G.R. No.
193897 January 23, 2013 Foundation but these could no longer be credited to her
UNIVERSITY OF THE EAST, DEAN ELEANOR JAVIER,
RONNIE GILLEGO and DR. JOSE C.
BENEDICTO,Petitioners,
vs.
ANALIZA F. PEPANIO and MARITI D.
BUENO, Respondents.
DECISION
ABAD, J.:
This case is about the employment status of college
teachers with no postgraduate degrees who have been
repeatedly extended semester-to-semester appointments
as such.
The Facts and the Case
In 1992, the Department of Education, Culture and Sports
(DECS) issued the Revised Manual of Regulations for
Private Schools,1 Article IX, Section 44, paragraph 1 (a), of
which requires college faculty members to have a master's
degree as a minimum educational qualification for
acquiring regular status.2
In 1994 petitioner University of the East (UE) and the UE
Faculty Association executed a five-year Collective
Bargaining Agreement (CBA) with effect up to 1999 which
provided, among others, that UE shall extend only
semester-to-semester appointments to college faculty
staffs who did not possess the minimum qualifications.
Those with such qualifications shall be given probationary
appointments and their performance on a full-time or full-
load basis shall be reviewed for four semesters.3
Meantime, on February 7, 1996 several concerned
government agencies issued DECS-CHED-TESDA-DOLE
Joint Order 14 which reiterated the policy embodied in the
Manual of Regulations that "teaching or academic
personnel who do not meet the minimum academic
qualifications shall not acquire tenure or regular status." In
consonance with this, the UE President issued a University
Policy stating that, beginning the School Year 1996-1997, it
would hire those who have no postgraduate units or
master’s degree for its college teaching staffs, in the
absence of qualified applicants, only on a semester-to-
semester basis.
UE hired respondent Mariti D. Bueno in 19975 and
respondent Analiza F. Pepanio in 2000,6 both on a
semester-to-semester basis to teach in its college. They
could not qualify for probationary or regular status
because they lacked postgraduate degrees. Bueno enrolled
in six postgraduate subjects at the Philippine Normal
University’s graduate school but there is no evidence that
she finished her course. Pepanio earned 27 units in her
graduate studies at the Gregorio Araneta University
because she failed to continue with her studies within five
years.
In 2001 UE and the UE Faculty Association entered into a
new CBA7 that would have the school extend probationary
full-time appointments to full-time faculty members who
did not yet have the required postgraduate degrees
provided that the latter comply with such requirement
within their probationary period. The CBA granted UE,
however, the option to replace these appointees during
their probationary period if a qualified teacher becomes
available at the end of the semester.8
Pursuant to the new CBA, UE extended probationary
appointments to respondents Bueno and Pepanio. Two
years later in October 2003, the Dean of the UE College of
Arts and Sciences, petitioner Eleanor Javier, sent
notices9 to probationary faculty members, reminding them
of the expiration of the probationary status of those
lacking in postgraduate qualification by the end of the first
semester of the School Year 2003-2004. Pepanio replied
that she was enrolled at the Polytechnic University of the
Philippines Graduate School. Bueno, on the other hand,
replied that she was not interested in acquiring tenure as
she was returning to her province.
In any event, Dean Javier subsequently issued a
memorandum, stating that she would recommend the
extension of the probationary appointees for two more
semesters for those who want it based on the wishes of the
University President. Respondent Pepanio requested a
three-semester extension but Dean Javier denied this
request and directed Pepanio to ask for just a two-
semester extension. The records do not show if Bueno
submitted a request for extension. At any rate, the school
eventually wrote respondents, extending their
probationary period but neither Pepanio nor Bueno
reported for work.
Bueno later wrote UE, demanding that it consider her a
regular employee based on her six-and-a-half-year service
on a full-load basis, given that UE hired her in 1997 when
what was in force was still the 1994 CBA. Pepanio made
the same demand, citing her three-and-a-half years of
service on a full-load basis.10 When UE did not heed their
demands, respondents filed cases of illegal dismissal
against the school before the Labor Arbiter ’s (LA) office.
For its defense, UE countered that it never regarded
respondents as regular employees since they did not hold
the required master’s degree that government rules
required as minimum educational qualification for their
kind of work.
On March 10, 2005 the LA held that Bueno and Pepanio
were regular employees, given that they taught at UE for at
least four semesters under the old CBA.11 The new CBA,
said the LA, could not deprive them of the employment
benefits they already enjoyed. Since UE enjoined Pepanio
from attending her classes and since it did not give Bueno
any teaching load, they were dismissed without just cause.
The LA directed UE to reinstate respondents with
backwages.12 Dissatisfied, UE appealed to the National
Labor Relations Commission (NLRC).
Bueno and Pepanio questioned the timeliness of the appeal
to the NLRC. They pointed to the postmaster’s certification
that its office received the mail containing the LA’s
Decision on March 17, 2005 and "informed the Office of
Atty. Mison right away but they only got the letter on April
4, 2005." Bueno and Pepanio claim that the 10-day period
for appeal should be counted from March 22, 2005, five
days after the postmaster’s first notice to Atty. Mison to
claim his mail.
On September 27, 2006 the NLRC Third Division set aside
the LA Decision.1âwphi1 It rejected the technical objection
and ruled that the four-semester probationary period
provided under the old CBA did not automatically confer
permanent status to Bueno and Pepanio. They still had to
meet the standards for permanent employment provided
under the Manual of Regulations and the Joint Order
mentioned above. The non-renewal of their contract was
based on their failure to obtain the required postgraduate
degrees and cannot, therefore, be regarded as illegal.
On petition for certiorari, the Court of Appeals (CA)
rendered a Decision13 on July 9, 2010, reinstating the LA’s
Decision by reason of technicality. It held that the 10-day
period for appeal already lapsed when UE filed it on April
14, 2005 since the reckoning period should be counted five
days from March 17, when the postmaster gave notice to
UE’s legal counsel to claim his mail or from March 22,
2005. This prompted UE to file the present petition.
Respondents point out, however, that the petition should
be denied since it failed to enclose a certification from the
UE Board of Trustees, authorizing petitioner Dean Javier to
sign the verification and certification of non-forum
shopping.
The Issues
The following issues are presented for the Court’s
resolution:
1. Whether or not UE filed a timely appeal to the
NLRC from the Decision of the LA;
2. Whether or not UE’s petition before this Court
can be given due course given its failure to enclose
a certification from the UE Board of Trustees’
empowering petitioner Dean Javier to execute the
verification and certification of non-forum
shopping; and
3. Whether or not UE illegally dismissed Bueno
and Pepanio.
The Court’s Rulings
One. Respondents Bueno and Pepanio contend that UE
filed its appeal to the NLRC beyond the required 10-day
period. They point out that the postmaster gave notice to
Atty. Mison on March 17, 2005 to claim his mail that
contained the LA Decision. He was deemed in receipt of
that decision five days after the notice or on March 22,
2005. UE had 10 days from the latter date or until April 1,
2005 within which to file its appeal from that decision. UE
contends, on the other hand, that the period of appeal
should be counted from April 4, 2005, the date appearing
on the registry return receipt of the mail addressed to its
counsel.
For completeness of service by registered mail, the
reckoning period starts either (a) from the date of actual
receipt of the mail by the addressee or (b) after five days
from the date he received the first notice from the
postmaster.14There must be a conclusive proof, however,
that the registry notice was received by or at least served
on the addressee before the five-day period begins to
run.15
Here, the records fail to show that Atty. Mison in fact
received the alleged registry notice from the post office on
March 22, 2005 that required him to claim his mail.
Respondents have not presented a copy of the receipt
evidencing that notice. The Court has no choice but to
consider the registry return receipt bearing the date April
4, 2005 which showed the date of Atty. Mison’s receipt of a
copy of the LA Decision a conclusive proof of service on
that date. Reckoned from April 4, UE filed its appeal to the
NLRC on time.
Two. Respondents alleged that UE failed to attach to its
petition a Secretary’s Certificate evidencing the resolution
from its Board of Trustees, authorizing a representative or
agent to sign the verification and certification of non-
forum shopping.
As a general rule, the Board of Directors or Board of
Trustees of a corporation must authorize the person who
signs the verification and certification against non-forum
shopping of its petition. But the Court has held16 that such
authorization is not necessary when it is self-evident that
the signatory is in a position to verify the truthfulness and
correctness of the allegations in the petition. Here the
verification and certification were signed by petitioner
Dean Javier who, based on the given facts of the case, was
"in a position to verify the truthfulness and correctness of
the allegations in the petition."17
Three. Respondents argue that UE hired them in 1997 and
2000, when what was in force was the 1994 CBA between
UE and the faculty union. Since that CBA did not yet
require a master’s degree for acquiring a regular status
and since respondents had already complied with the
three requirements of the CBA, namely, (a) that they
served full-time; (b) that they rendered three consecutive
years of service; and (c) that their services were
satisfactory,18 they should be regarded as having attained
permanent or regular status.
But the policy requiring postgraduate degrees of college
teachers was provided in the Manual of Regulations as
early as 1992. Indeed, recognizing this, the 1994 CBA
provided even then that UE was to extend only semester-
to-semester appointments to college faculty staffs, like
respondents, who did not possess the minimum
qualifications for their positions.
Besides, as the Court held in Escorpizo v. University of
Baguio,19 a school CBA must be read in conjunction with
statutory and administrative regulations governing faculty
qualifications. Such regulations form part of a valid CBA
without need for the parties to make express reference to
it. While the contracting parties may establish such
stipulations, clauses, terms and conditions, as they may see
fit, the right to contract is still subject to the limitation that
the agreement must not be contrary to law or public
policy.
The State through Batas Pambansa Bilang 232 (The
Education Act of 1982) delegated the administration of the
education system and the supervision and regulation of
educational institutions to the Ministry of Education,
Culture and Sports (now Department of Education).
Accordingly, in promulgating the Manual of Regulations,
DECS was exercising its power of regulation over
educational institutions, which includes prescribing the
minimum academic qualifications for teaching personnel. 20
In 1994 the legislature transferred the power to prescribe
such qualifications to the Commission on Higher Education
(CHED). CHED’s charter authorized it to set minimum
standards for programs and institutions of higher
learning.21 The Manual of Regulations continued to apply
to colleges and universities and suppletorily the Joint
Order until 2010 when CHED issued a Revised Manual of
Regulations which specifically applies only to institutions
involved in tertiary education.
The requirement of a masteral degree for tertiary
education teachers is not unreasonable. The operation of
educational institutions involves public interest. The
government has a right to ensure that only qualified
persons, in possession of sufficient academic knowledge
and teaching skills, are allowed to teach in such
institutions. Government regulation in this field of human
activity is desirable for protecting, not only the students,
but the public as well from ill-prepared teachers, who are
lacking in the required scientific or technical knowledge.
They may be required to take an examination22or to
possess postgraduate degrees as prerequisite to
employment.
Respondents were each given only semester-to-semester
appointments from the beginning of their employment
with UE precisely because they lacked the required
master's degree. It was only when UE and the faculty union
signed their 2001 CBA that the school extended petitioners
a conditional probationary status subject to their obtaining
a master's degree within their probationary period. It is
clear, therefore, that the parties intended to subject
respondents' permanent status appointments to the
standards set by the law and the university.
Here, UE gave respondents Bueno and Pepanio more than
ample opportunities to acquire the postgraduate degree
required of them. But they did not take advantage of such
opportunities. Justice, fairness, and due process demand
that an employer should not be penalized for situations
where it had little or no participation or control.23
WHEREFORE, the Court GRANTS the petition and
REVERSES the Decision of the Court of Appeals in CA-G.R.
SP 98872 dated July 9, 2010 and REINSTATES the Decision
of the National Labor Relations Commission dated
September 27, 2006 as well as its Resolutions dated
December 29, 2006 and February 27, 2007 that dismissed
the complaints of respondents Analiza F. Pepanio and
Mariti D. Bueno.
SO ORDERED.
G.R. No. 188914 December 11, 2013
JOCELYN HERRERA-MANAOIS, Petitioner,
vs.
ST. SCHOLASTICA'S COLLEGE, Respondent
FACTS:The present case concerns the academic
qualifications required in attaining the status of a
permanent full-time faculty member in the tertiary level of
a private educational institution. Petitioner Jocelyn
Herrera-Manaois (Manaois) assails the judgments1 of the
Court of Appeals (CA), which reversed the Resolution2 of
the National Labor Relations Commission (NLRC) and
ruled that respondent St. Scholastica's College (SSC) was
not guilty of illegal dismissal. SSC did not extend to
Manaois the position of permanent full-time faculty
member with the rank of instructor because she failed to
acquire a master's degree and because her specialization
could no longer be maximized by the institution due to the
changes in its curriculum and streamlining.
THE FACTS
SSC, situated in the City of Manila, is a private educational
institution offering elementary, secondary, and tertiary
education. Manaois graduated from SSC in October 1992
with a degree in Bachelor of Arts in English. In 1994, she
returned to her alma mater as a part-time English teacher.
After taking a leave of absence for one year, she was again
rehired by SSC for the same position. Four years into the
service, she was later on recommended by her Department
Chairperson to become a full-time faculty member of the
English Department.
Manaois thus applied for a position as full-time instructor
for school year 2000-2001. She mentioned in her
application letter3 that she had been taking the course
Master of Arts in English Studies, Major in Creative
Writing, at the University of the Philippines, Diliman (UP);
that she was completing her master’s thesis; and that her
oral defense was scheduled for June 2000. In a reply
letter4 dated 17 April 2000, the Dean of Arts and Sciences
informed her of the SSC Administrative Council’s approval
of her application. She was then advised to maintain the
good performance that she had shown for the past years
and to submit the necessary papers pertaining to her
master’s degree. Accordingly, SSC hired her as a
probationary fulltime faculty member with the assigned
rank of instructor for the school year 2000-2001.5 Her
probationary employment continued for a total of three
consecutive years. Throughout her service as a
probationary full-time faculty member with no derogatory
record, she was given above-satisfactory ratings by both
the Department Chairperson and the Dean of Arts and
Sciences.
Because of the forthcoming completion of her third year of
probationary employment, Manaois wrote the Dean of Arts
and Sciences requesting an extension of her teaching load
for the school year 2003-2004. She again mentioned in her
letter that she was a candidate for a master’s degree in
English Studies; that the schedule of her oral defense may
actually materialize anytime within the first academic
semester of 2003; and that she intended to fully earn her
degree that year. She also furnished the school with a
Certification from UP, stating that she had already finished
her coursework in her master’s studies. Furthermore, she
indicated that it was her long-term goal to apply for a
return to full-time faculty status by then and for SSC to
consider the aforesaid matters.6
Manaois eventually received a letter from the Dean of
College and Chairperson of the Promotions and
Permanency Board officially informing her of the board’s
decision not to renew her contract. The letter provides as
follows:7
The Permanency Board reviewed your case and after a
thorough deliberation, the members decided not to renew
your contract for school year 2003-2004.
With due consideration to your services, the institution
had granted your request for a three-year extension to
finish your master’s degree. However, you failed to comply
with the terms which you yourself had requested. In
addition, your specialization cannot be maximized at SSC
due to the college’s curriculum changes and streamlining.
It is with your best interest in mind and deep regret on our
part that we have to let you go. A new environment may be
able to provide you more avenues and opportunities
where you can utilize your graduate studies in Creative
Writing to the fullest.
Manaois sought clarification and reconsideration of the
decision of SSC to terminate her services. SSC denied her
request in a letter dated 11 July 2003. Consequently, she
filed a complaint for illegal dismissal, payment of 13th
month pay, damages, and attorney’s fees against SSC.
SSC explained that upon consideration of the written
application of Manaois, the Dean of Arts and Sciences
wrote the following notation at the bottom of her letter of
application – "APPROVED: on the basis that she finishes
her MA."8 The college clarified that the application for full-
time faculty status of Manaois was accepted with the
specific qualification that she would submit the necessary
papers pertaining to her master’s degree. It stressed that
permanency may only be extended to full-time faculty
members if they had fulfilled the criteria provided in the
SSC Faculty Manual. According to SSC, the Chair of the
English Department did not endorse the application for
permanency of Manaois, since the latter had not finished
her master’s degree within the three-year probationary
period. SSC then refuted the supposed performance ratings
of Manaois and instead pointed out that she had merely
received an average rating from her students. Finally, it
asserted that her specialization was the subject of writing
and not English Literature, which was the subject area that
they needed a faculty member for.
THE ISSUE
Whether the completion of a master’s degree is required in
order for a tertiary level educator to earn the status of
permanency in a private educational institution.
OUR RULING
Probationary employment refers to the trial stage or
period during which the employer examines the
competency and qualifications of job applicants, and
determines whether they are qualified to be extended
permanent employment status.11 Such an arrangement
affords an employer the opportunity – before the full force
of the guarantee of security of tenure comes into play – to
fully scrutinize and observe the fitness and worth of
probationers while on the job and to determine whether
they would become proper and efficient employees.12 It
also gives the probationers the chance to prove to the
employer that they possess the necessary qualities and
qualifications to meet reasonable standards for permanent
employment.13 Article 281 of the Labor Code, as amended,
provides as follows:
Art. 281. Probationary employment. Probationary
employment shall not exceed six (6) months from the date
the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a
probationary basis may be terminated for a just cause
or when he fails to qualify as a regular employee in
accordance with reasonable standards made known
by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a
probationary period shall be considered a regular
employee. (Emphases supplied)
We agree with the CA in setting aside the NLRC Decision
and in ruling that the requirement to obtain a master’s
degree was made known to Manaois. The contract she
signed clearly incorporates the rules, regulations, and
employment conditions contained in the SSC Faculty
Manual, viz:14
I. EMPLOYMENT
A. x x x x
B. After having read and understood in full the
contents of the COLLEGE UNIT’s current FACULTY
MANUAL, the FACULTY MEMBER agrees
to faithfully perform all the duties and
responsibilities attendant to her position as
PROBATIONARY FULL-TIME FACULTY MEMBER
and comply with all the rules, regulations and
employment conditions of the SCHOOL, as
provided in said FACULTY MANUAL including
any amendment/s pertinent to her position as
may be hereinafter incorporated therein.
xxxx
IV. EFFECTIVITY
A. The SCHOOL has the right to terminate the
FACULTY MEMBER’S services for just cause such
as, among others, failure to comply with any of
the provisions of the FACULTY MANUAL
pertinent to her status as FULL-TIME
PROBATIONARY FACULTY MEMBER. (Emphases
supplied)
The SSC Faculty Manual in turn provides for the
following conditions in order for a faculty member
to acquire permanent employment status:15
B. PERMANENCY
1. Prior to the end of the probationary period, the
faculty member formally applies for permanency
to her/his Department Chair/Coordinator. The
Department Chair/Coordinator, in consultation
with the faculty member, reviews the applicant’s
over-all performance. If the records show that the
criteria for permanency are met, the applicant is
recommended for permanency to the Promotions
and Permanency Board by the Department
Chair/Coordinator. In certain instances (i.e., when
the Department Chair/Coordinator does not give a
recommendation for permanency), the Academic
Dean can exercise her prerogative to recommend
the applicant.
xxxx
CRITERIA FOR PERMANENCY
1. The faculty member must have completed at
least a master’s degree.
2. The faculty member must manifest behavior
reflective of the school’s mission-vision and goals.
3. The faculty member must have consistently
received above average rating for teaching
performance as evaluated by the Academic Dean,
Department Chair/Coordinator and the students.
4. The faculty member must have manifested
more than satisfactory fulfillment of duties and
responsibilities as evidenced by official records
especially in the areas of: x x x
5. The faculty member must manifest awareness
of and adherence to the school’s code of ethics for
faculty.
6. The faculty member must be in good physical
health and manifest positive well being.
(Emphasis supplied)
Viewed next to the statements and actions of Manaois – i.e.,
the references to obtaining a master’s degree in her
application letter, in the subsequent correspondences
between her and SSC, and in the letter seeking the
extension of a teaching load for the school year 2003-
2004; and her submission of certifications from UP and
from her thesis adviser – we find that there is indeed
substantial evidence proving that she knew about the
necessary academic qualifications to obtain the status of
permanency.
We also agree with the CA that the labor arbiter and the
NLRC gravely misinterpreted the section in the SSC Faculty
Manual, which purportedly provided for a lower academic
requirement for full-time faculty members with the rank of
instructor, regardless of whether they have attained
permanency or are still on probation. The labor arbiter
refers to the following section in the SSC Manual:16
B. ACCORDING TO RANK
Only full-time and half-time faculty members are
ranked. Subsidiary faculty members follow a separate
ranking system. Based on academic preparation,
fulfillment of duties and responsibilities, performance,
research, output and/or community service, a full-time or
half-time faculty member may be appointed to any of the
following ranks:
1. INSTRUCTOR
There are 4 probationary ranks and 8 permanent ranks
a. Minimum Requirements
1. A bachelor’s degree with at least 25%
masteral units completed
2. At least 2 years of teaching experience or its
equivalent
(i.e., 1 year supervisory or professional
experience)
b. Promotion within the Rank
1. A minimum of 1 year in the present
level for promotion to Instructor 2, 3, 4,
and 5; a minimum of 2 years for
promotion to Instructor 6, 7 and 8.
2. An Instructor at any level may be
promoted to the rank of Assistant
Professor upon fulfillment of all the
qualifications and requirements of the
said rank. (Emphases supplied)
As correctly pointed out by the CA, the aforecited
minimum requirements provided for the rank of instructor
merely refer to how instructors are ranked, and not to the
academic qualifications required to attain permanency. It
must be noted that the section in the SSC Faculty Manual
on the ranking of instructors cover those who are still on
probationary employment and those who have already
attained permanency. It would therefore be erroneous to
simply read the section on the ranking of instructors –
without taking into consideration the previously quoted
section on permanency – in order to determine the
academic qualifications for the position of permanent full-
time faculty member with the rank of instructor. Thus, to
properly arrive at the criteria, the sections on both the
permanency and the ranking of an instructor, as provided
in the SSC Manual, must be read in conjunction with each
another.
At this juncture, we reiterate the rule that mere
completion of the three-year probation, even with an
above-average performance, does not guarantee that the
employee will automatically acquire a permanent
employment status.17 It is settled jurisprudence18 that the
probationer can only qualify upon fulfillment of the
reasonable standards set for permanent employment as a
member of the teaching personnel. In line with academic
freedom and constitutional autonomy, an institution of
higher learning has the discretion and prerogative to
impose standards on its teachers and determine whether
these have been met. Upon conclusion of the probation
period, the college or university, being the employer, has
the sole prerogative to make a decision on whether or not
to re-hire the probationer. The probationer cannot
automatically assert the acquisition of security of tenure
and force the employer to renew the employment contract.
In the case at bar, Manaois failed to comply with the stated
academic qualifications required for the position of a
permanent full-time faculty member.
Notwithstanding the existence of the SSC Faculty Manual,
Manaois still cannot legally acquire a permanent status of
employment. Private educational institutions must still
supplementarily refer19 to the prevailing standards,
qualifications, and conditions set by the appropriate
government agencies (presently the Department of
Education, the Commission on Higher Education, and the
Technical Education and Skills Development Authority).
This limitation on the right of private schools, colleges, and
universities to select and determine the employment
status of their academic personnel has been imposed by
the state in view of the public interest nature of
educational institutions, so as to ensure the quality and
competency of our schools and educators.
The applicable guidebook20 at the time petitioner was
engaged as a probationary full-time instructor for the
school year 2000 to 2003 is the 1992 Manual of
Regulations for Private Schools (1992 Manual).21 It
provides the following conditions of a probationary
employment:
Section 89. Conditions of Employment. Every private
school shall promote the improvement of the economic,
social and professional status of all its personnel.
In recognition of their special employment status and
their special role in the advancement of knowledge,
the employment of teaching and non-teaching
academic personnel shall be governed by such rules as
may from time to time be promulgated, in
coordination with one another, by the Department of
Education, Culture and Sports and the Department of
Labor and Employment.
Conditions of employment of non-academic non-teaching
school personnel, including compensation, hours of work,
security of tenure and labor relations, shall be governed by
the appropriate labor laws and regulations.
Section 92. Probationary Period. Subject in all instances
to compliance with Department and school
requirements, the probationary period for academic
personnel shall not be more than three (3) consecutive
years of satisfactory service for those in the elementary
and secondary levels, six (6) consecutive regular
semesters of satisfactory service for those in the
tertiary level, and nine (9) consecutive trimesters of
satisfactory service for those in the tertiary level where
collegiate courses are offered on the trimester basis.
Section 93. Regular or Permanent Status. Those who have
served the probationary period shall be made regular
or permanent. Fulltime teachers who have
satisfactorily completed their probationary period
shall be considered regular or permanent. (Emphases
supplied)
Considering that petitioner ultimately sought for the
position of a permanent full-time instructor, we must
further look into the following provisions under the 1992
Manual, which set out the minimum requirements for such
status:
Section 44. Minimum Faculty Qualifications. The minimum
qualifications for faculty for the different grades and levels
of instruction duly supported by appropriate
credentials on file in the school shall be as follows:
xxxx
c. Tertiary
(1) For undergraduate courses, other than vocational:
(a) Holder of a master’s degree, to teach largely in his
major field; or, for professional courses, holder of the
appropriate professional license required for at least a
bachelor's degree. Any deviation from this requirement
will be subject to regulation by the Department.
Section 45. Full-time and Part-time Faculty. As a general
rule, all private schools shall employ full-time academic
personnel consistent with the levels of instruction.
Full-time academic personnel are those meeting all the
following requirements:
a. Who possess at least the minimum academic
qualifications prescribed by the
Department under this Manual for all academic
personnel;
b. Who are paid monthly or hourly, based on the
regular teaching loads as provided for in the
policies, rules and standards of the Department
and the school;
c. Whose total working day of not more than eight
hours a day is devoted to the school;
d. Who have no other remunerative occupation
elsewhere requiring regular hours of work that
will conflict with the working hours in the school;
and
e. Who are not teaching full-time in any other
educational institution.
All teaching personnel who do not meet the foregoing
qualifications are considered part-time.
xxxx
Section 47. Faculty Classification and Ranking. At the
tertiary level, the academic teaching positions shall be
classified in accordance with academic qualifications,
training and scholarship preferably into academic ranks of
Professor, Associate Professor, Assistant Professor, and
Instructor, without prejudice to a more simplified or
expanded system of faculty ranking, at the option of the
school.
Any academic teaching personnel who does not fall under
any of the classes or ranks indicated in the preceding
paragraph shall be classified preferably as professorial
lecturer, guest lecturer, or any other similar academic
designation on the basis of his qualifications. (Emphases
supplied)
Thus, pursuant to the 1992 Manual, private educational
institutions in the tertiary level may extend "full-time
faculty" status only to those who possess, inter alia, a
master’s degree in the field of study that will be taught.
This minimum requirement is neither subject to the
prerogative of the school nor to the agreement between
the parties. For all intents and purposes, this qualification
must be deemed impliedly written in the employment
contracts between private educational institutions and
prospective faculty members. The issue of whether
probationers were informed of this academic requirement
before they were engaged as probationary employees is
thus no longer material, as those who are seeking to be
educators are presumed to know these mandated
qualifications. Thus, all those who fail to meet the criteria
under the 1992 Manual cannot legally attain the status of
permanent full-time faculty members, even if they have
completed three years of satisfactory service.
In the light of the failure of Manaois to satisfy the academic
requirements for the position, she may only be considered
as a part-time instructor pursuant to Section 45 of the
1992 Manual. In turn, as we have enunciated in a line of
cases,22 a part-time member of the academic personnel
cannot acquire permanence of employment and security of
tenure under the Manual of Regulations in relation to the
Labor Code. We thus quote the ruling of this Court
in Lacuesta, viz:23
Section 93 of the 1992 Manual of Regulations for Private
Schools provides that full-time teachers who have
satisfactorily completed their probationary period shall be
considered regular or permanent. Moreover, for those
teaching in the tertiary level, the probationary period shall
not be more than six consecutive regular semesters of
satisfactory service. The requisites to acquire permanent
employment, or security of tenure, are (1) the teacher is a
full-time teacher; (2) the teacher must have rendered
three consecutive years of service; and (3) such service
must have been satisfactory.
As previously held, a part-time teacher cannot acquire
permanent status.1âwphi1 Only when one has served as a
full-time teacher can he acquire permanent or regular
status. The petitioner was a part-time lecturer before she
was appointed as a full-time instructor on probation. As a
parttime lecturer, her employment as such had ended
when her contract expired. Thus, the three semesters she
served as part-time lecturer could not be credited to her in
computing the number of years she has served to qualify
her for permanent status.
Petitioner posits that after completing the three-year [full-
time instructor on] probation with an above-average
performance, she already acquired permanent status. On
this point, we are unable to agree with petitioner.
Completing the probation period does not automatically
qualify her to become a permanent employee of the
university. Petitioner could only qualify to become a
permanent employee upon fulfilling the reasonable
standards for permanent employment as faculty member.
Consistent with academic freedom and constitutional
autonomy, an institution of higher learning has the
prerogative to provide standards for its teachers and
determine whether these standards have been met. At the
end of the probation period, the decision to re-hire an
employee on probation, belongs to the university as the
employer alone. (Emphases supplied)
For the foregoing reasons, we rule that there is no legal
obligation on the part of SSC to reappoint Manaois after
the lapse of her temporary appointn:ient. We thus affirm in
toto the findings of fact of the CA and rule that SSC is not
guilty of illegal dismissal.
WHEREFORE, the petition is DENIED for lack of merit.
Accordingly, the Court of Appeals Decision dated 27
February 2009 and the Resolution dated 22 July 2009 in
CA-G.R. SP. No. 101382 are hereby AFFIRMED.
SO ORDERED.
YNVIL FISHING ENTERPRISES, INC. and/or ROSENDO S.
DE BORJA,
Petitioners,
-versus-
ANDRES G. ARIOLA, JESSIE D. ALCOVENDAS, JIMMY B.
CALINAO AND LEOPOLDO G. SEBULLEN,
Respondents.
PEREZ, J.:
Before the Court is a Petition for Review on
Certiorari[1] of the Decision[2] of the Fourteenth Division of
the Court of Appeals in CA-G.R. SP No. 95094 dated 10
September 2007, granting the Writ of Certiorari prayed for
under Rule 65 of the 1997 Revised Rules of Civil Procedure
by herein respondents Andres G. Ariola, Jessie D.
Alcovendas, Jimmy B. Calinao and Leopoldo Sebullen
thereby reversing the Resolution of the National Labor
Relations Commission (NLRC). The dispositive portion of
the assailed decision reads:
WHEREFORE, premises
considered, the Decision dated March 31,
2004 rendered by the National Labor
Relations Commission is
hereby REVERSED and SET ASIDE. In lieu
thereof, the Decision of the Labor Arbiter
is hereby REINSTATED, except as to the
award of attorneys fees, which is
ordered DELETED.[3]
The version of the petitioners follows:
1. Lynvil Fishing Enterprises, Inc. (Lynvil) is a
company engaged in deep-sea fishing, operating along the
shores of Palawan and other outlying islands of the
Philippines.[4] It is operated and managed by Rosendo S. de
Borja.
2. On 1 August 1998, Lynvil received a report from
Romanito Clarido, one of its employees, that on 31 July
1998, he witnessed that while on board the company
vessel Analyn VIII, Lynvil employees, namely: Andres G.
Ariola (Ariola), the captain; Jessie D. Alcovendas
(Alcovendas), Chief Mate; Jimmy B. Calinao (Calinao), Chief
Engineer; Ismael G. Nubla (Nubla), cook; Elorde Baez
(Baez), oiler; and Leopoldo D. Sebullen
(Sebullen), bodegero, conspired with one another and stole
eight (8) tubs of pampano and tangigue fish and delivered
them to another vessel, to the prejudice of Lynvil.[5]
3. The said employees were engaged on a per trip
basis or por viaje which terminates at the end of each
trip. Ariola, Alcovendas and Calinao were managerial field
personnel while the rest of the crew were field
personnel.[6]
4. By reason of the report and after initial
investigation, Lynvils General Manager Rosendo S. De
Borja (De Borja) summoned respondents to explain within
five (5) days why they should not be dismissed from
service. However, except for Alcovendas and Baez,[7] the
respondents refused to sign the receipt of the notice.
5. Failing to explain as required, respondents
employment was terminated.
6. Lynvil, through De Borja, filed a criminal
complaint against the dismissed employees for violation of
P.D. 532, or the Anti-Piracy and Anti-Highway Robbery
Law of 1974 before the Office of the City Prosecutor of
Malabon City.[8]
7. On 12 November 1998, First Assistant City
Prosecutor Rosauro Silverio found probable cause for the
indictment of the dismissed employees for the crime of
qualified theft[9] under the Revised Penal Code.
 Aggrieved, the employees filed with the
Arbitration Branch of the National Labor Relations
Commission-National Capital Region on 25 August 1998 a
complaint for illegal dismissal with claims for backwages,
salary differential reinstatement, service incentive leave,
holiday pay and its premium and 13th month pay from
1996 to1998. They also claimed for moral, exemplary
damages and attorneys fees for their dismissal with bad
faith.[14]
They added that the unwarranted accusation of
theft stemmed from their oral demand of increase of
salaries three months earlier and their request that they
should not be required to sign a blank payroll and
vouchers.[15]
On 5 June 2002, Labor Arbiter Ramon Valentin C.
Reyes found merit in complainants charge of illegal
dismissal.[16]
The Court of Appeals found merit in the petition
and reinstated the Decision of the Labor Arbiter except as
to the award of attorneys fees. The appellate court held
that the allegation of theft did not warrant the dismissal of
the employees since there was no evidence to prove the
actual quantities of the missing kinds of fish loaded to
Analyn VIII.[25]It also reversed the finding of the NLRC that
the dismissed employees were merely contractual
employees and added that they were regular ones
performing activities which are usually necessary or
desirable in the business and trade of Lynvil. Finally, it
ruled that the two-notice rule provided by law and
jurisprudence is mandatory and non-compliance therewith
rendered the dismissal of the employees illegal.
The following are the assignment of errors
presented before this Court by Lynvil:
I

All other claims are dismissed for lack of merit.[17] THE HONORABLE COURT OF APPEALS
ERRED IN FAILING TO CONSIDER THE
The Labor Arbiter found that there was no evidence ESTABLISHED DOCTRINE LAID DOWN
showing that the private respondents received the IN NASIPIT LUMBER COMPANY V.
41 baeras of pampano as alleged by De Borja in his reply- NLRC HOLDING THAT THE FILING OF A
affidavit; and that no proof was presented that the CRIMINAL CASE BEFORE THE
8 baeras of pampano [and tangigue] were missing at the PROSECUTORS OFFICE CONSTITUTES
place of destination.[18] SUFFICIENT BASIS FOR A VALID
TERMINATION OF EMPLOYMENT ON
The Labor Arbiter disregarded the Resolution of Assistant THE GROUNDS OF SERIOUS
City Prosecutor Rosauro Silverio on the theft case. He MISCONDUCT AND/OR LOSS OF TRUST
reasoned out that the Labor Office is governed by different AND CONFIDENCE.
rules for the determination of the validity of the dismissal
of employees.[19] II

The Labor Arbiter also ruled that the contractual provision THE HONORABLE COURT OF APPEALS
that the employment terminates upon the end of each trip ERRED IN RULING THAT THE
does not make the respondents dismissal legal. He pointed TERMINATION OF RESPONDENTS
out that respondents and Lynvil did not negotiate on equal EMPLOYMENT WAS NOT SUPPORTED BY
terms because of the moral dominance of the employer.[20] SUBSTANTIAL EVIDENCE.
The Labor Arbiter found that the procedural due process III
was not complied with and that the mere notice given to
the private respondents fell short of the requirement of THE HONORABLE COURT OF APPEALS
ample opportunity to present the employees side.[21] ERRED IN FAILING TO CONSIDER THAT
THE RESPONDENTS EMPLOYMENT, IN
On appeal before the National Labor Relations ANY EVENT, WERE CONTRACTUAL IN
Commission, petitioners asserted that private respondents NATURE BEING ON A PER VOYAGE BASIS.
were only contractual employees; that they were not THUS, THEIR RESPECTIVE EMPLOYMENT
illegally dismissed but were accorded procedural due TERMINATED AFTER THE END OF EACH
process and that De Borja did not commit bad faith in VOYAGE
dismissing the employees so as to warrant his joint
liability with Lynvil.[22] IV

On 31 March 2004, the NLRC reversed and set THE HONORABLE COURT OF APPEALS
aside the Decision of the Labor Arbiter. ERRED IN RULING THAT THE
RESPONDENTS WERE NOT ACCORDED
The private respondents except Elorde Baez filed a PROCEDURAL DUE PROCESS.
Petition for Certiorari[24] before the Court of Appeals
alleging grave abuse of discretion on the part of NLRC. V
 THE HONORABLE COURT OF APPEALS
ERRED IN RULING THAT THE
RESPONDENTS ARE ENTITLED TO THE
PAYMENT OF THEIR MONEY CLAIMS.
VI
THE HONORABLE COURT OF APPEALS
ERRED IN FAILING TO CONSIDER THAT
PETITIONER ROSENDO S. DE BORJA IS
NOT JOINTLY AND SEVERALLY LIABLE
FOR THE JUDGMENT WHEN THERE WAS
NO FINDING OF BAD FAITH.[26]
The Courts Ruling
The Supreme Court is not a trier of facts. Under
Rule 45,[27] parties may raise only questions of law. We are
not duty-bound to analyze again and weigh the evidence
introduced in and considered by the tribunals below.
Generally when supported by substantial evidence, the
findings of fact of the CA are conclusive and binding on the
parties and are not reviewable by this Court, unless the
case falls under any of the following recognized
exceptions:
(1) When the conclusion is a finding
grounded entirely on speculation,
surmises and conjectures;
(2) When the inference made is manifestly
mistaken, absurd or impossible;
(3) Where there is a grave abuse of
discretion;
(4) When the judgment is based on a
misapprehension of facts;
(5) When the findings of fact are
conflicting;
(6) When the Court of Appeals, in making
its findings, went beyond the issues
of the case and the same is contrary
to the admissions of both appellant
and appellee;
(7) When the findings are contrary to
those of the trial court;
(8) When the findings of fact are
conclusions without citation of
specific evidence on which they are
based;
(9) When the facts set forth in the petition
as well as in the petitioners' main
and reply briefs are not disputed by
the respondents; and
(10) When the findings of fact of the Court
of Appeals are premised on the
supposed absence of evidence and
contradicted by the evidence on
record. (Emphasis supplied)[28]
The contrariety of the findings of the Labor
Arbiter and the NLRC prevents reliance on the principle of
special administrative expertise and provides the reason
for judicial review, at first instance by the appellate court,
and on final study through the present petition.
In the first assignment of error, Lynvil contends
that the filing of a criminal case before the Office of the
Prosecutor is sufficient basis for a valid termination of
employment based on serious misconduct and/or loss of
trust and confidence relying on Nasipit Lumber Company v.
NLRC.[29]
Nasipit is about a security guard who was charged
with qualified theft which charge was dismissed by the
Office of the Prosecutor. However, despite the dismissal of
the complaint, he was still terminated from his
employment on the ground of loss of confidence. We ruled
that proof beyond reasonable doubt of an employee's
misconduct is not required when loss of confidence is the
ground for dismissal. It is sufficient if the employer has
"some basis" to lose confidence or that the employer has
reasonable ground to believe or to entertain the moral
conviction that the employee concerned is responsible for
the misconduct and that the nature of his participation
therein rendered him absolutely unworthy of the trust and
confidence demanded by his position.[30] It added that the
dropping of the qualified theft charges against the
respondent is not binding upon a labor tribunal.[31]
In Nicolas v. National Labor Relations
Commission,[32] we held that a criminal conviction is not
necessary to find just cause for employment termination.
Otherwise stated, an employees acquittal in a criminal
case, especially one that is grounded on the existence of
reasonable doubt, will not preclude a determination in a
labor case that he is guilty of acts inimical to the employers
interests.[33] In the reverse, the finding of probable cause is
not followed by automatic adoption of such finding by the
labor tribunals.
In other words, whichever way the public
prosecutor disposes of a complaint, the finding does not
bind the labor tribunal.
Thus, Lynvil cannot argue that since the Office of
the Prosecutor found probable cause for theft the Labor
Arbiter must follow the finding as a valid reason for the
termination of respondents employment. The proof
required for purposes that differ from one and the other
are likewise different.
Nonetheless, even without reliance on the
prosecutors finding, we find that there was valid cause for
respondents dismissal.
In illegal dismissal cases, the employer bears the
burden of proving that the termination was for a valid or
authorized cause.[34]
Just cause is required for a valid dismissal. The
Labor Code[35] provides that an employer may terminate
an employment based on fraud or willful breach of the
trust reposed on the employee. Such breach is considered
willful if it is done intentionally, knowingly, and purposely, written agreement to the
without justifiable excuse, as distinguished from an act contrary notwithstanding and
done carelessly, thoughtlessly, heedlessly or inadvertently. regardless of the oral agreement
It must also be based on substantial evidence and not on of the parties, an employment
the employers whims or caprices or suspicions otherwise, shall be deemed to be regular
the employee would eternally remain at the mercy of the where the employee has been
employer. Loss of confidence must not be indiscriminately engaged to perform activities
used as a shield by the employer against a claim that the which are usually necessary or
dismissal of an employee was arbitrary. And, in order to desirable in the usual business or
constitute a just cause for dismissal, the act complained of trade of the employer, except
must be work-related and shows that the employee where the employment has been
concerned is unfit to continue working for the employer. In fixed for a specific project or
addition, loss of confidence as a just cause for termination undertaking the completion or
of employment is premised on the fact that the employee termination of which has been
concerned holds a position of responsibility, trust and determined at the time of the
confidence or that the employee concerned is entrusted engagement of the employee or
with confidence with respect to delicate matters, such as where the work or service to be
the handling or care and protection of the property and performed is seasonal in nature
assets of the employer. The betrayal of this trust is the and the employment is for the
essence of the offense for which an employee is duration of the season.
penalized.[36]
An employment shall be deemed
Breach of trust is present in this case. to be casual if it is not covered by
We agree with the ruling of the Labor Arbiter and
the preceding paragraph:
Court of Appeals that the quantity of tubs expected to be
Provided, That any employee
received was the same as that which was loaded. However, who has rendered at least one
what is material is the kind of fish loaded and then
year of service, whether such
unloaded. Sameness is likewise needed.
service is continuous or broken,
We cannot close our eyes to the positive and clear shall be considered a regular
narration of facts of the three witnesses to the commission employee with respect to the
of qualified theft. Jonathan Distajo, a crew member of the
activity in which he is employed
Analyn VIII, stated in his letter addressed to De
and his employment shall
Borja[37] dated 8 August 1998, that while the vessel was continue while such activity
traversing San Nicolas, Cavite, he saw a small boat
exists.
approach them.When the boat was next to their vessel,
Alcovendas went inside the stockroom while Sebullen Lynvil contends that it cannot be guilty of illegal
pushed an estimated four tubs of fish away from it. Ariola,
dismissal because the private respondents were employed
on the other hand, served as the lookout and negotiator of
under a fixed-term contract which expired at the end of the
the transaction. Finally, Baez and Calinao helped in putting voyage.
the tubs in the small boat. He further added that he
Lynvil insists on the applicability of the case
received P800.00 as his share for the
of Brent School,[41] to wit:
transaction. Romanito Clarido, who was also on board the
Accordingly, and since the entire
vessel, corroborated the narration of Distajo on all purpose behind the development of
accounts in his 25 August 1998 affidavit.[38] He added that
legislation culminating in the present
Alcovendas told him to keep silent about what happened
Article 280 of the Labor Code clearly
on that day. Sealing tight the credibility of the narration of appears to have been, as already
theft is the affidavit[39] executed by Elorde Baez dated 3
observed, to prevent circumvention of the
May 1999. Baez was one of the dismissed employees who
employee's right to be secure in his
actively participated in the taking of the tubs. He clarified tenure, the clause in said article
in the affidavit that the four tubs taken out of the
indiscriminately and completely ruling
stockroom in fact contained fish taken from the eight
out all written or oral agreements
tubs. He further stated that Ariola told everyone in the
conflicting with the concept of regular
vessel not to say anything and instead file a labor case employment as defined therein should be
against the management.Clearly, we cannot fault Lynvil
construed to refer to the substantive evil
and De Borja when it dismissed the employees.
that the Code itself has singled out:
The second to the fifth assignment of errors interconnect. agreements entered into precisely to
circumvent security of tenure. It should
The nature of employment is defined in the Labor
have no application to instances where a
Code, thus: fixed period of employment was agreed
Art. 280. Regular and casual upon knowingly and voluntarily by the
employment. The provisions of parties, without any force, duress or
 improper pressure being brought to bear
upon the employee and absent any other
circumstances vitiating his consent, or
where it satisfactorily appears that the
employer and employee dealt with each
other on more or less equal terms with no
moral dominance whatever being
exercised by the former over the latter.
Unless thus limited in its purview, the law
would be made to apply to purposes
other than those explicitly stated by its
framers; it thus becomes pointless and
arbitrary, unjust in its effects and apt to
lead to absurd and unintended
consequences.
Contrarily, the private respondents contend that
they became regular employees by reason of their
continuous hiring and performance of tasks necessary and
desirable in the usual trade and business of Lynvil.
Jurisprudence,[42] laid two conditions for the
validity of a fixed-contract agreement between the
employer and employee:
First, the fixed period of
employment was knowingly and
voluntarily agreed upon by the
parties without any force, duress,
or improper pressure being
brought to bear upon the
employee and absent any other
circumstances vitiating his
consent; or
Second, it satisfactorily appears
that the employer and the
employee dealt with each other
on more or less equal terms with
no moral dominance exercised by
the former or the latter.[43]
Textually, the provision that: NA ako ay sumasang-ayon na
maglingkod at gumawa ng mga gawain sang-ayon sa
patakarang por viaje na magmumula sa pagalis sa Navotas
papunta sa pangisdaan at pagbabalik sa pondohan ng
lantsa sa Navotas, Metro Manila is for a fixed period of
employment. In the context, however, of the facts that: (1)
the respondents were doing tasks necessarily to Lynvils
fishing business with positions ranging from captain of the
vessel to bodegero; (2) after the end of a trip, they will
again be hired for another trip with new contracts; and (3)
this arrangement continued for more than ten years, the
clear intention is to go around the security of tenure of the
respondents as regular employees. And respondents are so
by the express provisions of the second paragraph of
Article 280, thus:
xxx Provided, That any employee who has
rendered at least one year of service,
whether such service is continuous or
broken, shall be considered a regular
employee with respect to the activity in
which he is employed and his
employment shall continue while such
activity exists.
The same set of circumstances indicate clearly enough that
it was the need for a continued source of income that
forced the employees acceptance of the por viaje provision.
Having found that respondents are regular
employees who may be, however, dismissed for cause as
we have so found in this case, there is a need to look into
the procedural requirement of due process in Section 2,
Rule XXIII, Book V of the Rules Implementing the Labor
Code. It is required that the employer furnish the
employee with two written notices: (1) a written notice
served on the employee specifying the ground or grounds
for termination, and giving to said employee reasonable
opportunity within which to explain his side; and (2) a
written notice of termination served on the employee
indicating that upon due consideration of all the
circumstances, grounds have been established to justify his
termination.
From the records, there was only one written
notice which required respondents to explain within five
(5) days why they should not be dismissed from the
service. Alcovendas was the only one who signed the
receipt of the notice. The others, as claimed by Lynvil,
refused to sign. The other employees argue that no notice
was given to them. Despite the inconsistencies, what is
clear is that no final written notice or notices of
termination were sent to the employees.
The twin requirements of notice and hearing
constitute the elements of [due] process in cases of
employee's dismissal. The requirement of notice is
intended to inform the employee concerned of the
employer's intent to dismiss and the reason for the
proposed dismissal. Upon the other hand, the requirement
of hearing affords the employee an opportunity to answer
his employer's charges against him and accordingly, to
defend himself therefrom before dismissal is
effected.[44] Obviously, the second written notice, as
indispensable as the first, is intended to ensure the
observance of due process.
Applying the rule to the facts at hand, we grant a monetary
award of P50,000.00 as nominal damages, this, pursuant to
the fresh ruling of this Court in Culili v. Eastern
Communication Philippines, Inc.[45] Due to the failure of
Lynvil to follow the procedural requirement of two-notice
rule, nominal damages are due to respondents despite
their dismissal for just cause.
Given the fact that their dismissal was for just
cause, we cannot grant backwages and separation pay to
respondents. However, following the findings of the Labor
Arbiter who with the expertise presided over the
proceedings below, which findings were affirmed by the
Court of Appeals, we grant the 13th month pay and salary
differential of the dismissed employees.
Whether De Borja is jointly and severally liable with
Lynvil
As to the last issue, this Court has ruled that in
labor cases, the corporate directors and officers are
solidarily liable with the corporation for the termination of
employment of employees done with malice or in bad
faith.[46] Indeed, moral damages are recoverable when the
dismissal of an employee is attended by bad faith or fraud
or constitutes an act oppressive to labor, or is done in a
manner contrary to good morals, good customs or public
policy.
It has also been discussed in MAM Realty
Development Corporation v. NLRC[47] that:
x x x A corporation being a juridical entity,
may act only through its directors, officers
and employees. Obligations incurred by
them, acting as such corporate agents, are
not theirs but the direct accountabilities
of the corporation they represent. True,
solidary liabilities may at times be
incurred but only when exceptional
circumstances warrant such as, generally,
in the following cases:
1. When directors and trustees or, in
appropriate cases, the officers of a
corporation:
xxx
(b) act in bad faith or with gross
negligence in directing the corporate
affairs;
x x x [48]
The term "bad faith" contemplates a "state of mind
affirmatively operating with furtive design or with some
motive of self-interest or will or for ulterior purpose."[49]
We agree with the ruling of both the NLRC and the Court of
Appeals when they pronounced that there was no evidence
on record that indicates commission of bad faith on the
part of De Borja. He is the general manager of Lynvil, the
one tasked with the supervision by the employees and the
operation of the business. However, there is no proof that
he imposed on the respondents the por viaje provision for
purpose of effecting their summary dismissal.
WHEREFORE, the petition is partially
GRANTED. The 10 September 2007 Decision of the Court
of Appeals in CA-G.R. SP No. 95094 reversing the
Resolution dated 31 March 2004 of the National Labor
Relations Commission is hereby MODIFIED. The Court
hereby rules that the employees were dismissed for just
cause by Lynvil Fishing Enterprises, Inc. and Rosendo S. De
Borja, hence, the reversal of the award for backwages and
separation pay. However, we affirm the award for
13th month pay, salary differential and grant an
additional P50,000.00 in favor of the
employees representing nominal damages for petitioners
non-compliance with statutory due process. No cost.
SO ORDERED.
G.R. Nos. 97652-53 October 19, 1999
JOSE H. RUTAQUIO and ERLINDA F.
VILLAREAL, petitioners,
vs.
THE HON. NATIONAL LABOR RELATIONS COMMISSION
(Third Division), THE HON. LABOR ARBITER,
AMBROCIO B. SISON, RURAL BANK OF BALER, INC., and
FLORDELIZA S. CARPIO, respondents.
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the
Revised Rules of Court assailing the Resolution of the
National Labor Relations Commission in NLRC Case Nos.
RAB-IV-10-2874-89 and RAB-IV-10-2878-89, dated July
11, 1990, and the Resolution, dated February 15, 1991,
denying Petitioners' Motion for Reconsideration.
The facts that matter are as follows:
Petitioners Jose H. Rutaquio and Erlinda F. Villareal are
Savings Bookkeeper and Cashier, respectively, of the
respondent Rural Bank of Baler, Inc., the respondent
herein.
On September 15, 1989, M.Y. Mateo & Company, Certified
Public Accountants of respondent bank, recommended the
reprimand of the employees, Jose Rutaquio and Erlinda
Villareal, who were found guilty of negligence in the
performance of their duties and responsibilities, to wit:
1. After a reconciliation of the cash
account, cash in the custody of the Cashier
exceeded her accountability per books by
P7,730.65.
2. At the time of the examination,
recording in the books of account was
behind by about a week as the last
posting was August 31, 1989. The daily
proofsheets covering the period from
September 1 to 8, 1989 were prepared
and up-dated during the examination to
determine the exact accountability of the
Cashier.
3. It should be pointed out at this juncture
that a week's delay in the recording of
transactions in the books of account and a
shortage or overage in cash accountability
regardless of amount constituted
negligence on the part of the employees
concerned. 1
Acting thereupon, on September 29, 1989, Flordeliza
Carpio, President and Manager of the Bank, issued Board
Resolution No. 89-35 recommending disciplinary action
against Erlinda Villareal and Jose Rutaquio. They were
required to submit their formal resignation effective
immediately upon receipt of the letter. 2
On October 1, 1989, the employees sent a letter to the
Manager questioning their illegal dismissal, stating that
they would resign only after vindicating their names
before the proper dispenser of justice, theorizing that the
imputation of negligence was malicious. 3
On October 3, 1989, the President replied thus:
In the case of Mr. Rutaquio: the Bank was
fined by the Central Bank in an amount of
approximately P35,000.00 for late
financial reports; books of account of the
bank remain unbalanced, and lately, even
after being aware that the new
management intends to dismiss him,
entries in the books of account were late.
In the case of Mrs. Villareal: she could not
account for a P10,000.00 check and the
fact that she paid them the sum when the
new management took over is no
mitigation. In the cash count made last
month, there was an average of over
P7,000.00.
When a small bank with a paid-up capital
of only P500,000.00 has only one
bookkeeper and only one cashier with
such unreliability, the viability thereof is
in imminent danger. Moreover, you have
always been acting in an insolent manner
towards the new management which is
anathema to the smooth operation of the
bank.
You are dismissed from the Bank as of the
of last month. 4
On October 5, 1989, the employees presented an Answer
to the Notice of Dismissal and Request for Hearing,
contending:
xxx xxx xxx
As to the statement of Capital Required
and Capital Accounts-CBP Form-7-19-07
from June to December 1987 mentioned
by the Central Bank, in its letter of July 25,
1987, it is worth mentioning that the
Rural Bank of Baler, Inc., had never
prepared and submitted the same until a
form was furnished by the Central Bank,
thru (sic) Director Jesse Domingo in 1988,
hence the incumbent bookkeeper could
not be held liable for failure to prepare
and submit said statement of Capital
Required and Capital Accounts, for there
is no available record in the Bank to show
that said report had been prepared and
submitted before I (Jose H. Rutaquio)
assumed office as General Bookkeeper in
May 1987.
With respect to the Ten Thousand Pesos
(P10,000.00) check, which was lost, the
incident happened during that time when
there was panic withdrawal from the
depositors. And after discovering that the
check was in fact lost, all necessary
actions were made to safeguard the
interest of the Bank. But after sometime
the amount was charged to my (Erlinda F.
Villareal) account. The full amount,
however, was recovered after Mr. Alberto
Ong issued Solidbank Check No. CA
496704, dated February 14, 1989 in favor
of the Rural Bank of Baler, Inc.
As to the overage amounting to Seven
Thousand Seven Hundred Thirty Pesos
and 65/100 (P7,730.65) during the Cash
Audit made by Mr. Bartolome I. Conde in
the presence of Ms. Flordeliza S. Carpio,
President/Manager of the Bank on
September 8, 1989, at about 2:30 P.M.
without any written authority from the
Central Bank to audit Rural Bank of Baler,
Inc., the cash audit was undertaken even
if the bank transaction was still going on.
Hence, the overage of Seven Thousand
Seven Hundred Thirty Pesos and 65/100
(P7,730.65) has been recorded, which
may be explained as follows:
a) Under Savings Deposit Number 3760,
the amount of Eight Thousand Pesos
(P8,000.00) for deposit was received,
however the said deposit was accounted
the following banking day dated
September 11, 1989 and therefore the
cash on hand exceeded the recorded cash
on hand.
b) On the same day, Savings Deposit
Number 2181, withdrew the amount of
Two Hundred Seventy Pesos (P270.00).
The said withdrawal had been paid-up
but accounted and recorded on
September 15, 1989.
Finally, Section 5 of Rule XIV of the
Omnibus Rules Implementing the Labor
 Code on termination of employment,
requires the employer to give the worker
ample opportunity to be heard and
defend himself with the assistance of his
counsel or representative.
In view of all the foregoing, we
respectfully request for a hearing and be
given the opportunity to prove that the
Bank has no just cause to dismiss us and
granting arguendo that the Bank believes
there is any, the dismissal should be made
only after due process, is afforded us, as
provided under Section 1, Rule XIV of the
Omnibus Rules Implementing the Labor
Code on termination of employment.
xxx xxx xxx
On October 13, 1989, Jose Rutaquio brought a Complaint,
docketed as NLRC Case No. RB-IV-10-2878-89 before the
Arbitration Branch, Region No. IV, for illegal Dismissal and
Damages in the amount of One Hundred Thousand
(P100,000.00) Pesos.
On November 7, 1989, Erlinda F. Villareal and Jose
Rutaquio filed their Position Papers with Rutaquio's
Position paper praying:
Wherefore, premises considered it is
most respectfully prayed unto this
Honorable Commission, that after
hearing, judgment be rendered in favor of
the complainant against respondent,
declaring illegal and unlawful the
dismissal of herein complainant by
respondent, granting and awarding to
said complainant, the following:
a) His salary from October 1, 1989 until the case is finally
terminated;
b) His monthly allowance from October 1, 1989 until the
case is finally terminated;
c) The money value of his earned leave;
d) His separation pay;
e) Payment for damages in the amount of P100,000.00
f) Attorney's fee in the amount of P30,000.00; and
g) Other reliefs which are just and equitable under the
premises. 6
So, also, on November 14, 1989, a Certification was issued
by P/Sgt. Miguel R. Barribal, Jr., INP relating to the Police
Blotter, alleging that:
. . . he was threatened by Manuel
Suaverdez and Gregorio Suaverdez on or
about 072030 January 89 during a
conference held at Rural Bank of Baler
Incorporated at Recto Street this
municipality. This incident happened
after said Jose Rutaquio has explained in
the said conference the present financial
statement of the said Rural Bank.
Likewise Gregorio Suaverdez uttered
defamatory words and expressions
against Jose Rutaquio, to wit: "PUTANG-
INA MO. PARA KANG MAY-ARI NG
BANGKO KUNG MAGSALITA". Gregorio
Suaverdez asked Danilo Natividad to get
his gun from his wife (Vilma Suaverdez),
and he also said "KUNG GUSTO MO
TAPUSIN KA NA NAMIN". More so,
Manuel Suaverdez and Gregorio
Suaverdez also uttered the following
"PAG PINATAY KA NAMIN, ANG WITNESS
MO LAMANG AY SI EX-MAYOR PIMENTEL
...7
On December 21, 1989, Flordeliza S. Carpio, with the
assistance of her counsel, filed a Revised Position Paper
stating:
The respondents are engaged in banking
business. Confidence and trust are the
principal consideration in the selection
and hiring of employees. In the same
manner, loss of confidence and breach of
trust should also be the principal
consideration in the removal or dismissal
of the employees.
Respondents have enumerated the
irregularities, incompetence,
disobedience, negligence, misbehavior
and misconduct of complainant. All these
facts are inimical to the employer's
interest. In consonance with the ruling of
the Supreme Court in San Miguel
Corporation vs. NLRC, 142, (sic) SCRA 376,
an employer has the right to dismiss an
employee whose continuance in office is
inimical to the employer's interests.
The respondents have lost confidence in
complainant when he continuously
neglected his duties on account of which
the respondent bank was penalized twice
in the total amount of P32,890.00. The
right of the employer to dismiss the
bookkeeper based on loss of confidence
due to incompetence, serious
irregularities grave misconduct cannot be
precluded. Such is the ruling of the
Supreme Court in Metro Drug Corp. vs.
NLRC, 143 SCRA 132.
. . . It was only after his refusal to take
advantage of the magnanimity of the bank
that he was finally considered resigned at
 the end of business hour on September
29, 1989. . . . 8
On February 8, 1990, Jose Rutaquio filed his Comment to
the Respondent's Revised Position Paper.
On July 1, 1990, Labor Arbiter Ambrocio B. Sison found
that subject employees were illegally dismissed and
ordered thus:
In the light of the foregoing facts and
jurisprudence, it is crystal clear that the
dismissals of the complainants are illegal,
hence they must be reinstated to their
former positions, considering however,
the strained relationship which
culminated between the parties, it is
believed more appropriate under the
premises not to reinstate complainants to
prevent further the already acrimonious
relationship between the contending
parties. Payment therefore of a separation
pay (one-half month pay for every year of
service) is in order in the interest of
justice with damages for their social
humiliation, sleepless nights, mental
anguish occasioned by their unwarranted
dismissals which has dawned upon them
without the benefit of due
process.1âwphi1.nêt
Premises considered, judgment is hereby
rendered declaring the dismissals of the
complainants as illegal and therefore
respondents are hereby ordered:
1. To pay complainant Erlinda F. Villareal
backwages from the date when she was
illegally dismissed on September 30, 1989
up to July 1, 1990 the date of the
rendition of this decision, in the amount
of P25,012.80, the amount of P28,139.40
as separation pay and the amount of
P15,000.00 as moral damages;
2. To pay complainant Jose H. Rutaquio
his backwages from the time he was
illegally dismissed on September 30, 1989
to July 1, 1990 the amount of P23,968.80,
the amount of P9,321.20 as separation
pay and the amount of P15,000.00 as
moral damages;
3. To pay complainant's counsel ten
percent (10%) of the total award as
Attorney's fees. 9
On August 3, 1990, the Bank filed its Memorandum on
Appeal while the employees filed theirs on August 9, 1990.
On December 13, 1990, the Third Division of the National
Labor Relations Commission modified the Decision of the
Labor Arbiter, to wit:
Although the case of City Service Corp.
Workers Union vs. City Service Corp., 135
SCRA 565, the Supreme Court held that an
employee unjustly dismissed shall be
entitled under the Labor Code to
reinstatement and backwages from the
time his compensation was withheld to
the time of his reinstatement. Such fact is
not obtainable in this case considering
that the Labor Arbiter awarded
separation pay to the complainants in lieu
of reinstatement. However, to obviate
protracted litigations that may arise in
the computation of complainant's
backwages, We deemed it proper to fix
the award of backwages to one (1) year
without qualification and deduction.
Likewise, We delete the award of moral
damages and attorney's fee's for lack of
factual and legal basis. In the case
of Gutierrez vs. Villegas, 8 SCRA 527, the
Supreme Court held that no award for
moral damages can be made where the
record shows no proof of mental anguish.
The other issues and arguments raised by
the complainants in their appeal are
dismissed for want of merit.
Anent the appeal of the respondents,
records show that the questioned
decision was received by the respondents,
thru (sic) counsel on July 24, 1990 and the
appeal was filed on October 30, 1990
which is way beyond the ten (10)
calendar days reglementary period for
the filing of appeals as required by the
Revised NLRC Rules. Well rooted is the
principle that perfection of an appeal
within the statutory or reglementary
period is not only mandatory but
jurisdictional and failure to do so renders
the questioned decision final and
executory that deprives the appellate or
body of jurisdiction to alter the final
judgment much less entertain the appeal
(Acda vs. Minister of Labor, 306-307, (sic)
SCRA 119, Dec. 15, 1982). Likewise, the
records indicate that no appeal fee was
paid by the respondents. It has been held
that the non-payment of appeal fee is an
essential requirement in the perfection of
an appeal. Appellant must conform to the
requisites of law (Art. 221) considering
that the right to appeal is not a natural
right but merely statutory right (Acda vs.
 MOLE, 119 SCRA, 507). For these reasons,
We dismiss respondents' appeal.
WHEREFORE, premises considered, the
appealed decision is hereby modified to
delete the award of moral damages and
attorney's fees. Accordingly, respondents
are hereby ordered to pay complainants
Jose F. Rutaquio and Erlinda F. Villareal
their backwages fixed at one (1) year
without qualification and deduction. All
other dispositions stand. 10
On February 1, 1991, the employees interposed a Motion
for Reconsideration of the aforesaid Decision but the same
was denied in the Resolution of February 15, 1991.
Undaunted, the petitioners found their way to this Court
through the present Petition for Certiorari; assigning as
errors, that:
I penalty he has to pay for illegally
PUBLIC RESPONDENTS ERRED IN FIXING
THE BACKWAGES OF HEREIN
PETITIONERS AT ONLY ONE YEAR
WITHOUT QUALIFICATION.
II
PUBLIC RESPONDENTS ERRED IN
AWARDING TO HEREIN PETITIONERS
SEPARATION PAY EQUIVALENT TO ONLY
ONE-HALF (1/2) MONTH FOR EVERY
YEAR OF SERVICE.
III
PUBLIC RESPONDENT COMMISSION
ERRED IN NOT AWARDING MORAL
DAMAGES AND ATTORNEY'S FEES FOR
"LACK OF FACTUAL AND LEGAL
BASIS." 11
The pivot of inquiry here is the correctness of the
award of backwages, separation pay, moral
damages and attorney's fees.
On the issue of backwages, the award of a fixed
amount of one (1) year backwages without
qualification and deduction is not proper under
the circumstances. The illegal dismissal of the
herein employees-complainants was effective
September 30, 1989, or after Republic Act 6715
(Herrera-Veloso Law) took effect on March 15,
1989. Absent any exceptional circumstance, it is
now settled that an employee who is unjustly
dismissed from work shall be entitled to full
backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent
computed from the time his compensation was
withheld from him to the time of his actual
reinstatement. 12 In the landmark case of Osmalik
Bustamante, et al. v. National Labor Relations
Commission, G.R. No. 111651, November 28, 1996,
265 SCRA 61, the Court ruled:
. . . conformably with the evident
legislative intent as expressed in Rep. Act
No. 6715, above-quoted, backwages to be
awarded to an illegally dismissed
employee, should not, as a general rule, be
diminished or reduced by the earnings
derived by him elsewhere during the
period of his illegal dismissal. The
underlying reason for this ruling is that
the employee, while litigating the legality
(illegality) of his dismissal, must still earn
a living to support himself and his family,
while full backwages have to be paid by
the employer as part of the price or
dismissing his employee. The clear
legislative intent of the amendment in
Rep. Act No. 6715 is to give more benefits
to workers than was previously given
them under the Mercury Drug Rule or the
deduction of earnings elsewhere rule.
Thus, a closer adherence to the legislative
policy behind Rep. Act No. 6715 points to
full backwages as meaning exactly
that, i.e., without deducting from
backwages the earnings derived
elsewhere by the concerned employee
during the period of his illegal dismissal.
In other words, the provision calling for
full backwages to illegally dismissed
employees is clear, pain and free from
ambiguity and, therefore, must be applied
without attempted or strained
interpretation. Index animi sermo est.
With respect to separation pay, the dismissal of petitioners
being illegal, the Court holds that the award below of one-
half month pay for every year of service cannot be upheld.
Respondent commission erred in adopting the Labor
Arbiter's award of one-half month pay for every year of
service. Following the prevailing doctrine enunciated in
the case of Reformist Union of R.B. Liner, Inc. v. National
Labor Relations Commission, 266 SCRA 728, citing Seatand
Service, Inc. v. National Labor Relations Commission, 206
SCRA 701, 710, petitioners are entitled to a separation pay
equivalent to one month pay for every year of service, as
an alternative to reinstatement.
Illegally dismissed, as they are, petitioners who were
awarded separation pay in lieu of reinstatement, are
granted full backwages from the time of their illegal
dismissal up to the date of this decision of the Court,
without qualification or deduction.

As regards the award of moral damages, employer

contends that mere allegation of entitlement to moral
damages would not suffice to justify the award, absent any
concrete proof. The Court is of the sense that moral
damages must have a factual basis. In the case under
consideration, petitioners were unable to substantiate
their claim for moral damages. In the absence of fraud or
bad faith on the part of the employer in dismissing
petitioners, an award of moral damages is not proper.

Moral damages are recoverable only

where the dismissal was attended by bad
faith or fraud, or constituted an act
oppressive to labor, or was done in a
manner contrary to morals, good customs
or public policy. (Lopez v. Javier, 252
SCRA 68)

With respect to attorney's fees, the Court believes, and so

rules, that an award of attorney's fees is warranted since it
has been established that legal services have been
rendered by the lawyer of the petitioners. Taking into
account the attendant facts and circumstances, ten (10%)
percent of the total award is a reasonable amount of
attorney's fees. In the case of Philippine National
Construction Corporation v. National Labor Relations
Commission, 277 SCRA 91, the Court held.

It is settled that in actions for recovery of

wages or where an employee was forced
to litigate and, thus, incur expenses to
protect his rights and interest, the award
of attorney's fees is legally and morally
justifiable.

WHEREFORE, the Decision of the National Labor Relations

Commission in NLRC Case Nos. RB-IV-102874-89 and
NLRC Case No. RB-IV-10-2878 is AFFIRMED with
MODIFICATION and petitioners are hereby adjudged
entitled to full backwages from the time of their illegal
dismissal to the finality of this Decision, without
qualification and deduction, one month separation pay for
every year of service and attorney's fees equivalent to ten
(10%) percent of the total award. No pronouncement as to
costs.1âwphi1.nêt

SO ORDERED.