasting Network, Inc. and
Edgardo B. Quiogue v. National Labor Relations
Commission and Carlos C. de Castro.

the facts in this Rule 45 case. We find the petition

Factual Background
meritorious. To our mind, the CA erred in the appreciation
of the evidence surrounding petitioners termination from
employment. The cited grounds are at best doubtful under
the proven surrounding circumstances, and should have The facts of the case as gathered from the records are
been interpreted in the petitioners favor pursuant to Article briefly summarized below.
4 of the Labor Code.
The petitioner commenced his employment with respondent
Labor Law; Illegal Dismissals; If doubts exist between the Liberty Broadcasting Network, Inc. (respondent company)
evidence presented by the employer and the employee, the as Building Administrator on August 7, 1995. On May 16,
scales of justice must be tilted in favor of the latterit is a 1996, the respondent company, through its HRM Senior
time-honored rule in controversies between a laborer and Manager (Personnel Manager) Bernard Mandap, sent a
his master, doubts reasonably arising from the evidence, or notice to the petitioner requiring him to explain within
in the interpretation of agreements and writing should be forty-eight (48) hours why he should not be made liable for
resolved in the formers favor.We join the NLRC in violation of the Company Code of Conduct for acts
concluding that the employer failed to prove a just cause for constituting serious misconduct, fraud and willful breach of
the termination of the petitioners employmenta burden the trust reposed in him as a managerial employee.4
the company, as employer, carries under the Labor Code
and the CA erred when it saw grave abuse of discretion in
the NLRCs ruling. The evidentiary situation, at the very
least, brings to the fore the dictum we stated in Prangan v.
NLRC, 289 SCRA 142 (1998), and in Nicario v. NLRC,
295 SCRA 619 (1998), that if doubts exist between the
evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter. It is a
time-honored rule in controversies between a laborer and

In his answer, the petitioner denied the allegations against

him contained in the affidavits of respondents witnesses,
Vicente Niguidula (Niguidula) and Gil Balais (Balais).5
The petitioner labeled all of the respondents accusations as
com-Pletely baseless and sham, designed to protect
Niguidula and Balais who were the favorite boys of
respondent Edgardo Quiogue (Quiogue), the Executive Vice
President of the respondent company. At the petitioners
request, the respondent company scheduled a formal
8

hearing at 2:00 p.m. of May 28, 1996. However, the

petitioner sent a notice that he would not participate when
he learned through his wife that criminal cases for estafa
and qualified theft had been filed against him at the Makati
Prosecutors Office. He felt that the hearing was a moromoro investigation. On May 24, 1996, the respondent
company further charged the petitioner with Violation of
Company Code of Conduct, based on the affidavits of
Balais, Cristino Samarita (Samarita), and Jose Aying
(Aying).6

Raul Pacaldo (Pacaldo) to exact 2%-5% of the price of the

contracts awarded to suppliers; and
8.Slander, for uttering libelous statements against
Niguidula.
The petitioner filed a complaint for illegal dismissal against
the respondents with the National Labor Relations
Commission (NLRC) Arbitration Branch in the National
Capital Region. At the arbitration, he denied committing the
offenses charged. He maintained that: he could not
encourage solicitation of commissions from suppliers
considering that he was quite new in the company; the
accusations are belated because the imputed acts happened
in 1995; the one gallon of Delo oil he allegedly carted away
was at the room of Balais at the time, which circumstance
he immediately relayed to Mandap; the affidavits of
Niguidula and Balais are not reliable because he had
altercations with them; in the first week of May 1996, he
reprimanded Balais for incurring unnecessary overtime
work, which Balais resented; on May 9, 1996, Niguidula
verbally assaulted and challenged him to a fight, which he
reported to respondent Quiogue and to the Makati Police.
Attached to the petitioners position paper were the
affidavits8 of Aying and Ronalisa O. Rosana, a telephone
operator of the company.

On May 31, 1996, the respondent company issued a Notice

of Dismissal to the petitioner based on the following
grounds:7
1.Soliciting and/or receiving money for his own benefit
from suppliers/dealers/traders Aying and Samarita,
representing commissions for job contracts involving the
repair, reconditioning and replacement of parts of the
airconditioning units at the companys Antipolo Station, as
well as the installation of fire exits at the Technology
Centre;
2.Diversion of company funds by soliciting and receiving
on different occasions a total of P14,000.00 in
commissions from Aying for a job contract in the
companys Antipolo Station;

On April 30, 1999, Labor Arbiter Felipe Pati rendered a

3.Theft of company property involving the unauthorized Decision in the petitioners favor, holding the respondent
removal of one gallon of Delo oil from the company storage company liable for illegal dismissal.9 Arbiter Pati
room;
disbelieved the affidavits of Niguidula, Balais, Pacaldo,
4.Disrespect/discourtesy towards a co-employee, for Samarita, and
using offensive language against Niguidula;

_______________

5.Disorderly behavior, for challenging Niguidula to a

fight during working hours within company premises,
thereby creating a disturbance that interrupted the normal
flow of activities in the company;

Aying in view of the circumstances prior to their execution.

The Arbiter noted that Niguidula and Balais had altercations
with petitioner prior to the issuance of the notice of
violation to the latter; the affidavit of Samarita showed that
it was not petitioner who personally asked commission
from him but Balais; Ayings credibility had been placed in
6.Threat and coercion, for threatening to inflict bodily serious doubt because he recanted his previous affidavit and
harm on the person of Niguidula and for coercing Balais, a issued another stating that the petitioner did not actually ask
subordinate, into soliciting money in his (the petitioners) commission from him; and Pacaldos affidavit should not
also be believed because he was a subordinate of Niguidula
behalf from suppliers/contractors;
who had an ax to grind against the petitioner.
7.Abuse of authority, for instructing Balais to collect
commissions from Aying and Samarita, and for requiring On appeal, the NLRC reversed the Labor Arbiters decision
and adopted the findings of Labor Arbiter Tamayo who had
9

reviewed the appeal on the NLRCs instructions.10 It ruled to lack of or in excess of jurisdiction, or when such finding
that Arbiter Pati erred in disregarding the affidavits of the is not supported by the evidence. He argues that the
respondents witnesses.
respondent company failed to raise any jurisdictional
question of jurisdiction or grave abuse of discretion before
The petitioner filed a motion for reconsideration which the the CA. What the respondent company effectively sought
NLRC granted in a Resolution promulgated on September from the CA, citing our ruling in Flores v. NLRC,15 was a
20, 2002.11 The NLRC held that the charges against judicial re-evaluation of the adequacy or inadequacy of the
petitioner were never really substantiated other than by the evidence on recordan
bare allegations in the affidavits of witnesses who were
the companys employees and who had altercations with improper exercise of power outside the scope of the
petitioner prior to the execution of their affidavits.
extraordinary writ of certiorari.
The NLRC turned down the motion for reconsideration that
the respondent company subsequently filed.12 The
respondent company thus elevated the case to the CA via a
petition for certiorari under Rule 65 of the Rules of Court.
The CA granted the petition in its Decision promulgated on
May 25, 2004,13 thereby effectively confirming the validity
of the petitioners dismissal. The appellate court found that
the NLRC gravely abused its discretion when it disregarded
the affidavits of all the respondents witnesses, particularly
those of Balais, Samarita, Niguidula, and Pacaldo who were
one in saying that the petitioner demanded commissions
from the companys job contractors. The CA observed that
it could not have been possible that Balais and Niguidula
(who had previous altercations with the petitioner), and
Samarita (who did not previously know Quiogue) all
committed perjury to execute respondent Quiogues scheme
of removing the petitioner from the company.
The petitioner moved but failed to secure a reconsideration
of the CA Decision; hence, he came to us through the
present petition.
The Petition

The petitioner submits that the CA erred when it acted as a

trial court and interfered without sufficient basis with the
NLRCs findings. Citing our ruling in Cosmos Bottling
Corporation v. NLRC, et al.,14 he points out that factual
findings of the NLRC, particularly when they coincide with
those of the Labor Arbiter, are accorded respect and finality
and should not be disturbed if they are supported by
substantial evidence.

The petitioner further argues that the CA erred when it

substituted its judgment for that of the Labor Arbiter and
the NLRC who were the triers of facts who had the
opportunity to review the evidence extensively.
The petitioner theorizes that his termination from
employment was a hatchet job maliciously concocted by the
respondents, with Quiogue at the helm. He had offended
Quiogue when he questioned the latters award of the fire
exit contract to Samarita; as a result, Quiogue fabricated
charges against him, using his underlings Niguidula and
Balais. He particularly questions the charge that he
conspired with his fellow managers (such as Niguidula,
Pacaldo and even Personnel Manager Mandap) in
December 1995, and asks why his investigation and the
supporting evidence came only in May 1996.
The petitioner likewise cites Ayings change of statement as
evidence that the respondents charges have been
concoctions. He belies that he slandered and challenged
Niguidula to a fight; it was in fact Niguidula who had
defamed him. He stresses that he complained in writing to
respondent Quiogue about the incident immediately after it
happened, copy furnished B. P. Mandap, F. A. Domingo and
R. M. Moreno, the Personnel Manager, Head of Human
Relations and President of the company, respectively. He
likewise reported the matter to the police and to the
barangay covering the workplace, and lodged a complaint
for grave oral defamation against Niguidula before the
Makati Prosecutors Office. His co-employee, Ronalisa
Rosana, corroborated all these allegations. He points out
that Niguidula never reported the incident to Quiogue or to
anyone for that matter, thus, proving the falsity of his
(Niguidulas) complaint.

The petitioner points out, too, that Rule 65 of the Rules of

Court finds full application only when an administrative Finally, the petitioner draws attention to Quiogues failure
tribunal has acted with grave abuse of discretion amounting to act on his complaint against Niguidula, only to resurrect
10

it under the Notice of Violation served on him on May 16,

1996.16 This time, however, Niguidula was already the
victim. As to the notice of violation itself, the petitioner
laments that although he was given 48 hours to explain,
Quiogue, in bad faith, immediately filed complaints for
estafa and qualified theft against him. Mandap even went to
his residence and warned his wife not to file charges against
the company, or else, Quiogue would file cases against him
in the regular courts.
The Case for the Respondents

The respondents submit that the CA correctly ruled as the

NLRC committed grave abuse of discretion when it flipflopped in its factual findings. They further stress that the
positive testimonies of Balais, Pacaldo, and Samarita
should be given credence over the negative testimony of the
petitioner. Even granting that the testimony of Niguidula
was tainted with malice and bad faith, the affidavit of Balais
should stand because no evidence supports the petitioners
claim that Balais also had altercations with him before he
(Balais) executed his two affidavits.
With respect to the testimony of Samarita, the respondents
point out that Samarita stated in no uncertain terms that he
was forced to increase his quotation for the construction of
the company fire exits from P70,091.00 to P87,000.00
because the petitioner had asked for commissions. The
petitioner failed to rebut this. They brush aside the
insinuation that Samarita and Pacaldo suffer from bias as
the petitioner failed to show by evidence that their personal
interests led them to favor the company.

As a rule, and as recently held in Rudy A. Palecpec, Jr. v.

Hon. Corazon C. Davis, et al.17 (a 2007 case), this Court is
not a trier of facts and can review a Rule 45 petition only on
questions of law. We wade, however, into questions of facts
when there are substantial conflicts in the factual findings
of the CA, on the one hand, and the trial court or
government agency concerned, on the other. This is
precisely the situation that we have before us since the
NLRC and the CA have diametrically opposed factual
findings leading to differing conclusions. Hence, we are left
with no option but to undertake a review of the facts in this
Rule 45 case.
We find the petition meritorious. To our mind, the CA erred
in the appreciation of the evidence surrounding petitioners
termination from employment. The cited grounds are at best
doubtful under the proven surrounding circumstances, and
should have been interpreted in the petitioners favor
pursuant to Article 4 of the Labor Code.
1.The petitioner had not stayed long in the company and
had not even passed his probationary period when the acts
charged allegedly took place.18 This fact carries several
significant implications. First, being new, his natural
motivation was to make an early positive impression on his
employer. Thus, it is believable that as building
administrator, he diligently, zealously, and faithfully
performed his tasks, working in excess of eight hours per
day to maintain the company buildings and facilities in
excellent shape; he even lent the company his personal
tools and equipment to facilitate urgent repairs and
maintenance work on company properties.19 Second,
because of his natural motivation as a new employee and
his lack of awareness of the dynamics of relationships
within the company, he must have been telling the truth
when he said that he objected to the way the contract for the
installation of fire escapes was awarded to Samarita. Third,
his being new somehow rendered doubtful the charge that
he had already encouraged solicitation of commission from
suppliers, especially if considered with the timing of the
charges against him and the turnaround of witness Ayings
testimony.

The respondents lastly maintain that petitioners claim

that Quiogue orchestrated the petitioners dismissal after he
(the petitioner) questioned Quiogues award of a contract to
Samarita Enterprises for a questionable priceis not
supported by evidence. They reiterate the gravity of the
charges the petitioner faces; they constitute serious
misconduct and fraud or willful breach of trust reposed in
him by his employer and are just causes for termination of
employment under Article 282 of the Labor Code, as well
as serious breaches of company rules and the trust reposed 2.The relationships within the company at the time the
charges were filed showed that he was a stranger who might
in him by the respondent company.
not have known the dynamics of company interrelationships and might have stepped on the wrong toes in
Our Ruling
the course of performing his duties.
11

Respondent Quiogue was the Executive Vice-President of

the company,20 a very powerful official with a lot of say in
company operations. Since Samarita was doing the
fabrication of steel balusters for Quiogues home in New
Manila, Quezon City,21 there is a lot of hidden dynamics in
their relationship and it is not surprising that Samarita
testified against the petitioner. Both Samarita and Quioque
have motives to resent the petitioners comments about the
irregular award of a contract to Samarita.

pricing his purchases; and thus, Balais had every reason to

testify against the petitioner.24

As already mentioned, Ayingthe contractor who had

earlier testified against the petitionerrecanted his earlier
statement that petitioner asked for commissions from
him.25 Aying, in his second statement, exonerated the
petitioner.26 This turnaround by itself is significant, more
so if considered with other circumstances,27 particularly
the possibility that the charges might have been
Mandap, as Personnel Manager, is a subordinate of orchestrated owing to the confluence of the people who
Quiogue. The proposal to secure commissions from were allied against the petitioner, their respective
company suppliers reportedly took place in a very public motivations and the timing of events.
gatheringa drinking sessionin his house. Why Mandap
did not take immediate action when he knew of the alleged 3.The timing of the filing of charges was, as the
plan as early as December 1995 was never explained petitioner pointed out, unusual. Indeed, if the proposal to
although the petioner raised the issue squarely.22 The time solicit commissions had transpired in December, the
gapfrom December 1995 to May 1996is an incredibly charges were quite late when they came in May.
long time under the evidence available and can be Interestingly, it was in April 1996 that the petitioner
accounted for only by the fact that there was no intention to questioned the soundness of respondent Quiogues decision
terminate the services of the petitioner in December; the to award the fabrication and installation of six (6) units of
motivation and the scheme to do this came only sometime fire escape to Samarita Enterprises without observing
company procedure of requiring at least three quotations
in April-May 1996 as the discussions below will show.
from suppliers and contractors.28 The petitioner
Niguidula, as Purchasing Manager, occupies a position that reprimanded air-con maintenance man Balais sometime in
deals with supplies and suppliers. He, not the petitioner, is the first week of May 1996 for unnecessary overtime work
one who might be expected to be in the middle of all the and the two had a verbal altercation, an incident that the
actions regarding supply deals. He would not welcome a petitioner reported to Quiogue.29 On May 9, 1996,
new and over-zealous building administrator since the petitioner also had an altercation with Niguidula, the
building facilities generate the need for supplies and the companys Purchasing Manager, who verbally assaulted,
building administrator is the end-user who can see how slandered, and challenged him to a fight, another incident
supplies are procured and used. It is significant that which he likewise reported to Quiogue and to the Makati
Niguidula and the petitioner had a dispute regarding the Police.30 All these strangely coincided with the time the
accounting of company items and had a near-fight that charges were filed. The respondents never successfully
interrupted the normal flow of activities in the accounted for the coincidences.
company.23
All these considerations, to our mind, render the cited
Pacaldo, a Purchasing Officer and a subordinate of causes for the petitioners dismissal tenuous as the evidence
Niguidula, under usual conditions would side with supporting these grounds come from highly suspect
Niguidula. He and Niguidula, not the petitioner, occupy the sources:
positions critical in the purchase of supplies for the
company and were the people who could exact they come either from people who harbor resentment
against the petitioner; those whose positions have inherent
commissions from suppliers.
conflict points with that of the petitioner; or from people
Balais is an air-con maintenance man whom petitioner with business dealings with the company. Thus, it was not
reprimanded for unauthorized overtime work on an air- surprising for the NLRC to observe:
conditioning unit; for failure to monitor a newly overhauled
compressor unit contrary to standard practice; and for over- From the above, the Commission believes that the Motion
for Reconsideration should be granted. Respondents
12

charges against complainant were never substantiated by

any evidence other than the barefaced allegations in the
affidavits of respondents witnesses who are employees of
the company and who had an altercation with complainant
prior to the execution of their affidavits and charges. The
other witnesses are contractors having business deals with
respondent company and in fact, Jose Aying has made a
turn around and denied the complainant has been asking
commission from him.

petition deals only with legal issues is not an absolute rule;

it admits of exceptions. In the labor law setting, we wade
into factual issues when conflict of factual findings exists
among the labor arbiter, the NLRC, and the CA. This is the
exact situation that obtains in the present case since the
labor arbiter found facts supporting the conclusion that
there had been constructive dismissal, while the NLRCs
and the CAs factual findings contradicted the labor
arbiters findings. Under this situation, the conflicting
factual findings below are not binding on us, and we retain
Under the circumstances, we join the NLRC in concluding the authority to pass on the evidence presented and draw
that the employer failed to prove a just cause for the conclusions therefrom.
termination of the petitioners employmenta burden the
company, as employer, carries under the Labor Code31 Labor Law; Termination of Employment; Evidence; In
and the CA erred when it saw grave abuse of discretion in employee termination disputes, the employer bears the
the NLRCs ruling. The evidentiary situation, at the very burden of proving that the employees dismissal was for
least, brings to the fore the dictum we stated in Prangan v. just and valid cause.The first is the settled rule that in
NLRC32 and in Nicario v. NLRC33 that if doubts exist employee termination disputes, the employer bears the
between the evidence presented by the employer and the burden of proving that the employees dismissal was for
employee, the scales of justice must be tilted in favor of the just and valid cause. That Peaflor did indeed file a letter of
latter. It is a time-honored rule in controversies between a resignation does not help the companys case as, other than
laborer and his master, doubts reasonably arising from the the fact of resignation, the company must still prove that the
evidence, or in the interpretation of agreements and writing employee voluntarily resigned. There can be no valid
should be resolved in the formers favor.
resignation where the act was made under compulsion or
under circumstances approximating compulsion, such as
WHEREFORE, premises considered, we hereby GRANT when an employees act of handing in his resignation was a
the petition. Accordingly, we REVERSE and SET ASIDE reaction to circumstances leaving him no alternative but to
the Decision and Resolution of the CA promulgated on May resign. In sum, the evidence does not support the existence
25, 2004 and August 30, 2004, respectively, and of voluntariness in Peaflors resignation.
REINSTATE in all respects the Resolution of the National
Labor Relations Commission dated September 20, 2002. Same; Same; Same; The principle that all doubts in the
Costs against the respondents.
interpretation and implementation of the Labor Code should
be interpreted in favor of the workingman has been
SO ORDERED.
extended by jurisprudence to cover doubts in the evidence
presented by the employer and the employee.Another
G.R. No. 177114.January 21, 2010.*
basic principle is that expressed in Article 4 of the Labor
MANOLO A. PEAFLOR, petitioner, vs. OUTDOOR Codethat all doubts in the interpretation and
CLOTHING MANUFACTURING CORPORATION, implementation of the Labor Code should be interpreted in
NATHANIEL T. SYFU, President, MEDYLENE M. favor of the workingman. This principle has been extended
DEMOGENA, Finance Manager, and PAUL U. LEE, by jurisprudence to cover doubts in the evidence presented
by the employer and the employee. As shown above,
Chairman, respondents.
Peaflor has, at very least, shown serious doubts about the
Remedial Law; Appeals; Rule that a Rule 45 petition deals merits of the companys case, particularly in the
only with legal issues is not an absolute rule; It admits of appreciation of the clinching evidence on which the NLRC
exceptions; The conflicting factual findings below are not and CA decisions were based. In such contest of evidence,
binding on the Court which retain its authority to pass on the cited Article 4 compels us to rule in Peaflors favor.
the evidence presented and draw conclusions therefrom.
We see no merit in this argument as the rule that a Rule 45
13

PETITION for review on certiorari of the decision and On the pretext of retrenchment, Peaflors two staff
resolution of the Court of Appeals.
members were dismissed, leaving him as the only member
of Outdoor Clothings HRD and compelling him to perform
The facts are stated in the opinion of the Court.
all personnel-related work. He worked as a one-man
department, carrying out all clerical, administrative and
Vicente S. Pulido for petitioner.
liaison work; he personally went to various government
Kho, Bustos, Malcontento, Argosino Law Offices for offices to process the companys papers.
respondents.
When an Outdoor Clothing employee, Lynn Padilla
(Padilla), suffered injuries in a bombing incident, the
BRION,J.:
company required Peaflor to attend to her hospitalization
Petitioner Manolo A. Peaflor (Peaflor) seeks the reversal needs; he had to work outside office premises to undertake
of the Court of Appeals (CA) decision1 dated December 29, this task. As he was acting on the companys orders,
2006 and its resolution2 dated March 14, 2007, through the Peaflor considered himself to be on official business, but
present petition for review on certiorari filed under Rule 45 was surprised when the company deducted six days salary
of the Rules of Court. The assailed CA decision affirmed corresponding to the time he assisted Padilla. According to
the September 24, 2002 decision3 of the National Labor Finance Manager Medylene Demogena (Demogena), he
Relations Commission (NLRC) that in turn reversed the failed to submit his trip ticket, but Peaflor belied this claim
August 15, 2001 decision4 of the Labor Arbiter.5
as a trip ticket was required only when a company vehicle
was used and he did not use any company vehicle when he
The Factual Antecedents
attended to his off-premises work.6After Peaflor returned
Peaflor was hired on September 2, 1999 as probationary from his field work on March 13, 2000, his officemates
Human Resource Department (HRD) Manager of informed him that while he was away, Syfu had appointed
respondent Outdoor Clothing Manufacturing Corporation Nathaniel Buenaobra (Buenaobra) as the new HRD
(Outdoor Clothing or the company). As HRD head, Manager. This information was confirmed by Syfus
Peaflor was expected to (1) secure and maintain the right memorandum of March 10, 2000 to the entire office stating
quality and quantity of people needed by the company; (2) that Buenaobra was the concurrent HRD and Accounting
maintain the harmonious relationship between the Manager.7 Peaflor was surprised by the news; he also felt
employees and management in a role that supports betrayed and discouraged. He tried to talk to Syfu to clarify
organizational goals and individual aspirations; and (3) the matter, but was unable to do so. Peaflor claimed that
represent the company in labor cases or proceedings. Two under these circumstances, he had no option but to resign.
staff members were assigned to work with him to assist him He submitted a letter to Syfu declaring his irrevocable
resignation from his employment with Outdoor Clothing
in undertaking these functions.
effective at the close of office hours on March 15, 2000.8
Peaflor claimed that his relationship with Outdoor
Clothing went well during the first few months of his Peaflor then filed a complaint for illegal dismissal with the
employment; he designed and created the companys Policy labor arbiter, claiming that he had been constructively
Manual, Personnel Handbook, Job Expectations, and dismissed. He included in his complaint a prayer for
Organizational Set-Up during this period. His woes began reinstatement and payment of backwages, illegally
when the companys Vice President for Operations, Edgar deducted salaries, damages, attorneys fees, and other
Lee (Lee), left the company after a big fight between Lee monetary claims.
and Chief Corporate Officer Nathaniel Syfu (Syfu).
Outdoor Clothing denied Peaflors allegation of
Because of his close association with Lee, Peaflor claimed
constructive dismissal. It posited instead that Peaflor had
that he was among those who bore Syfus ire.
voluntarily resigned from his work. Contrary to Peaflors
When Outdoor Clothing began undertaking its alleged statement that he had been dismissed from employment
downsizing program due to negative business returns, upon Syfus appointment of Buenaobra as the new HRD
Peaflor alleged that his department had been singled out. Manager on March 10, 2000, Peaflor had in fact continued
14

working for the company until his resignation on March 15, never furnished copies of these. Moreover, he could not be
2000. The company cited as evidence the security report on prolonged absence without official leave, as his
that Peaflor himself prepared and signed on March 13, residence was just a few meters away from the office.
2000.9
The NLRC apparently found Outdoor Clothings submitted
Outdoor Clothing disclaimed liability for any of Peaflors memoranda sufficient to overturn the labor arbiters
monetary claims. Since Peaflor had voluntarily resigned, decision.13 It characterized Peaflors resignation as a
Outdoor Clothing alleged that he was not entitled to any response, not to the allegedly degrading and hostile
backwages and damages. The company likewise denied treatment that he was subjected to by Syfu, but to Outdoor
making any illegal deduction from Peaflors salary; while Clothings downward financial spiral. Buenaobras
deductions were made, they were due to Peaflors failure appointment was made only after Peaflor had submitted
to report for work during the dates the company questioned. his resignation letter, and this was made to cover the
As a probationary employee, he was not yet entitled to any vacancy Peaflors resignation would create. Thus, Peaflor
leave credit that would offset his absences.
was not eased out from his position as HRD manager. No
malice likewise was present in the companys decision to
In his August 15, 2001 decision, the labor arbiter found that dismiss Peaflors two staff members; the company simply
Peaflor had been illegally dismissed.10 Outdoor Clothing exercised its management prerogative to address the
was consequently ordered to reinstate Peaflor to his former financial problems it faced. Peaflor, in fact, drafted the
or to an equivalent position, and to pay him his illegally dismissal letters of his staff members. In the absence of any
deducted salary for six days, proportionate 13th month pay, illegal dismissal, no basis existed for the monetary awards
attorneys fees, moral and exemplary damages.Outdoor the labor arbiter granted.
Clothing appealed the labor arbiters decision with the
NLRC. It insisted that Peaflor had not been constructively Peaflor anchored his certiorari petition with the CA on the
dismissed, claiming that Peaflor tendered his resignation claim that the NLRC decision was tainted with grave abuse
on March 1, 2000 because he saw no future with the of discretion, although he essentially adopted the same
corporation due to its dire financial standing. Syfu alleged arguments he presented before the labor arbiter and the
that he was compelled to appoint Buenaobra as concurrent NLRC.
HRD Manager through a memorandum dated March 1,
2000 to cover the position that Peaflor would soon In a decision dated December 29, 2006,14 the CA affirmed
vacate.11 The appointment was also made to address the the NLRCs decision, stating that Peaflor failed to present
personnel matters that had to be taken cared of while sufficient evidence supporting his claim that he had been
Peaflor was on unauthorized leave. Incidentally, Outdoor constructively dismissed. The CA ruled that Peaflors
Clothing alleged that Peaflor had already been given two resignation was knowingly and voluntarily made.
notices, on March 6 and 11, 2000 (absence without official Accordingly, it dismissed Peaflors certiorari petition. It
leave memoranda or the AWOL memoranda), for his likewise denied the motion for reconsideration that Peaflor
unauthorized absences. In a memorandum dated March 3, subsequently filed.15 Faced with these CA actions, Peaflor
2000 addressed to Syfu, Buenaobra accepted the filed with us the present petition for review on certiorari.
appointment.12
The Parties Arguments
Peaflor contested Syfus March 1, 2000 memorandum,
Buenaobras March 3, 2000 memorandum, and the AWOL
memoranda, claiming these pieces of evidence were
fabricated and were never presented before the labor arbiter.
He pointed out that nothing in this resignation letter
indicated that it was submitted to and received by Syfu on
March 1, 2000. He claimed that it was submitted on March
15, 2000, the same date he made his resignation effective.
The AWOL memoranda could not be relied on, as he was

Peaflor insists that, contrary to the findings of the NLRC

and the CA, he had been constructively dismissed from his
employment with Outdoor Clothing. He alleges that the
dismissal of his two staff members, the demeaning liaison
work he had to perform as HRD Manager, the salary
deduction for his alleged unauthorized absences, and the
appointment of Buenaobra as the new HRD manager even
before he tendered his resignation, were clear acts of
discrimination that made his continued employment with

15

the Outdoor Clothing unbearable. He was thus forced to support exists for Peaflors allegation that he had been
resign.
forced to resign due to the prevailing abusive and hostile
working environment. Buenaobras appointment would then
Outdoor Clothing claims that Peaflor voluntarily resigned be simply intended to cover the vacancy created by
from his work and his contrary allegations were all Peaflors resignation. On the other hand, if the resignation
unsubstantiated. The HRD was not singled out for letter was submitted after the appointment of Buenaobra,
retrenchment, but was simply the first to lose its staff then factual basis exists indicating that Peaflor had been
members because the company had to downsize. Thus, all constructively dismissed as his resignation was a response
HRD work had to be performed by Peaflor. Instead of to the unacceptable appointment of another person to a
being grateful that he was not among those immediately position he still occupied.
dismissed due to the companys retrenchment program,
Peaflor unreasonably felt humiliated in performing work The question of when Peaflor submitted his resignation
that logically fell under his department; insisted on having a letter arises because this letterundisputably madewas
full staff complement; absented himself from work without undated. Despite Peaflors claim of having impressive
official leave; and demanded payment for his unauthorized intellectual and academic credentials,19 his resignation
absences.
letter, for some reason, was undated. Thus, the parties have
directly opposing claims on the matter. Peaflor claims that
The Issue and The Courts Ruling
he wrote and filed the letter on the same date he made his
resignation effectiveMarch 15, 2000. Outdoor Clothing,
The Court finds the petition meritorious.
on the other hand, contends that the letter was submitted on
A preliminary contentious issue is Outdoor Clothings March 1, 2000, for which reason Syfu issued a
argument that we should dismiss the petition outright memorandum of the same date appointing Buenaobra as the
because it raises questions of facts, not the legal questions concurrent HRD manager; Syfus memorandum cited
that should be raised in a Rule 45 petition.16We see no Peaflors intention to resign so he could devote his time to
merit in this argument as the rule that a Rule 45 petition teaching. The company further cites in support of its case
deals only with legal issues is not an absolute rule; it admits Buenaobras March 3, 2000 memorandum accepting his
of exceptions. In the labor law setting, we wade into factual appointment. Another piece of evidence is the Syfu
issues when conflict of factual findings exists among the memorandum of March 10, 2000, which informed the
labor arbiter, the NLRC, and the CA. This is the exact office of the appointment of Buenaobra as the concurrent
situation that obtains in the present case since the labor Head of HRDthe position that Peaflor occupied. Two
arbiter found facts supporting the conclusion that there had other memoranda are alleged to exist, namely, the AWOL
been constructive dismissal, while the NLRCs and the memoranda of March 6 and 11, 2000, allegedly sent to
CAs factual findings contradicted the labor arbiters Peaflor.
findings.17 Under this situation, the conflicting factual
findings below are not binding on us, and we retain the Several reasons arising directly from these pieces of
authority to pass on the evidence presented and draw evidence lead us to conclude that Peaflor did indeed
submit his resignation letter on March, 15, 2000, i.e., on the
conclusions therefrom.18
same day that it was submitted.
The petition turns on the question of whether Peaflors
undisputed resignation was a voluntary or a forced one, in First, we regard the Syfu memorandum of March 1, 2000
the latter case making it a constructive dismissal equivalent and the memorandum of Buenaobra of March 3, 2000
to an illegal dismissal. A critical fact necessary in resolving accepting the position of HRD Head to be highly suspect.
this issue is whether Peaflor filed his letter of resignation In our view, these memoranda, while dated, do not
before or after the appointment of Buenaobra as the constitute conclusive evidence of their dates of preparation
new/concurrent HRD manager. This question also gives rise and communication. Surprisingly, Peaflor was never
to the side issue of when Buenaobras appointment was informed about these memoranda when they directly
made. If the resignation letter was submitted before Syfus concerned him, particularly the turnover of responsibilities
appointment of Buenaobra as new HRD manager, little to Buenaobra if indeed Peaflor had resigned on March 1,
16

2000 and a smooth turnover to Buenaobra was intended.

Even the recipients of these communications do not appear
to have signed for and dated their receipt. The AWOL
memoranda, to be sure, should have been presented with
proof of service if they were to have any binding effect on
Peaflor.
Second, we find it surprising that these pieces of evidence
pointing to a March 1, 2000 resignationspecifically,
Syfus March 1, 2000 memorandum to Buenaobra about
Penaflors
resignation
and
Buenaobras
own
acknowledgment and acceptancewere only presented to
the NLRC on appeal, not before the labor arbiter. The
matter was not even mentioned in the companys position
paper filed with the labor arbiter.20 While the presentation
of evidence at the NLRC level on appeal is not unheard of
in labor cases,21 still sufficient explanation must be
adduced to explain why this irregular practice should be
allowed. In the present case, Outdoor Clothing totally failed
to explain the reason for its omission. This failure, to us, is
significant, as these were the clinching pieces of evidence
that allowed the NLRC to justify the reversal of the labor
arbiters decision.

that Peaflor cited for his discriminatory treatment, i.e., that

he was caught in the bitter fight between Syfu and Lee, then
Vice President for Operations, that led the latter to leave the
company.24 After Lee left, Peaflor alleged that those
identified with Lee were singled out for adverse treatment,
citing in this regard the downsizing of HRD that occurred
on or about this time and which resulted in his one-man
HRD operation. We say this downsizing was only alleged
as the company totally faileddespite Penaflors claim of
discriminatory practiceto adduce evidence showing that
there had indeed been a legitimate downsizing. Other than
its bare claim that it was facing severe financial problems,
Outdoor Clothing never presented any evidence to prove
both the reasons for its alleged downsizing and the fact of
such downsizing. No evidence was ever offered to rebut
Peaflors claim that his staff members were dismissed to
make his life as HRD Head difficult. To be sure, Peaflors
participation in the termination of his staff members
employment cannot be used against him, as the termination
of employment was a management decision that Peaflor, at
his level, could not have effectively contested without
putting his own job on the line.

Peaflors own service with the company deserves close

Third, the circumstances and other evidence surrounding scrutiny. He started working for the company on September
Peaflors resignation support his claim that he was 2, 1999 so that by March 1, 2000, his probationary period
practically compelled to resign from the company.
would have ended and he would have become a regular
Foremost among these is the memorandum of March 10, employee. We find it highly unlikely that Peaflor would
2000 signed by Syfu informing the whole office (To: All resign on March 1, 2000 and would then simply leave given
concerned) about the designation of Buenaobra as his undisputed record of having successfully worked within
concurrent Accounting and HRD Manager. In contrast with his probationary period on the companys Policy Manual,
the suspect memoranda we discussed above, this Personnel Handbook, Job Expectations, and Organizational
memorandum properly bore signatures acknowledging Set-up. It does not appear sound and logical to us that an
receipt and dates of receipt by at least five company employee would tender his resignation on the very same
officials, among them the readable signature of Demogene day he was entitled by law to be considered a regular
and one Agbayani; three of them acknowledged receipt on employee, especially when a downsizing was taking place
March 13, 2000, showing that indeed it was only on that and he could have availed of its benefits if he would be
day that the appointment of Buenaobra to the HRD position separated from the service as a regular employee. It was
was disclosed. This evidence is fully consistent with strange, too, that he would submit his resignation on March
Peaflors position that it was only in the afternoon of 1, 2000 and keep completely quiet about this development
March 13, 2000 that he was told, informally at that, that until its effective date on March 15, 2000. In the usual
Buenaobra had taken over his position. It explains as well course, the turnover alone of responsibilities and work
why as late as March 13, 2000, Peaflor still prepared and loads to the successor in a small company would have
signed a security report,22 and is fully consistent with his prevented the matter from being completely under wraps
position that on that day he was still working on the excuse for 10 days before any announcement was ever made. That
letter of certain sales personnel of the company.23We note Peaflor was caught by surprise by the turnover of his post
that the company only belatedly questioned the motivation to Buenaobra is in fact indicated by the companys own
evidence that Peaflor still submitted a security report on
17

March 13, 2000. On the whole, Peaflors record with the

company is not that of a company official who would
simply and voluntarily tender a precipitate resignation on
the excuse that he would devote his time to teachinga
lame excuse at best considering that March is the month the
semester usually ends and is two or three months away
from the start of another school year.

alternative but to resign from his employment.29Last but

not the least, we have repeatedly given significance in
abandonment and constructive dismissal cases to the
employees reaction to the termination of his employment
and have asked the question: is the complaint against the
employer merely a convenient afterthought subsequent to
an abandonment or a voluntary resignation? We find from
the records that Peaflor sought almost immediate official
recourse to contest his separation from service through a
complaint for illegal dismissal.30 This is not the act of one
who voluntarily resigned; his immediate complaints
characterize him as one who deeply felt that he had been
wronged.

In our view, it is more consistent with human experience

that Peaflor indeed learned of the appointment of
Buenaobra only on March 13, 2000 and reacted to this
development through his resignation letter after realizing
that he would only face hostility and frustration in his
working environment. Three very basic labor law principles
support this conclusion and militate against the companys WHEREFORE, we GRANT the petitioners petition for
case.
review on certiorari, and REVERSE the decision and
resolution of the Court of Appeals in CA-G.R. SP No.
The first is the settled rule that in employee termination 87865 promulgated on December 29, 2006 and March 14,
disputes, the employer bears the burden of proving that the 2007, respectively. We REINSTATE the decision of the
employees dismissal was for just and valid cause.25 That labor arbiter dated August 15, 2001, with the
Peaflor did indeed file a letter of resignation does not help MODIFICATION that, due to the strained relations between
the companys case as, other than the fact of resignation, the the parties, respondents are additionally ordered to pay
company must still prove that the employee voluntarily separation pay equivalent to the petitioners one months
resigned.26 There can be no valid resignation where the act salary.
was made under compulsion or under circumstances
approximating compulsion, such as when an employees act Costs against the respondents.
of handing in his resignation was a reaction to
circumstances leaving him no alternative but to resign.27 In SO ORDERED.
sum, the evidence does not support the existence of NORKIS FREE AND INDEPENDENT WORKERS
voluntariness in Peaflors resignation.Another basic UNION,
petitioner,
vs.
NORKIS
TRADING
principle is that expressed in Article 4 of the Labor Code COMPANY, INC., respondent.
that all doubts in the interpretation and implementation of
the Labor Code should be interpreted in favor of the Labor Law; Contracts; Stipulations in a contract must be
workingman. This principle has been extended by read together not in isolation from one another.
jurisprudence to cover doubts in the evidence presented by Stipulations in a contract must be read together, not in
the employer and the employee.28 As shown above, isolation from one another. When the terms of its clauses
Peaflor has, at very least, shown serious doubts about the are clear and leave no room for doubt as to the intention of
merits of the companys case, particularly in the the contracting parties, it would not be necessary to
appreciation of the clinching evidence on which the NLRC interpret those terms, whose literal meanings should
and CA decisions were based. In such contest of evidence, prevail.
the cited Article 4 compels us to rule in Peaflors favor.
Thus, we find that Peaflor was constructively dismissed Same; Same; The Wage Order was intended to fix a new
given the hostile and discriminatory working environment minimum wage only, not to grant across-the-board wage
he found himself in, particularly evidenced by the increases to all employees in Region VII.We hold that the
escalating acts of unfairness against him that culminated in issue here is not about creditability, but the applicability of
the appointment of another HRD manager without any prior Wage Order No. ROVII-06 to respondents employees. The
notice to him. Where no less than the companys chief Wage Order was intended to fix a new minimum wage only,
corporate officer was against him, Peaflor had no not to grant across-the-board wage increases to all
18

employees in Region VII. The intent of the Order is

indicated in its title, Establishing New Minimum Wage
Rates, as well as in its preamble: the purpose, reason or
justification for its enactment was to adjust the minimum
wage of workers to cushion the impact brought about by the
latest economic crisis not only in the Philippines but also in
the Asian region.

PANGANIBAN, J.:

Wage Order No. ROVII-06, issued by the Tripartite Wages

and Productivity Board (RTWPB), merely fixed a new
minimum wage rate for private sector employees in Region
VII; hence, respondent cannot be compelled to grant an
Same; Same; The Board, like any other executive agency, across-the-board increase to its employees who, at the time
has the authority to interpret its own rules and issuances, of the promulgation of the Wage Order, were already being
any phrase contained in its interpretation becomes a part of paid more than the existing minimum wage.
those rules on issuance themselves.Notably, the RTWPB The Case
was interpreting only its own issuance, not a statutory
provision. The best authority to construe a rule or an Before us is a Petition for Review1 under Rule 45 of the
issuance is its very source, in this case the RTWPB. Rules of Court, seeking to set aside the July 30, 2002
Without a doubt, the Board, like any other executive Decision2 and the January 16, 2003 Resolution3 of the
agency, has the authority to interpret its own rules and Court of Appeals (CA) in CA-GR SP No. 54611. The
issuances; any phrase contained in its interpretation disposition of the assailed Decision reads as follows:
becomes a part of those rules or issuances themselves.
Therefore, it was proper for the CA to consider the letter ACCORDINGLY, We GRANT the instant petition for
dated June 13, 2000, written by the RTWPB to explain the certiorari. The Decision of public respondent Voluntary
scope and import of the latters own Order, as such Arbitrator in VA Case No. 374-VII-09-014-98E dated July
8, 1999, and Order dated August 13, 1999, denying
interpretation is deemed a part of the Order itself.
petitioners Motion for Reconsideration, are hereby SET
Same; Same; Social justice does not mandate that every ASIDE. Petitioner is hereby declared to have lawfully
dispute should be automatically decided in favor of labor. complied with Wage Order No. ROVII-06. No
In the resolution of labor cases, this Court has always been pronouncement as to costs.4
guided by the State policy enshrined in the Constitution:
social justice and the protection of the working class. Social The Decision5 of Voluntary Arbitrator Perfecto R. de los
justice does not, however, mandate that every dispute Reyes III,6 reversed by the CA, disposed as follows:
should be automatically decided in favor of labor. In every
WHEREFORE, premises considered, this Office hereby
case, justice is to be granted to the deserving and dispensed
decides in favor of Complainant. Respondent is hereby
in the light of the established facts and the applicable law
ordered to grant its employees the amount of increases
and doctrine.
granted under RTWPB Wage Order ROVII-06 in an acrossPETITION for review on certiorari of the decision and the-board manner retroactive to the dates provided for
under the said Wage Order.7
resolution of the Court of Appeals.
The January 16, 2003 Resolution denied petitioners
Motion for Reconsideration.
The facts are stated in the opinion of the Court.

The Facts

Armando M. Alforque for petitioner.

The CA summarized the undisputed factual antecedents as

Muntuerto, Almendras, Miel, Cavada Law Offices for follows:
private respondent.
The instant case arose as a result of the issuance of Wage
Alvarez, Caete & Lopez co-counsel for private Order No. ROVII-06 by the Regional Tripartite Wages and
respondent.
Productivity Board (RTWPB) increasing the minimum
daily wage by P10.00, effective October 1, 1998.
19

Prior to said issuance, herein parties entered into a Thus, [respondent] argued that long before the passage of
Collective Bargaining Agreement (CBA) effective from Wage Order ROVII-06 on March 10, 1998, and by virtue of
August 1, 1994 to July 31, 1999.
the Memorandum of Agreement it entered with herein
[petitioner], [respondent] was already paying its employees
Sec. 1. Salary Increase.The Company shall grant a a daily wage of P165.00 per day retroactive on August 1,
FIFTEEN (P15.00) PESOS per day increase to all its 1997, while the minimum wage at that time was still
regular or permanent employees effective August 1, 1994. P155.00 per day. On August 1, 1998, [respondent] again
Sec. 2. Minimum Wage Law Amendment.In the event granted an increase from P165.00 per day to P175.00, so
that a law is enacted increasing minimum wage, an across- that at the time of the effectivity of Wage Order No. 06 on
the-board increase shall be granted by the company October 1, 1998 prescribing the new minimum wage of
P165.00 per day, [respondents] employees were already
according to the provisions of the law.
receiving P175.00 per day.
On January 27, 1998, a re-negotiation of the CBA was
terminated and pursuant to which a Memorandum of For failure of the parties to settle this controversy, a
Agreement was forged between the parties. It was therein preventive mediation complaint was filed by herein
stated that petitioner shall grant a salary increase to all [petitioner] before the National Conciliation and Mediation
Board, pursuant to which the parties selected public
regular and permanent employees as follows:
respondent Voluntary Arbitrator to decide said controversy.
Ten (10) pesos per day increase effective August 1, 1997;
Submitted for arbitral resolution is the sole issue of
Ten (10) pesos per day increase effective August 1, 1998.
whether or not [respondent] has complied with Wage Order
Pursuant to said Memorandum of Agreement, the No. ROVII-06, in relation to the CBA provision mandating
employees received wage increases of P10.00 per day an across-the-board increase in case of the issuance of a
effective August 1, 1997 and P10.00 per day effective Wage Order.
August 1, 1998. As a result, the agreed P10.00 re-negotiated
salary increase effectively raised the daily wage of the In his decision, public respondent arbitrator found herein
employees to P165.00 retroactive August 1, 1997; and [respondent] not to have complied with the wage order,
another increase of P10.00, effective August 1, 1998, through the following dispositions:
raising the employees[] daily wage to P175.00.
The CBA provision in question (providing for an acrossOn March 10, 1998, the Regional Tripartite Wage
Productivity Board (RTWPB) of Region VII issued Wage
Order ROVII-06 which established the minimum wage of
P165.00, by mandating a wage increase of five (P5.00)
pesos per day beginning April 1, 1998, thereby raising the
daily minimum wage to P160.00 and another increase of
five (P5.00) pesos per day beginning October 1, 1998,
thereby raising the daily minimum wage to P165.00 per
day.

the-board increase in case of a wage order) is worded and

couched in a vague and unclear manner.

x x x In order to judge the intention of the contracting

parties, their contemporaneous and subsequent acts shall be
principally considered (Art. 1371, New Civil Code). Thus,
this Office x x x required the parties to submit additional
evidence in order to be able to know and interpret the
parties working intent and application of Wage Order No.
06 issued by the Regional Tripartite Wages and Productivity
In accordance with the Wage Order and Section 2, Article Board, Regional Office VII in relation to Section 2, Article
XII of the CBA, [petitioner] demanded an across-the-board XII provided for in the parties[] existing CBA.
increase. [Respondent], however, refused to implement the x x x Viewed from the foregoing facts and evidence, the
Wage Order, insisting that since it has been paying its working intent and application of RTWPB Wage Order
workers the new minimum wage of P165.00 even before ROVII-06 in relation to Section 2, Article XII of the
the issuance of the Wage Order, it cannot be made to parties[] existing CBA is clearly established. The evidence
comply with said Wage Order.
submitted by the parties, all point to the fact that their true
intention on how to implement existing wage orders is to
20

grant such wage orders in an across-the-board manner in

relation to the provisions of Section 2, Article XII of their
existing CBA. Respondent in this case [has] failed to
comply with its contractual obligation of implementing the
increase under RTWPB Wage Order ROVII-06 in an
across-the-board manner as provided in Section 2, Article
XII of its CBA with [petitioner].

for the Collective Bargaining Agreement (CBA) to provide

expressly for such creditability.

x x x

Hence, this Petition.10

xxx

x x x 8

Finally, the CA sustained respondents explanation that the

across-the-board increases provided in the CBA was
required only when a minimum wage law caused a
distortion in the wage structure.

Respondent elevated the case to the CA via a Petition for Issues

Certiorari and Prohibition under Rule 65 of the Rules of In its Memorandum, petitioner submits the following issues
Court.
for our consideration:
Ruling of the Court of Appeals

I. Whether or not the Honorable Court of Appeals gravely

The CA noted that the grant of an across-the-board increase, abused its discretion in setting aside the decision and
provided under Section 2 of Article XII of the CBA, was resolution of the honorable voluntary arbitrator[.]
qualified by the phrase according to the provisions of the 10 This case was deemed submitted for decision on
law. It thus stressed the necessity of determining the December 22, 2003, upon this Courts receipt of petitioners
import of Wage Order No. ROVII-06, the law involved in Memorandum, signed by Atty. Armando M. Alforque.
the present controversy. Taking into consideration the Respondents Memorandumsigned by Attys. Anastacio T.
opinion of the RTWPB, Region VII, the appellate court held Muntuerto Jr., Arturo C. Fernan, Deolito L. Alvarez and
that respondent had sufficiently complied with Wage Order Arlan Richard S. Alvarezwas received by this Court on
No. ROVII-06. The Board had opined that since December 1, 2003.
adjustments granted are only to raise the minimum wage or
the floor wage as a matter of policy, x x x wages granted 492
over the above amount set by this Board is deemed a
compliance.
The CA added that the policy and intent of the Wage Order
was to cushion the impact of the regional economic crisis
upon both the workers and the employers, not to enrich the
employees at the expense of the employers. Further, it held
that the-board wage increase, notwithstanding that it was
already paying salaries to its employees above the
minimum wage, would be to penalize generous employers
and effectively make them wait for the passage of a new
wage order before granting any increase. This would be
counter-productive [insofar] as securing the interests of
labor is concerned.9

Norkis Free and Independent Workers Union vs. Norkis

Trading Company, Inc.
II. Whether or not the Honorable Court of Appeals gravely
abused its discretion in considering the Supplemental
Memorandum of respondent and giving merit to evidence
presented for the first time on appeal and filed after the
lapse of the non[-]extendible period of time to file
memorandum and despite an extension granted to
respondent[.]

III. Whether or not the Honorable Court of Appeals gravely

abused its discretion in disregarding established
The appellate court said that the Wage Order exempted
jurisprudence on statutory construction.11
from compliance those enterprises already paying salaries
equal to or more than the prescribed minimum wage; thus, The main issue is whether respondent violated the CBA in
the Order effectively made the previous voluntary increases its refusal to grant its employees an across-the-board
given by respondent to its employees creditable against the increase as a result of the passage of Wage Order No.
law-mandated increase. Consequently, there was no need ROVII-06. Also raised is the procedural issue relating to the
propriety of the admission by the CA of RTWPBs letter21

opinion, which was attached to respondents Supplemental intended no such creditability; otherwise, they would have
Memorandum submitted to that court on August 30, 2000, expressly stated such intent in the CBA.
beyond the July 17, 2000 extended deadline.
We hold that the issue here is not about creditability, but the
The Courts Ruling
applicability of Wage Order No. ROVII-06 to respondents
employees. The Wage Order was intended to fix a new
The Petition lacks merit.
minimum wage only, not to grant across-the-board wage
increases to all employees in Region VII. The intent of the
Main Issue:
Order is indicated in its title, Establishing New Minimum
Wage Rates, as well as in its preamble: the purpose, reason
Effect of Wage Order No. ROVII-06 on the Parties CBA
or justification for its enactment was to adjust the
Petitioner insists that respondent should have granted to the minimum wage of workers to cushion the impact brought
employees the increase stated in Wage Order No. ROVII- about by the latest economic crisis not only in the
06. In addition to the increases both parties had mutually Philippines but also in the Asian region.
agreed upon, the CBA supposedly imposed upon
respondent the obligation to implement the increases In Cagayan Sugar Milling Company v. Secretary of Labor
mandated by law without any condition or qualification. To and Employment14 and Manila Mandarin Employees
support its claim, petitioner repeatedly invokes Section 2 of Union v. NLRC,15 the Wage Orders that were the subjects
of those cases were substantially and similarly worded as
Article XII of the CBA, which reads:
Wage Order No. ROVII-06. In those cases, this Court
SECTION 2. Minimum Wage Law Amendment.In the construed the Orders along the same line that it follows
event that a law is enacted increasing minimum wage, an now: as providing for an increase in the prevailing statutory
across-the-board increase shall be granted by the Company minimum wage rates of workers. No across-the-board
according to the provisions of the law.
increases were granted.
Interestingly, petitioner disregards altogether in its
argument the qualifying phrase according to the provisions
of the law and merely focuses its attention on the acrossthe-board increase clause. Given the entire sentence, it is
clear that the above-quoted CBA provision does not support
the unyielding view of petitioner that the issuance of Wage
Order No. ROVII-06 entitles its members to an across-theboard increase, absolutely and without any condition.

Parenthetically, there are two methods of adjusting the

minimum wage. In Employers Confederation of the Phils. v.
National Wages and Productivity Commission,16 these
were identified as the floor wage and the salary-ceiling
methods. The floor wage method involves the fixing of a
determinate amount to be added to the prevailing statutory
minimum wage rates. On the other hand, in the salaryceiling method, the wage adjustment was to be applied to
employees receiving a certain denominated salary ceiling.
Stipulations in a contract must be read together,12 not in
In other words, workers already being paid more than the
isolation from one another. When the terms of its clauses
existing minimum wage (up to a certain amount stated in
are clear and leave no room for doubt as to the intention of
the Wage Order) are also to be given a wage increase.
the contracting parties, it would not be necessary to
interpret those terms, whose literal meanings should A cursory reading of the subject Wage Order convinces us
prevail.13
that the intention of the Regional Board of Region VII was
The CA correctly observed that the import of Wage Order
No. ROVII-06 should be considered in the implementation
of the government-decreed increase. The present Petition
makes no denial or refutation of this finding, but merely an
averment of the silence of the CBA on the creditability of
increases provided under the Agreement against those in the
minimum wage under a wage order. It insists that the parties

to prescribe a minimum or floor wage; not to determine a

salary ceiling. Had the latter been its intention, the Board
would have expressly provided accordingly. The text of
Sections 2 and 3 of the Order states:
Section 2. AMOUNT AND MANNER OF INCREASE.
Upon the effectivity of this Order, the daily minimum wage
rates for all the workers and employees in the private sector

22

shall be increased by Ten Pesos (P10.00) per day to be VII. In its letter-opinion17 answering respondents queries,
given in the following manner:
the Board gave a similar interpretation of the essence of the
Wage Order: to fix a new floor wage or to upgrade the
i. Five Pesos (P5.00) per day effective April 1, 1998, and
wages of the employees receiving lower than the minimum
ii. Additional Five Pesos (P5.00) per day effective October wage set by the Order.
1, 1998.
Section 3. UNIFORM WAGE RATE PER AREA
CLASSIFICATION.To effect a uniform wage rate
pursuant to Section 1 hereof, the prescribed minimum wage
after full implementation of this Order for each area
classification shall be as follows:
Area Classification
Non-Agriculture Sector
Agriculture Sector
Class A
165.00
150.00
Class B
155.00
140.00
Class C
145.00
130.00
Class D
135.00
120.00

Notably, the RTWPB was interpreting only its own

issuance, not a statutory provision. The best authority to
construe a rule or an issuance is its very source,18 in this
case the RTWPB. Without a doubt, the Board, like any
other executive agency, has the authority to interpret its
own rules and issuances; any phrase contained in its
interpretation becomes a part of those rules or issuances
themselves.19 Therefore, it was proper for the CA to
consider the letter dated June 13, 2000, written by the
RTWPB to explain the scope and import of the latters own
Order, as such interpretation is deemed a part of the Order
itself. That the letter was belatedly submitted to that Court
is not fatal in the determination of this particular case.
We cannot sustain petitioner, even if we assume that its
contention is right and that the implementation of any
government-decreed increase under the CBA is absolute.
The CBA is no ordinary contract, but one impressed with
public interest.20 Therefore, it is subject to special orders
on wages,21 such as those issued by the RTWPB. Capitol
Wireless v. Bate22 is squarely in point. The union in that
case claimed that all government-mandated increases in
salaries should be granted to all employees across-the-board
without any qualification whatsoever, pursuant to the CBA
provision that any government-mandated wage increases
should be over and above the benefits granted in the CBA.
The Court denied such claim and held that the provisions of
the Agreement should be read in harmony with the Wage
Orders. Applying that ruling to the present case, we hold
that the implementation of a wage increase for respondents
employees should be controlled by the stipulations of Wage
Order No. ROVII-06.

At the risk of being repetitive, we stress that the employees

are not entitled to the claimed salary increase, simply
because they are not within the coverage of the Wage Order,
as they were already receiving salaries greater than the
minimum wage fixed by the Order. Concededly, there is an
increase necessarily resulting from raising the minimum
wage level, but not across-the-board. Indeed, a double
burden cannot be imposed upon an employer except by
Further supporting this construction of Wage Order No. clear provision of law.23 It would be unjust, therefore, to
ROVII-06 is the opinion of its drafter, the RTWPB Region
23
These provisions show that the prescribed minimum wage
after full implementation of the P10 increase in the Wage
Order is P165 for Class A private non-agriculture sectors. It
would be reasonable and logical, therefore, to infer that
those employers already paying their employees more than
P165 at the time of the issuance of the Order are sufficiently
complying with the Order.

interpret Wage Order No. ROVII-06 to mean that ocean-going vessels. The issue raised of whether petitioner
respondent should grant an across-the-board increase. Such is entitled to death compensation benefits from respondents
interpretation of the Order is not sustained by its text.24
is best resolved by the provisions of their Employment
Contract which incorporated the 2000 Standard Terms and
In the resolution of labor cases, this Court has always been Conditions Governing the Employment of Filipino
guided by the State policy enshrined in the Constitution: Seafarers on Board Ocean-Going Vessels.
social justice25 and the protection of the working class.26
Social justice does not, however, mandate that every dispute Same; Same; Death Benefits; To be entitled for death
should be automatically decided in favor of labor. In every compensation benefits from the employer, the death of the
case, justice is to be granted to the deserving and dispensed seafarer (1) must be work-related; and (2) must happen
in the light of the established facts and the applicable law during the term of the employment contract.Clearly, to be
and doctrine.27
entitled for death compensation benefits from the employer,
the death of the seafarer (1) must be work-related; and (2)
WHEREFORE, the Petition is DENIED, and the assailed must happen during the term of the employment contract.
Decision and Resolution AFFIRMED. Costs against Under the Amended POEA Contract, work-relatedness is
petitioner.
now an important requirement. The qualification that death
must be work-related has made it necessary to show a
SO ORDERED.
causal connection between a seafarers work and his death
Sandoval-Gutierrez, Corona, Carpio-Morales and to be compensable.
Garcia, JJ., concur.
Same; Same; Work-Related Injuries; Words and Phrases;
Under the 2000 Philippine Overseas Employment
G.R. No. 191740.February 11, 2013.*
Administration (POEA) Amended Employment Contract,
SUSANA R. SY, petitioner, vs. PHILIPPINE work-related injury is defined as an injury(ies) resulting in
TRANSMARINE CARRIERS, INC., and/or SSC SHIP disability or death arising out of and in the course of
MANAGEMENT PTE., LTD., respondents.
employment.Under the 2000 POEA Amended
Employment Contract, work-related injury is defined as an
Labor Law; Seafarers; Philippine Overseas Employment
injury(ies) resulting in disability or death arising out of and
Administration-Standard Employment Contract (POEAin the course of employment. Thus, there is a need to show
SEC); The terms and conditions of a seafarers employment
that the injury resulting to disability or death must arise (1)
is governed by the provisions of the contract he signs with
out of employment, and (2) in the course of employment.
the employer at the time of his hiring, and deemed
integrated in his contract is a set of standard provisions set Same; Same; Death Benefits; While it is true that the labor
and implemented by the Philippine Overseas Employment contracts are impressed with public interest and the
Administration (POEA), called the Standard Terms and provisions of the Philippine Overseas Employment
Conditions Governing the Employment of Filipino Administration-Standard Employment Contract (POEASeafarers on Board Ocean-Going Vessels, which provisions SEC) must be construed logically and liberally in favor of
are considered to be the minimum requirements acceptable Filipino seamen in the pursuit of their employment on
to the government for the employment of Filipino seafarers board ocean-going vessels, still the rule is that justice is in
on board foreign ocean-going vessels.The terms and every case for the deserving, to be dispensed with in the
conditions of a seafarers employment is governed by the light of established facts, the applicable law, and existing
provisions of the contract he signs with the employer at the jurisprudence.While we commiserate with petitioner, we
time of his hiring, and deemed integrated in his contract is a cannot grant her claim for death compensation benefits in
set of standard provisions set and implemented by the the absence of substantial evidence to prove her entitlement
POEA, called the Standard Terms and Conditions thereto, since to do so will cause injustice to the employer.
Governing the Employment of Filipino Seafarers on Board Otherwise stated, while it is true that labor contracts are
Ocean-Going Vessels, which provisions are considered to impressed with public interest and the provisions of the
be the minimum requirements acceptable to the government POEA-SEC must be construed logically and liberally in
for the employment of Filipino seafarers on board foreign
24

favor of Filipino seamen in the pursuit of their employment

on board ocean-going vessels, still the rule is that justice is
in every case for the deserving, to be dispensed with in the
light of established facts, the applicable law, and existing
jurisprudence.

Based on the initial investigation conducted by the local

police, AB Sy was riding on a motorcycle when he stopped
the driver to urinate at the riverside of the road. Since AB
Sy had not returned after a while, the motorcycle driver
went to look for him at the riverside, but the former was
nowhere to be found.4 At 1830 hrs., AB Sys corpse was
PETITION for review on certiorari of the decision and found.5 A forensic pathologist certified that AB Sys death
resolution of the Court of Appeals.
was an accident due to drowning, and that there was
alcohol 20mg% in his urine.6
The facts are stated in the opinion of the Court.
AB Sys body was repatriated to the Philippines. On
October 8, 2005, the Medico-Legal Officer of the National
Bureau of Investigation (NBI) conducted a post-mortem
examination on AB Sys body and certified that the cause of
death was Asphyxia by drowning.7

Linsangan, Linsangan & Linsangan for petitioner.

Del Rosario & Del Rosario for respondents.
PERALTA,J.:
Assailed in this petition for review on certiorari are the
Decision1 dated September 17, 2009 and the Resolution2
dated February 26, 2010 of the Court of Appeals issued in
CA-G.R. SP No. 107379.

Petitioner Susana R. Sy, widow of AB Sy, demanded from

respondents payment of her husbands death benefits and
compensation. Respondents denied such claim, since AB
Sys death occurred while he was on a shore leave, hence,
his death was not work-related and, therefore, not
The antecedent facts are as follows:
compensable. As her repeated demands were denied,
On June 23, 2005, Alfonso N. Sy (Sy) was hired by petitioner filed, on March 1, 2006, a complaint against
respondent Philippine Transmarine Carriers, Incorporated respondents for death benefits, burial assistance, moral and
for and in behalf of its foreign principal, co-respondent SSC exemplary damages, and attorneys fees.
Ship Management Pte. Ltd. In their contract of
On August 28, 2007, the Labor Arbiter (LA) rendered a
employment, Sy was assigned to work as Able Seaman
Decision,8 the dispositive portion of which reads:
(AB) on board the vessel M/V Chekiang for the duration of
ten months, with a basic monthly salary of US$512.00. WHEREFORE, premises considered, respondent is ordered
Considered incorporated in AB Sys Philippine Overseas to pay complainant the Philippine Currency equivalent to
Employment
Administration-Standard
Employment Fifty Thousand US Dollars (US$50,000.00) as death benefit
Contract (POEA-SEC) is a set of standard provisions and an additional amount of Philippine Currency equivalent
established and implemented by the POEA, called the to One Thousand U.S. Dollars (US$1,000.00) as burial
Amended Standard Terms and Conditions Governing the expenses at the exchange rate prevailing at the time of
Employment of Filipino Seafarers on Board Ocean-Going payment.
Vessels.
SO ORDERED.9
On October 1, 2005, while the vessel was at the Port of
Jakarta, Indonesia, AB Sy went on shore leave and left the The LA found that AB Sy was still under the respondents
vessel at about 1300 hours. At 1925 hours, the vessels employ at the time he drowned although he was on shore
agent from Jardine received an advice from the local police leave; that while on shore leave, he was still under the
that one of the vessels crew members died ashore. At 1935 control and supervision of the master or captain of the
hours, the agent advised the vessels master, Capt. Norman vessel as it was provided under Section 13 of the Contract
C. Marquez, about the incident. At 2050 hrs., Capt. that the seafarer before taking a shore leave must secure the
Marquez and his 3 crew members went to Cipto consent of the master of the vessel; and his leave was
Mangunkusumo Hospital where they confirmed the cadaver conditioned on considerations of operations and safety of
the vessel; that another indication that a seafarer is
to be that of AB Sy.3
considered to be doing work-related functions even when
25

on shore leave is found in subparagraph 4, paragraph B,

Section 1 of the Contract where the duties of the seafarer
are not limited to his stay while on board, but extend to his
stay ashore.

not for said employment, he would not have gone to the

riverside and urinate, and would not have accidentally
fallen into the river and drowned. It found petitioner
entitled to an award of attorneys fees, since she was
constrained to hire the services of a lawyer to protect her
The LA then ruled that since AB Sy was doing work-related rights but found no basis for the grant of moral and
functions during the term of his contract, only a finding that exemplary damages.
his death was self-inflicted or attributable to him would bar
the payment of death benefits. It found that respondents Respondents filed their Motion for Reconsideration, which
evidence, which consisted of the Indonesia Police Autopsy the NLRC denied in a Resolution12 dated December 8,
Report, stating that the cause of death was drowning, did 2008.
not establish the circumstance of death which would show
that the death was the result of AB Sys willful act on his Respondents filed a petition for certiorari with the CA to
own life; that there were traces of alcohol in his blood did which petitioner was required to file her Comment, but
not make him intoxicated as there was no proof that he failed to do so.
was; and granting that he was intoxicated, such was In the meantime, petitioner moved for the execution of the
accidental drowning and not an intentional taking of his NLRC Resolution. On March 5, 2009, petitioner executed
own life.
an Affidavit13 stating that she had received from
Respondents filed their appeal with the National Labor
Relations Commission (NLRC), reiterating that AB Sys
death was not work-related, hence, there was no basis for
the LAs award. Petitioner also filed her appeal claiming
that she was entitled to attorneys fees as well as moral and
exemplary damages.

respondents the sum of two million six hundred ninety-one

thousand one hundred seventy-three pesos and 10/100
(P2,691,173.10) as conditional payment of all her claims
against respondents; and that the payment was made to
prevent further execution proceedings she initiated with the
NLRC and without prejudice to respondents petition then
pending with the CA.

On October 17, 2008, the NLRC rendered its Resolution,10

On September 17, 2009, the CA rendered its assailed
the decretal portion of which reads:
Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, Respondents appeal
is DISMISSED for lack of merit, while Complainants WHEREFORE, the petition is hereby GRANTED. The
appeal is partly GRANTED. The Labor Arbiters assailed NLRCs Decision dated October 17, 2008 and Resolution
dated December 8, 2008 in NLRC LAC No. 10-000256-07
decision in the above-entitled case is hereby MODIFIED.
are hereby REVERSED.
In addition to the award of FIFTY THOUSAND U.S.
DOLLARS (US$50,000.00) as death benefits and ONE Accordingly, the complaint in NLRC NCR OFW Case No.
THOUSAND U.S. DOLLARS (US$1,000.00) as burial (M) 06-03-00821-00 is hereby dismissed.
expenses, Respondents are jointly and severally liable to The application for issuance of a temporary restraining
Complainant for attorneys fees equivalent to ten percent order and/or preliminary mandatory injunction is hereby
(10%) of her total monetary award, to be paid in Philippine declared moot and academic.
Currency equivalent to the exchange rate prevailing during
the time of payment.11
The private respondent, Susana R. Sy, is hereby ordered to
return to the petitioners the full amount of Two Million Six
The NLRC affirmed the LAs finding that AB Sys death Hundred Ninety-One Thousand One Hundred Seventywas compensable, saying that if not for his employment Three pesos and 10/100 (P2,691,173.10) pursuant to her
with respondents, he would have been in some other place undertaking in the Conditional Satisfaction of Judgment
and
with Urgent Motion to Cancel Appeal Bond dated March 5,
would not have been enjoying any employment benefit of 2009 and Affidavit executed by her also on March 5,
shore leave in Jakarta, Indonesia on that fateful day; that if 2009.14
26

In reversing the NLRC, the CA found AB Sys death not

work-related based on the following evidence, to wit: (1)
AB Sy was on a shore leave at the time of the incident; (2)
he was found dead by the police authorities in Indonesia
and upon autopsy, the cause of death was established as
drowning; (3) he was intoxicated when he died due to traces
of alcohol in his urine; and (4) the Philippine government
authorities, namely, the Department of Foreign Affairs and
the NBI, confirmed the cause of his death was drowning.
The CA said that under Section 20 (A) of POEA
Memorandum Circular No. 9, series of 2000, it was not
sufficient to establish that AB Sys death had occurred
during the term of his contract, but there must be a causal
connection between his death and the work for which he
had been contracted. In this case, when AB Sy died, he was
on a shore leave and left the vessel, and his death neither
occurred at his workplace nor while performing an act
within the scope of his employment.
Petitioner filed her Motion for Reconsideration, which the
CA denied in a Resolution dated February 26, 2010.
Hence, this petition where the sole issue raised is:
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION
IN
GRANTING
RESPONDENTS
PETITION FOR CERTIORARI AND DENYING
PETITIONERS MOTION FOR RECONSIDERATION
BY REVERSING AND SETTING ASIDE THE
NATIONAL LABOR.

benefits from respondents is best resolved by the provisions

of their Employment Contract which incorporated the 2000
Standard Terms and Conditions Governing the Employment
of Filipino Seafarers on Board Ocean-Going Vessels.17
Section 20 (A) of the Contract provides:
SECTION20.COMPENSATION AND BENEFITS
A.COMPENSATION AND BENEFITS FOR DEATH
1.In the case of work-related death of the seafarer during
the term of his contract, the employer shall pay his
beneficiaries the Philippine Currency equivalent to the
amount of Fifty Thousand US dollars (US$50,000) and an
additional amount of Seven Thousand US dollars
(US$7,000) to each child under the age of twenty-one (21)
but not exceeding four (4) children, at the exchange rate
prevailing during the time of payment.
Clearly, to be entitled for death compensation benefits from
the employer, the death of the seafarer (1) must be workrelated; and (2) must happen during the term of the
employment contract. Under the Amended POEA Contract,
work-relatedness is now an important requirement. The
qualification that death must be work-related has made it
necessary to show a causal connection between a seafarers
work and his death to be compensable.

Under the 2000 POEA Amended Employment Contract,

work-related injury is defined as an injury(ies) resulting in
disability or death arising out of and in the course of
employment. Thus, there is a need to show that the injury
RELATIONS
[COMMISSIONS]
DECISION
IN resulting to disability or death must arise (1) out of
AWARDING DEATH BENEFITS UNDER THE POEA employment, and (2) in the course of employment.
STANDARD CONTRACT15
In Iloilo Dock & Engineering Co. v. Workmens
Compensation Commission,18 we explained the phrase
arising out of and in the course of employment in this
The terms and conditions of a seafarers employment is wise:
governed by the provisions of the contract he signs with the
employer at the time of his hiring, and deemed integrated in x x x The two components of the coverage
his contract is a set of standard provisions set and formulaarising out of and in the course of
implemented by the POEA, called the Standard Terms and employmentare said to be separate tests which must be
Conditions Governing the Employment of Filipino independently satisfied; however, it should not be forgotten
Seafarers on Board Ocean-Going Vessels, which provisions that the basic concept of compensation coverage is unitary,
are considered to be the minimum requirements acceptable not dual, and is best expressed in the word, workto the government for the employment of Filipino seafarers connection, because an uncompromising insistence on an
on board foreign ocean-going vessels.16 The issue raised of independent application of each of the two portions of the
whether petitioner is entitled to death compensation test can, in certain cases, exclude clearly work-connected
injuries. The words arising out of refer to the origin or
27
We find the petition devoid of merit.

cause of the accident, and are descriptive of its character, employment as a seaman. In fact, he was in no different
while the words in the course of refer to the time, place circumstance with other people walking along the riverside
and circumstances under which the accident takes place.
who might also drown if no due
As a matter of general proposition, an injury or accident is
said to arise in the course of employment when it takes
place within the period of the employment, at a place where
the employee reasonably may be, and while he is fulfilling
his duties or is engaged in doing something incidental
thereto.19

care to ones safety is exercised. Petitioner failed to

establish by substantial evidence her right to the entitlement
of the benefits provided by law.

Petitioner argues that AB Sys death happened in the course

of employment, because if not for his employment he could
be somewhere else and was not on shore leave; and that he
would not be in the riverside of Jakarta, Indonesia and had
not answered the call of nature and fell into the river and
drowned.

February 26, 2010 of the Court of Appeals are hereby

AFFIRMED.

Petitioners claim that AB Sys death was by accident, thus,

not willfully done which would negate compensability, has
no relevance in this case based on our aforementioned
AB Sy was hired as a seaman on board M/V Chekiang on disquisition.
June 23, 2005 and was found dead on October 1, 2005, with
drowning as the cause of death. Notably, at the time of the While we commiserate with petitioner, we cannot grant her
accident, AB Sy was on shore leave and there was no claim for death compensation benefits in the absence of
showing that he was doing an act in relation to his duty as a substantial evidence to prove her entitlement thereto, since
seaman or engaged in the performance of any act incidental to do so will cause injustice to the employer. Otherwise
thereto. It was not also established that, at the time of the stated, while it is true that labor contracts are impressed
accident, he was doing work which was ordered by his with public interest and the provisions of the POEA-SEC
superior ship officers to be done for the advancement of his must be construed logically and liberally in favor of
employers interest. On the contrary, it was established that Filipino seamen in the pursuit of their employment on
he was on shore leave when he drowned and because of the board ocean-going vessels, still the rule is that justice is in
20% alcohol found in his urine upon autopsy of his body, it every case for the deserving, to be dispensed with in the
can be safely presumed that he just came from a personal light of established facts, the applicable law, and existing
social function which was not related at all to his job as a jurisprudence.20
seaman. Consequently, his death could not be considered WHEREFORE, the petition is DENIED. The Decision
work-related to be compensable.
dated September 17, 2009 and the Resolution dated

SO ORDERED.
G.R. No. 211497.March 18, 2015.*

We are not persuaded.

HOCHENG
PHILIPPINES
CORPORATION,
petitioner, vs. ANTONIO M. FARRALES, respondent.

While AB Sys employment relationship with respondents

did not stop but continues to be in force even when he was
on shore leave, their contract clearly provides that it is not
enough that death occurred during the term of the
employment contract, but must be work-related to be
compensable. There is a need to show the connection of AB
Sys death with the performance of his duty as a seaman. As
we found, AB Sy was not in the performance of his duty as
a seaman, but was doing an act for his own personal benefit
at the time of the accident. The cause of AB Sys death at
the time he was on shore leave, which was drowning was
not brought about by a risk which was only peculiar to his

Labor Law; Termination of Employment; To validly dismiss

an employee, the law requires the employer to prove the
existence of any of the valid or authorized causes, which, as
enumerated in Article 282 of the Labor Code.To validly
dismiss an employee, the law requires the employer to
prove the existence of any of the valid or authorized causes,
which, as enumerated in Article 282 of the Labor Code, are:
(a) serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or the latters
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

28

by his employer or his 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. As a supervisorial
employee, Farrales is admittedly subject to stricter rules of
trust and confidence, and thus pursuant to its management
prerogative HPC enjoys a wider latitude of discretion to
assess his continuing trustworthiness, than if he were an
ordinary rank-and-file employee. HPC therefore insists that
only substantial proof of Farrales guilt for theft is needed
to establish the just causes to dismiss him, as the NLRC
lengthily asserted in its decision.
Same; Same; Security of Tenure; Consistent with the States
avowed policy to afford protection to labor, as Article 3 of
the Labor Code and Section 3, Article XIII of the 1987
Constitution have enunciated, particularly in relation to the
workers security of tenure, the Court held that [t]o be
lawful, the cause for termination must be a serious and
grave malfeasance to justify the deprivation of a means of
livelihood.Article 4 of the Labor Code mandates that all
doubts in the implementation and interpretation of the
provisions thereof shall be resolved in favor of labor.
Consistent with the States avowed policy to afford
protection to labor, as Article 3 of the Labor Code and
Section 3, Article XIII of the 1987 Constitution have
enunciated, particularly in relation to the workers security
of tenure, the Court held that [t]o be lawful, the cause for
termination must be a serious and grave malfeasance to
justify the deprivation of a means of livelihood. This is
merely in keeping with the spirit of our Constitution and
laws which lean over backwards in favor of the working
class, and mandate that every doubt must be resolved in
their favor. Moreover, the penalty imposed on the erring
employee ought to be proportionate to the offense, taking
into account its nature and surrounding circumstances.
Same; Same; Serious Misconduct; Theft; Theft committed
by an employee against a person other than his employer, if
proven by substantial evidence, is a cause analogous to
serious misconduct.Theft committed by an employee
against a person other than his employer, if proven by
substantial evidence, is a cause analogous to serious
misconduct. Misconduct is improper or wrong conduct, it is
the transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in

judgment. The misconduct to be serious must be of such

grave and aggravated character and not merely trivial or
unimportant. Such misconduct, however serious, must,
nevertheless, be in connection with the employees work to
constitute just cause for his separation.
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Zamora, Poblador, Vasquez & Bretana for petitioner.
Frederick T. Yu for respondent.

REYES,J.:

Before this Court on Petition for Review on Certiorari1 is

the Decision2 dated October 17, 2013 of the Court of
Appeals (CA) in C.A.-G.R. S.P. No. 125103, which
reversed the Decision3 dated February 29, 2012 and
Resolution4 dated May 7, 2012 of the National Labor
Relations Commission (NLRC) in NLRC LAC No. 08002249-11, and reinstated with modifications the Decision5
dated April 29, 2011 of the Labor Arbiter (LA) in NLRC
Case No. RAB-IV-03-00618-10-C, which found that
respondent Antonio M. Farrales (Farrales) was illegally
dismissed by Hocheng Philippines Corporation (HPC). The
fallo of the appellate decision reads:
WHEREFORE, premises considered, the Decision of the
Labor Arbiter dated April 29, 2011 in NLRC Case No.
RAB-IV-03-00618-10-C is reinstated with modifications.
Private respondent Hocheng Philippines Corporation is
liable to pay [Farrales] the following:
(1) Full backwages from date of dismissal on February 15,
2010 until date of decision equivalent to P276,466.67;
(2) Separation pay of one (1) month salary per year of
service for a period of twelve years equivalent to
P228,800.00;
(3) Appraisal year-end bonus in the sum of P11,000.00; and
(4) Attorneys fees equivalent to 10% of the total award.
SO ORDERED.6

29

motorcycle was black in color. As there were many

motorcycles with helmets, he asked another employee,
The Facts
Andy Lopega (Andy) who was in the parking area where
he could find Erics helmet. Andy handed over to him the
supposed helmet which he believed to be owned by Eric,
Farrales was first employed by HPC on May 12, 1998 as then he went home.
Production Operator, followed by promotions as (1)
Leadman in 2004, (2) Acting Assistant Unit Chief in 2007, On November 28, 2009, at around 6 oclock in the morning,
and (3) Assistant Unit Chief of Production in 2008, a he saw Eric at their barangay and told him to get the helmet.
supervisory position with a monthly salary of P17,600.00. But Eric was in a rush to go to work, he did not bother to
He was a consistent recipient of citations for outstanding get it.
performance, as well as appraisal and year-end bonuses.7
In the morning of December 3, 2009, upon seeing Eric in
the workplace, [Farrales] asked him why he did not get the
helmet from his house. Eric told him that, Hindi po sa akin
yung nakuha nyong helmet. [Farrales] was shocked and he
immediately phoned the HPCs guard to report the situation
that he mistook the helmet which he thought belonged to
Eric. After several employees were asked as to the
ownership of the helmet, he finally found the owner
thereof, which is Jun Reyess (Jun) nephew, Reymar, who
was with him on November 27, 2009. [Farrales] promptly
a. At around 3:07:44, [Farrales] was seen walking towards apologized to Jun and undertook to return the helmet the
following day and explained that it was an honest mistake.
the motorcycle parking lot;
These all happened in the morning of December 3, 2009;
b. At around 3:08:47, [Farrales] walked back towards the [Farrales] did not know yet that HPC will send a letter
pedestrian gate of the company, passing by the motorcycle demanding him to explain.10
parking lot;
On December 2, 2009, a report reached HPC management
that a motorcycle helmet of an employee, Reymar Solas
(Reymar), was stolen at the parking lot within its premises
on November 27, 2009. On December 3, 2009, Security
Officer Francisco Paragas III confirmed a video sequence
recorded on closed-circuit television (CCTV) around 3:00
p.m. on November 27, 2009 showing Farrales taking the
missing helmet from a parked motorcycle, to wit:

c. At around 3:08:51, [Farrales] walked back towards the

A hearing was held on December 10, 2009 at 1:00 p.m.
motorcycle parking lot and returned to the pedestrian gate;
Present were Farrales, Eric Libutan (Eric), Andy Lopega
d. At around 3:09:10, [Farrales] called on the person of (Andy), Jun Reyes, Antonio Alinda, a witness, and Rolando
Andy Lopega and instructed him to get the helmet he was Garciso, representing ULO-Hocheng. From Andy it was
pointing at; [and]
learned that at the time of the alleged incident, he was
already seated on his motorcycle and about to leave the
e. At around 3:09:30, Andy gave the helmet to [Farrales].8
company compound when Farrales approached and asked
him to hand to him a yellow helmet hanging from a
motorcycle parked next to him. When Andy hesitated,
Later that day, HPC sent Farrales a notice to explain his Farrales explained that he owned it, and so Andy complied.
involvement in the alleged theft. The investigation was But Eric had specifically told Farrales that his helmet was
supported by the employees union, ULO-Hocheng.9 Below colored red and black and his motorcycle was a black
is Farrales explanation, as summarized by the CA:
Honda XRM-125 with plate number 8746-DI, parked near
the perimeter fence away from the walkway to the
On November 27, 2009, [Farrales] borrowed a helmet from
pedestrian gate. The CCTV showed Farrales instructing
his coworker Eric Libutan (Eric) since they reside in the
Andy to fetch a yellow helmet from a blue Rossi 110
same barangay. They agreed that Eric could get it at the
motorcycle with plate number 3653-DN parked in the
house of [Farrales] or the latter could return it the next time
middle of the parking lot, opposite the location given by
that they will see each other. Eric told him that his
Eric. Farrales in his defense claimed he could no longer
30

remember the details of what transpired that time, nor could

he explain why he missed Erics specific directions.11
On February 15, 2010, the HPC issued a Notice of
Termination12 to Farrales dismissing him for violation of
Article 69, Class A, Item No. 29 of the HPC Code of
Discipline, which provides that stealing from the company,
its employees and officials, or from its contractors, visitors
or clients, is akin to serious misconduct and fraud or
willful breach by the employee of the trust reposed in him
by his employer or duly authorized representative, which
are just causes for termination of employment under Article
282 of the Labor Code.
\

On March 25, 2010, Farrales filed a complaint for illegal

dismissal, nonpayment of appraisal and mid-year bonuses,
service incentive leave pay and 13th month pay. He also
prayed for reinstatement, or in lieu thereof, separation pay
with full backwages, plus moral and exemplary damages
and attorneys fees. During the mandatory conference, HPC
paid Farrales P10,914.51, representing his 13th month pay
for the period of January to February 2010 and vacation
leave/sick leave conversion. Farrales agreed to waive his
claim for incentive bonus.13

31

On April 29, 2011, the LA ruled in favor of Farrales,14 the Petition for Review to the Supreme Court
fallo of which is as follows:
WHEREFORE, PREMISES CONSIDERED, all the
respondents Hocheng Phils. Corporation, Inc. Sam Chen[g]
and Judy Geregale are found guilty of illegal dismissal and
ordered jointly and severally to pay complainant the
following:

In this petition, HPC raises the following grounds for this

Courts review:

A. THE HONORABLE [CA] PLAINLY ERRED AND

ACTED CONTRARY TO EXISTING LAW AND
1.Full backwages from date of dismissal on February 15, JURISPRUDENCE IN REVERSING THE DECISION OF
THE [NLRC] AND DECLARING ILLEGAL THE
2010 until date of decision equivalent to P276,466.67.
DISMISSAL FOR [HPCs] ALLEGED FAILURE TO
2.Separation pay of one (1) month salary per year of PROVE THE EXISTENCE OF JUST CAUSE.
service for a period of twelve years equivalent to
1.THERE IS SUBSTANTIAL EVIDENCE TO SHOW
P228,800.00.
THAT [FARRALES] COMMITTED THEFT IN [HPCs]
3.Appraisal year-end bonus in the sum of P11,000.00.
PREMISES.
4.Moral damages in the sum of P200,000.00.

2.THEFT IS A JUST CAUSE FOR TERMINATION.

5.Exemplary damages in the sum of P100,000.00.

3.BY COMMITTING THEFT, [FARRALES], BEING A

SUPERVISORIAL EMPLOYEE, FORFEITED THE
6.10% of all sums owing as attorneys fees or the amount TRUST REPOSED IN HIM BY [HPC], THUS
of P81,626.67.
RENDERING HIM DISMISSIBLE FOR LOSS OF
CONFIDENCE.
SO ORDERED.15
B. IN DECLARING ILLEGAL THE DISMISSAL OF
[FARRALES], THE HONORABLE [CA] VIOLATED
On appeal by HPC,16 the NLRC reversed the LA,17 and DOCTRINES LAID DOWN BY THE SUPREME COURT.
denied Farrales motion for reconsideration, finding
1.COURTS
CANNOT
SUBSTITUTE
THEIR
substantial evidence of just cause to terminate Farrales.18
JUDGMENT FOR THAT OF THE MANAGEMENT.
On petition for certiorari to the CA,19 Farrales sought to
refute the NLRCs factual finding that he committed theft, 2.COURTS MUST ACCORD DUE RESPECT TO THE
as well as to question NLRCs jurisdiction over HPCs FINDINGS OF ADMINISTRATIVE AGENCIES.21
appeal for nonpayment of appeal fees. But the CA found
that HPC was able to perfect its appeal by posting a bond
equivalent to the monetary award of P897,893.37 and Chiefly, HPC insists that since the complaint below
paying the appeal fees by postal money order in the amount involves an administrative case, only substantial evidence,
of P520.00.20
not proof of guilt beyond reasonable doubt, is required to
prove the guilt of Farrales;22 that what the CA has done is
Concerning the substantive issues, the appellate court substitute its judgment for that of the NLRC, which is
agreed with the LA that Farrales act of taking Reymars vested with statutory duty to make factual determinations
helmet did not amount to theft, holding that HPC failed to based on the evidence on record.23
prove that Farrales conduct was induced by a perverse and
wrongful intent to gain, in light of the admission of Eric
that he did let Farrales borrow one of his two helmets, only
that Farrales mistook Reymars helmet as the one belonging Ruling of the Court
to him.
32

The Court resolves to deny the petition.

insufficient to support them, or too much was deduced from

the bare facts submitted by the parties, or the LA and the
To validly dismiss an employee, the law requires the NLRC came up with conflicting positions, as is true in this
employer to prove the existence of any of the valid or case.29
authorized causes,24 which, as enumerated in Article 282 of
the Labor Code, are: (a) serious misconduct or willful As aptly pointed out by the LA, while HPC has the onus
disobedience by the employee of the lawful orders of his probandi that the taking of Reymars helmet by Farrales
employer or the latters representative in connection with was with intent to gain, it failed to discharge this burden, as
his work; (b) gross and habitual neglect by the employee of shown by the following circumstances: Farrales sought and
his duties; (c) fraud or willful breach by the employee of obtained the permission of Eric, his co-employee as well as
the trust reposed in him by his employer or his duly barangay coresident, to borrow his helmet; at the parking
authorized representative; (d) commission of a crime or lot, Farrales asked another employee, Andy, to fetch a
offense by the employee against the person of his employer yellow helmet from one of the parked motorcycles,
or any immediate member of his family or his duly mistakenly thinking it belonged to Eric (whom he knew
authorized representative; and (e) other causes analogous to owned two helmets); the following day, November 28,
the foregoing.25 As a supervisorial employee, Farrales is Farrales asked Eric why he had not dropped by his house to
admittedly subject to stricter rules of trust and confidence, get his helmet, and Eric replied that Farrales got the wrong
and thus pursuant to its management prerogative HPC helmet because he still had his other helmet with him;
enjoys a wider latitude of discretion to assess his continuing Farrales immediately sought the help of the company
trustworthiness, than if he were an ordinary rank-and-file guards to locate the owner of the yellow helmet, who turned
employee.26 HPC therefore insists that only substantial out to be Reymar; Farrales apologized to Reymar for his
proof of Farrales guilt for theft is needed to establish the mistake, and his apology was promptly accepted.30 All
just causes to dismiss him, as the NLRC lengthily asserted these circumstances belie HPCs claim that Farrales took
in its decision.
Reymars helmet with intent to gain, the LA said.
Article 4 of the Labor Code mandates that all doubts in the
implementation and interpretation of the provisions thereof
shall be resolved in favor of labor. Consistent with the
States avowed policy to afford protection to labor, as
Article 3 of the Labor Code and Section 3, Article XIII of
the 1987 Constitution have enunciated, particularly in
relation to the workers security of tenure, the Court held
that [t]o be lawful, the cause for termination must be a
serious and grave malfeasance to justify the deprivation of a
means of livelihood. This is merely in keeping with the
spirit of our Constitution and laws which lean over
backwards in favor of the working class, and mandate that
every doubt must be resolved in their favor.27 Moreover,
the penalty imposed on the erring employee ought to be
proportionate to the offense, taking into account its nature
and surrounding circumstances.
The Court has always taken care, therefore, that the
employer does not invoke any baseless justification, much
less management prerogative, as a subterfuge by which to
rid himself of an undesirable worker,28 and thus in
exceptional cases the Court has never hesitated to delve into
the NLRCs factual conclusions where evidence was found

In ruling that Farrales dismissal by HPC was attended with

utmost malice and bad faith as to justify an award of moral
and exemplary damages and attorneys fees, the LA stated
that [i]t is succinctly clear that [the] respondents [therein]
tried to blow out of proportions the indiscretion of
[Farrales] for reasons known only to them, and moreover,
[f]inding that the dismissal on the ground of theft is
unavailing, [the] respondents [therein] immediately offered
[Farrales] his former position when he filed [his] complaint.
What does this act of [the] respondents [therein] speak
[of]?31
On the other hand, the NLRC found that Farrales lied, first,
when he told Andy, then already astride his motorbike at the
parking area and about to leave the company premises, that
the yellow helmet belonged to him,32 and second, when he
claimed that Eric was his neighbor, although they were not.
It ruled as doubtful Farrales hazy recollection about what
happened that afternoon at the parking lot, since he could
not even give a description of the motorcycle from which
he took the yellow helmet. These circumstances, the NLRC
determined, comprise substantial proof belying Farrales
claim of good faith. As a supervisory employee, he held a

33

position of high responsibility in the company making him

accountable to stricter rules of trust and confidence than an
ordinary employee, and under Article 282 of the Labor
Code, he is guilty of a serious misconduct and a willful
breach of trust. The NLRC went on to cite a settled policy
that in trying to protect the rights of labor, the law does not
authorize the oppression or self-destruction of the employer.
Management also has its own rights, which as such, are
entitled to respect and enforcement in the interest of simple
fair play.33

Theft committed by an employee against a person other

than his employer, if proven by substantial evidence, is a
cause analogous to serious misconduct.34 Misconduct is
improper or wrong conduct, it is the transgression of some
established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. The
misconduct to be serious must be of such grave and
aggravated character and not merely trivial or unimportant.
Such misconduct, however serious, must, nevertheless, be
in connection with the employees work to constitute just
But the Court agrees with the CA that Farrales committed cause for his separation.35
no serious or willful misconduct or disobedience to warrant
his dismissal. It is not disputed that Farrales lost no time in But where there is no showing of a clear, valid and legal
returning the helmet to Reymar the moment he was cause for termination of employment, the law considers the
apprised of his mistake by Eric, which proves, according to case a matter of illegal dismissal.36 If doubts exist between
the CA, that he was not possessed of a depravity of conduct the evidence presented by the employer and that of the
as would justify HPCs claimed loss of trust in him. employee, the scales of justice must be tilted in favor of the
Farrales immediately admitted his error to the company latter. The employer must affirmatively show rationally
guard and sought help to find the owner of the yellow adequate evidence that the dismissal was for a justifiable
helmet, and this, the appellate court said, only shows that cause.37
Farrales did indeed mistakenly think that the helmet he took
Nonetheless, the Court agrees with the CAs dismissal of
belonged to Eric.
the award of moral and exemplary damages for lack of
It is not, then, difficult to surmise that when Farrales told merit. There is no satisfactory proof that the concerned
Andy that the yellow helmet was his, his intent was not to officers of HPC acted in bad faith or with malice in
put up a pretence of ownership over it and thus betray his terminating Farrales. Notwithstanding the LAs assertion to
intent to gain, as the NLRC held, but rather simply to this effect, Farrales bare allegations of bad faith deserve no
assuage Andys reluctance to heed his passing request to credence, and neither is the mere fact that he was illegally
reach for the helmet for him; Andy, it will be recalled, was dismissed sufficient to prove bad faith on the part of HPCs
at that moment already seated in his motorbike and about to officers.38 But concerning the award of attorneys fees,
drive out when Farrales made his request. As to Farrales Farrales was dismissed for a flimsy charge, and he was
claim that he and Eric were neighbors, suffice it to say that compelled to litigate to secure what is due him which HPC
as the CA noted, they resided in the same barangay, and unjustifiably withheld.
thus, loosely, were neighbors.
WHEREFORE, premises considered, the petition for
The CA also pointed out that although the alleged theft review is DENIED.
occurred within its premises, HPC was not prejudiced in
any way by Farrales conduct since the helmet did not SO ORDERED.
belong to it but to Reymar. In light of Article 69, Class A,
Item No. 29 of the HPC Code of Discipline, this
observation may be irrelevant, although it may be that the
LA regarded it as proving HPCs bad faith.

34